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, 1997
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 31, 1998, the Registrant had 115,379,628 (115,418,788 shares
less 39,160 treasury shares) shares of Common Stock outstanding.
PART I - FINANCIAL INFORMATION
Certain statements incorporated by reference or made in this Report,
including those under the caption Management's Discussion and Analysis
and elsewhere are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, and are subject to the
safe harbor created by the Act. Such forward-looking statements include,
without limitation, the future availability and prices of raw materials,
the availability of capital on acceptable terms, the competitiveness of
the agricultural seed industry, the future availability and pricing of
export sale arrangements and other statements contained herein that are
not historical facts. Because such forward-looking statements involve
risks and uncertainties, there are important factors that could cause
actual results to differ materially from those expressed or implied by
such forward-looking statements. Factors that could cause actual results
to differ materially include, but are not limited to, changes in general
economic and business conditions (including in the agricultural seed
industry), the Company's ability to recover its costs of goods sold in
the pricing of its products, the availability of capital on acceptable
terms, the availability of raw materials, actions of competitors and
governmental entities, adverse weather conditions, the future
availability of export sale arrangements, the support of the Company's
parent and affiliates, changes in the Company's business strategies and
other factors.
Item 1. Financial Statements
<TABLE>
BIOTECHNICA INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of dollars)
December 31, June 30,
Assets 1997 1997
<CAPTION>
<S> <C> <C>
Current assets:
Cash & cash equivalents $ 709 $ 207
Accounts receivable 2,330 7,068
Inventories 13,064 8,330
Prepaid expenses & other assets 274 130
Total Current Assets 16,377 15,735
Property, plant & equipment 13,835 14,317
Less: accumulated depreciation (5,361) (5,001)
Net property, plant & equipment 8,474 9,316
Goodwill and other assets 8,107 8,385
Total Assets $32,958 $33,436
Liabilities and Shareholders' Equity
Current liabilities:
Borrowings under line of credit $ 5,700 $10,900
Borrowings from affiliates 3,000 --
Current portion of debt -- 31
Accounts payable 2,890 690
Accrued liabilities 3,562 1,669
Due to affiliates 370 115
Total current liabilities 15,522 13,405
Long-term debt:
Due to affiliates 6,761 5,261
Other noncurrent liabilities 294 295
Total Liabilities $22,577 $18,961
Shareholders' Equity
Preferred stock, Class A, 900,000
outstanding 9 9
Common stock, 150,000,000 shares
authorized; 104,055,577 shares
outstanding, net of $95,000
for treasury shares 946 946
Additional paid-in capital 20,823 20,823
Accumulated deficit (11,397) (7,303)
Total equity $10,381 $14,475
Total Liabilities and
Shareholders' Equity $32,958 $33,436
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,
1997 1996 1997 1996
<CAPTION>
<S> <C> <C> <C> <C>
Net Sales:
Domestic $ 196 $ 542 $ 587 $ 1,297
Export-Affiliates 2,412 1,288 2,439 1,288
2,608 1,830 3,026 2,585
Cost of Goods Sold:
Cost of goods sold 2,159 1,459 2,523 2,078
Gross Margin 449 371 503 507
Operating expenses:
Sales and marketing 930 864 2,014 1,803
Warehouse and distribution 204 207 429 470
Administration 715 655 1,388 1,380
Amortization of goodwill 126 126 252 252
1,975 1,852 4,083 3,905
Operating income (loss) (1,526) (1,481) (3,580) (3,398)
Other income (expense):
Interest (242) (232) (483) (454)
Other (133) 55 (31) 164
Net income before taxes (1,901) (1,658) (4,094) (3,688)
Income taxes -- -- -- --
Net income (loss) $(1,901) $(1,658) $(4,094) $(3,688)
Current undeclared
preferred stock
dividend (169) (169) (338) (338)
Net income available to
common shareholders net of
undeclared preferred
dividends (2,070) (1,827) (4,432) (4,026)
Per share of common stock (0.02) (0.02) (0.04) (0.03)
Weighted average
shares outstanding 104,055,577 115,418,788 104,055,577 115,418,788
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,
1997 1996
<CAPTION>
<S> <C> <C>
Cash flow from operating activities:
Net income (loss) $(4,094) $(3,688)
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 734 680
Loss on disposition of fixed assets 218 --
Changes in assets and liabilities:
Accounts receivable 4,738 6,733
Inventories (4,734) (7,475)
Accounts payable and accrued liabilities 4,093 4,795
Other (122) (202)
Net cash provided by (used in)
operating activities 833 843
Cash flow from investing activities:
Acquisition of property, plant & equipment (106) (466)
Proceeds from sale of fixed assets 251 --
Other -- --
Net cash provided by (used in)
investing activities (145) (466)
Cash flow from financing activities:
Net repayment under line of credit (5,200) (100)
Increase (decrease)in debt to affiliates 4,755 71
Increase (decrease) in long-term debt (31) (58)
Net cash provided by (used in)
financing activities (476) (87)
Net increase (decrease) in cash
and cash equivalents 502 290
Cash and cash equivalents at beginning
of period 207 194
Cash and cash equivalents at end of
period $ 709 $ 484
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 Additional
Stock Paid-In Total
Class A Common Capital Retained Treasury Shareholder's
Non-Voting Stock Paid-In Earnings Stock Equity
At Par At Par
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
June 30, 1997 9 $1,041 $20,823 ($7,303) ($95) $14,475
Net loss -- -- -- (2,193) -- ( 2,193)
Balance
September 30,
1997 9 1,041 20,823 ( 9,496) ( 95) 12,282
Net loss -- -- -- ( 1,901) -- (1,901)
Balance
December 31,
1997 $9 $1,041 $20,823 ($11,397) ($95) $10,381
Shares at
June 30, 1997 900,000 104,094,737 (39,160)
Shares at
December 31, 1997 900,000 104,094,737 (39,160)
See notes to Condensed Consolidated Financial Statement
</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 consis-
tent with the audited consolidated financial statements incorporated in
the Company's Form 10-K for the year ended June 30, 1997, such informa-
tion 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,
1997 1997
Finished seed $ 9,762 $ 4,666
Unfinished seed 2,595 2,955
Supplies and other 707 709
Total Inventory $ 13,064 $ 8,330
"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 1997, 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. The Company includes in
its production cost of seed (i) amounts paid to farmer growers, (ii) the
direct costs of producing the seed, and (iii) an allocation of indirect
plant operating costs. These costs are spread over good units produced
to arrive at a cost per unit.
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
Groupe Limagrain Holding ("Limagrain") is a large European seed company,
headquartered in Chappes, France. Limagrain is the parent of Limagrain
Genetics Corp., a Delaware corporation, ("LG Corp.") that owns the
Limagrain United States-based field seed business. LG Corp. owns
approximately 95% of the common stock and 100% of the preferred stock of
the Company.
Since October 1993, the Company has had a revolving credit arrangement
with its principal bank, renewable annually (the "Line of Credit"),
whereby the Company may borrow up to $12,000,000, subject to the
limitations of a borrowing base formula. Borrowings under the Line of
Credit are secured by the inventory and accounts receivable of the
Company and its subsidiary, and by the guarantees of Limagrain, LG Corp.
and the Company's subsidiary. Borrowings under the Line of Credit at
June 30, 1997 and December 31, 1997 totaled $10,900,000 and $5,700,000,
respectively. The maximum amounts available under the line of Credit
pursuant to the borrowing base formula, absent waivers, at June 30, 1997
and December 31, 1997 were $9,804,000 and $9,027,000, respectively. The
Company received waivers from its principal bank to allow it to borrow up
to $1,500,000 in excess of its Borrowing Base during the periods June 15,
1997 to July 31, 1997 and from August 27, 1997 to September 30, 1997.
The Company was not out of compliance with the Line of Credit at any
other times during the relevant periods. In addition to the Line of
Credit, the Company also borrows funds from affiliates of Limagrain from
time to time in order to fund the interim working capital needs of the
Company, including the reduction of the Line of Credit.
Cash and cash equivalents increased $502,000 during the first six months
of Fiscal 1998 from $207,000 at June 30, 1997 to $709,000 at December 31,
1997. The relatively high cash balance of December 31, 1997 resulted
from cash collections at the end of the year that were not yet
transferred to pay down the Line of Credit borrowings. Cash flow from
operations generated $833,000 for the six months ended December 31, 1997.
Major items impacting cash flow from operations for the six months ended
December 31, 1997 were: (i) net loss for the period of $4,094,000,
offset by depreciation and amortization of $734,000; (ii) a decrease in
accounts receivable of $4,738,000 as a result of collection on prior year
sales; (iii) increase in inventory of $4,734,000 resulting from inventory
produced this year; (iv) an increase in accrued liabilities and payables
of $4,093,000, resulting primarily from prepayments on seed to be
delivered to customers in the third and fourth fiscal quarters; (v)
$218,000 in losses on disposal of fixed assets; and (vi) $122,000
consumed by other charges.
Cash flow from investing activities consumed $106,000 related to new
capital expenditures, but generated $251,000 in proceeds from disposals
of fixed assets.
Cash flow from financing activities consumed $476,000. The Company
borrowed a net total of $4,755,000 from affiliates ($3,000,000 in short-
term borrowings, $1,500,000 in long-term borrowings, and $255,000 in
other amounts due, primarily accrued interest) and used the proceeds to
reduce its borrowings under its Line of Credit and to finance operations
during the period. Of these affiliate borrowing amounts, $3,000,000 is
due on demand and bears interest at Canadian prime plus 0.18%; and
$1,500,000 is due July 1, 1999 and bears interest at Canadian prime plus
0.18%. The $1,500,000 due July 1, 1999 is subordinated to the Line of
Credit. Management believes that upon the maturities of these notes,
either (i) the notes will be extended, (ii) amounts due will be
refinanced by affiliates, or (iii) borrowings can be made under the Line
of Credit to offset any needed repayments to affiliates.
Effective December 31, 1997, the Line of Credit was extended until
December 31, 1998 under substantially the same conditions. Management
expects that the Company will have access to sufficient cash resources to
meet the reasonably foreseeable obligations of its continuing business
operations. Management believes there is a strong commitment by
Limagrain to enable the Company to obtain sufficient working capital to
support the business. Management's belief that Limagrain's support will
continue is based on Limagrain's commitment under the Line of Credit
guarantee (which it has not had the obligation to continue since November
1994), its past contributions of $9,000,000 for Preferred Stock and its
past advances of $6,761,000 in long-term borrowings. Limagrain has no
legal obligation to provide additional funding for the Company.
There is no assurance that Limagrain, LG Corp., or any other affiliate of
the Company will continue to (i) guarantee the Line of Credit, (ii) loan
funds to the Company, or (iii) convert such loans to Preferred Stock. In
addition, there is no assurance that without such guarantees, loans and
conversions, the Company would not be out of compliance with the Line of
Credit during seasonal fluctuations in the Company's borrowing base and
net tangible assets, respectively, or otherwise.
Results of Operations - Quarter Ended December 31, 1997
Due to the seasonal nature of the seed business, 70-80% 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 seed
products, and substantial marketing efforts are underway in preparation
for the next sales season which begins in the third fiscal quarter.
Net sales for the second quarter of Fiscal 1998 increased $778,000
compared to Fiscal 1997, increasing from $1,830,000 in Fiscal 1997 to
$2,608,000 for Fiscal 1998. This increase was primarily related to
higher export sales to affiliates, offset by lower domestic wheat and
other fall seed sales in Fiscal 1998. The higher export sales level
resulted principally from earlier shipping schedules. Cost of goods
increased $700,000 compared to last year, increasing from $1,459,000 in
Fiscal 1997 to $2,159,000 in Fiscal 1998. This was due to volume and
higher production costs in this year resulting from lower production
yields due primarily to weather factors. Gross margin is higher by
$78,000 compared to the second quarter of last year. This change
resulted primarily from changes in sales volumes.
Sales and marketing expenses have increased $66,000 from $864,000 in the
second quarter of Fiscal 1997 to $930,000 for the second quarter of
Fiscal 1998. Most of the increase relates to costs incurred in launching
the new year marketing campaign, increased advertising programs and
differences in when expenses were incurred from year-to-year.
Warehouse and distribution costs were lower by $3,000, decreasing from
$207,000 in the second quarter of Fiscal 1997 to $204,000 in the second
quarter of Fiscal 1998. Most of this decrease resulted from lower
domestic sales volume.
General and administrative costs increased by $60,000 from $655,000 for
the second quarter of Fiscal 1997 to $715,000 for the second quarter of
Fiscal 1998. Most of the increase related to differences in when expenses
were incurred from year-to-year.
Interest costs increased $10,000 from $232,000 in the second quarter of
Fiscal 1997 to $242,000 in the second quarter of Fiscal 1998, due
primarily to higher interest rates.
The Company purchases soybeans and wheat futures to hedge its cost of
those commodities. During the second quarter of Fiscal 1998 and 1997,
the Company had losses of $24,127 and $39,787, respectively, on futures.
These amounts have been included in inventory valuation. Most of these
losses related to soybeans and so have no impact on the income statement
as those products are still on hand.
Other incomes and expenses decreased by $188,000, deteriorating from
$55,000 in the second quarter of Fiscal 1997 to ($133,000) in the second
quarter of Fiscal 1998. Most of this deterioration related to the loss
on the sale of a portion of the Company's Mt. Pleasant, IA facility.
This loss amounted to $217,000. On November 7, 1998, the Company sold a
portion of this facility to an unrelated party for the sum of $250,000.
The book value of these assets was $467,000. The sale of these assets
will have no impact on the operations of the Mt. Pleasant Service Center.
This action was taken after a reevaluation of Company assets that could
be turned into cash without adversely impacting operations that was
completed in October, 1997.
Results of Operations - Six Months Ended December 31, 1997
Net sales for the first six months of Fiscal 1998 increased $441,000 over
Fiscal 1997, increasing from $2,585,000 in Fiscal 1997 to $3,026,000 for
Fiscal 1998. This improvement is a result of increased export sales,
offset by lower domestic fall seed sales, compared to the first six
months of Fiscal 1997. The higher export sales level resulted
principally from earlier shipping schedules. Cost of goods increased
$445,000 compared to last year, increasing from $2,078,000 in Fiscal 1997
to $2,523,000 in Fiscal 1998 due to volume and to higher production costs
in this year resulting from lower production yields due primarily to
weather fluctuations. Gross margin is lower by $3,000 compared to the
first six months of last year. This deterioration related to lower
domestic fall seed sales volume.
Sales and marketing expenses have increased $211,000 from $1,803,000 in
Fiscal 1997 to $2,014,000 for the first six months of Fiscal 1998. Most
of this increase relates to the higher cost of launching the new year
marketing campaign, increased advertising programs, and timing
differences account for most of the lower costs.
Warehouse and distribution costs were lower by $41,000, decreasing from
$470,000 in Fiscal 1997 to $429,000 in Fiscal 1998. Most of this
decrease resulted because of the lower domestic sales volume.
General and administrative costs increased $8,000 from $1,380,000 for the
first six months of Fiscal 1997 to $1,388,000 for the first six months of
Fiscal 1998.
Interest costs increased $29,000 compared to the first six months of
Fiscal 1997, increasing from $454,000 to $483,000 in Fiscal 1998. This
was due to higher borrowing levels and rates.
Other income and expense deteriorated by $195,000 over the first six
months of last year from $164,000 to ($31,000). Most of this
deterioration related to the loss on the sale of a portion of the
Company's Mt. Pleasant, IA. This loss amounted to $237,000.
The Company purchases soybean and wheat futures to hedge its cost of
those commodities. During the first six months of Fiscal 1997 and 1998,
the Company had losses of $30,741 and $50,241, respectively, on futures.
Most of these losses related to soybeans and so have no impact on the
income statement as those products are still on hand.
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 12, 1997 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. There were no abstentions in the voting for directors.
In Favor Against
Claude Agier 102,006,706 39,986
George Allbritten 102,013,211 33,481
Bruno Carette 102,013,911 32,781
Ralph W. F. Hardy 102,014,211 32,481
Serge Lebreton 102,014,211 32,481
Claude Lescoffit 102,014,211 32,481
Laurent Petoton 102,013,211 33,481
(2) Ratification of the appointment of KPMG Peat Marwick as
independent auditors of the Company for the fiscal year ending June 30,
1998: 102,022,911 votes were cast in favor of such proposal; 7,700 votes
were cast against such proposal; and 15,081 votes abstained.
Item 5. Other Information.
On February 2, 1998, the Company repurchased 1,000,000 shares of its
common stock (approximately 1% of the then-outstanding shares) from a
non-affiliated shareholder for $.01 per share. This price per share was
substantially below the then-current market price and net book value per
share. The effect of this repurchase was to increase proportionately the
percentage of common stock of the Company held by all remaining
shareholders by 1%, including LG Corp., whose ownership increased from
94.4% to 95.3%.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits required by Item 601 of Regulation S-K:
Exhibit 11 Statement Regarding Computation of Per
Share Earnings
Exhibit 27 Financial Data Schedule
Exhibit 99 Ninth Amendment to The Secured Revolving Credit
Agreement and Sixth Amendment to Secured
Revolving Credit Note
(b) Reports on Form 8-K:
Current Report on Form 8-K filed with the Commission on November
13, 1997, File No. 0-11854, relating to the Company's Annual
Meeting of Shareholders which was held November 12, 1997.
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: February 12, 1998 ___________________________
Bruno Carette, President and
Chief Executive Officer
Date: February 12, 1998 ___________________________
Edward Germain
Chief Financial Officer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1998
<PERIOD-END> SEP-30-1997 DEC-31-1997
<CASH> 0 709
<SECURITIES> 0 0
<RECEIVABLES> 2422 2427
<ALLOWANCES> (123) (97)
<INVENTORY> 11327 13064
<CURRENT-ASSETS> 13793 16377
<PP&E> 14400 13835
<DEPRECIATION> (5247) (5361)
<TOTAL-ASSETS> 31195 32958
<CURRENT-LIABILITIES> 11857 15522
<BONDS> 6761 6761
0 0
9 9
<COMMON> 1041 1041
<OTHER-SE> 11232 9331
<TOTAL-LIABILITY-AND-EQUITY> 31195 32958
<SALES> 418 3026
<TOTAL-REVENUES> 418 3026
<CGS> 364 2523
<TOTAL-COSTS> 364 2523
<OTHER-EXPENSES> 2006 4114
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 241 483
<INCOME-PRETAX> (2193) (4094)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (2193) (4094)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2193) (4094)
<EPS-PRIMARY> (0.02) (0.04)
<EPS-DILUTED> (0.02) (0.04)
</TABLE>
Exhibit 11
BIOTECHNICA INTERNATIONAL INC.
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(Unaudited)
(in thousands of dollars except share and per share amounts)
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
Net income (loss) $(1,901) $(1,658) $(4,094) $(3,688)
Current undeclared
preferred stock
dividend (169) (169) (338) (338)
Net income available to
common shareholders net of
undeclared preferred
dividends (2,070) (1,827) (4,432) (4,026)
Per share of common stock (0.02) (0.02) (0.04) (0.03)
Weighted average
shares outstanding 104,055,577 115,418,788 104,055,577 115,418,788
BIOTECHNICA INTERNATIONAL, INC.
NINTH AMENDMENT TO SECURED REVOLVING CREDIT AGREEMENT
AND SIXTH AMENDMENT TO SECURED REVOLVING CREDIT NOTE
Harris Trust and Savings Bank
Chicago, IL
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 3 hereof, the Credit Agreement shall be and hereby is amended as
follows:
1.1. Section 1.1(a) of the Credit Agreement shall be amended by
replacing the date "December 1, 1997" appearing therein with the date
"December 31, 1998".
1.2. 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 31, 1997"
appearing in the first paragraph therein with the date "December 31,
1998".
1.3. The Bank shall type the following legend on its Note:
"This Note has been amended pursuant to the terms of a Ninth
Amendment to Secured Revolving Credit Agreement and Sixth Amendment to
Secured Revolving Credit Note dated as of December ___, 1997, including
an extension of the maturity date hereof, to which reference is hereby
made for a statement of terms thereof".
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. All legal matters incident to the execution and delivery hereof
and the instruments and documents contemplated hereby shall be
satisfactory to the Bank.
2.5. Each of Genetics and each Guarantor Subsidiary shall have
executed and delivered to the Bank its acknowledgment in the form set
forth below.
2.6 The Bank shall have received copies, certified as true, complete
and correct by the secretary or assistant secretary of the Company, of
resolutions adopted by the Company's Board of Directors authorizing the
Company to execute and deliver this Amendment and perform its
obligations under the Credit Agreement and Note as amended hereby.
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 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 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 December ___, 1997.
BIOTECHNICA INTERNATIONAL, INC.
By: /s/ Bruno Carette
Its: President-CEO
Accepted and agreed to as of the date and year last above written.
HARRIS TRUST AND SAVINGS BANK
By: /s/ Julie K. Hossack
Its: Vice President
