UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 1995
Commission File Number 0-11854
BIOTECHNICA INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2344703
(State of incorporation) (I.R.S. Employer
Identification No.)
4001 North War Memorial Drive, Peoria, IL 61614
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 309/681-0300
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 the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
On January 19, 1996, the Registrant had 115,379,628 (115,418,788 shares
less, 39,160 treasury shares) shares of Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
December 31, June 30,
Assets 1995 1995
<CAPTION>
<S> <C> <C>
Current assets:
Cash & cash equivalents 0 399
Accounts receivable 1,297 7,778
Inventories 10,491 6,927
Prepaid expenses & other assets 353 105
------ ------
Total Current Assets 12,141 15,209
Property, plant & equipment
At cost 12,552 13,281
Less accumulated depreciation 3,696 3,510
------ ------
Net property, plant & equipment 8,856 9,771
Goodwill and other assets 9,232 9,522
Total Assets 30,229 34,502
====== ======
Liabilities and Shareholders' equity
Current liabilities:
Borrowings under line of credit 6,300 9,200
Current portion of long-term debt 115 115
Accounts payable 1,834 735
Customer advances 2,313 0
Accrued liabilities 391 2,051
Due to affiliates 160 0
------ ------
Total current liabilities 11,113 12,101
Long- term debt 77 129
Due to affiliates 3,261 5,326
Other noncurrent liabilities 158 156
------ ------
Total Liabilities 14,609 17,712
Shareholders' equity:
Preferred stock, Class A, 2,000,000
shares authorized; 900,000 and 700,000
shares outstanding, respectively 9 7
Common stock, 150,000,000 shares
authorized; 115,418,788 shares
outstanding 1,154 1,154
Additional paid-in capital 20,891 18,893
Accumulated deficit (6,339) (3,169)
Treasury stock (95) (95)
------ ------
Total shareholders' equity 15,620 16,790
Total liabilities and
shareholders' equity 30,229 34,502
====== ======
See notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands of dollars except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
<CAPTION>
<S> <C> <C> <C> <C>
Net Sales:
Domestic 314 1,022 870 2,905
Export-Affiliates 1,218 1,979 1,218 1,979
Export-Other 161 0 161 0
------ ------ ------ ------
1,693 3,001 2,249 4,884
Cost of Goods Sold:
Cost of goods sold 1,590 2,742 1,941 4,481
------ ------ ------ ------
Gross Margin 103 259 308 403
Operating expenses:
Sales and marketing 831 945 1,845 2,085
Warehouse and distribution 185 395 380 868
General and administrative 631 846 1,288 1,738
------ ------ ------ ------
1,647 2,186 3,513 4,691
Operating income (1,544) (1,927) (3,205) (4,288)
Other income (expense):
Interest expense (205) (306) (455) (627)
Amortization of goodwill (125) (124) (250) (238)
Gain on sale of fixed assets 395 16 406 21
Other 133 (3) 334 63
------ ------ ------ ------
Net income before taxes (1,346) (2,344) (3,170) (5,069)
Income taxes 0 0 0 0
Net income (loss) (1,346) (2,344) (3,170) (5,069)
====== ====== ====== ======
Net income (loss) per share (0.01) (0.02) (0.03) (0.04)
Weighted average
shares outstanding
(in thousands) 115,419 121,434 115,419 121,434
See notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands of dollars)
Six Months Ended
December 31,
1995 1994
<CAPTION>
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) (3,170) (5,069)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 716 815
Changes in assets and liabilities
Accounts receivable 6,481 5,851
Inventories (3,564) (4,720)
Other current assets (208) 1,091
Customer advances 2,313 0
Accounts payable and accrued liabilities (561) 3,934
------ ------
Net cash provided by (used in)
operating activities 2,007 1,902
Cash flow from investing activities:
Acquisition of property, plant & equipment (198) (137)
Other 647 0
------ ------
Net cash provided by (used in)
investing activities 449 (137)
Cash flow from financing activities:
Increase (decrease)in line of credit (2,900) (6,650)
Increase (decrease)in debt to affiliates (1,905) 3,083
(Decrease) in long-term debt and notes payable (50) (243)
Increase in equity 2,000 2,000
------ ------
Net cash provided by (used in)
financing activities (2,855) (1,810)
Net increase (decrease) in cash (399) (45)
Cash and cash equivalents at beginning of period 399 1,141
Cash and cash equivalents at end of period 0 1,096
See notes to Condensed Consolidated Financial Statements
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands of dollars, except share data)
Preferred Stock Common Stock
Class A Non-Voting
Shares Par Value Shares Par Value
<CAPTION>
<C> <C> <C> <C> <C>
Balance June 30, 1995 700,000 $7 115,418,788 $1,154
Net loss First Quarter 0 $0 0 $0
Balance September 30, 1995 700,000 $7 115,418,788 $1,154
Issuance of Preferred Stock 200,000 $2 0 $0
Net loss Second Quarter 0 $0 0 $0
Balance December 31, 1995 900,000 $9 115,418,788 $1,154
</TABLE>
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(in thousands of dollars, except share data)
Additional Retained Treasury Stock Total
Paid-In Earnings Shareholders
Capital (Deficit) Shares Par Value Equity
<CAPTION>
<C> <C> <C> <C> <C> <C>
Balance June 30, 1995 $18,893 ($3,169) (39,160) ($95) $16,790
Net loss First Quarter $0 ($1,824) 0 $0 ($1,824)
Balance September 30, 1995 $18,893 ($4,993) (39,160) ($95) $14,966
Issuance of Preferred Stock $1,998 $0 0 $0 $2,000
Net loss Second Quarter $0 ($1,346) 0 $0 ($1,346)
Balance December 31, 1995 $20,891 ($6,339) (39,160) ($95) $15,620
See notes to Condensed Consolidated Financial Statements
</TABLE>
BIOTECHNICA INTERNATIONAL, INC.
NOTES TO QUARTERLY CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1) Financial Statements
The accompanying condensed consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q. To the extent
that information and footnotes required by generally accepted accounting
principles for complete financial statements are contained in or
consistent with the audited consolidated financial statements
incorporated in the Company's Form 10-K for the year ended June 30, 1995,
such information and footnotes have not been duplicated herein. In the
opinion of management, all adjustments, consisting of normal recurring
accruals, considered necessary for a fair presentation of financial
statements have been reflected herein.
2) Inventories
(in thousand of dollars)
December 31, June 30,
1995 1995
Finished seed $ 8,777 $ 4,243
Unfinished seed 1,131 2,123
Supplies and other 583 561
-------- --------
Total Inventory $ 10,491 $ 6,927
"Finished seed" consists of bagged product, ready for sale, net of
reserves for obsolescence. "Unfinished seed" consists of bulk product not
yet bagged and the costs associated with the seed crop planted in the
spring of 1995, net of reserves for obsolescence. "Supplies and other"
consists of foundation seed, unused bags, pallets, and other supply
items. Seed product inventory is valued at the lower of average cost by
crop year or market. Supply inventory is valued at the lower of cost
using the first-in, first-out method or market.
3) Financing Agreement
On November 15, 1995, the Company renewed its line of credit with its
principal bank, extending the terms of the agreement until December 1,
1996. The Company may borrow up to $12,000,000, based upon a borrowing
base formula, subject to certain limitations and availability. Borrowings
under the line of credit are secured by receivables and inventory and by
the guarantee of the majority shareholder, Limagrain Genetics Corp., and
its parent, Groupe Limagrain Holding S.A. Borrowings against the line of
credit at January 19, 1996, totaled $6,000,000.
4) Changes in Equity
On November 30, 1995, the Company retired $2,000,000 of long-term debt
with its majority shareholder in exchange for 200,000 shares of the
Company's Class A Preferred Stock. The additional 200,000 shares brought
the total Class A Preferred Stock ownership of the majority shareholder
to 900,000 shares, representing a contribution of $9,000,000 in equity to
the Company during the past two years.
Item 2. Management's Discussion and Analysis
Business
The primary business of the Company is the production, processing and
sale of agricultural seeds to a network of farmer-dealers throughout the
midwestern United States. Corn, soybeans, and alfalfa comprise the
Company's major product lines.
The Company contracts with independent farmer-growers for the production
of seed to be grown under Company supervision to meet specific quality
and marketability specifications. The Company then processes and treats
the delivered seed with appropriate fungicides and insecticides and bags
the products for sale. Because weather conditions can cause material
fluctuations in yields and seed quality, the Company's cost of goods sold
is highly dependent upon weather conditions in its growing areas.
Liquidity and Capital Resources
Cash and cash equivalents declined $399,000 during the first six months
of Fiscal 1996 from $399,000 at June 30, 1995 to $0 at December 31, 1995.
Cash flow from operations totaled $2,007,000 primarily as a result of the
$2,313,000 in customer prepayments received during the second quarter of
Fiscal 1996. In addition, Depreciation and amortization of $716,000 and
the collection of $6,481,000 in cash from receivables nearly offset the
$3,564,000 growth in inventory, the $3,170,000 loss year to date, and the
$561,000 reduction in accounts payable and accrued expenses thus far this
year.
Production projects and information system improvements used $198,000 in
cash during the six month period but this was more than offset by the
$647,000 reduction in net fixed assets for the six month period. This
reduction is due to the involuntary disposal and resulting gain on fixed
assets mentioned in the last paragraph of this section.
Repayment of both short and long term debt used $2,950,000 of the
Company's cash flow, while the conversion of $2,000,000 in affiliate debt
into Preferred Stock mentioned in Note 4 of the Notes to the Quarterly
Consolidated Financial Statements resulted in the $2,000,000 increase to
equity and the $1,905,000 decline in debt to affiliates.
On November 15, 1995, the Company renewed its line of credit with its
principal bank, extending the terms of the agreement until December 1,
1996. The Company may borrow up to $12,000,000, based upon a borrowing
base formula, subject to certain limitations and availability. Borrowings
under the line of credit are secured by receivables and inventory and by
the guarantee of the majority shareholder and its parent. Borrowings at
January 19, 1996, totaled $6,000,000 compared to an availability under
the borrowing base of $7,515,000 at December 31, 1995. Management
believes that with the renewal the Company has access to sufficient cash
to fund the Company's operational needs for Fiscal 1996.
In October the Company and its insurance carrier reached a settlement in
determining the replacement cost of a production building destroyed by
fire on August 11, 1995. The insurance carrier has paid the Company
$1,029,000 for the replacement of the building which results in a gain on
involuntary disposal of fixed assets of approximately $383,000 which is
included in the three and six month periods ending December 31, 1995.
Management has decided to replace the destroyed building with a more
efficient and higher capacity facility, resulting in a capital
improvement project for Fiscal 1996 and Fiscal 1997 totaling $1,900,000.
This project will improve the processing capability at the Elmwood
facility and integrate it into the $3,500,000 plant built in Elmwood in
1990.
Results of Operations
Due to the seasonal nature of the seed business, 80-90% of the Company's
revenues normally occur during the third and fourth fiscal quarters of
each year. During the first six months of the year, the Company's
production facilities are harvesting, conditioning and bagging their seed
products and substantial marketing efforts are underway in preparation
for the next planting season which begins in the spring. Consequently,
companies in this industry typically have losses during the July through
December period and, as a result, the first and second quarters of the
year are not indicative of the results to be expected for the full year.
The Condensed Consolidated Statements of Operations for the three and six
months ended December 31, 1994, include the operations of Scott Seed and
severance costs for a number of former Company employees. For a more
meaningful comparison of the operating results of the respective three
and six month periods ending December 31, of Fiscal 1996 versus Fiscal
1995, the severance costs and the operations of Scott Seed have been
excluded in the proforma statement of operations shown below. Management
believes this proforma allows the reader to make a better comparison of
the three and six month periods ending December 31, of Fiscal 1995 to
Fiscal 1996 as the Company exists today and shows the Company's
continuing efforts to reduce expenses and improve profitability. The
following discussion is in reference to these proforma statements.
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(in thousands of dollars except per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1995 1994 1995 1994
<CAPTION>
<S> <C> <C> <C> <C>
Net Sales:
Domestic 314 171 870 682
Export-Affiliates 1,218 1,979 1,218 1,979
Export-Other 161 0 161 0
------ ------ ------ ------
1,693 2,150 2,249 2,661
Cost of Goods Sold:
Cost of goods sold 1,590 2,028 1,941 2,664
------ ------ ------ ------
Gross Margin 103 122 308 (3)
Operating expenses:
Sales and marketing 831 890 1,845 1,968
Warehouse and distribution 185 247 380 565
General and administrative 631 798 1,288 1,616
------ ------ ------ ------
1,647 1,935 3,513 4,149
Operating income (1,544) (1,813) (3,205) (4,152)
Other income (expense):
Interest expense (205) (305) (455) (625)
Amortization of goodwill (125) (124) (250) (238)
Gain on sale of fixed assets 395 16 406 21
Other 133 20 334 109
------ ------ ------ ------
Net income before taxes (1,346) (2,206) (3,170) (4,885)
Income taxes 0 0 0 0
Net income (loss) (1,346) (2,206) (3,170) (4,885)
====== ====== ====== ======
Net income (loss) per share (0.01) (0.02) (0.03) (0.04)
Weighted average
shares outstanding 115,419 121,434 115,419 121,434
(in thousands)
See notes to Condensed Consolidated Financial Statements
</TABLE>
Net sales on a proforma basis are $457,000 lower in the second quarter of
Fiscal 1996, declining from $2,150,000 in Fiscal 1995 to $1,693,000
in Fiscal 1996. Fall wheat sales improved over last year increasing from
$135,000 in the second quarter of Fiscal 1995 to $317,000 in the second
quarter of Fiscal 1996, however export sales to affiliates are $761,000
lower declining from $1,979,000 in Fiscal 1995 to $1,218,000 in Fiscal
1996. Affiliate corn production contracts for Fiscal 1996 are roughly
half of Fiscal 1995 totals and on top of that, due to the poor production
year experienced by the entire industry, the Company was unable to
produce enough of the proprietary corn genetics to fill the European
affiliates orders. As a result, these sales will be significantly lower
than Fiscal 1995. Cost of goods sold is $438,000 lower than Fiscal 1995
with the reduced sales volumes, but with the poor production year, the
cost of the current years corn crop for both domestic and export markets
will be significantly higher than in a normal production year. Sales and
marketing costs are $59,000 lower in the second quarter of Fiscal 1996
declining from $890,000 in Fiscal 1995 to $831,000 in Fiscal 1996, as the
Company continues its standardization of its sales programs. Warehouse
and distribution costs are $62,000 lower, declining from $247,000 in
Fiscal 1995 to $185,000 in Fiscal 1996. Administrative costs are $167,000
lower in the second quarter of Fiscal 1996 declining from $798,000 in
Fiscal 1995 to $631,000 in Fiscal 1996. Interest costs are $100,000 lower
due to the Company's reduced borrowing needs declining from $305,000 in
Fiscal 1995 to $205,000 in Fiscal 1996. Due to the $383,000 gain on
assets disposed as a result of the Elmwood fire, the Company's gain on
the sale of fixed assets increased from $16,000 in Fiscal 1995 to
$395,000 in Fiscal 1996. Other income of $133,000 is $113,000 higher
than the $20,000 reported in Fiscal 1995. As a result, the Company
reduced its net loss for the second quarter by $860,000 from a loss of
$2,206,000 in Fiscal 1995 to a loss of $1,346,000 for the second quarter
of Fiscal 1996
On a year to date proforma basis, net sales for the first six months of
the year are $412,000 lower than Fiscal 1995, declining from $2,661,000
to $2,249,000. For the fall selling season just completed, wheat sales
increased 55% from $530,000 in Fiscal 1995 to $823,000 in Fiscal 1996.
Management attributes this increase to a strong price for commodity wheat
and the acceptance of the Company's marketing concept and products.
Export sales to affiliates are $761,000 lower due to the reduced demand
and the poor production year mentioned in the preceding paragraph. Cost
of goods is $723,000 lower in Fiscal 1996 with the reduced export volume,
declining from $2,664,000 in Fiscal 1995 to $1,941,000 in Fiscal 1996.
Sales and marketing costs are $123,000 lower in the six months ended
December 31, 1995, declining from $1,968,000 in Fiscal 1995 to $1,845,000
in Fiscal 1996. Warehouse and distribution costs are $185,000 lower
declining from $565,000 in Fiscal 1995 to $380,000 in Fiscal 1996 as the
Company tries to improve its product management. Administrative costs
declined $328,000 in the six months ending December 31, 1995 decreasing
from $1,616,000 in Fiscal 1995 to $1,288,000 in Fiscal 1996. Interest
expense declined $170,000 decreasing from $625,000 in Fiscal 1995 to
$455,000 in Fiscal 1996 due to the reduced borrowing needs of the
Company. With the $383,000 gain from the Elmwood fire, gain on the sale
of fixed assets rose from $21,000 in Fiscal 1995 to $406,000 in Fiscal
1996. Other income rose $225,000 during the first six months ending
December 31, 1995 increasing from $109,000 in Fiscal 1995 to $334,000 in
Fiscal 1996. As a result of these efforts the Company reduced its net
loss for the first six months ending December 31, 1995 from $4,885,000 in
Fiscal 1995 to $3,170,000 in Fiscal 1996, a reduction of $1,715,000.
PART II
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of the Shareholders (the "Annual Meeting") of the
Company was held at the Signature Inn, 4112 North Brandywine Drive,
Peoria, Illinois 61614, on November 14, 1995 at 10:00 a.m. local time.
The following matters were voted on by the shareholders at the Annual
Meeting:
(1) Election of seven directors to serve until their successors shall be
elected and shall qualify. The following persons were elected directors
of the Company, as successors to the class of directors whose terms
expired with the annual election, to hold office for the term of one (1)
year.
In Favor Opposed
George R. Allbritten 113,451,310 24,890
Claude Agier 113,451,310 24,890
Jean Ferrand 113,451,310 24,890
Ralph W. F. Hardy 113,452,310 23,890
William Hittinger 113,452,310 23,890
Laurent Petoton 113,451,310 24,890
Emmanual Rougier 113,451,310 24,890
(2) Ratification of the appointment of KPMG Peat Marwick as independent
auditors of the Company for the fiscal year ending June 30, 1996:
113,456,289 votes were cast in favor of such proposal; 7,700 votes were
cast against such proposal; and 12,211 votes abstained.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit 99 Sixth Amendment to The Secured Revolving Credit
Agreement between BioTechnica International, Inc.
and Harris Bank
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
None.
Pursuant to the requirements 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.
BIOTECHNICA INTERNATIONAL, INC.
Date: January 19, 1996 _____J.C. Gouache_______________________
J. C. Gouache, President and
Chief Operating Officer
Date: January 19, 1996 _____Edward Germain_______________________
Edward Germain
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7916
<ALLOWANCES> 138
<INVENTORY> 10491
<CURRENT-ASSETS> 12141
<PP&E> 12552
<DEPRECIATION> 3696
<TOTAL-ASSETS> 30229
<CURRENT-LIABILITIES> 11113
<BONDS> 3496
<COMMON> 1154
0
9
<OTHER-SE> 14457
<TOTAL-LIABILITY-AND-EQUITY> 30229
<SALES> 2249
<TOTAL-REVENUES> 2249
<CGS> 1941
<TOTAL-COSTS> 1941
<OTHER-EXPENSES> 3023
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 455
<INCOME-PRETAX> (3170)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3170)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3170)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
BIOTECHNICA INTERNATIONAL, INC.
SIXTH AMENDMENT TO SECURED REVOLVING CREDIT AGREEMENT
AND FOURTH AMENDMENT TO SECURED REVOLVING CREDIT NOTE
Harris Trust and Savings Bank
Chicago, Illinois
Gentlemen:
Reference is hereby made to that certain Secured Revolving Credit
Agreement dated as of October 26, 1993, as amended (the "Credit
Agreement") between the undersigned, BioTechnica International, Inc., a
Delaware corporation (the "Company") and you (the "Bank"). All
capitalized terms used herein without definition shall have the same
meanings herein as such terms have in the Credit Agreement.
The Company has requested that the Bank make certain amendments to the
Credit Agreement and the Bank is willing to do so under the terms and
conditions set forth in this Amendment.
1. AMENDMENTS
Upon your acceptance hereof in the space provided for that purpose
below, and the satisfaction of the conditions precedent set forth in
Section 2 hereof, the Credit Agreement and the Note shall be and hereby
are amended as follows:
1.1 Section 1.1 of the Credit Agreement shall be restated in its
entirety to read as follows:
"SECTION 1.1. AMOUNT OF OUTSTANDING CREDIT. (a) The maximum aggregate
principal amount of the Revolving Credit at any one time outstanding
hereunder shall not exceed the lesser of (i) $12,000,000 (such amount,
as reduced pursuant to this Agreement is referred to as the "Bank's
Commitment") from the date hereof through December 1, 1996 (the
"Termination Date"), or (ii) the then Borrowing Base as determined in
the most recent Borrowing Base Certificate, and may be availed by the
Company from time to time, be repaid and used again, during the period
from the date hereof through the Termination Date. Loans under the
Revolving Credit may be Domestic Rate Loans or Eurodollar Rate Loans or
Offered Rate Loans (each as hereinafter defined). Each Fixed Rate Loan
shall be in an amount of $1,000,000 or such greater amount as is an
integral multiple of $100,000 and each Domestic Rate Loan shall be in an
amount of $100,000 or such greater amount as is an integral multiple of
$100,000."
1.2 Section 1.2 of the Credit Agreement shall be amended by restating
the third sentence thereof as follows:
"The Bank shall record on its books or records or on a schedule to the
Note, the amount of each loan made by it under the Revolving Credit, all
payments of principal and interest and the principal balance from time
to time outstanding and the interest rate and Interest Period applicable
to each Fixed Rate Loan, provided that prior to transfer of the Note all
such amounts shall be recorded on the schedule to the Note."
1.3 Sections 1.3 and 1.4 of the Credit Agreement shall be restated in
their entirety to read as follows:
"SECTION 1.3. APPLICABLE INTEREST RATES. (a) All Domestic Rate Loans
hereunder shall bear interest (computed on the basis of a year of 360
days and actual days elapsed) on the unpaid principal amount thereof
from the date such loan is made until maturity (whether by acceleration
or otherwise) at a rate per annum equal to the Domestic Rate from time
to time in effect, payable monthly on the last day of each calendar
month in each year, commencing on the first such date occurring after
the date of this Agreement, and at maturity (whether by acceleration or
otherwise).
(b) Each Eurodollar Rate Loan shall bear interest (computed on the
basis of a year of 360 days and actual days elapsed) on the unpaid
principal amount thereof from the date such Eurodollar Rate Loan is made
until the last day of the Interest Period applicable thereto and at
maturity (whether by acceleration or otherwise) at the rate per annum
equal to the sum of three-quarters of one percent (0.75%) plus the
Adjusted Eurodollar Rate for the Interest Period applicable thereto,
payable on the last day of the Interest Period applicable thereto and at
maturity (whether by acceleration or otherwise) and, with respect to
Interest Periods of greater than three months, on the date occurring
every three months after the day such Interest Period began.
(c) Each Offered Rate Loan shall bear interest (computed on the basis
of a year of 360 days and actual days elapsed) on the unpaid principal
amount thereof from the date such Offered Rate Loan is made until the
last day of the Interest Period applicable thereto and at maturity
(whether by acceleration or otherwise) at the Offered Rate for such
Interest Period. Interest on each Offered Rate Loan shall be due and
payable on the last day of each Interest Period applicable thereto and,
with respect to any Interest Period applicable to an Offered Rate Loan
in excess of ninety (90) days, on the date occurring every ninety (90)
days after the date such Interest Period began and at the end of such
Interest Period. The Company shall notify the Bank on or before 11:00
a.m. (Chicago time) on the Business Day preceding the end of an Interest
Period applicable to an Offered Rate Loan whether such Offered Rate Loan
is to continue as an Offered Rate Loan, in which event the Company shall
notify the Bank of the new Interest Period selected therefor, and in the
event the Company shall fail to so notify the Bank, such Offered Rate
Loan shall automatically be converted into and added to the Domestic
Rate Loan as of and on the last day of such Interest Period. The
Company understands and agrees that the Bank has no obligation to quote
Offered Rates or to make any Offered Rate Loan available to the Company,
that the Bank may refuse to make any such Offered Rate Loan after
receiving a request therefor from the Company, and that any such Offered
Rate Loan made available to the Company shall be subject to such other
terms and conditions are mutually agreed upon by the Company and the
Bank.
(d) If any payment of principal on any loan is not made when due, such
unpaid amount shall bear interest (computed on the basis of a year of
360 days and actual days elapsed) from the date such payment was due
until paid in full, payable on demand, at a rate per annum equal to:
(i) with respect to any Domestic Rate Loan, the sum of 2% plus the
Domestic Rate from time to time in effect; and
(ii) with respect to any Fixed Rate Loan, the sum of 2% plus the rate
of interest in effect thereon at the time of such default until the end
of the Interest Period then applicable thereto, and, thereafter, at a
rate per annum equal to the sum of 2% plus the Domestic Rate from time
to time in effect.
SECTION 1.4. MANNER OF BORROWING. The Company shall notify the Bank
(i) by 1:30 p.m. (Chicago time) on the date any Domestic Rate Loan is to
be made, (ii) by 11:00 a.m. (Chicago time) at least three (3) Business
Days prior to the date upon which the Company requests that any
Eurodollar Rate Loan be made or that any part of the Domestic Rate Loan
or any part of an Offered Rate Portion be converted into a Eurodollar
Rate Loan and (iii) by 11:00 a.m. (Chicago time) at least one (1)
Business Day prior to the date upon which the Company requests that any
Offered Rate Loan be made or that any part of the Domestic Rate Loan or
any part of a Eurodollar Rate Loan be converted into an Offered Rate
Loan (each such notice to specify in each instance the amount thereof
and the Interest Period selected therefor). If any request is made to
convert a Fixed Rate Loan into another type of loan available hereunder,
such conversion shall only be made so as to become effective as of the
last day of the Interest Period applicable thereto. All requests for
the creation, continuance and conversion of loans under this Agreement
shall be irrevocable. Such requests may be written or oral and the Bank
is hereby authorized to honor telephonic requests for creations,
continuances and conversions received by it from any person the Bank in
good faith believes to be an authorized representative of the Company
without the need of independent investigation, the Company hereby
indemnifying the Bank from any liability or loss ensuing from so acting.
The proceeds of each loan made under the Revolving Credit shall be made
available to the Company be being deposited in its account with the Bank
or to such other account as the Company may direct in writing at the
time a loan is requested as provided in this SECTION 1.4; PROVIDED,
HOWEVER, that if prior to the time the Bank has disbursed the proceeds
of such loan an Event of Default or Potential Default shall have
occurred, the Bank shall not be required to disburse such loan."
1.4 Section 2.2 of the Credit Agreement shall be amended by deleting
the last sentence thereof and substituting therefor the following:
"The Company may not prepay any Fixed Rate Loan. Unless the Company
directs otherwise, principal payments shall first be applied to Domestic
Rate Loans until payment in full thereof, with any balance applied to
the Fixed Rate Loans in the order in which their Interest Periods
expire."
1.5 The definition of the term "Eligible Receivables" appearing in
Section 4.1 of the Credit Agreement shall be amended by replacing
subsection (d) thereof with the following:
"(d) it has not remained unpaid in whole or in part for (i) more than
sixty (60) days past its due date or (ii) if during the period from July
1st through November 30th of any calendar year, more than ninety (90)
days past its due date PROVIDED such Receivable appears on the most
recent list of past due Receivables delivered to the Bank pursuant to
Section 7.4(d) hereof;"
1.6 The definition of the term "Interest Period" appearing in Section
4.1 of the Credit Agreement shall be restated in its entirety to read as
follows:
""INTEREST PERIOD" means, with respect to (a) any Eurodollar Rate Loan,
the period commencing on, as the case may be, the creation, continuation
or conversion date with respect to such Eurodollar Rate Loan and ending
one (1), two (2), three (3) or six (6) months thereafter as selected by
the Company in its notice as provided herein and (b) any Offered Rate
Loan, the period commencing on, as the case may be, the creation,
continuation or conversion date with respect to such Offered Rate Loan
and ending five (5) to ninety (90) days thereafter as selected by the
Company in its notice as provided herein; PROVIDED THAT, all of the
foregoing provisions relating to Interest Periods are subject to the
following:
(i) if any Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next
succeeding Business Day, unless in the case of an Interest Period for a
Eurodollar Rate Loan the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) no Interest Period may extend beyond the final maturity date of
the Note;
(iii) the interest rate to be applicable to each Fixed Rate Loan for
each Interest Period shall apply from and including the first day of
such Interest Period to but excluding the last day thereof; and
(iv) no Interest Period may be selected if after giving effect thereto
the Company will be unable to make a principal payment scheduled to be
made during such Interest Period without paying part of a Fixed Rate
Loan on a date other than the last day of the Interest Period applicable
thereto.
For purposes of determining an Interest Period, a month means a period
starting on one day in a calendar month and ending on a numerically
corresponding day in the next calendar month, provided, however, if an
Interest Period begins on the last day of a month or if there is no
numerically corresponding day in the month in which an Interest Period
is to end, then such Interest Period shall end on the last Business Day
of such month."
1.7 Section 4 of the Credit Agreement shall be amended by inserting the
following new definitions in the appropriate alphabetical order:
""FIXED RATE LOAN" means and includes Eurodollar Rate Loans and Offered
Rate Loans, unless the context in which such term is used shall
otherwise require.
"OFFERED RATE" shall mean the rate per annum quoted to the Company by
the Bank for the applicable Interest Period, such Offered Rate being
subject at all times to the provisions of Section 1.3(c) hereof.
"OFFERED RATE LOAN" shall mean a loan hereunder bearing interest as
provided in Section 1.3(c) hereof."
1.8 Section 9 of the Credit Agreement shall be restated in its entirety
to read as follows:
"SECTION 9. CHANGE IN CIRCUMSTANCES REGARDING FIXED RATE LOANS.
SECTION 9.1. CHANGE OF LAW. Notwithstanding any other provisions of
this Agreement or the Note, if at any time the Bank shall determine in
good faith that any change in applicable law or regulation or in the
interpretation thereof makes it unlawful for the Bank to make or
continue to maintain any Fixed Rate Loan or to give effect to its
obligations as contemplated hereby, the Bank shall promptly give notice
thereof to the Company. Company shall prepay on demand the outstanding
principal amount of any such affected Fixed Rate Loan made to it,
together with all interest accrued thereon and all other amounts due and
payable to the Bank under this Agreement; PROVIDED, HOWEVER, the Company
may then elect to borrow the principal amount of such affected Fixed
Rate Loan by means of another type of loan available hereunder, subject
to all of the terms and conditions of this Agreement.
SECTION 9.2. UNAVAILABILITY OF DEPOSITS OR INABILITY TO ASCERTAIN
ADJUSTED EURODOLLAR RATE. Notwithstanding any other provision of this
Agreement or of the Note, if prior to the commencement of any Interest
Period, the Bank shall determine that deposits in the amount of any
Eurodollar Rate Loan scheduled to be outstanding during such Interest
Period are not readily available to the Bank in the relevant market or
by reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Adjusted Eurodollar
Rate, then the Bank shall promptly give notice thereof to the Company
and the obligations of the Bank to create, continue or effect by
conversion any Eurodollar Rate Loan in such amount and for such Interest
Period shall terminate until deposits in such amount and for the
Interest Period selected by the Company shall again be readily available
in the relevant market and adequate and reasonable means exist for
ascertaining the Adjusted Eurodollar Rate.
SECTION 9.3. TAXES AND INCREASED COSTS. With respect to the Fixed Rate
Loans, if the Bank shall determine in good faith that any change in any
applicable law, treaty, regulation or guideline (including, without
limitation, Regulation D of the Board of Governors of the Federal
Reserve System) or any new law, treaty, regulation or guideline, or any
interpretation of any of the foregoing by any governmental authority
charged with the administration thereof or any central Bank or other
fiscal, monetary or other authority having jurisdiction over the Bank or
its lending branch or the Fixed Rate Loans contemplated by this
Agreement (whether or not having the force of law) ("CHANGE IN LAW")
shall:
(a) impose, modify or deem applicable any reserve, special deposit or
similar requirements against assets held by, or deposits in or for the
account of, or loans by, or any other acquisition of funds or
disbursements by, the Bank (other than reserves or assessment rates
included in the determination of the interest rate applicable to such
Fixed Rate Loan);
(b) subject the Bank, any Fixed Rate Loan or the Note to any tax
(including, without limitation, any United States interest equalization
tax or similar tax however named applicable to the acquisition or
holding of debt obligations and any interest or penalties with respect
thereto), duty, charge, stamp tax, fee deduction or withholding in
respect of this Agreement, any Fixed Rate Loan or the Note except such
taxes as may be measured by the overall net income of the Bank or its
lending branch and imposed by the jurisdiction, or any political
subdivision or taxing authority thereof, in which the Bank's principal
executive office or its lending branch is located;
(c) change the basis of taxation of payments of principal and interest
due from the Company to the Bank hereunder or under the Note (other than
by a change in taxation of the overall net income of the Bank); or
(d) impose on the Bank any penalty with respect to the foregoing or any
other condition regarding this Agreement, its disbursement, any Fixed
Rate Loan or the Note;
and the Bank shall determine that the result of any of the foregoing is
to increase the cost (whether by incurring a cost or adding to a cost)
to the Bank by making or maintaining any Fixed Rate Loan hereunder or to
reduce the amount of principal or interest received by the Bank, then
the Company shall pay to the Bank from time to time as specified by the
Bank such additional amounts as the Bank shall determine are sufficient
to compensate and indemnify it for such increased cost or reduced
amount. If the Bank makes such a claim for compensation, it shall
provide to the Company a certificate setting forth such increased cost
or reduced amount as a result of any event mentioned herein. Upon the
imposition of any such cost, the Company may prepay any affected Loan,
subject to the provisions of Section 2.2 and 9.4 hereof, except the
provisions of Section 2.2 limiting prepayment of any Fixed Rate Loan.
SECTION 9.4. FUNDING INDEMNITY. In the event the Bank shall incur any
loss, cost, expense or premium (including, without limitation, any lost
profit and any loss, cost, expense or premium incurred by reason of the
liquidation or re-employment of deposits or other funds acquired by the
Bank to fund or maintain any Eurodollar Rate Loan or the relending or
reinvesting of such deposits or amounts paid or prepaid to the Bank) as
a result of:
(i) any payment or prepayment of a Fixed Rate Loan on a date other than
the last day of the then applicable Interest Period;
(ii) any failure by the Company to borrow any Fixed Rate Loan on the
date specified in the notice given pursuant to Section 1.3 hereof; or
(iii) the occurrence of any Event of Default;
then, upon the demand of the Bank, the Company shall pay to the Bank
such amount as will reimburse the Bank for such loss, cost or expense.
SECTION 9.5. LENDING BRANCH. The Bank may, at its option, elect to
make, fund or maintain its loans hereunder at the branch or office
specified in Section 10.6 hereof or such other of its branches or
offices as the Bank may from time to time elect, subject to the
provisions of Section 1.3 hereof.
SECTION 9.6. DISCRETION OF BANK AS TO MANNER OF FUNDING.
Notwithstanding any provision of this Agreement to the contrary, the
Bank shall be entitled to fund and maintain its funding of all or any
part of its loans in any manner it sees fit, it being understood
however, that for the purposes of this Agreement all determinations
hereunder shall be made as if the Bank had actually funded and
maintained each Fixed Rate Loan during each Interest Period for such
Loan through the purchase of deposits in the relevant interbank market
having a maturity corresponding to such Interest Period and bearing an
Interest Rate equal to the Eurodollar Rate or Offered Rate, as the case
may be, for such Interest Period."
1.9 Section 7.4(d) of the Credit Agreement shall be amended by
inserting the following phrase immediately before the semicolon
appearing at the end thereof:
"and, for each of the months of June, July, August, September, October
and November in each year, a listing of the Account Debtors of the
Company and each Guarantor Subsidiary showing total Receivables plus
Receivables over sixty days and under ninety days past due by Account
Debtor and Location".
1.10 Exhibit A to the Credit Agreement and the Revolving Note of the
Company payable to the order of Harris Trust and Savings Bank (the
"Note") shall each be amended by replacing the date "December 1, 1995"
appearing in the first paragraph therein with the date "December 1,
1996".
1.11 Exhibit A to the Credit Agreement and the Note shall each be
further amended by (i) replacing the amount of "$17,000,000" appearing in
the upper left corner thereof with the amount "$12,000,000" and (ii)
replacing the phrase "Seventeen Million Dollars ($17,000,000)" appearing
in the first paragraph thereof with the amount "Twelve Million Dollars
($12,000,000)".
1.12 Exhibit A to the Credit Agreement and the Note shall each be
further amended by deleting the third sentence of the second paragraph
thereof and substituting therefor the following:
"The payee hereof shall record on its books or records or on a schedule
to this Note, which is a part hereof, the principal amount of each loan
made under the Credit Agreement, all payments of principal and interest
on this Note, the principal balance from time to time outstanding
hereon, and the interest rate and Interest Period applicable to each
Fixed Rate Loan."
1.13 The Bank shall type the following legend on its Note:
"This Note has been amended pursuant to the terms of a Sixth Amendment
to Secured Revolving Credit Agreement and Fourth Amendment to Secured
Revolving Credit Note dated as of November ___, 1995, including an
extension of the maturity date hereof and a reduction in the principal
amount hereof, to which reference is hereby made for a statement of
terms thereof".
1.14 The Attachment to Compliance Certificate attached to Exhibit E to
the Credit Agreement and Exhibit F to the Credit Agreement shall each be
amended to read as the Attachment to Compliance Certificate and Exhibit
F, respectively, attached to this Amendment.
2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment is subject to the satisfaction of
all of the following conditions precedent:
2.1 The Company and the Bank shall have executed and delivered this
Amendment.
2.2 Each of the representations and warranties set forth in Section 5
of the Credit Agreement shall be true and correct.
2.3 The Company shall be in full compliance with all of the terms and
conditions of the Credit Agreement and no Event of Default or Potential
Default shall have occurred and be continuing thereunder or shall result
after giving effect to this Amendment.
2.4 Each of Genetics, Holding and each Guarantor Subsidiary shall have
executed and delivered to the Bank its acknowledgment in the form set
forth below.
3. REPRESENTATIONS.
In order to induce the Bank to execute and deliver this Amendment, the
Company hereby represents to the Bank that as of the date hereof, each
of the representations and warranties set forth in Section 5 of the
Credit Agreement are and shall be and remain true and correct (except
that the representations contained in Section 5.4 shall be deemed to
refer to the most recent financial statements of the Company delivered
to the Bank) and the Company is in full compliance with all of the terms
and conditions of the Credit Agreement and no Potential Default or Event
of Default has occurred and is continuing thereunder or shall result
after giving effect to this Amendment.
4. MISCELLANEOUS.
4.1 The Company has heretofore executed and delivered to the Bank that
certain Security Agreement Re: Accounts Receivable, General Intangibles
and Inventory dated as of October 26, 1993 (the "SECURITY AGREEMENT")
and the Company hereby agrees that notwithstanding the execution and
delivery of this Amendment, the Security Agreement shall be and remain
in full force and effect and that any rights and remedies of the Bank
thereunder, obligations of the Company thereunder and any liens and
security interests created or provided for thereunder shall be and
remain in full force and effect and shall not be affected, impaired or
discharged thereby. Nothing herein contained shall in any manner affect
or impair the priority of the liens and security interests created and
provided for by the Security Agreement as to the indebtedness which
would be secured thereby prior to giving effect to this Amendment.
4.2 Except as specifically amended herein, the Credit Agreement and the
Note shall each continue in full force and effect in accordance with its
original terms. Reference to this specific Amendment need not be made
in any note, document, letter, certificate, the Credit Agreement itself,
the Note or any communication issued or made pursuant to or with respect
to the Credit Agreement or the Note, any reference in any of such to the
Credit Agreement or the Note being sufficient to refer to the Credit
Agreement or the Note, as the case may be, as amended hereby.
4.3 The Company agrees to pay on demand all costs and expenses of or
incurred by the Bank in connection with the negotiation, preparation,
execution and delivery of this Amendment, including the fees and
expenses of counsel for the Bank.
4.4 This Amendment may be executed in any number of counterparts, and
by the different parties on different counterparts, all of which taken
together shall constitute one and the same agreement. Any of the
parties hereto may execute this Amendment by signing any such
counterpart and each of such counterparts shall for all purposes be
deemed to be an original. This Amendment shall be governed by the
internal laws of the State of Illinois.
Dated as of November 15, 1995.
BIOTECHNICA INTERNATIONAL, INC.
By: /s/ J.C. GOUACHE
Its: President
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK
By: /s/
Its: Vice President
GUARANTORS' ACKNOWLEDGMENT
The undersigned, LG Seeds, Inc., formerly BioTechnica Agriculture, Inc.,
has heretofore executed and delivered to the Bank a Guaranty Agreement
and a Security Agreement Re: Accounts Receivable, General Intangible
and Inventory, each dated October 26, 1993 and each of the undersigned,
Limagrain Genetics Corp. and Groupe Limagrain Holding S.A. has
heretofore executed and delivered to the Bank a separate Guaranty
Agreement dated October 26, 1993.
Each of the undersigned hereby acknowledges the Sixth Amendment to
Secured Revolving Credit Agreement and Fourth Amendment to Secured
Revolving Credit Note as set forth above and confirms that its Guaranty
and, if applicable, its Security Agreement and all of its obligations
thereunder remain in full force and effect. Each of the undersigned
further agrees that its consent to any further amendments of the Credit
Agreement or the Note shall not be required as a result of this
acknowledgment having been obtained, except to the extent, if any,
required by any Guaranty referred to above.
Dated as of November 15, 1995.
LIMAGRAIN GENETICS CORP.
By: E. ROUGIER
Its: President and COO
GROUPE LIMAGRAIN HOLDING S.A.
By: E. ROUGIER
Its: E.V.P. Field Seeds Division Groupe Limagrain
LG SEEDS, INC.
By: J.C. GOUACHE
Its: President
