SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 January 31, 1997
Commission File Number: 0-24312
AGRI-NUTRITION GROUP LIMITED
State of Incorporation: Delaware I.R.S. Employer I.D. 43-1648680
Riverport Executive Center II
13801 Riverport Drive
Suite 111
Maryland Heights, MO 63043
(314) 298-7330
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 twelve months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
The number of shares of common stock outstanding at March 14, 1997 is 8,389,699
shares.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
INDEX
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PAGE
FINANCIAL INFORMATION
Financial Statements
Consolidated Balance Sheet -
January 31, 1997 (Unaudited) and
October 31, 1996 1
Consolidated Statement of Operations -
three months ended January 31, 1997
and 1996 (Unaudited) 2
Consolidated Statement of Cash Flows -
three months ended January 31, 1997
and 1996 (Unaudited) 3
Consolidated Statement of Shareholders' Equity -
three months ended January 31, 1997
(Unaudited) 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Signature 12
<PAGE>
AGRI-NUTRITION GROUP LIMITED
CONSOLIDATED BALANCE SHEET
PAGE 1
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OCTOBER 31, JANUARY 31,
1996 1997
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 2,186,877 $ 2,138,934
Accounts receivable 4,273,452 3,903,459
Inventories 6,373,708 6,228,809
Prepaid expenses and other assets 1,188,377 1,336,183
----------------- -----------------
14,022,414 13,607,385
Property, plant and equipment, net 4,907,813 4,887,999
Goodwill 6,372,687 6,321,722
Other assets 1,046,599 1,090,337
----------------- -----------------
$ 26,349,513 $ 25,907,443
----------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt and notes payable $ 487,169 $ 491,120
Accounts payable 2,449,928 1,820,943
Accrued compensation expense 487,250 143,169
Accrued expenses 778,819 748,747
----------------- -----------------
4,203,166 3,203,979
Long-term debt and notes payable 5,719,364 6,336,021
Acquisition notes payable 2,104,648 2,104,648
Commitments and contingencies (Notes 2 and 8)
Shareholders' equity:
Common stock ($.01 par value;
20,000,000 shares
authorized; 8,430,949 shares issued) 84,309 84,309
Additional paid-in capital 14,817,183 14,817,183
Accumulated deficit (529,171) (559,155)
----------------- -----------------
14,372,321 14,342,337
Cost of common stock held in Treasury
(46,850 and 25,650 shares in 1997
and 1996, respectively) (49,986) (79,542)
----------------- -----------------
14,322,335 14,262,795
----------------- -----------------
Total Liabilities and
Shareholders' Equity $ 26,349,513 $ 25,907,443
----------------- -----------------
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
PAGE 2
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FOR THE THREE MONTHS
ENDED JANUARY 31,
1996 1997
Net sales (including sales of $4.3 million and
$3.8 million for the three months
ended January 31, 1997 and 1996, respectively,
to Purina Mills) $ 8,299,066 $ 10,156,807
Cost of sales 6,802,363 8,304,329
----------------- -----------------
Gross profit 1,496,703 1,852,478
Selling, general and
administrative expenses 1,667,566 1,717,589
Research and development 56,722 47,746
----------------- -----------------
Income (loss) from operations (227,585) 87,143
Interest expense (118,303) (166,650)
Other income 61,890 29,523
----------------- -----------------
Loss before income tax benefit (283,998) (49,984)
Income tax benefit 108,000 20,000
----------------- -----------------
Net loss $ (175,998) $ (29,984)
----------------- -----------------
Primary net loss per common and common
equivalent share (Note 3) $ (.02) $ --
----------------- -----------------
Fully diluted net loss per common and common
equivalent share (Note 3) $ (.02) $ --
----------------- -----------------
Primary common and common equivalent shares
outstanding (Note 3) 8,401,344 8,368,090
----------------- -----------------
Fully diluted common and common equivalent shares
outstanding (Note 3) 8,401,344 8,368,090
----------------- -----------------
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
PAGE 3
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<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED JANUARY 31,
1996 1997
OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (175,998) $ (29,984)
Adjustments to reconcile net loss to net
cash used in operating activities:-
Depreciation and amortization 185,000 207,138
Changes in operating assets and liabilities:
Decrease in accounts receivable 818,184 369,993
(Increase) decrease in inventories (1,068,462) 144,899
Increase in prepaid expenses and other (166,618) (91,243)
Increase (decrease) in accounts payable 599,782 (628,985)
Decrease in accounts payable to Purina (930,954)
Decrease in accrued expenses (156,834) (30,072)
Decrease in accrued compensation expense (309,979) (344,081)
----------------- -----------------
Net cash used in operating activities (1,205,879) (402,335)
----------------- -----------------
INVESTING ACTIVITIES
Purchase of property, plant and equipment (165,563) (120,517)
Sale of short-term investment securities 791,379
----------------- -----------------
Net cash provided by (used in) investing activities 625,816 (120,517)
----------------- -----------------
FINANCING ACTIVITIES
Proceeds from long-term debt and notes payable, net 1,012,154 504,465
Purchase of treasury stock (29,556)
----------------- -----------------
Net cash provided by financing activities 1,012,154 474,909
----------------- -----------------
Increase (decrease) in cash and cash equivalents 432,091 (47,943)
Cash and cash equivalents, beginning of period 2,330,685 2,186,877
----------------- -----------------
Cash and cash equivalents, end of period $ 2,762,776 $ 2,138,934
----------------- -----------------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
PAGE 4
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<TABLE>
<CAPTION>
Common Stock in
Common Stock Treasury, at Cost
Number Additional Number
of Par Paid in of Accumulated
Shares Value Capital Shares Amount Deficit Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, November 1,
1996 8,430,949 $ 84,309 $ 14,817,183 (25,650) $ (49,986) $ (529,171) $ 14,322,335
Treasury stock
purchased (unaudited) (21,200) (29,556) (29,556)
Net loss (unaudited) (29,984) (29,984)
-------------------------------------------------------------------------------------------
Balance, January 31,
1997 (unaudited) 8,430,949 $ 84,309 $ 14,817,183 (46,850) $ (79,542) $ (559,155) $ 14,262,795
==========================================================================================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
PAGE 5
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1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of January 31, 1997 and the
consolidated statements of operations, of cash flows and of shareholders'
equity for the three-month periods ended January 31, 1996 and 1997 have
been prepared by Agri-Nutrition Group Limited ("the Company") without
audit. In the opinion of management, all adjustments (which include only
normal, recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at and for the periods
ended January 31, 1996 and 1997 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted where inapplicable.
The results of operations for the periods ended January 31, 1996 and
1997, respectively, are not necessarily indicative of the operating
results for the full year.
2. ORGANIZATION
Organized in 1993, Agri-Nutrition Group Limited (the
"Company"),manufactures and distributes animal health and pet care
products. In September 1993, through its wholly-owned subsidiary, PM
Resources, Inc. ("Resources"), the Company acquired certain assets and
assumed certain liabilities of the Health Industries Business of the
Consumer Products Division (the "Business") of Purina Mills, Inc.
("Purina"). Resources commenced operations on September 9, 1993, the
effective date of the acquisition of the Business. Resources formulates,
manufactures and distributes feed additives, medicated treatments,
anthelmetics, nutritional supplements, cleaners and disinfectants, pest
control products, home, lawn and garden products, and specialty
compounds.
Effective March 31, 1995, the Company purchased substantially all
of the net assets and business of Zema Corporation ("Zema"). The
Company also purchased substantially all of the net assets and business
of St. JON Laboratories, Inc. ("St. JON") effective August 31, 1995. Zema
and St. JON formulate, package, market and distribute pet health care,
veterinary and grooming products domestically and abroad.
See Note 3 to the Company's Consolidated Financial Statements
included in the Company's annual report to shareholders for the year
ended October 31, 1996 ("1996 Annual Report") for additional information
related to the acquisitions of Zema and St. JON, including information
regarding the additional purchase price which must be paid to the former
owner of Zema if Zema achieves certain financial goals. In addition, see
Note 4 to the Company's Consolidated Financial Statements included in the
1996 Annual Report for information about the Company's acquisition of the
worldwide patents, active ingredient inventory, registrations and rights
to Bromethalin ("the Bromethalin Assets"), a highly effective and
proprietary rodenticide serving agricultural and Pest Control Operator
(PCO) markets, including information regarding additional consideration
to be paid based on shipments of Bromethalin to Purina over a five-year
period.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed by the Company are set forth in
Note 6 to the Consolidated Financial Statements included in the 1996
Annual Report. The financial statements included herein
<PAGE>
AGRI-NUTRITION GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
PAGE 6
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should be read in conjunction with the Consolidated Financial Statements
and Notes thereto included in such report.
NET LOSS PER COMMON AND COMMON EQUIVALENT SHARE
Net loss per common and common equivalent share is calculated
based on the weighted average number of common and common equivalent
shares outstanding during the periods presented, using the treasury stock
method. The calculation does not reflect common stock equivalent shares
when their inclusion in such calculation would have been anti-dilutive.
4. INVENTORIES
Inventories consist of the following:
OCTOBER 31, JANUARY 31,
1996 1997
Raw materials $ 3,700,881 $ 3,814,905
Work-in-process 312,300 308,188
Finished goods 2,508,959 2,257,148
----------------- -----------------
6,522,140 6,380,241
Less: reserve for
excess and obsolete
inventor ies (148,432) (151,432)
----------------- -----------------
$ 6,373,708 $ 6,228,809
----------------- -----------------
5. FINANCING
The Company has revolving credit facilities which aggregated $7.8
million at January 31, 1997. The agreements were amended in March 1997 to
extend their maturity dates through March 31, 1998. They consist of up to
an aggregate of $3.4 million in revolving credit lines, the available
amount being based upon specified percentages of qualified accounts
receivable and inventory, and a $4.4 million revolving credit line with
available amounts being reduced $150,000 per quarter. The interest rate
ranges from prime to prime plus 1.125%, depending on the Company's ratio
of debt to net worth, as defined in the agreements. At January 31, 1997,
the interest rate charged on borrowings outstanding was 8.50% which is
the bank's prime rate plus .25%.
At January 31, 1997, the Company and its subsidiaries were in
compliance with all covenants related to its various financing
arrangements.
6. RELATED PARTY TRANSACTIONS
See Note 13 to the Company's Consolidated Financial Statements in
the 1996 Annual Report for a discussion regarding related party
transactions.
7. EMPLOYEE BENEFIT PLANS
During the three months ended January 31, 1997, no shares or
options were issued in connection with the Company's 1996 Incentive Stock
Plan , 1995 Incentive Stock Plan or the Company's Incentive Stock Plan.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
PAGE 7
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8. COMMITMENTS AND CONTINGENCIES
From time to time, the Company becomes party to various claims and
legal actions arising during the ordinary course of business. Management
believes that the Company's costs and any potential judgments resulting
from such claims and actions will be covered by the Company's product
liability insurance, except for deductible limits. The Company intends to
defend such claims and actions in cooperation with its insurers. It is
management's opinion that, in any event, their outcome would not have a
material effect on the Company's financial position or results of
operations.
9. SUBSEQUENT EVENTS
Subsequent to January 31, 1997, the Company terminated its letter
of intent related to its proposed acquisition of Anthony Products
Company. In conjunction with this action, the Company will record a
$150,000 charge, net of tax, in the second quarter of fiscal 1997.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PAGE 8
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OVERVIEW
Organized in 1993, the Company manufactures and distributes animal
health and pet care products. In September 1993, the Company, through its PM
Resources, Inc. subsidiary ("Resources"), acquired the Health Industries
Business of Purina Mills, Inc. which formulates, manufacturers and distributes
animal health products and to a lesser extent, home, lawn and garden, and other
products. In July 1994, the Company completed its initial public offering of
Common Stock ("IPO"), the net proceeds of which were approximately $12.1
million. Effective March 31, 1995, the Company purchased substantially all of
the net assets and business of Zema Corporation ("Zema"), a formulator,
manufacturer and supplier of health care and grooming products to the pet
industry. Effective August 31, 1995, the Company purchased substantially all of
the net assets and business of St. JON Laboratories, Inc. ("St. JON"), a
developer, manufacturer and marketer of oral hygiene, dermatological and
gastrointestinal products for dogs and cats. Although the focus of the Company's
business strategy historically has been the acquisition of animal health and
related companies, in August 1996, management announced the completion of the
acquisition phase of the Company's strategy and its increased focus on internal
growth, while continuing to pursue strategic acquisitions and alliances.
The Company has reported certain financial information for two
segments - ingredients and specialty products. Ingredients consist of feed
products that are purchased or blended by the Company and distributed for Purina
Mills (see Note 14 to the Company's Consolidated Financial Statements included
in the 1996 Annual Report). Specialty products consist of all other products
formulated, manufactured, and distributed by the Company to various customers,
including Purina Mills. Included in the specialty products segment are sales of
private label and branded products for which the Company manufactures goods
using registrations and/or formulas owned by the Company, and sales of products
manufactured under contract for which the Company manufactures products using
the customers' registrations and/or formulas. While the Company believes segment
data is meaningful for net sales, the Company does not believe segment data for
costs of sales and administrative costs are necessarily relevant to
understanding the Company's business. Costs of sales other than raw materials,
and administrative costs incurred in the servicing of the two segments are joint
in nature and essentially invariable, particularly within the levels of sales
volume experienced within the reporting periods. The supporting asset base,
excluding inventories, is also joint in nature.
Given the acquisitions of businesses with branded, consumer-targeted
products in 1995 and the continued emphasis on growth of the specialty product
segment, the significance of the ingredient segment has decreased in fiscal 1996
and 1997. Management expects this trend to continue in the future such that at
some point, the ingredient segment may no longer meet the requirements for
segment disclosure under generally accepted accounting principles.
Subsequent to January 31, 1997, the Company terminated its letter of
intent related to its proposed acquisition of Anthony Products Company. In
conjunction with this action, the Company will record a $150,000 charge, net of
tax, in the second quarter of fiscal 1997.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PAGE 9
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THREE MONTHS ENDED JANUARY 31, 1996 COMPARED TO THREE MONTHS ENDED
JANUARY 31, 1997 (in 000's except percentages)
<TABLE>
<CAPTION>
1996 1997
<S> <C> <C> <C> <C>
Net sales
Ingredients..............................$ 2,484 29.9% $ 2,728 26.9%
Specialty products....................... 5,815 70.1 7,429 73.1
Total net sales....................... 8,299 100.0 10,157 100.0
Cost of sales............................... 6,802 82.0 8,305 81.8
Gross profit................................ 1,497 18.0 1,852 18.2
Selling, general and
administrative expense.................... 1,668 20.1 1,718 16.9
Research and development.................... 57 .7 48 .5
Operating income (loss)..................... (228) (2.7) 87 .9
</TABLE>
Total net sales increased 22% from $8.3 million in fiscal 1996 to $10.2
million for 1997, reflecting a 28% increase in higher margin specialty product
sales and a 10% increase in ingredients sales. Higher volume of ingredients
shipments compared to the prior year was the most significant factor causing an
increase in ingredients sales of $.2 million from $2.5 million in 1996 to $2.7
million in 1997. The cost of ingredients during the quarter were generally
consistent with that during the first quarter of 1996. The increased sales of
lower margin ingredients had minimal impact on gross profit. Specialty products
sales increased $1.6 million, or 28%, compared to the same period of the prior
year, reflecting strong sales of rodenticides and new contract manufacturing
business at Resources during the quarter. In addition, sales from the branded,
pet care businesses grew 17% reflecting the impact of new products introduced
during fiscal 1996, particularly the Cartiflex(TM) line of products, and strong
growth from the Company's sales and distribution operation in the United
Kingdom.
The Company's manufacturing and supply agreement with Purina Mills
pursuant to which Purina Mills had guaranteed the Company sufficient sales to
generate annual income, net of ingredient, direct manufacturing, and other
direct costs of approximately $2.9 million for the three-year period ended
October 31, 1996 expired as of that date. Although the Company expects to have a
supply relationship with Purina Mills, there can be no assurance what level of
sales or income will be obtained in the future. For the three months ended
January 31, 1997, sales to Purina Mills totaled $4.3 million compared to $3.8
million during the same period in fiscal 1996.
Gross profit increased from $1.5 million in 1996 (18.0% of net sales) to
$1.9 million in 1997 (18.2% of net sales), primarily due to the increased
specialty products sales in 1997. Gross profit as a percentage of sales
increased slightly due to the increasing ratio of higher margin specialty
product sales as a percent of total sales.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PAGE 10
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Selling, general and administrative expenses were $1.7 million in both
1997 and 1996, but decreased as a percent of net sales from 20.1% in 1996 to
16.9% in 1997. The decrease in selling, general and administrative expenses as a
percent of sales is primarily related to the impact of the corporate management
restructuring announced in August 1996. The increase in net sales of
ingredients, as discussed above, with relatively little related change in
selling, general and administrative expenses, also contributed to the decrease
in selling, general and administrative expenses as a percentage of sales.
The factors discussed above resulted in operating income of approximately
$.1 million during the three months ended January 31, 1997, a $.3 million
improvement compared to the operating loss of approximately $.2 in the prior
year.
Interest expense was approximately $.1 million in 1996 and $.15 million
in 1997, reflecting increased debt balances that resulted from the Company's
investment in inventory related to new product introductions subsequent to the
first quarter of fiscal 1996 and increased sales volume in fiscal 1997.
The effective income tax rate of the Company was 38% and 40% for 1996 and
1997, respectively. The aggregate amount of the deferred tax asset valuation
allowance at January 31, 1997 was approximately $.1 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's existing capital requirements are primarily to fund
equipment purchases and working capital needs. The Company's cash balance of
$2.1 million at January 31, 1997 principally reflects remaining net proceeds
from the IPO which are available for further acquisition funding requirements.
During April 1995, the Company completed the acquisition of Zema, which required
utilization of approximately $3.2 million of net proceeds for the acquisition
and related expenses in 1995 and will require additional payments of $.3 million
plus interest prior to April 1998, and potentially additional payments
conditioned upon the achievement of certain operating criteria by Zema which
would be due in April 2000. In August 1995, the Company acquired the net assets
of St. JON, which required approximately $3.5 million of cash, the assumption of
certain liabilities aggregating approximately $1.5 million which were paid
within four months of closing, and an additional $2 million plus interest to be
paid in annual installments over six years commencing March 31, 1997. Effective
May 1996, the Company acquired the worldwide patents and other assets and rights
to Bromethalin, which required payments of $1 million including related expenses
at closing, and will require additional consideration based on shipments of
Bromethalin to Purina Mills over a five-year period. The Company's cash balances
continue to be invested in high-grade, short-term interest-bearing obligations
(primarily discount and demand notes with maturities of three months or less,
and high-grade, corporate bonds and notes) pending their specific use.
Speculative use of derivatives is prohibited by the Company's investment policy.
During the three months ended January 31, 1996 and 1997, cash used by
operations approximated $1.2 million and $.4 million, respectively, which was
primarily related to funding seasonal working capital requirements. These
requirements were funded through utilization of available credit facilities.
The Company has revolving credit facilities which aggregated $7.8 million
at January 31, 1997. The agreements were amended in March 1997 to extend their
maturity dates through March 31, 1998. They consist of up to an aggregate of
$3.4 million in revolving credit lines, the available amount being based upon
specified percentages of qualified accounts receivable and inventory, and a $4.4
million revolving credit line with available amounts being reduced $150,000 per
quarter. The interest rate ranges from prime to prime plus 1.125%, depending on
the Company's ratio of debt to net worth, as defined in the agreements. At
January 31, 1997, the interest rate charged on borrowings outstanding was 8.50%
<PAGE>
AGRI-NUTRITION GROUP LIMITED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PAGE 11
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which is the bank's prime rate plus .25%. The agreements allow the Company to
sweep all cash balances against outstanding borrowings, thus reducing the
Company's overall interest expense.
In December 1995, the Company's board of directors authorized the
repurchase of up to 500,000 shares of the Company's Common Stock. The amount of
funds required will depend upon the actual number of shares repurchased and the
market price paid by the Company for those shares. The Company will utilize
available funds to implement this stock repurchase. As of January 31, 1997,
46,850 shares had been repurchased under this program at an aggregate cost of
$79,542.
Management believes that the Company will generally have sufficient cash
to meet the needs of the current operations for the foreseeable future from cash
flows from current operations, available funds, and existing financing
facilities.
The Company has no plans to significantly increase any of its operating
subsidiaries' plant facilities capacity. Capital expenditures for the three
months ended January 31, 1997 were approximately $.12 million. Future capital
expenditures for the Company's operating subsidiaries are not expected to
significantly exceed historical amounts, which approximate current depreciation
expense.
QUARTERLY EFFECTS AND SEASONALITY
Resources' results of operations historically have been seasonal, with a
high percentage of its volume and earnings being generated in the second quarter
(February through April) and a low percentage of its volume and earnings in the
fourth quarter (August through October) of the fiscal year. However, such
seasonal patterns are highly dependent on weather, feeding economics and the
timing of customer orders. Furthermore, new business has not exhibited
historical patterns, particularly the sales of rodenticides which tend to be
concentrated in the Company's first and fourth quarters. The results of Zema's
operations also historically have been seasonal with a high volume of its sales
and earnings being generated during the months of April through September. St.
JON's sales and earnings historically have not been seasonal.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
PART II - OTHER INFORMATION
PAGE 12
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ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS.
On March 6, 1997, the Company held its annual meeting of stockholders. At
the meeting, the stockholders elected Alec L. Poitevint, II as a Class 3
Director. The following table summarizes the voting:
<TABLE>
<CAPTION>
FOR AGAINST/WITHHELD ABSTENTIONS/NONVOTES
<S> <C> <C> <C>
Alec L. Poitevint II 7,783,564 144,853 0
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits.
10.19 Second amendment to amended and restated revolving credit
agreement by and between PM Resources, Inc., Zema Corporation
and First Bank.
10.20 Second amendment to revolving credit agreement by and
between St. JON Laboratories, Inc. and First Bank.
b. Reports of Form 8-K.
No reports on Form 8-K were filed during the period covered by this
Report.
SIGNATURE
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.
AGRI-NUTRITION GROUP LIMITED
/s/ Robert J. Elfanbaum
---------------------------
Robert J. Elfanbaum
Vice President and Chief Financial Officer
March 14, 1997
SECOND AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT, made and entered into as of the 6th day of March, 1997, by and
between PM RESOURCES, INC., a Missouri corporation and ZEMA CORPORATION, a
Delaware corporation ("Borrowers") and FIRST BANK, a Missouri state banking
corporation ("Bank").
WITNESSETH:
WHEREAS, Borrowers heretofore jointly and severally executed
and delivered to Bank a Revolving Credit Note dated May 31, 1996, in the
principal amount of up to Six Million Nine Hundred Thousand Dollars
($6,900,000.00), payable to the order of Bank as therein set forth (the
"Note"); and
WHEREAS, the Note is described in an Amended and Restated
Revolving Credit Agreement dated July 14, 1995 made by and among Borrowers and
Bank, as amended by an Amendment to Amended and Restated Revolving Credit
Agreement dated as of May 31, 1996 made by and among Borrowers and Bank (as
amended, the "Loan Agreement"); and
WHEREAS, Borrowers and Bank desire to amend the Loan Agreement
and the Note to extend the term thereof and to make certain other amendments
thereto on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual provisions and agreements hereinafter set forth, the parties hereto do
hereby mutually promise and agree as follows:
1. The Note shall be amended and restated in the form of that
certain Revolving Credit Note attached hereto as Exhibit C, to extend the
maturity thereof to March 31, 1998 and to make certain amendments as set forth
therein. All references in the Loan Agreement to the "Note," the "Revolving
Credit Note" and other references of similar import shall hereafter be amended
and deemed to refer to the Note in the form of the Revolving Credit Note, as
amended and restated in the form attached hereto as Exhibit C.
2. The first paragraph beginning with the word "WHEREAS" on
the first page of the Loan Agreement shall be deleted in its entirety and in
its place shall be substituted the following:
WHEREAS, Borrowers have applied for a joint and
several revolving credit loan from Bank in an aggregate principal
amount of up to Six Million Nine Hundred Thousand Dollars
($6,900,000.00) for a period of time up to and including March 31,
1998, as extended thereafter in Bank's discretion for subsequent one
year periods, One Million Six Hundred Thousand Dollars ($1,600,000.00)
of which shall be
<PAGE>
subject to a Borrowing Base (as set forth herein) ("Facility A"), and
the remaining Five Million Three Hundred Thousand Dollars
($5,300,000.00) of which shall be a reducing revolving credit line from
Bank ("Facility B"); and
3. Section 1 of the Loan Agreement shall be deleted in
its entirety and in its place shall be substituted the following:
The "Term" of this Agreement shall commence on the
date hereof and shall end on March 31, 1998, unless earlier terminated
upon the occurrence of an Event of Default under this Agreement, or
unless subsequently extended by Bank, in its sole discretion and
without obligation to do so, pursuant to the terms of Section 3.9
herein.
4. Section 3.9 of the Loan Agreement shall be deleted
in its entirety and in its place shall be substituted the following:
3.9 Maturity. All Loans not paid prior to March 31,
1998, together with all accrued and unpaid interest thereon, shall be
due and payable on March 31, 1998 (as from time to time extended, if
any, pursuant to this Section, the "Maturity Date"); provided, however,
that in the event Bank, in its sole and absolute discretion, shall
deliver to Borrowers a written notice signed by Bank on or before the
date one year prior to the then current Maturity Date (and prior to any
subsequent Maturity Date thereafter if extended under this Section 3.9)
of Bank's intention to extend the term of this Agreement for an
additional year, then the Maturity Date of this Agreement shall be
extended for a period of one additional year following the then current
Maturity Date. Following any such extension of the Maturity Date by
Bank, all of the outstanding principal and all accrued and unpaid
interest, fees and other amounts due under this Agreement and the Note
shall be due and payable on such new Maturity Date, unless it is again
extended by Bank, in its sole and absolute discretion, under the
foregoing sentence.
5. Borrowers hereby represent and warrant to Bank that:
(a) The execution, delivery and performance by Borrowers of this Second
Amendment to Amended and Restated Revolving Credit Agreement and the amended
and restated Revolving Credit Note are within the corporate powers of
Borrowers, have been duly authorized by all necessary corporate action and
require no action by or in respect of, or filing with, any governmental or
regulatory body, agency or official. The execution, delivery and performance
by Borrowers of this Second Amendment to Amended and Restated Revolving Credit
Agreement and the amended and restated Revolving Credit Note do not conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under or result in any violation of, and neither of the
Borrowers is now in default under or in violation of, the terms of the
Articles of Incorporation or Bylaws of such Borrower, any applicable law, any
rule, regulation, order, writ, judgment or decree of any court or governmental
or regulatory agency or instrumentality, or any agreement or instrument to
which either of the Borrowers is a party or by which either of them is bound
or to which either of them is subject;
<PAGE>
(b) This Second Amendment to Amended and Restated Revolving Credit
Agreement and the amended and restated Revolving Credit Note have been duly
executed and delivered and constitute the legal, valid and binding obligations
of Borrowers enforceable in accordance with their terms; and
(c) As of the date hereof, all of the covenants, representations
and warranties of Borrowers set forth in the Loan Agreement are true and
correct and no "Event of Default" (as defined therein) under or within the
meaning of the Loan Agreement has occurred and is continuing.
6. All references in the Loan Agreement to "this Loan
Agreement" and any other references of similar import shall henceforth mean
the Loan Agreement as amended by this Second Amendment to Amended and Restated
Revolving Credit Agreement.
7. This Second Amendment to Amended and Restated Revolving
Credit Agreement and the amended and restated Revolving Credit Note shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrowers may not assign,
transfer or delegate any of its rights or obligations hereunder.
8. This Second Amendment to Amended and Restated Revolving
Credit Agreement shall be governed by and construed in accordance with the
internal laws of the State of Missouri.
9. In the event of any inconsistency or conflict between this
Second Amendment to Amended and Restated Revolving Credit Agreement and the
Loan Agreement, the terms, provisions and conditions of this Second Amendment
to Amended and Restated Revolving Credit Agreement shall govern and control.
10. The Loan Agreement, as hereby amended and modified, and
the amended and restated Revolving Credit Note, as hereby amended and
restated, are and shall remain the binding obligations of Borrowers and all of
the provisions, terms, stipulations, conditions, covenants and powers
contained therein shall stand and remain in full force and effect, except only
as the same are herein and hereby specifically varied or amended, and the same
are hereby ratified and confirmed. If any installment of principal or interest
on the amended and restated Revolving Credit Note shall not be paid when due
as provided in the amended and restated Revolving Credit Note, the holder of
the amended and restated Revolving Credit Note shall be entitled to and may
exercise all rights and remedies under the amended and restated Revolving
Credit Note and the Loan Agreement, as amended.
11. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWERS AND
BANK FROM ANY MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY
BORROWERS AND BANK COVERING SUCH MATTERS ARE CONTAINED IN THE LOAN AGREEMENT,
AS AMENDED BY THIS AGREEMENT, WHICH CONSTITUTES A COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENTS BETWEEN BORROWERS AND BANK EXCEPT AS BORROWERS AND
BANK MAY LATER AGREE IN WRITING TO MODIFY. THE LOAN AGREEMENT, AS AMENDED BY
THIS AGREEMENT, EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
PARTIES HERETO AND
<PAGE>
SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR WRITTEN) RELATING
TO THE SUBJECT MATTER HEREOF.
IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the date first written above on this 6th day of March, 1997.
PM RESOURCES, INC.
By:
Robert J. Elfanbaum, Vice President
and Treasurer
ZEMA CORPORATION
By:
Robert J. Elfanbaum, Secretary
FIRST BANK
By:
Brenda J. Laux, Vice President
<PAGE>
CONSENT TO SECOND AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT AGREEMENT
The undersigned hereby consents to the terms of the foregoing
Second Amendment to Amended and Restated Revolving Credit Agreement and the
amended and restated Revolving Credit Note referenced therein, and
acknowledges that the execution and delivery by PM Resources, Inc. of said
Second Amendment and said Note will not affect or impair the undersigned's
obligations to and agreements with Bank under (i) that certain Guaranty dated
July 14, 1995 made by the undersigned in favor of Bank, (ii) that certain
Agreement of Pledge (Third Party) dated July 14, 1995 made by the undersigned
in favor of Bank, or (iii) that certain Subordination Agreement dated July 14,
1995 made by the undersigned in favor of Bank, which obligations and
agreements are hereby ratified and confirmed. The undersigned further
acknowledges and agrees that all references in the Guaranty, the Agreement of
Pledge (Third Party) and in the Subordination Agreement to the "Amended and
Restated Revolving Credit Agreement" and other references of similar import
shall henceforth mean the Amended and Restated Revolving Credit Agreement as
amended by the foregoing Second Amendment to Amended and Restated Revolving
Credit Agreement, as the same may from time to time be further amended, and
all references in the Guaranty, the Agreement of Pledge (Third Party) and in
the Subordination Agreement to the "Note," the "Revolving Credit Note" and
other references of similar import shall henceforth mean the Revolving Credit
Note as amended and restated, and as the same may from time to time be further
amended.
Dated: as of March 6, 1997.
AGRI-NUTRITION GROUP LIMITED
By:
Robert J. Elfanbaum, Vice President
and Chief Financial Officer
<PAGE>
EXHIBIT C
Revolving Credit Note
$6,900,000.00 St. Louis, Missouri
March 6, 1997
FOR VALUE RECEIVED, on March 31, 1998 (or such subsequent
anniversary thereof as determined pursuant to Section 3.9 of the Loan
Agreement (hereinafter identified)), the undersigned, PM RESOURCES, INC., a
Missouri corporation, and ZEMA CORPORATION, a Delaware corporation
(collectively, the "Borrowers"), hereby jointly and severally promise to pay
to the order of FIRST BANK, a Missouri state banking corporation ("Bank"), the
principal sum of Six Million Nine Hundred Thousand Dollars ($6,900,000.00), or
such lesser sum as may then be outstanding hereunder. The aggregate principal
amount which Bank shall be committed to have outstanding under Facility A
hereunder at any one time shall not exceed the lesser of (i) One Million Six
Hundred Thousand Dollars ($1,600,000.00), or (ii) the "Borrowing Base" (as
defined in the Loan Agreement (as hereinafter defined)), which amount may be
borrowed, paid, reborrowed and repaid, in whole or in part, subject to the
terms and conditions hereof and of the Loan Agreement hereinafter identified.
The aggregate principal amount which Bank shall be committed to have
outstanding under Facility B hereunder at any one time shall not exceed Five
Million Three Hundred Thousand Dollars ($5,300,000.00) as reduced from time to
time pursuant to Section 3.1(b) of the Loan Agreement hereinafter identified,
which amount may be borrowed, paid, reborrowed and repaid, in whole or in
part, subject to the terms and conditions hereof and of the Loan Agreement
hereinafter identified.
Borrowers further jointly and severally promise to pay to the
order of Bank interest on the principal amount from time to time outstanding
hereunder prior to maturity from the date disbursed until paid at the rate or
rates per annum required by the Loan Agreement or otherwise selected by either
of the Borrowers as set forth in the Loan Agreement. All accrued and unpaid
interest with respect to each principal disbursement made hereunder shall be
payable (a) monthly on the fifteenth (15th) day of the month following the
month in which such interest accrued, commencing with the fifteenth (15th) day
of the month following the month in which any such disbursement was made, and
on the fifteenth (15th) day of each month thereafter, (b) if such disbursement
is a Treasury Rate Loan, such accrued interest shall also be payable on the
last day of the Interest Period with respect thereto, and (c) at the maturity
of this Note, whether by reason of acceleration or otherwise. After the
maturity of this Note, whether by reason of acceleration or otherwise,
interest shall accrue and be payable on demand on the entire outstanding
principal balance hereunder until paid at a rate per annum equal to Four and
One-Eighth Percent (4.125%) over and above the Prime Rate, fluctuating as and
when said Prime Rate shall change. All payments hereunder (other than
prepayments) shall be applied first to the payment of all accrued and unpaid
interest, with the balance, if any, to be applied to the payment of principal.
All prepayments hereunder shall be applied solely to the payment of principal.
All payments of principal and interest hereunder shall be made
in lawful currency of the United States in Federal or other immediately
available funds at the office of Bank situated at 1281 Graham Road,
Florissant, Missouri 63031, or at such other place as the holder hereof shall
designate in writing. Interest shall be computed on an actual day, 360-day
year basis.
<PAGE>
Bank may record the date and amount of all loans and all
payments of principal and interest hereunder in the records it maintains with
respect thereto. Bank's books and records showing the account between Bank and
Borrowers shall be admissible in evidence in any action or proceeding and
shall constitute prima facie proof of the items therein set forth.
This Note is the Note referred to in that certain Amended and
Restated Revolving Credit Agreement dated July 14, 1995 made by and between
Borrowers and Bank (as the same may from time to time be amended, the "Loan
Agreement"), to which Loan Agreement reference is hereby made for a statement
of the terms and conditions upon which the maturity of this Note may be
accelerated, and for other terms and conditions, including prepayment, which
may affect this Note. All capitalized terms used herein and not otherwise
defined shall have the meanings assigned to such terms in the Loan Agreement.
This Note is secured by that certain Security Agreement dated
as of July 14, 1995 and executed by PM Resources, Inc. in favor of Bank and by
that certain Security Agreement dated as of July 14, 1995 executed by Zema
Corporation in favor of Bank (as the same may from time to time be amended,
the "Security Agreements"), to which Security Agreements reference is hereby
made for a description of the security and a statement of the terms and
conditions upon which this Note is secured.
This Note is also secured by that certain Deed of Trust and
Security Agreement dated September 9, 1993 and executed by PM Resources, Inc.
in favor of Katherine D. Knocke, as trustee for Bank (as the same may from
time to time be amended, the "Deed of Trust"), to which Deed of Trust
reference is hereby made for a description of the security and a statement of
the terms and conditions upon which this Note is secured.
This Note is also secured by that certain Agreement of Pledge
(Third Party) dated July 14, 1995 and executed by Agri-Nutrition Group Limited
in favor of Bank (as the same may from time to time be amended, the "Pledge
Agreement"), to which Pledge Agreement reference is hereby made for a
description of the additional security and a statement of the terms and
conditions upon which this Note is further secured.
If either of the Borrowers shall fail to make any payment of
any principal of or interest on this Note as and when the same shall become
due and payable, or if an "Event of Default" (as defined therein) shall occur
under or within the meaning of the Loan Agreement, either of the Security
Agreements, the Deed of Trust or the Pledge Agreement, Bank may, at its
option, terminate its obligation to make any additional loans under this Note
and Bank may further declare the entire outstanding principal balance of this
Note and all accrued and unpaid interest thereon to be immediately due and
payable.
In the event that any payment of any principal of or interest
on this Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of either of the Security
Agreements, the Deed of Trust or the Pledge Agreement securing payment hereof
or for representation of Bank in connection with bankruptcy or insolvency
proceedings relating hereto, Borrowers jointly and severally promise to pay,
in addition to all other amounts otherwise due hereon, the reasonable costs
and expenses of such collection, foreclosure and representation, including,
without limitation, reasonable attorneys' fees and expenses (whether or not
litigation shall be commenced in aid thereof). All parties hereto severally
waive presentment for payment, demand, protest, notice of protest and notice
of dishonor.
<PAGE>
This Note shall be governed by and construed in accordance
with the internal laws of the State of Missouri.
PM RESOURCES, INC.
By:
Robert J. Elfanbaum, Vice President
and Treasurer
ZEMA CORPORATION
By:
Robert J. Elfanbaum, Secretary
SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
THIS SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT, made and
entered into as of the 6th day of March, 1997, by and between ST. JON
LABORATORIES, INC., a California corporation ("Borrower") and FIRST BANK, a
Missouri state banking corporation ("Bank").
WITNESSETH:
WHEREAS, Borrower heretofore executed and delivered to Bank a
Revolving Credit Note dated May 31, 1996, in the principal amount of up to One
Million Eight Hundred Thousand Dollars ($1,800,000.00), payable to the order
of Bank as therein set forth (the "Note"); and
WHEREAS, the Note is described in a Revolving Credit Agreement
dated January 19, 1996 between Borrower and Bank, as amended by that certain
Amendment to Revolving Credit Agreement dated as of May 31, 1996 made by and
between Borrower and Bank (as amended, the "Loan Agreement"); and
WHEREAS, Borrower and Bank desire to amend the Loan Agreement
and the Note to extend the term thereof and to make certain other amendments
thereto on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the
mutual provisions and agreements hereinafter set forth, the parties hereto do
hereby mutually promise and agree as follows:
12. The Note shall be amended and restated in the form of that
certain Revolving Credit Note attached hereto as Exhibit C, to extend the
maturity thereof to March 31, 1998 and to make certain amendments as set forth
therein. All references in the Loan Agreement to the "Note," the "Revolving
Credit Note" and other references of similar import shall hereafter be amended
and deemed to refer to the Note in the form of the Revolving Credit Note, as
amended and restated in the form attached hereto as Exhibit C.
13. The first paragraph beginning with the word "WHEREAS" on
the first page of the Loan Agreement shall be deleted in its entirety and in
its place shall be substituted the following:
WHEREAS, Borrower has applied for a revolving credit
loan from Bank in the principal amount of up to One Million Eight
Hundred Thousand Dollars ($1,800,000.00) subject to a Borrowing Base
(as herein set forth) for a period of time up to and including March
31, 1998, as extended thereafter in Bank's discretion for subsequent
one year periods; and
14. Section 1 of the Loan Agreement shall be deleted in
its entirety and in its place shall be substituted the following:
- 21 -
<PAGE>
The "Term" of this Agreement shall commence on the
date hereof and shall end on March 31, 1998, unless earlier terminated
upon the occurrence of an Event of Default under this Agreement, or
unless subsequently extended by Bank, in its sole discretion and
without obligation to do so, pursuant to the terms of Section 3.8
herein.
15. Section 3.8 of the Loan Agreement shall be deleted
in its entirety and in its place shall be substituted the following:
3.8 Maturity. All Loans not paid prior to March 31,
1998, together with all accrued and unpaid interest thereon, shall be
due and payable on March 31, 1998 (as from time to time extended, if
any, pursuant to this Section, the "Maturity Date"); provided, however,
that in the event Bank, in its sole and absolute discretion, shall
deliver to Borrower a written notice signed by Bank on or before the
date one year prior to the then current Maturity Date (and prior to any
subsequent Maturity Date thereafter if extended under this Section 3.9)
of Bank's intention to extend the term of this Agreement for an
additional year, then the Maturity Date of this Agreement shall be
extended for a period of one additional year following the then current
Maturity Date. Following any such extension of the Maturity Date by
Bank, all of the outstanding principal and all accrued and unpaid
interest, fees and other amounts due under this Agreement and the Note
shall be due and payable on such new Maturity Date, unless it is again
extended by Bank, in its sole and absolute discretion, under the
foregoing sentence.
16. Borrower hereby represents and warrants to Bank that:
(a) The execution, delivery and performance by
Borrower of this Second Amendment to Revolving Credit Agreement and the
amended and restated Note are within the corporate powers of Borrower, have
been duly authorized by all necessary corporate action and require no action
by or in respect of, or filing with, any governmental or regulatory body,
agency or official. The
execution, delivery and performance by Borrower of this Second Amendment to
Revolving Credit Agreement and the amended and restated Note do not conflict
with, or result in a breach of the terms, conditions or provisions of, or
constitute a default under or result in any violation of, and Borrower is not
now in default under or in violation of, the terms of the Articles of
Incorporation or Bylaws of Borrower, any applicable law, any rule, regulation,
order, writ, judgment or decree of any court or governmental or regulatory
agency or instrumentality, or any agreement or instrument to which Borrower is
a party or by which it is bound or to which it is subject;
(b) This Second Amendment to Revolving Credit
Agreement and the amended and restated Note have been duly executed and
delivered and constitute the legal, valid and binding obligations of Borrower
enforceable in accordance with their terms; and
- 22 -
<PAGE>
(c)As of the date hereof, all of the covenants, representations and warranties
of Borrower set forth in the Loan Agreement are true and correct and no "Event
of Default" (as defined therein) under or within the meaning of the Loan
Agreement has occurred and is continuing.
17. All references in the Loan Agreement to "this Loan
Agreement" and any other references of similar import shall henceforth mean
the Loan Agreement as amended by this Second Amendment to Revolving Credit
Agreement.
18. This Second Amendment to Revolving Credit Agreement and
the amended and restated Note shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns, except that
Borrower may not assign, transfer or delegate any of its rights or obligations
hereunder or thereunder.
19. This Second Amendment to Revolving Credit Agreement
shall be governed by and construed in accordance with the internal laws of
the State of Missouri.
20. In the event of any inconsistency or conflict between this
Second Amendment to Revolving Credit Agreement and the Loan Agreement, the
terms, provisions and conditions of this Second Amendment to Revolving Credit
Agreement shall govern and control.
21. The Loan Agreement, as hereby amended and modified, and
the Note, as amended and restated, are and shall remain the binding
obligations of Borrower and all of the provisions, terms, stipulations,
conditions, covenants and powers contained therein shall stand and remain in
full force and effect, except only as the same are herein and hereby
specifically varied or amended, and the same are hereby ratified and
confirmed. If any installment of principal or interest on the Note, as amended
and restated, shall not be paid when due as provided in the Note, the holder
of the Note shall be entitled to and may exercise all rights and remedies
under the Note and the Loan Agreement.
22. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FOREBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES
TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND
BANK FROM ANY MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS REACHED BY
BORROWER AND BANK COVERING SUCH MATTERS ARE CONTAINED IN THE LOAN AGREEMENT,
AS AMENDED BY THIS AGREEMENT, WHICH CONSTITUTES A COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENTS BETWEEN BORROWER AND BANK EXCEPT AS BORROWER AND
BANK MAY LATER AGREE IN WRITING TO MODIFY. THE LOAN AGREEMENT, AS AMENDED BY
THIS AGREEMENT, EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
PARTIES HERETO AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR
WRITTEN) RELATING TO THE SUBJECT MATTER HEREOF.
- 23 -
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the date first written above on this 6th day of March, 1997.
ST. JON LABORATORIES, INC.
By:
John J. Nelson, President
FIRST BANK
By:
Brenda J. Laux, Vice President
- 24 -
<PAGE>
CONSENT TO SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
The undersigned hereby consents to the terms of the foregoing
Second Amendment to Revolving Credit Agreement, and acknowledges that the
execution and delivery by St. JON Laboratories, Inc. of said Second Amendment
will not affect or impair the undersigned's obligations to and agreements with
Bank under (i) that certain Guaranty dated January 19, 1996 made by the
undersigned in favor of Bank, (ii) that certain Agreement of Pledge (Third
Party) dated January 19, 1996 made by the undersigned in favor of Bank, or
(iii) that certain Subordination and Standby Agreement dated January 19, 1996
made by the undersigned in favor of Bank, which obligations and agreements are
hereby ratified and confirmed. The undersigned further acknowledges and agrees
that all references in the Guaranty, the Agreement of Pledge (Third Party) and
in the Subordination Agreement to the "Revolving Credit Agreement" and other
references of similar import shall henceforth mean the Revolving Credit
Agreement as amended by the foregoing Second Amendment to Revolving Credit
Agreement, as the same may from time to time be further amended and all
references in the Guaranty, the Agreement of Pledge (Third Party) and in the
Subordination and Standby Agreement to the "Note," the "Revolving Credit Note"
and other references of similar import shall henceforth mean the Revolving
Credit Note, as amended and restated, and as the same may from time to time be
further amended.
Dated: as of March 6, 1997.
AGRI-NUTRITION GROUP LIMITED
By:
Robert J. Elfanbaum, Vice President
and Chief Financial Officer
- 25 -
<PAGE>
CONSENT TO SECOND AMENDMENT TO REVOLVING CREDIT AGREEMENT
The undersigned hereby consent to the terms of the foregoing
Second Amendment to Revolving Credit Agreement, and acknowledge that the
execution and delivery by St. JON Laboratories, Inc. of said Second Amendment
will not affect or impair the undersigned's obligations to and agreements with
Bank under that certain Intercreditor Agreement dated January 19, 1996 made by
the undersigned in favor of Bank, which obligations and agreements are hereby
ratified and confirmed. The undersigned further acknowledge and agree that all
references in the Intercreditor Agreement to the "Revolving Credit Agreement"
and other references of similar import shall henceforth mean the Revolving
Credit Agreement as amended by the foregoing Second Amendment to Revolving
Credit Agreement, as the same may from time to time be further amended, and
all references in the Intercreditor Agreement to the "First Bank Note," the
"Revolving Credit Note" and other references of similar import shall
henceforth mean the Revolving Credit Note, as amended and restated, and as the
same may from time to time be further amended.
Dated: as of March 6, 1997.
John J. Nelson
JOHN J. NELSON, INC.
By:
John J. Nelson, President
- 26 -
<PAGE>
EXHIBIT C
Revolving Credit Note
$1,800,000.00 St. Louis, Missouri
March 6, 1997
FOR VALUE RECEIVED, on March 31, 1998 (or such subsequent
anniversary thereof as determined pursuant to Section 3.8 of the Loan
Agreement (as hereinafter defined)), the undersigned, ST. JON LABORATORIES,
INC., a California corporation ("Borrower"), hereby promises to pay to the
order of FIRST BANK, a Missouri state banking corporation ("Bank"), the
principal sum of One Million Eight Hundred Thousand Dollars ($1,800,000.00),
or such lesser sum as may then be outstanding hereunder. The aggregate
principal amount which Bank shall be committed to have outstanding hereunder
at any one time shall not exceed the lesser of (i) One Million Eight Hundred
Thousand Dollars ($1,800,000.00), or (ii) the "Borrowing Base" (as defined in
the Loan Agreement (as hereinafter defined)), which amount may be borrowed,
paid, reborrowed and repaid, in whole or in part, subject to the terms and
conditions hereof and of the Loan Agreement hereinafter identified.
Borrower further promises to pay to the order of Bank interest
on the principal amount from time to time outstanding hereunder prior to
maturity from the date disbursed until paid at the rate per annum required by
the Loan Agreement. All accrued and unpaid interest with respect to each
principal disbursement made hereunder shall be payable monthly on the
fifteenth (15th) day of the month following the month in which such interest
accrued, commencing with the fifteenth (15th) day of the month following the
month in which any such disbursement was made, and on the fifteenth (15th) day
of each month thereafter, and at the maturity of this Note, whether by reason
of acceleration or otherwise. After the maturity of this Note, whether by
reason of acceleration or otherwise, interest shall accrue and be payable on
demand on the entire outstanding principal balance hereunder until paid at a
rate per annum equal to Four and One-Eighth Percent (4.125%) over and above
the Prime Rate, fluctuating as and when said Prime Rate shall change. All
payments hereunder (other than prepayments) shall be applied first to the
payment of all accrued and unpaid interest, with the balance, if any, to be
applied to the payment of principal. All prepayments hereunder shall be
applied solely to the payment of principal.
All payments of principal and interest hereunder shall be made
in lawful currency of the United States in Federal or other immediately
available funds at the office of Bank situated at 1281 Graham Road,
Florissant, Missouri 63031, or at such other place as the holder hereof shall
designate in writing. Interest shall be computed on an actual day, 360-day
year basis.
Bank may record the date and amount of all loans and all
payments of principal and interest hereunder in the records it maintains with
respect thereto. Bank's books and records showing the account between Bank and
Borrower shall be admissible in evidence in any action or proceeding and shall
constitute prima facie proof of the items therein set forth.
- 27 -
<PAGE>
This Note is the Note referred to in that certain Revolving
Credit Agreement dated as of January 19, 1996 made by and between Borrower and
Bank (as the same may from time to time be amended, the "Loan Agreement"), to
which Loan Agreement reference is hereby made for a statement of the terms and
conditions upon which the maturity of this Note may be accelerated, and for
other terms and conditions, including prepayment, which may affect this Note.
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Loan Agreement.
This Note is secured by that certain Security Agreement dated
January 19, 1996 and executed by Borrower in favor of Bank (as the same may
from time to time be amended, the "Security Agreement"), to which Security
Agreement reference is hereby made for a description of the security and a
statement of the terms and conditions upon which this Note is secured.
This Note is also secured by that certain Agreement of Pledge
(Third Party) dated January 19, 1996 and executed by Agri-Nutrition Group
Limited in favor of Bank (as the same may from time to time be amended, the
"Pledge Agreement"), to which Pledge Agreement reference is hereby made for a
description of the additional security and a statement of the terms and
conditions upon which this Note is further secured.
If Borrower shall fail to make any payment of any principal of
or interest on this Note as and when the same shall become due and payable, or
if an "Event of Default" (as defined therein) shall occur under or within the
meaning of the Loan Agreement, the Security Agreement or the Pledge Agreement,
Bank may, at its option, terminate its obligation to make any additional loans
under this Note and Bank may further declare the entire outstanding principal
balance of this Note and all accrued and unpaid interest thereon to be
immediately due and payable.
In the event that any payment of any principal of or interest
on this Note shall not be paid when due, whether by reason of acceleration or
otherwise, and this Note shall be placed in the hands of an attorney or
attorneys for collection or for foreclosure of the Security Agreement or the
Pledge Agreement securing payment hereof or for representation of Bank in
connection with bankruptcy or insolvency proceedings relating hereto, Borrower
promises to pay, in addition to all other amounts otherwise due hereon, the
reasonable costs and expenses of such collection, foreclosure and
representation, including, without limitation, reasonable attorneys' fees and
expenses (whether or not litigation shall be commenced in aid thereof). All
parties hereto severally waive presentment for payment, demand, protest,
notice of protest and notice of dishonor.
- 28 -
<PAGE>
This Note shall be governed by and construed in accordance
with the internal laws of the State of Missouri.
ST. JON LABORATORIES, INC.
By:
John J. Nelson, President
- 29 -
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<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
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0
0
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