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 March 31, 1999
Commission File Number: 0-24312
VIRBAC CORPORATION
(formerly Agri-Nutrition Group Limited)
State of Incorporation: Delaware I.R.S. Employer I.D. 43-1648680
3200 Meacham Boulevard
Ft. Worth, TX 76137
(817) 831-5030
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 May 14, 1999 is 20,975,747
shares.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Index
- --------------------------------------------------------------------------------
Page
Financial information
Financial Statements
Consolidated Balance Sheet -
December 31, 1998 and
March 31, 1999 (unaudited) 1
Consolidated Statement of Operations -
three months ended March 31, 1998
and 1999 (unaudited) 2
Consolidated Statement of Cash Flows -
three months ended March 31, 1998
and 1999 (unaudited) 3
Consolidated Statement of Shareholders' Equity -
three months ended March 31, 1999
(unaudited) 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Other information
Item 6. Exhibits and Reports on Form 8-K 16
Signature 16
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Consolidated Balance Sheet
Page 1
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<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 412,378 $ --
Accounts receivable 1,230,361 7,279,905
Accounts receivable - Parent 91,212 6,153
Inventories 3,355,504 11,323,520
Prepaid expenses and other assets 845,840 763,868
---------------- -----------------
5,935,295 19,373,446
Property, plant and equipment, net 4,904,520 13,180,781
Goodwill 1,464,058 6,798,663
Other assets 376,778 1,011,105
---------------- -----------------
Total Assets $ 12,680,651 $ 40,363,995
================ =================
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt and notes
payable (see Note 4) $ 3,200,000 $ 868,403
Advance from Parent (see Note 1) 2,000,000 --
Accounts payable
Trade 503,724 3,691,598
Parent 262,487 998,888
Accrued expenses 823,740 1,960,767
---------------- -----------------
6,789,951 7,519,656
Long-term debt and notes payable (see Note 4) 4,000,000 3,449,144
Commitments and contingencies (see Note 6)
Shareholders' equity:
Common stock ($.01 par value; 38,000,000 shares
authorized; 12,580,918 and 21,975,747 issued
and outstanding, respectively) (see Note 5) 125,809 219,757
Additional paid-in capital (see Note 5) 8,284,453 35,682,986
Accumulated deficit (6,519,562) (6,507,548)
---------------- -----------------
1,890,700 29,395,195
---------------- -----------------
Total Liabilities and Shareholders' Equity $ 12,680,651 $ 40,363,995
================ =================
</TABLE>
The accompanying notes are an integral part
of these unaudited consolidated financial statements.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Consolidated Statement of Operations (unaudited)
Page 2
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<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1999
<S> <C> <C>
Net revenues $ 4,342,266 $ 7,719,983
Cost of goods sold 1,621,887 3,829,869
-------------- -------------
Gross profit 2,720,379 3,890,114
-------------- -------------
Operating expenses:
Selling, general and administrative 2,389,638 3,103,998
Research and development 267,525 215,503
Warehouse and distribution 322,842 453,740
Income (loss) from operations (259,626) 116,873
Interest expense (141,195) (116,644)
Other income (expense) 46,950 11,785
-------------- -------------
Income (loss) before income tax benefit (353,871) 12,014
Income tax expense (benefit) -- --
-------------- -------------
Net income (loss) $ (353,871) $ 12,014
============== =============
Basic income (loss) per share $ (.03) $ --
============== =============
Diluted income (loss) per share $ (.03) $ --
============== =============
Basic shares outstanding 12,580,918 15,295,064
============== =============
Diluted shares outstanding 12,580,918 15,295,064
============== =============
</TABLE>
The accompanying notes are an integral part
of these unaudited consolidated financial statements.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Consolidated Statement of Cash Flows (unaudited)
Page 3
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<TABLE>
<CAPTION>
For the three months
ended March 31,
1998 1999
<S> <C> <C>
Operating activities
Net income (loss) from continuing operations $ (353,871) $ 12,014
Adjustments to reconcile net income (loss) to net
cash used in operating activities:-
Depreciation and amortization 179,382 238,858
Changes in operating assets and liabilities, net of the
effect of purchasing Agri-Nutrition Group Limited:
Increase in accounts receivable (2,062,888) (1,625,782)
(Increase) decrease in inventories 390,852 (97,416)
(Increase) decrease in prepaid expenses and other (30,045) 363,982
Increase (decrease) in accounts payable (245,340) 355,689
Increase in accrued expense 191,728 30,014
---------------- -----------------
Net cash used in operating activities (1,930,182) (722,641)
---------------- -----------------
Investing activities
Purchase of property, plant and equipment (20,169) (31,329)
Payments related to the purchase of Agri-Nutrition
Group Limited (see Notes 1 and 2) -- (643,979)
---------------- -----------------
Net cash used in investing activities (20,169) (675,308)
---------------- -----------------
Financing activities
Proceeds from (repayment of) long-term debt and
notes payable, net 1,450,000 (12,772,811)
Advances from Parent 550,000
Cash infusion by Parent in connection with the
Merger (see Notes 1 and 2) -- 13,749,889
Issuance of common stock to directors -- 8,493
---------------- -----------------
Net cash provided by financing activities 2,000,000 985,571
---------------- -----------------
Increase (decrease) in cash and cash equivalents 49,649 (412,378)
Cash and cash equivalents, beginning of period 84,047 412,378
---------------- -----------------
Cash and cash equivalents, end of period $ 133,696 $ --
================ =================
</TABLE>
The accompanying notes are an integral part
of these unaudited consolidated financial statements.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Consolidated Statement of Cash Flows (unaudited) (continued)
Page 4
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Supplemental disclosure of non-cash investing and financing activities: On March
5, 1999, Agri-Nutrition Group Limited ("AGNU") consummated a merger with Virbac
S.A., a French corporation ("VBSA"), Interlab S.A.S., a French corporation and
wholly owned subsidiary of VBSA ("VBSA Sub"), and Virbac, Inc., a Delaware
corporation and subsidiary of VBSA Sub ("Virbac"), pursuant to which (i) Virbac
received a cash infusion of approximately $13.7 million from VBSA through VBSA
Sub, plus contribution of $2 million of debt to Virbac, Inc. equity, (ii) AGNU
issued 12,580,918 shares of its Common Stock (the "Merger Shares") to VBSA Sub,
and (iii) Virbac was merged (the "Merger") with and into AGNU, with AGNU being
the surviving entity and VBSA its controlling stockholder (see Note 1). Because
VBSA, the former parent of Virbac, received 60% of the voting equity of the
Company, Virbac is considered to be the acquiror for financial statement
purposes. Therefore, the Merger has been accounted for as a purchase of AGNU by
Virbac. See Notes 1 and 2 for further discussion.
The accompanying notes are an integral part
of these unaudited consolidated financial statements.
<PAGE>
VIRBAC CORPORATION (formerly Agri-nutrition Group Limited)
Consolidated Statement of Shareholders' Equity (unaudited)
Page 5
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<TABLE>
<CAPTION>
Common Stock
Number Additional
of Par Paid in Accumulated
Shares Value Capital Deficit Total
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1998 (see Note 5) 12,580,918 $ 125,809 $ 8,284,453 $ (6,519,562) $ 1,890,700
Cash infusion by Parent
in connection with the
Merger (see Notes 1 and 2) 13,749,889 13,749,889
Contribution of Parent's
debt to equity in connec-
tion with the Merger
(see Notes 1 and 2) 2,000,000 2,000,000
Merger with Agri-Nutrition
Group Limited (see
Notes 1 and 2) 9,387,279 93,873 11,640,226 11,734,099
Issuance of shares to
directors 7,550 75 8,418 8,493
Net income 12,014 12,014
Balance, March 31,
1999 21,975,747 $ 219,757 $ 35,682,986 $ (6,507,548) $ 29,395,195
</TABLE>
The accompanying notes are an integral part
of these unaudited consolidated financial statements.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Notes to Consolidated Financial Statements (unaudited)
Page 6
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1. Nature of Operations and Basis of Presentation
Virbac Corporation (the "Company" or "Virbac") manufactures
and distributes a wide variety of health, grooming, dental and
parasiticide products for pets and other companion animals. The
Company's operations are conducted by several subsidiaries operating in
Fort Worth, Texas; St. Louis, Missouri; Los Angeles, California;
Chicago, Illinois; and Yeovil, United Kingdom.
The Company is the result of the March 5, 1999 merger of
Virbac, S.A. a subsidiary of Virbac SA, a French veterinary
pharmaceutical manufacturer ("VBSA"), and Agri-Nutrition Group Limited
("AGNU"), a publicly held company. Pursuant to the merger agreement
dated October 16, 1998 (the "Merger Agreement"), the merger was
completed by the following series of transactions: (i) VBSA contributed
a total of $15.7 million to Virbac, Inc. consisting of $13.7 million
in cash and $2 million in intercompany debt recapitalized as equity;
(ii) AGNU issued 12,580,918 shares of AGNU stock to VBSA; and (iii)
Virbac Inc. merged with AGNU with AGNU being the surviving entity with
VBSA its majority stockholder (the "Merger"). The name of the surviving
entity was then changed to Virbac Corporation.
For financial statement reporting purposes, the Merger is
considered a purchase of AGNU by Virbac, Inc. Accordingly, the
accompanying unaudited consolidated financial statements are the
historical financial statements of Virbac, Inc., which reflect its
acquisition of AGNU as of March 5, 1999. See Note 2.
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and
do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. In
the opinion of management, these statements include all adjustments
(which consist of normal, recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows at
and for the three month periods ending March 31, 1998 and 1999. The
accompanying consolidated statements of operations reflect the historic
operations of Virbac, Inc. and include the operations of AGNU for the
month of March 1999, since the date of the Merger. The results of
operations for the three months ending March 31, 1998 and 1999 are not
necessarily indicative of the operating results for the full year. This
interim report should be read in conjunction with the Virbac, Inc. and
AGNU consolidated financial statements and notes related thereto,
included in the Proxy Statement of Agri-Nutrition Group Limited for the
1999 Annual Meeting of Stockholders filed with the Securities and
Exchange Commission on February 10, 1999 ("the Proxy Statement").
2. The Merger
As discussed in Note 1, the Company is the combination of
Virbac, Inc. and AGNU, the merger of which has been accounted for as a
purchase of AGNU by Virbac, Inc. The purchase price of $13.0 million
assigned to the transaction is the market value of the outstanding
common shares of AGNU at the time of the merger announcement (9,387,279
shares of AGNU at $1.25 per share, or $11.7 million) plus the direct
acquisition cost incurred by Virbac Inc. The purchase price has been
allocated to the aquired assets and liabilities as follows ($000's):
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Notes to Consolidated Financial Statements (unaudited)
Page 7
- --------------------------------------------------------------------------------
Working Capital $ (1,445)
Fixed Assets 8,812
Identifiable Intangible Assets 223
Goodwill 5,371
---------------
12,961
===============
Goodwill is being amortized over 20 years.
The results of the operations of AGNU have been included in
the Company's consolidated financial statements only since the date of
the Merger, March 5, 1999. The following table reflects the pro forma
sales, net income, and net income per share as if the merger had
occurred at the beginning of each period:
Pro Forma Information
($000's, except share and per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
1998 1999
<S> <C> <C>
Net sales $ 13,043 $ 12,908
Net loss $ (453) $ (118)
Loss per share $ (.02) $ (.01)
Weighted average shares outstanding 21,885,198 21,968,952
</TABLE>
Also pursuant to the Merger Agreement, in April 1999 the
Company commenced a public tender offer to purchase 1,000,000 shares of
Virbac (formerly AGNU) outstanding Common Stock for $3.00 per share
(the "Mandatory Tender Offer"). The shares issued to VBSA as part of
the merger were excluded from this tender offer. Following the
Mandatory Tender Offer, VBSA controls approximately 60% of the
outstanding Common Stock of the Company. In addition, if, during the
period ending on the second anniversary of the Merger, the closing sale
price of the Company's Common Stock has not reached $3.00 per share for
40 consecutive trading days, the Company will conduct another public
tender offer (the "Contingent Tender Offer") to purchase up to
1,395,000 of the Company's outstanding Common Stock at a price of $3.00
per share. Pursuant to the Merger Agreement, such tender will be funded
by VBSA's direct purchase from the Company of 1,395,000 shares of
unissued Common Stock at a price of $3.00 per share.
The Company has filed a current report on Form 8-K which
includes the historical audited financial statements of Virbac for the
years ended December 31, 1996, 1997 and 1998, and the related pro forma
financial data for the Merger.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Notes to Consolidated Financial Statements (unaudited)
Page 8
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3. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
<S> <C> <C>
Raw materials $ 799,848 $ 1,866,600
Packaging 855,305 4,514,841
Finished goods 1,756,137 5,856,517
---------------- -----------------
3,411,290 12,237,958
Less: reserve for excess and obsolete inventories (55,786) (914,438)
---------------- -----------------
$ 3,355,504 $ 11,323,520
================ =================
</TABLE>
4. Financing
The Company has revolving credit facilities which aggregated
$13.8 million at March 31, 1999. On March 5, 1999, in conjunction with
the Merger, the Company entered into similar credit agreements as to
those that were in place with Virbac and AGNU prior to the Merger.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Notes to Consolidated Financial Statements (unaudited)
Page 9
- --------------------------------------------------------------------------------
Notes payable as of December 31, 1998 and March 31, 1999, consist of
the following:
<TABLE>
<CAPTION>
December 31, March 31,
1998 1999
-------------- --------------
<S> <C> <C>
Rolling line of credit with a financial institution up to $ 1,000,000 $ 1,000,000
$1,000,000, interest due quarterly at LIBOR +.95% (6.6% at
March 31, 1999), unsecured and guaranteed by VBSA.
Note payable to a financial institution, amended March 5, 1999, with
interest due quarterly from the date of initial advance at LIBOR plus
.95% (6.6%, as of March 31, 1999) due in full on July 1, 1999,
unsecured and guaranteed by VBSA. 2,200,000 1,800,000
Revolving line of credit with a financial institution up to $4,000,000,
with interest due quarterly at LIBOR plus .75% (6.4% as of March 31,
1999), expires July 6, 2000, unsecured and guaranteed by VBSA. 4,000,000 400,000
Revolving credit facility with a financial institution up to $7.0
million based upon specified percentages of qualified accounts
receivable and inventory, secured by the assets of AGNU, amended March
5, 1999, with interest at prime (8.0%, as of March 31, 1999),
available amounts being reduced $100,000 per quarter, due in full on
July 31, 2000 524,871
Notes payable due to the former owners of Mardel Laboratories Inc.
dated September 25, 1997, interest at prime, due in annual
installments in 1999 and 2000 of approximately
$150,000, plus accrued interest, and $51,000 of which is payable
in shares of the Company's Common stock, and a final payment of
approximately $100,000 in 2001 497,179
Other financing 95,497
-------------- --------------
7,200,000 4,317,547
Less- Current maturities (3,200,000) (868,403)
-------------- --------------
$ 4,000,000 $ 3,449,144
============== ==============
</TABLE>
The note payable and rolling line of credit with a financial
institution will expire in 1999. Management is currently negotiating
the extension of such facilities and is confident that these credit
arrangements will be renewed, or comparable financing will be obtained
for at least another one-year period. Such amounts ($2.8 million in
aggregate) are included in long-term debt as management has
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Notes to Consolidated Financial Statements (unaudited)
Page 10
- --------------------------------------------------------------------------------
the intent to refinance these obligations with existing long-term
credit facilities if the expiring facilities are not restructured or
refinanced prior to their maturity.
At March 31, 1999, the Company and its subsidiaries were in
compliance with all covenants related to its various financing
arrangements, as amended. Approximately $10 million was available under
these facilities at March 31, 1999. Such availability is prior to the
April 1999 funding of the Mandatory Tender Offer, which utilized
approximately $3 million. See Note 5 below.
5. Common stock transactions
In accounting for the reverse purchase of AGNU by Virbac, as
discussed in Notes 1 and 2, the common stock and paid in capital of the
Company have been retroactively restated to reflect the Merger's impact
on the Company's capitalization. Common stock outstanding at December
31, 1998 reflects the 12,580,718 shares of common stock received by
VBSA in connection with the Merger, which is considered to be the pro
forma shares that would have been outstanding at that date. On March 5,
1999, in conjunction with the Merger, the Company is considered to have
"acquired" AGNU and "issued" the 9,387,279 shares that were outstanding
prior to the Merger. Subsequent to March 31, 1999, as required by the
Merger agreement, the Company repurchased 1,000,000 shares through a
tender offer. Such shares are held in Treasury.
During the three months ended March 31, 1999, the Company
issued 7,550 unissued shares to the former Chairman of the Company, in
conjunction with amounts due under the Company's compensation plan for
officers and directors.
6. 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, cash flows or results of operations.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 11
- --------------------------------------------------------------------------------
Overview
On March 5, 1999, Agri-Nutrition Group Limited ("AGNU") consummated a
merger with Virbac S.A., a French corporation ("VBSA"), Interlab S.A.S., a
French corporation and wholly owned subsidiary of VBSA ("VBSA Sub"), and Virbac,
Inc., a Delaware corporation and subsidiary of VBSA Sub ("Virbac"), pursuant to
which (i) Virbac received a cash infusion from VBSA through VBSA Sub, (ii) AGNU
issued 12,580,918 shares of its Common Stock (the "Merger Shares") to VBSA Sub
and Virbac was merged (the "Merger") with and into AGNU, with AGNU being the
surviving entity and VBSA its controlling stockholder. In conjunction with the
Merger, the Company commenced a tender offer in April 1999 to purchase 1,000,000
shares of its outstanding Common Stock (excluding the Merger Shares) at a price
of $3.00 per share (the "Mandatory Tender Offer"). In addition, the Company
will, on the second anniversary of the effective date of the Merger and under
certain circumstances, commence a second tender offer to purchase 1,395,000
shares of its outstanding Common Stock (excluding the Merger Shares and certain
other shares) at a price of $3.00 per share (the "Contingent Tender Offer"). As
required by the Merger Agreement, such tender will be funded by VBSA's direct
purchase from the Company of 1,395,000 shares of unissued Common Stock at a
price of $3.00 per share. Pursuant to the terms of the Merger Agreement, and as
approved by the stockholders of AGNU, AGNU's certificate of incorporation was
amended to, among other things, change the Company's name to Virbac Corporation
and increase its authorized shares of Common Stock from 20,000,000 to 38,000,000
shares. Hereinafter, "the Company" refers to Virbac and its acquired business,
AGNU.
Because VBSA, the former parent of Virbac, received 60% of the voting
equity of the Company, Virbac is considered to be the acquiror for financial
statement purposes. Therefore, the Merger has been accounted for as a reverse
purchase of AGNU by Virbac in a transaction accounted for using the purchase
method of accounting. Accordingly, the historical financial statements of the
Company prior to the merger have been changed to reflect the historical
financial statements of Virbac and the Company has adopted Virbac's fiscal year
ending December 31. The three month period ended March 31, 1999, included
herein, represents three months of operations of Virbac and approximately one
month of operations of AGNU. The three month period ended March 31, 1998,
included herein, represents the operations of Virbac. The purchase method of
accounting prescribes that the acquiring company allocate the cost of an
acquired company, including the expenses of the acquisition, to the assets
acquired and liabilities assumed as of the date of the acquisition based upon
their fair market values. Because the Merger will be accounted for as a reverse
acquisition and the stockholder of Virbac, which is treated as the acquiror for
accounting purposes, is receiving AGNU Common Stock, the fair market value of
the AGNU Common Stock outstanding for a reasonable period of time before and
after the announcement of the Merger determines the purchase price for
accounting purposes. Based on the above estimate of fair value, the Company
reduced AGNU's historical goodwill by approximately $2.4 million as of March 5,
1999. Goodwill is amortized over twenty years.
The Company has filed a current report on Form 8-K which includes the
historical audited financial statements of Virbac for the years ended December
31, 1996, 1997 and 1998, and the related pro forma financial data for the
Merger.
The following table sets forth unaudited pro forma information for the
Company as if the Merger had occurred on January 1, 1998 and 1999, respectively.
This information does not purport to represent the results of operations as they
would have been if Agri-Nutrition Group Limited and Virbac, Inc.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 12
- --------------------------------------------------------------------------------
constituted a single entity during such periods and is not necessarily
indicative of results which may be obtained in the future.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 13
- --------------------------------------------------------------------------------
Pro Forma Information
For the Three Months Ended
March 31,
1998 1999
Net sales $ 13,042,545 $ 12,907,839
Net loss $ (452,654) $ (118,097)
Loss per share $ (.02) $ (.01)
Weighted average shares outstanding 21,885,198 21,968,952
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1999
($000's)
<TABLE>
<CAPTION>
1998 1999
<S> <C> <C> <C> <C>
Net sales...................................$ 4,342 100.0% $ 7,720 100.0%
Cost of sales............................... 1,622 37.4 3,830 49.6
Gross profit................................ 2,720 62.6 3,890 50.4
Selling, general and administrative......... 2,390 55.0 3,104 40.2
Research and development.................... 268 6.2 215 2.8
Warehouse and distribution.................. 323 7.4 454 5.9
Operating (loss) income .................... (260) (6.0) 117 1.5
</TABLE>
Total net sales increased 78% from $4.3 million in 1998 to $7.7 million
in 1999. This increase primarily reflects the addition of AGNU's results
subsequent to the effective date of the Merger on March 5, 1999. The increase
also reflects increases in sales of pesticides, specifically an increase in
sales of Preventic tick collars to ethical distributors.
Gross profit increased from $2.7 million in 1998 (62.6% of net sales)
to $3.9 million in 1999 (50.4% of net sales), primarily due to the addition of
AGNU's results subsequent to the effective date of the Merger on March 5, 1999.
The increase also reflects the increased sales of pesticides. The lower gross
profit as a percent of sales results from the inclusion of AGNU's sales which
are historically at lower margins than those of Virbac.
Selling, general and administrative expenses increased from $2.4
million in 1998 to $3.1 million in 1999. This increase primarily reflects the
addition of AGNU's results subsequent to the effective date of the Merger.
However, the increase was partially offset by a 9% decrease in Virbac's
expenses. The decrease in expenses as a percent of sales reflects the
historically lower percent of selling, general and administrative expenses
incurred by AGNU as a percent of sales compared to Virbac.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 14
- --------------------------------------------------------------------------------
Research and development expenses decreased from $268,000 in 1998 to
$215,000 in 1999. The decrease in expenses as a percent of sales reflects the
addition of AGNU's sales and the lack of any significant expenditures for
research and development by AGNU.
Warehouse and distribution expenses increased from $0.3 million in 1998
to $0.5 million in 1999. This increase primarily reflects the addition of AGNU's
results subsequent to the effective date of the Merger. However, the increase
was partially offset by a 14% decrease in Virbac's expenses.
The factors discussed above resulted in an operating income of
approximately $0.1 million during the three months ended March 31, 1999,
compared to operating loss of approximately $0.3 million for the three months
ended March 31, 1998.
Interest expense was approximately $0.14 million in 1998 and $0.12
million in 1999, reflecting decreased net debt balances that resulted from the
cash infusion received in conjunction with the Merger. Since the cash infusion
occurred in March 1999, there was only a partial impact on the results for the
quarter. However, much of the benefit of the cash infusion was offset by AGNU's
additional debt assumed in the Merger.
The Company did not record a benefit for income taxes in 1998. In 1999,
the income tax expenses were offset by a reduction in the valuation allowance
that management had established in prior years. The aggregate amount of the
deferred tax asset valuation allowance at March 31, 1999 was approximately $1.5
million. This valuation allowance reflects management's view of the portion of
deferred tax assets for which it is more likely than not that tax benefits will
not be realized. The primary factor affecting management's view in this regard
are the Company's significant historical and pro forma losses from operations in
prior years.
Liquidity and Capital Resources
The Company's existing capital requirements are primarily to fund
equipment purchases, to fund expenses related to the consolidation of certain
functions and activities between the operations of Virbac and AGNU, and working
capital needs. During March 1999, the Company completed its Merger with
Agri-Nutrition Group Limited. In conjunction with the Merger, VBSA invested
approximately $13.7 million of cash in the Company, in addition to contribution
of a $2 million note as an equity investment. These funds were used to pay down
the Company's debt, both that of the former Virbac, Inc., as well as that
assumed in the merger with AGNU. Approximately $3.1 million of these funds were
also used to repurchase 1,000,000 shares of the Company's Common Stock at $3.00
per share in April 1999, pursuant to the Mandatory Tender Offer required under
the Merger Agreement.
During the three months ended March 31, 1999, cash used by operations
approximated $0.7 million, which was primarily related to funding seasonal
increases in accounts receivable. This compares to a use of cash by operations
of $1.9 million during the three months ended March 31, 1998; a period in which
the Company funded seasonal working capital needs, as well as a net loss from
continuing operations.
The Company has revolving credit facilities which aggregated $13.8
million at March 31, 1999. On March 5, 1999 the Company amended its existing
credit facilities to accommodate changes in the organizational structure of the
Company subsequent to the Merger. Its existing credit facilities with a bank,
aggregating $6.8 million, are unsecured, but guaranteed by the Company's
majority owner, VBSA. Under
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 15
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the $1.8 million term loan, which is due in full on July 1, 1999, interest is
due quarterly at LIBOR plus 0.95% (6.6% as of March 31, 1999). As of March 31,
1999, $3,600,000 was available under the revolving line of credit, which expires
July 6, 2000, and interest is due quarterly at LIBOR plus .75% (6.4% as of March
31, 1999). Under a $1,000,000 line of credit, interest is due quarterly at LIBOR
plus 0.95% (6.6% as of March 31, 1999). As of March 31, 1999, $1,000,000 was
outstanding under the line of credit. In addition, the Company entered into a
credit agreement with AGNU's bank, with total aggregate credit facilities of
$7.0 million. As of March 31, 1999, $6,500,000 was available under the revolving
line of credit, which expires July 31, 2000. The facility consists of $4.5
million in revolving credit lines, the available amount being based upon
specified percentages of qualified accounts receivable and inventory, and a $2.5
million revolving credit line with available amounts being reduced $100,000 per
quarter with the next such reduction on May 31, 1999. The interest rate on such
agreement is at the prime rate of interest.
At March 31, 1999, the Company and its subsidiaries were in compliance
with all covenants related to its various financing arrangements, as amended.
Approximately $1.0 million was available under these facilities at March 31,
1999. Such availability is prior to the April 1999 funding of the Mandatory
Tender Offer, which utilized approximately $3.0 million. In conjunction with the
Merger Agreement, the Company will be required to remove the guarantee of VBSA
from its financing agreements. The Company is currently in negotiations with its
banks to restructure its credit facilities. Management anticipates that the
restructuring of such agreements will not have a material effect upon the
Company's liquidity, financial position or results of operations.
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. In conjunction with the Merger Agreement in March 1999, the combined
company received a cash infusion of approximately $15.7 million from VBSA (the
"Cash Infusion"). See the Notes 1 and 2 above for a detailed description of the
Merger, the Cash Infusion, a description of the assets and liabilities obtained
by the Company in connection with the Merger and the pro forma results of the
Company.
The Company has no plans to significantly increase any of its operating
subsidiaries' plant facilities capacity. Capital expenditures for the three
months ended March 31, 1999 were less than $0.1 million. Future capital
expenditures for the Company's operating subsidiaries will include amounts
expended in the consolidation of certain operations. Management is currently
developing plans for such consolidations and expects to fund capital
requirements, if any, from its current operations, available funds, and existing
financing facilities
Quarterly Effects and Seasonality
The Merger with AGNU, as discussed above, and the impact of accounting
for the transaction as a reverse purchase of AGNU by Virbac, will result in
operating results during 1999 and 2000 that will not be comparable with the
respective prior year results of the Company. Trends of sales, gross profits and
related expenses will be impacted by the inclusion of AGNU's results subsequent
to the Merger in March 1999. See Notes 1 and 2 above for a detailed description
of the Merger, the Cash Infusion, a description of the assets and liabilities
obtained by the Company in connection with the Merger and the pro forma results
of the Company. The results of operations of certain products, including the
Company's flea and tick products, have been seasonal with a lower volume of its
sales and earnings being generated during the Company's first and fourth fiscal
quarters. In addition, consolidation of certain functions within the formerly
separate operating companies of Virbac and AGNU during 1999 will impact the
comparative results of the Company between quarters and in future periods.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 16
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New Accounting Standards
See Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Proxy Statement.
Year 2000 Compliance
See Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Proxy Statement, dated February 17, 1999.
Subsequent to such statement, the Company has continued to proceed on its Year
2000 compliance program. In addition, the Company is currently in the process of
developing a consolidated Year 2000 compliance program for the merged company.
During February and March 1999, the Company completed the upgrade of its key
accounting and information systems in Harbor City, California to a Year 2000
compliant system.
The Company has completed a significant part of the assessment and
remediation phases of its Year 2000 plan with respect to all key hardware and
software systems. The costs of repairs and upgrades to date have not been
material to the Company's financial position or results of operations. It is
anticipated that all key systems and non-information technology systems will be
year 2000 compliant by July of 1999.
The Company continues to believe that, with appropriate modifications
to existing computer systems/components, updates by vendors and trading
partners, and conversion to new software and hardware in the ordinary course of
business, the year 2000 issues will not pose significant operational problems
for the Company. However, there can be no assurance that the Company will not
experience unanticipated costs and/or business interruptions due to year 2000
problems in its internal systems, its supply chain or from customer product
migration issues, or that such costs and/or interruptions will not have a
material adverse effect on the Company's consolidated results of operations.
These statements are "Year 2000 Disclosures" within the meaning of the Year 2000
Information and Readiness Disclosure Act.
Euro Conversion Issues
To date there continues to be no material adverse impact on the
Company's operations, financial position or cash flows resulting from the
introduction of the Euro. See Management's Discussion and Analysis of Financial
Condition and Results of Operations in the Proxy Statement for further
discussion.
<PAGE>
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
Part II - Other Information
Page 17
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Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
10.19 Fourth amendment to amended and restated revolving credit
agreement by and between PM Resources, Inc., Agri-Nutrition
Group Limited, St. JON Laboratories, Inc. and First Bank,
dated March 5, 1999.
10.20 Fourth amendment to credit agreement between Virbac AH, Inc.
and Societe Generale, dated March 5, 1999.
b. Reports of Form 8-K.
1. On March 17, 1999, a Current Report on Form 8-K was filed to
report the Merger Agreement with Virbac S.A., a French
corporation, Interlab, S.A.S., a French corporation and
wholly-owned subsidiary of Virbac, S.A., Virbac, Inc., a
wholly-owned subsidiary of Interlab, S.A.S. ("Virbac") and
Agri-Nutrition Group Limited, a Delaware corporation ("AGNU"),
pursuant to which Virbac will be merged with and into AGNU
with AGNU being the surviving corporation.
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.
VIRBAC CORPORATION (formerly Agri-Nutrition Group Limited)
/s/ Robert J. Elfanbaum
- -----------------------------------------------------
Robert J. Elfanbaum
Vice President and Chief Financial Officer
May 17, 1999
FOURTH AMENDMENT TO
CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO CREDIT AGREEMENT, made and entered
into as of the _____ day of March, 1999, by and between PM RESOURCES, INC., a
Missouri corporation ("PM"), VIRBAC CORPORATION, a Delaware corporation,
formerly known as Agri-Nutrition Group Limited ("Virbac"), and ST. JON
LABORATORIES, INC., a California corporation ("St. JON," and collectively with
PM and Virbac referred to herein as "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 14, 1998, in the
principal amount of up to Nine Million Two Hundred Thousand Dollars
($9,200,000.00), payable to the order of Bank as therein set forth, which
Revolving Credit Note was most recently amended and restated by Borrowers in a
Revolving Credit Note dated as of February 1, 1999 in the principal amount of up
to Nine Million Five Hundred Fifty Thousand Dollars ($9,550,000.00) made by
Borrowers payable to the order of Bank as therein set forth (as amended and
restated, the "Note"); and
WHEREAS, the Note is described in a certain Credit Agreement
dated May 14, 1998 made by and among Borrowers and Bank as previously amended by
an Amendment to Credit Agreement dated as of August 6, 1998 made by and among
Borrowers and Bank, by a Second Amendment to Credit Agreement dated as of
October 2, 1998 made by and among Borrowers and Bank, and by a Third Amendment
to Credit Agreement dated as of February 1, 1999 made by and among Borrowers and
Bank (as amended, the "Loan Agreement," all capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Loan Agreement); and
WHEREAS, Borrowers and Bank desire to further amend the Loan
Agreement and the Note to reduce the maturity thereof to July 31, 2000, to
reduce the maximum available principal amount thereunder 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. All references in the Loan Agreement, the Note and the
other Transaction Documents to "Agri-Nutrition Group Limited" shall hereafter be
amended and deemed to refer to Virbac Corporation, a Delaware corporation, the
successor by merger of Virbac, Inc., a Delaware corporation, into Agri-Nutrition
Group Limited, which then changed its name to Virbac Corporation.
2. The Note shall be amended and restated in the form of that
certain Revolving Credit Note attached hereto as Exhibit C, to reduce the
maximum principal amount thereof to Seven Million Dollars ($7,000,000.00) for
the period of time up to and including May 30, 1999, reducing automatically on
May 31, 1999 to the new maximum amount of Six Million Nine Hundred Thousand
Dollars ($6,900,000.00) pursuant to Section 3.1(b) of the Loan Agreement for the
period up to August 30, 1999, and thereafter reducing as set forth in Section
3.1(b) of the Loan Agreement, and to make certain amendments as set forth
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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. Borrowers hereby
agree that on or before 5:00 p.m. (St. Louis time) on May 31, 1999, Borrowers
shall jointly and severally repay to Bank, without any requirement of demand or
notice from Bank, an amount equal to amount by which the outstanding principal
balance of the Note exceeds Six Million Nine Hundred Thousand Dollars
($6,900,000.00), together with all other amounts then due under the terms of the
Loan Agreement and the Note.
3. The fourth 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 requested the consolidation
of the above described credit facilities under one borrowing base for
Virbac Corporation (formerly known as Agri-Nutrition Group Limited) and
certain of its Subsidiaries on a joint and several basis and an
extension of such joint and several loan facility from Bank in an
aggregate principal amount of up to Seven Million Dollars
($7,000,000.00) for a period of time from March ___, 1999 up to and
including May 30, 1999, Four Million Five Hundred Thousand Dollars
($4,500,000.00) of which shall be subject to a Borrowing Base (as set
forth herein) ("Facility A"), and the remaining Two Million Five
Hundred Thousand Dollars ($2,500,000.00) of which shall be a reducing
revolving credit line from Bank ("Facility B"), that on May 31, 1999
the maximum principal amount of such loan facility and Facility B shall
reduce automatically as set forth in Section 3.1(b) herein, and
reducing thereafter pursuant to Section 3.1(b) herein during the period
of time from June 1, 1999 up to and including July 31, 2000; and
4. 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 July 31, 2000, 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 3.10
herein.
5. The definition of "Floating Rate Margin" in Section 2 of
the Loan Agreement shall be deleted in its entirety and in its place shall be
substituted the following:
Floating Rate Margin shall mean Zero Percent (0.00%).
6. The definitions of "Interest Period," "Treasury Margin,"
"Treasury Rate," "Treasury Rate Loan," and "Treasury Yield" in Section 2 of the
Loan Agreement shall be deleted in their entirety and shall be left blank
intentionally. All references in the Loan Agreement and the other Transaction
Documents to such terms shall be of no further effect and Borrowers shall no
longer have an option to have any of the loans accrued and bear interest at the
Treasury Rate plus Treasury Margin.
7. The second sentence of Section 3.1(a) of the Loan Agreement
shall be deleted in its entirety and in its place shall be substituted the
following:
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<PAGE>
The maximum aggregate principal amount of Loans plus the face amount of issued
and outstanding Letters of Credit which Bank, cumulatively, may be required to
have outstanding under this Facility A at any one time shall not exceed the
lesser of Four Million Five Hundred Thousand Dollars ($4,500,000.00), or (ii)
the Borrowing Base (as hereinafter defined).
8. The second sentence of Section 3.1(b) of the Loan
Agreement shall be deleted in its entirety and in its place shall be substituted
the following:
The aggregate principal amount of Facility B Loans which Bank,
cumulatively, shall be required to have outstanding hereunder at any
one time shall not exceed Two Million Five Hundred Thousand Dollars
($2,500,000.00) from the date of that certain Fourth Amendment to
Credit Agreement dated as of March ___, 1999 made by and among
Borrowers and Bank (the "Fourth Amendment") until May 30, 1999, which
amount shall thereafter be reduced by One Hundred Thousand Dollars
($100,000.00) on each February 28, May 31, August 31 and November 30,
with the first such reduction on May 31, 1999.
9. Section 3.2 of the Loan Agreement shall be deleted in
its entirety and in its place shall be substituted the following:
3.2 Procedure for Borrowing. Subject to the terms and
conditions hereof, Bank shall cause the Loans to be made to Borrowers at any
time and from time to time during the Term of this Agreement upon timely prior
oral or written notice ("Borrowing Notice") from any of the Borrowers to Bank
specifying:
(i) the desired amount of the Facility A Loan or
Facility B Loan requested;
(ii) the date on which the proceeds of such Loan are
to be made available to any of the Borrowers;
(iii) that on the date of, and after giving effect
to, such Loan, no Default or Event of Default under this Agreement has occurred
and is continuing; and
(iv) that on the date of, and after giving effect to,
such Loan, all of the representations and warranties of Borrowers contained in
this Agreement are true and correct in all material respects as if made on the
date of such Loan.
A Borrowing Notice shall not be required in connection with a Prime
Loan made to cover any overdraft in Virbac's operating account on a
day-to-day basis as set forth herein. A Borrowing Notice, if in
writing, shall be in the form of the notice attached as Exhibit B to
the Fourth Amendment. Each Borrowing Notice must be received by Bank
not later than 10:00 a.m. (St. Louis time) on the Business Day on which
a Loan is to be established. A Borrowing Notice shall not be revocable
by Borrowers. Subject to the terms and conditions hereof, provided that
Bank has received the Borrowing Notice, Bank shall (unless Bank
determines that any applicable condition specified in Section 4 has not
been satisfied) pay to Borrowers, or any of them, the Loan proceeds of
any new Loan in immediately available funds not later than 2:00 p.m.
(St. Louis time) on the Business Day specified in said Borrowing
Notice. Each of the Borrowers hereby authorizes Bank to reasonably rely
on telephonic, telegraphic, telecopy, telex or written instructions of
any person identifying himself as a person authorized to request a Loan
or make a repayment hereunder, and on any signature which Bank believes
to be genuine, and Borrowers shall be bound thereby in the same manner
as if such person were actually authorized or such signature were
genuine. Borrowers further request and authorize Bank, in Bank's sole
and absolute discretion, to make a Prime Loan to Borrowers hereunder at
the end of each day in which Borrowers shall have an overdraft
(negative ledger balance) in Virbac's operating account (Account No.
9800801785) with Bank after crediting all deposits received in
immediately available funds and debiting all withdrawals made and
checks presented against such account and honored by Bank as of such
date and after funding any advances to or receiving any collected
balances on such day from the "zero balance" operating accounts of PM
Resources (Account No. 9800802535) and St. JON (Account No. 9800805419)
with Bank to cover withdrawals made and checks presented on such date
and after crediting all deposits received in immediately available
funds on such date, which Prime Loan shall be in the amount of such
overdraft without any other request or authorization therefor from
Borrowers and without notice to Borrowers. Similarly, Borrowers request
that Bank apply any collected balances (after funding advances to or
receiving collections from the "zero balance" accounts of PM Resources
and St. JON) in excess of a mutually predetermined amount remaining at
the end of any day in Virbac's operating account to the repayment of
the principal balance of Borrowers' Obligations outstanding as Prime
Loans under the Note. Borrowers also hereby agree jointly and severally
to indemnify Bank and hold Bank harmless from and against any and all
claims, demands, damages, liabilities, losses, costs and expenses
(including, without limitation, Attorneys' Fees) relating to or arising
out of or in connection with the acceptance of instructions for making
Loans or repayments hereunder. Contemporaneously with the execution of
the Fourth Amendment, Borrowers shall execute and deliver to Bank a
Note of Borrowers dated as of March ___, 1999 and payable jointly and
severally to the order of Bank in the original principal amount of
Seven Million Dollars ($7,000,000.00) in the form attached as Exhibit C
to the Fourth Amendment and incorporated herein by reference (as the
same may from time to time be amended, modified, extended or renewed,
the "Note").
10. Section 3.4(b) of the Loan Agreement shall be deleted in
its entirety and in its place shall be substituted the following:
(b) Each Facility B Loan shall bear interest prior to
maturity at a rate per annum equal to the Prime Rate plus Floating Rate Margin
in effect from time to time during the period when such Facility B Loan is
outstanding, with changes in the interest rate taking effect on the date a
change in the Prime Rate is made effective generally by Bank.
11. The last sentence of Section 3.10 of the Loan Agreement
shall be deleted in its entirety and in its place shall be substituted the
following:
3.10 Maturity. All Loans not paid prior to July 31,
2000, together with all accrued and unpaid interest thereon, shall be
due and payable on July 31, 2000 (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
3.10) 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.
12. Section 7.1(a)(iii) of the Loan Agreement shall be deleted
in its entirety and in its place shall be substituted the following:
(iii) As soon as available and in any event within
twenty-eight (28) days after the end of each fiscal quarter, a certificate of
the principal financial officers or controllers of Borrowers in the form
attached hereto as Exhibit E and incorporated herein by reference, accompanied
by supporting financial work sheets where appropriate; ---------
13. Section 7.1(i)(i) of the Loan Agreement shall be deleted
in its entirety and in its place shall be substituted the following:
(i) Maintain a ratio of Indebtedness (determined on a
consolidated basis for Borrowers and their Consolidated Subsidiaries and in
accordance with Generally Accepted Accounting Principles consistently applied,
but excluding Subordinated Debt) to Consolidated Tangible Net Worth of not more
than 1.00 to 1.0 at each fiscal quarter end during the Term hereof, commencing
with the first such test as of Borrowers' fiscal quarter ending March 31, 1999;
14. Section 7.1(i)(ii) of the Loan Agreement shall be deleted
in its entirety and in its place shall be substituted the following:
(ii) Maintain a minimum Consolidated Tangible Net
Worth at all times during the Term hereof of not less than Two Million
Dollars ($2,000,000.00) less than the amount of Borrowers' Consolidated
Tangible Net Worth on the date of and immediately following the
occurrence of the merger of Virbac, Inc. into Agri-Nutrition Group
Limited (the "Closing Net Worth"), which Closing Net Worth shall not be
less than Twenty-Three Million Five Hundred Thousand Dollars
($23,500,000.00) in an event, and Borrowers agree to provide Bank with
a calculation of the Closing Net Worth amount not later than five days
after the date of the Fourth Amendment;
15. Section 7.1(i)(iii) of the Loan Agreement shall be deleted
in its entirety and shall be left blank intentionally.
16. Section 7.1(i)(iv) of the Loan Agreement shall be deleted
in its entirety and shall be left blank intentionally.
17. A new subsection (vii) shall be added to Section 7.2(a) of
the Loan Agreement immediately following subsection 7.2(a)(vi) therein as
follows:
(vii) Indebtedness not otherwise permitted by this Section
7.2(a) in an amount not to exceed $3,000,000.00 in the aggregate at any one time
outstanding for Borrowers and all Subsidiaries of any of the Borrowers, which
Indebtedness may either be unsecured or secured solely by a Lien on the real
property, improvements and fixtures of Virbac AH, Inc. located in Fort Worth,
Texas.
18. A new subsection (vi) shall be added to Section 7.2(b) of
the Loan Agreement immediately following subsection 7.2(b)(v) therein as
follows:
(vi) Liens granted by Virbac AH, Inc. on its real property,
improvements and fixtures located in Fort Worth, Texas to secure the
Indebtedness permitted under Section 7.2(a)(vii) above;
19. Section 7.2(f) of the Loan Agreement shall be deleted in
its entirety and in its place shall be substituted the following:
(f) Fiscal Year. None of the Borrowers nor any Subsidiary of
any of the Borrowers will change its fiscal year from a fiscal year ending
December 31, without the prior written consent of Bank.
20. Bank hereby consents to Virbac's repurchase of up to
1,000,000 shares of its outstanding common stock at $3.00 per share pursuant to
the Mandatory Tender Offer as defined and described in that certain Proxy
Statement of Agri-Nutrition Group Limited issued for use in connection with its
March 1, 1999 annual meeting of shareholders. Also, under each relevant
provision of Section 7.2 of the Loan Agreement, including, without limitation
Sections 7.2(d) (Mergers and Consolidations), 7.2(e) (Acquisitions), 7.2(i)
(Loans and Investments) and 7.2(k) (Change in Nature of Business), Bank further
consents to: (i) the acquisition of more than Fifty Percent of Borrower's
outstanding stock by Virbac S. A., a French corporation, and the merger of its
United States subsidiary, Virbac, Inc. with and into Agri-Nutrition Group
Limited with Agri-Nutrition Group Limited then changing its name to Virbac
Corporation; and (ii) the resulting investment of all existing assets of Virbac,
Inc. into Virbac AH, Inc., including, without limitation, the stock of
Francodex, Inc., which is the existing subsidiary of Virbac S. A.'s United
States subsidiary, Virbac, Inc., provided Bank receives the Guaranty of all of
Borrowers' obligations and indebtedness to Bank under the Loan Agreement, the
Note and the other transaction documents as required under Paragraphs 24(c) and
(d) herein. Borrowers hereby represent that following the acquisition and merger
of Virbac, Inc. into Agri-Nutrition Group Limited and prior to the repurchase of
the 1,000,000 shares of stock pursuant to the Mandatory Tender Offer, Borrowers
shall have a Consolidated Tangible Net Worth of at least Twenty-Three Million
Five Hundred Thousand Dollars ($23,500,000.00).
21. The Borrowing Base Certificate shall be amended and
restated in the form of that certain Borrowing Base Certificate attached hereto
as Exhibit A to incorporate the above changes. All references in the Loan
Agreement to the "Borrowing Base Certificate" and other references of similar
import shall hereafter be amended and deemed to refer to the Borrowing Base
Certificate in the form attached hereto as Exhibit A.
22. The form of Borrowing Notice shall be amended and restated
in the form of that certain Borrowing Notice attached hereto as Exhibit B to
incorporate the above changes. All references in the Loan Agreement to the form
of "Borrowing Notice" and other references of similar import shall hereafter be
amended and deemed to refer to the Borrowing Notice in the form attached hereto
as Exhibit B.
23. In consideration of Bank's agreement to amend the Loan
Agreement and Note as set forth herein and to amend the covenants and provide
the consents as set forth herein, Borrowers agree to jointly and severally pay
to Bank an amendment fee in the amount of $5,000.00, which fee shall be due and
payable and fully earned on the date hereof.
24. The agreements of Bank contained herein are expressly
conditioned upon deliver by Borrowers of the following:
(a) the executed original of this Fourth Amendment to Credit
Agreement;
(b) the executed original of the amended and restated Note;
(c) the original of an unlimited continuing Guaranty in form
and substance acceptable to Bank duly executed by an authorized officer of
Virbac's Subsidiary, Virbac AH, Inc., guarantying all of the present and future
liabilities and obligations of any of the Borrowers to Bank;
(d) the original of an unlimited continuing Guaranty in form
and substance acceptable to Bank duly executed by an authorized officer of
Virbac AH, Inc.'s Subsidiary, Francodex, Inc., guarantying all of the present
and future liabilities and obligations of any of the Borrowers to Bank;
(e) a copy of resolutions of the Board of Directors of each of
the Borrowers, duly adopted, which authorize the execution, delivery and
performance of this Fourth Amendment to Credit Agreement and the amended and
restated Note and the other Transaction Documents, certified by the Secretary of
each such Borrower;
(f) a certified copy of the [Certificate of Merger and
Amendments to Virbac's Certificate of Incorporation] evidencing the completion
of the merger of Virbac, Inc. into Agri-Nutrition Group Limited and the changing
of Agri-Nutrition Group Limited's name to Virbac Corporation issued by the
Secretary of State of the State of Delaware;
(g) the Consent of Virbac and St. JON in the form attached
hereto, acknowledging the amendments contained herein and the continuing
effectiveness of the Pledge Agreements, duly executed respectively by Virbac and
St. JON;
(h) the executed originals of such UCC-3 amendments to the
existing financing statements filed by Bank against the assets of Virbac to
change the name of the debtor on such filings to Virbac's name;
(i) a copy of resolutions of the Board of Directors of each of
Virbac AH, Inc. and of Francodex, Inc. duly adopted, which authorize the
execution, delivery and performance of their respective Guaranties of the
obligations of Borrowers, certified by the respective Secretaries of Virbac AH,
Inc. and of Francodex, Inc.
(j) such other documents as Bank may reasonably request; and
(k) payment by Borrowers of the amendment fee
required under paragraph 23 above.
25. Borrowers hereby represent and warrant to Bank that:
(a) The execution, delivery and performance by Borrowers of
this Fourth Amendment to 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 Fourth
Amendment to 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
none 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 any of the Borrowers is a party or by which any of them is
bound or to which any of them is subject;
(b) This Fourth Amendment to 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.
26. 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 Fourth Amendment to Credit Agreement.
27. This Fourth Amendment to 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 their rights
or obligations hereunder.
28. This Fourth Amendment to Credit Agreement shall be
governed by and construed in accordance with the internal laws of the State of
Missouri.
29. In the event of any inconsistency or conflict between this
Fourth Amendment to Credit Agreement and the Loan Agreement, the terms,
provisions and conditions of this Fourth Amendment to Credit Agreement shall
govern and control.
30. 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.
31. 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
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 _____ day of March, 1999.
PM RESOURCES, INC.
By:
Robert J. Elfanbaum, Vice President
VIRBAC CORPORATION
By:
Robert J. Elfanbaum, Vice President and Chief
Financial Officer
ST. JON LABORATORIES, INC.
By:
Robert J. Elfanbaum, Vice President
FIRST BANK
By:
Ted H. Kraizer, Vice President
<PAGE>
CONSENT TO FOURTH AMENDMENT TO
CREDIT AGREEMENT
The undersigned hereby consent to the terms of the foregoing
Fourth Amendment to Credit Agreement and the amended and restated Revolving
Credit Note and other amendments being executed in connection therewith as
referenced therein (collectively, the "Amendments"), and the undersigned
acknowledge that the execution and delivery by PM Resources, Inc., Virbac
Corporation (formerly known as Agri-Nutrition Group Limited) and St. JON
Laboratories, Inc. of said Amendments will not affect or impair the
undersigned's respective obligations to and agreements with Bank under (i) that
certain Agreement of Pledge (Third Party) dated May 14, 1998 made by
Agri-Nutrition Group Limited (now known as Virbac Corporation) in favor of Bank
(the "Virbac Pledge Agreement"), or (ii) that certain Agreement of Pledge (Third
Party) dated May 14, 1998 made by St. JON Laboratories, Inc. in favor of Bank
(the "St. JON Pledge Agreement"), which obligations and agreements are hereby
ratified and confirmed. The undersigned further acknowledge and agree that all
references in the Virbac Pledge Agreement and in the St. JON Pledge Agreement to
the "Credit Agreement" and other references of similar import shall henceforth
mean the foregoing Credit Agreement, as amended on the date hereof and as the
same may from time to time be further amended; all references in the Virbac
Pledge Agreement and the St. JON Pledge 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; and all references in the Virbac Pledge Agreement and
the St. JON Pledge Agreement to any of the other transaction documents shall
henceforth mean such documents as the same may have been amended by the other
Amendments and as the same may from time to time be further amended.
Dated: as of March ___, 1999.
VIRBAC CORPORATION
By:
Robert J. Elfanbaum, Vice President
and Chief Financial Officer
ST. JON LABORATORIES, INC.
By:
Robert J. Elfanbaum, Vice President
FOURTH AMENDMENT AGREEMENT
This Fourth Amendment Agreement dated as of March 5, 1999 (this
"Amendment") is between Virbac AH, Inc., a Delaware corporation ("Borrower"),
and Societe Generale, New York Branch ("Bank"), and amends the Credit Agreement
dated as of July 6, 1994, as amended by the First Amendment Agreement dated as
of August 30, 1995, the Second Amendment Agreement dated as of July 6, 1997 and
the Third Amendment Agreement dated as of January 1, 1998, each between Virbac,
Inc., a Delaware corporation ("Predecessor Borrower") and Societe Generale,
Southwest Agency (as previously amended, the "Credit Agreement"). Capitalized
terms defined in the Credit Agreement and not otherwise defined or redefined
herein are used herein with the meanings so defined.
WHEREAS, on March 5, 1999 Predecessor Borrower merged (the "Merger")
with and into Agri-Nutrition Group Limited, a Delaware corporation, which as a
result of the Merger changed its name to Virbac Corporation;
WHEREAS, immediately after the Merger, Virbac Corporation contributed
all of the Predecessor Borrower's assets to Borrower (the "Contribution"), a
newly formed wholly owned subsidiary of Virbac Corporation, and Borrower assumed
all of Predecessor Borrower's duties and liabilities, including its duties and
liabilities under the Credit Agreement (the "Assumption");
WHEREAS, the Borrower has requested the Bank to amend the Credit
Agreement to set forth Bank's consent to the Merger, the Contribution and the
Assumption as hereinafter provided, and the Bank has agreed to such amendment on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendment of Credit Agreement.
1.1 Opening Paragraph. The opening paragraph to the Credit
Agreement is amended by replacing "Virbac, Inc." with "Virbac AH, Inc." as
Borrower.
1.2 Section 1.01. Section 1.01 of the Credit Agreement is
amended by adding a definition for "Merger Agreement" as follows:
"Merger Agreement" means that certain Agreement and Plan of
Merger dated as of October 16, 1998 between Agri-Nutrition Group Limited,
Parent, Predecessor Borrower and, by addendum, Interlab S.A.S., a French
corporation and wholly owned subsidiary of Parent ("Interlab"), as amended.
1.3 Section 4.05. Section 4.05 of the Credit Agreement is
amended to read in its entirety as follows: "After consummation of the
transactions contemplated by the Merger
DL: 1035306v4
1
<PAGE>
Agreement, Interlab will own approximately 60% of the issued and outstanding
common stock of Virbac Corporation. Parent is the sole stockholder of Interlab."
1.4 Section 6.01. Section 6.01(g) is amended to read in its
entirety as follows: "Upon consummation of the transactions described in the
Merger Agreement, Interlab shall cease to own 60% of the outstanding capital
stock of Virbac Corporation and Virbac Corporation shall cease to own 100% of
the outstanding capital stock of Borrower."
1.5 Section 7.08. The second sentence of Section 7.08 is
hereby amended to read in its entirety as follows: "Except for the Contribution
of rights by Virbac Corporation and the Assumption of duties by Borrower under
the Credit Agreement, which are hereby approved, Borrower may not assign its
rights or delegate its duties under the Agreement, the Notes and the other
Credit Documents."
1.6 Section 7.09. Section 7.09 of the Credit Agreement is
amended by deleting:
Virbac, Inc.
P.O. Box 162059
Fort Worth, Texas 76161
Attention: Mr. Scott Smith
Telephone: (817) 831-5030
Telecopy: (817) 831-8327
and replacing it with:
Virbac AH, Inc.
3200 Meacham Boulevard
Fort Worth, Texas 76137
Attention: Ms. Debbie Giles
Telephone: (817) 831-5030
(800) 338-3659
Telecopy: (817) 831-8327
1.7 Exhibit A. Exhibit A attached to the Credit Agreement is
hereby replaced with Exhibit A attached to this Amendment.
1.8 Exhibit B. Exhibit B attached to the Credit Agreement is
hereby replaced with Exhibit B attached to this Amendment.
1.9 Exhibit C. Exhibit C attached to the Credit Agreement is
hereby replaced with Exhibit C attached to this Amendment.
1.10 Exhibit D. Exhibit D attached to the Credit Agreement is
hereby deleted.
DL: 1035306v4
2
<PAGE>
1.11 Exhibit E. Exhibit E attached to the Credit Agreement is
hereby replaced with Exhibit D attached to this Amendment.
2. Representations and Warranties. The Borrower hereby represents and
warrants to the Bank that (a) each of the representations and warranties set
forth in the Credit Agreement is true and correct as of the date of this
Amendment, (b) this Amendment, the Credit Agreement as amended by this
Amendment, and all other agreements or documents executed in connection herewith
have been duly authorized, executed and delivered by the Borrower, and
constitute the legal, valid and binding obligations of the Borrower, enforceable
against the Borrower in accordance with their respective terms, subject to
applicable bankruptcy, insolvency and similar laws affecting generally the
enforcement of creditors' rights and remedies, and (c) the execution, delivery
and performance of the Credit Agreement as amended hereby is within the
corporate power and authority of the Borrower and has been duly authorized by
appropriate corporate proceedings.
3. No Default. The Borrower hereby represents and warrants to the Bank
that no Event of Default and no Default has occurred and is continuing as of the
date of this Amendment.
4. Effectiveness of Amendment. This Amendment shall be deemed to be
effective on and as of March 5, 1999 when the Bank has received the following:
(a) an original counterpart of this Amendment executed by
the Borrower;
(b) an executed Revolving Note in substantially the form
of Exhibit B attached hereto;
(c) an executed Term Note in substantially the form of
Exhibit C attached hereto;
(d) an executed Certificate of the Secretary or Assistant
Secretary of the Borrower in substantially the form of Exhibit D attached
hereto, together with copies of all Borrower documents referred to therein.
5. Counterparts. This Amendment may be executed in any number of
counterparts which together shall constitute one instrument.
6. Governing Law. This Amendment shall be governed by, and construed
and enforced in accordance with, the laws of the State of New York.
7. Preservation of Credit Agreement and Other Agreements. Except as
specifically modified by the terms of this Amendment all of the terms,
provisions, covenants, warranties and agreements contained in the Credit
Agreement and in any other agreements or documents executed in connection
therewith shall remain in full force and effect.
8. ENTIRE AGREEMENT. THIS AMENDMENT AND THE CREDIT AGREEMENT AND OTHER
CREDIT DOCUMENTS CONSTITUTE THE ENTIRE AGREEMENT AMONG THE PARTIES PERTAINING TO
THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDES ALL PRIOR AND
3
<PAGE>
CONTEMPORANEOUS AGREEMENTS, UNDERTAKINGS, UNDERSTANDINGS, REPRESENTATIONS OR
OTHER ARRANGEMENTS, WHETHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, OF THE PARTIES
IN CONNECTION HEREWITH EXCEPT TO THE EXTENT EXPRESSLY INCORPORATED OR
SPECIFICALLY REFERRED TO HEREIN OR THEREIN.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Amendment to be executed by their respective officers duly authorized as of the
date first written above.
VIRBAC AH, INC.
By:
Name:
Title:
SOCIETE GENERALE, NEW YORK
BRANCH
By:
Name:
Title:
4
<PAGE>
EXHIBIT A
FORM OF NOTICE OF BORROWING
[Date]
Societe Generale, New York Branch
1221 Avenue of the Americas
New York, NY 10020
Ladies and Gentlemen:
Reference is made to the Credit Agreement dated as of July 6, 1994 (as amended,
the "Credit Agreement"), between Virbac AH, Inc., a Delaware corporation
("Borrower"), and Societe Generale, New York Branch ("Bank"). Capitalized terms
used herein but not defined herein shall have the meanings specified by the
Credit Agreement.
Pursuant to Section 2.03 of the Credit Agreement, the Borrower hereby gives to
the Bank an irrevocable request for the making of the follow Advance[s]
([collectively, the] "Requested Advance[s]") described below:
1. [Advance#1]
(a) Facility (Revolving or Term):
(b) Type (Prime, or LIBOR, or N/A):
(c) Amount:
(d) Interest Period:
(e) Date of Funding:
The Borrower certifies that the following statements are true on the date
hereof, and will be true on [each] [the] date of funding for the Requested
Advance[s]:
1. All of the representations and warranties made by the Borrower in
the Credit Documents are true and correct in all materials respects on the date
of this certificate as if made on this date.
DL: 1035306v4
1
<PAGE>
Societe Generale, New York Branch
[Date]
Page 2
2. There exists no Default or Event of Default and the making of the
Advance would not cause or be reasonably expected to cause a Default or Event of
Default.
Very truly yours,
VIRBAC AH, INC.
By:
Name:
Title:
DL: 1035306v4
2
<PAGE>
EXHIBIT B
FORM OF REVOLVING NOTE
PROMISSORY NOTE
$4,000,000 March 5, 1999
Virbac AH, Inc., a Delaware corporation ("Borrower"), for value
received, hereby promises to pay to the order of Societe Generale, New York
Branch ("Bank"), the principal sum of Four Million Dollars ($4,000,000) or, if
less, the aggregate outstanding principal amount of the Revolving Advances made
pursuant to the Credit Agreement dated as of July 6, 1994, as amended by the
First Amendment Agreement dated as of August 30, 1995, the Second Amendment
Agreement dated as of July 6, 1997, and the Third Amendment Agreement dated as
of January 1, 1998, each between Virbac, Inc. and Societe General, Southwest
Agency, and as further amended by the Fourth Amendment Agreement dated as of
March 5, 1999 between the Borrower and the Bank (as modified from time to time,
the "Credit Agreement"), and interest thereon as required by the Credit
Agreement.
This Promissory Note ("Note") is given in renewal and substitution for
the Promissory Note of Virbac, Inc. to the Bank dated January 1, 1998 in the
principal amount of $4,000,000, and is subject to the terms of the Credit
Agreement. Capitalized terms used herein but not defined herein shall have the
meanings specified by the Credit Agreement. Pursuant to the Credit Agreement,
the Borrower's obligations under this Note may be accelerated upon the
occurrence of an Event of Default.
The Bank shall record in its records all Revolving Advances and all
payments of principal and interest thereon. Any failure of the Bank to make such
recordings, however, shall not affect the Borrower's repayment obligations under
this Note. The Bank's records shall be presumptive evidence of the principal and
interest owed by the Borrower.
It is contemplated that because of prepayments there may be times when
no indebtedness is owed under this Note. Notwithstanding such prepayments, this
Note shall remain valid and shall be in force as to Revolving Advances made
pursuant to the Credit Agreement after such prepayments.
It is the intention of the Bank and the Borrower to conform strictly to
any applicable usury laws. Accordingly, the terms of the Credit Agreement
relating to the prevention of usury will be strictly followed.
1
<PAGE>
This Note shall be governed by, and construed and enforced in
accordance with, the laws of New York.
VIRBAC AH, INC.
By:
Name:
Title:
DL: 1035306v4
2
<PAGE>
EXHIBIT C
FORM OF TERM NOTE
PROMISSORY NOTE
$5,000,000 March 5, 1999
Virbac AH, Inc., a Delaware corporation ("Borrower"), for value
received, hereby promises to pay to the order of Societe Generale, New York
Branch ("Bank"), the principal sum of Five Million Dollars ($5,000,000) or, if
less, the aggregate outstanding principal amount of Term Advances made pursuant
to the Credit Agreement dated as of July 6, 1994 between the Borrower and the
Bank (as modified from time to time, the "Credit Agreement"), and interest
thereon as required by the Credit Agreement.
This Promissory Note ("Note") is given in renewal and substitution of
that certain Promissory Note dated January 1, 1998 in the original amount of
$5,000,000 from Virbac, Inc. to the Bank and is subject to the terms of the
Credit Agreement. Capitalized terms used herein but not defined shall have the
meanings specified by the Credit Agreement. Pursuant to the Credit Agreement,
the Borrower's obligations under this Note may be accelerated upon the
occurrence of an Event of Default.
The Bank shall record in its records all payments of principal and
interest thereon. Any failure of the Bank to make such recordings, however,
shall not affect the Borrower's repayment obligations under this Note. The
Bank's records shall be presumptive evidence of the principal and interest owed
by the Borrower.
It is the intention of the Bank and the Borrower to conform strictly to
any applicable usury laws. Accordingly, the terms of the Credit Agreement
relating to the prevention of usury will be strictly followed.
This Note shall be governed by, and construed and enforced in
accordance with, the laws of New York.
VIRBAC AH, INC.
By:
Name:
Title:
1
<PAGE>
EXHIBIT D
CERTIFICATE OF SECRETARY
The undersigned Secretary of VIRBAC AH, INC., a Delaware corporation
("Company"), does hereby certify to SOCIETE GENERALE, NEW YORK BRANCH (the
"Bank") in connection with the Fourth Amendment Agreement dated as of March 5,
1999 ("Agreement") amending the Credit Agreement dated as of July 6, 1994, as
amended, between the Company and the Bank, as follows:
1. Attached hereto as Annex 1 is a true and correct copy of resolutions
duly adopted by the Board of Directors of the Company, and such resolutions have
not been altered, amended, rescinded or repealed and are now in full force and
effect.
2. The copies of the Certificate of Incorporation and the Bylaws of the
Company attached as Annexes 2 and 3, respectively, hereto, are true and correct,
have not been altered, amended, rescinded or repealed and are now in full force
and effect.
3. The person who, as an officer of the Company, signed the Agreement
was at the time of such signing and delivery and is now duly elected, qualified
and acting as such officer, and the signature appearing on such document is the
genuine signature of such officer.
4. The Company is duly organized and existing under the laws of the
State of Delaware, all franchise and other taxes required to maintain its
corporate existence have been paid when due and no such taxes are delinquent; no
proceedings are pending for the forfeiture of its Certificate of Incorporation
or for its dissolution, voluntarily or involuntarily.
5. There is no provision in the Certificate of Incorporation or Bylaws
of the Company limiting the power of the Board of Directors of the Company to
pass the resolutions referenced in paragraph 1.
6. The following persons are as of the date hereof duly elected,
qualified and acting officers of the Company holding the offices set forth
below, and the signature appearing next to such person's name is such person's
genuine signature:
Name Signature Office
Brian A. Crook President
Robert J. Elfanbaum Vice President and Secretary
IN WITNESS WHEREOF, I have hereunto signed my name as of the day of
March 1999.
Robert D. Elfanbaum
2
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 6,287,170
<ALLOWANCES> 0
<INVENTORY> 11,323,520
<CURRENT-ASSETS> 19,373,446
<PP&E> 13,180,781
<DEPRECIATION> 0
<TOTAL-ASSETS> 40,363,995
<CURRENT-LIABILITIES> 7,519,656
<BONDS> 0
0
0
<COMMON> 219,757
<OTHER-SE> 29,395,195
<TOTAL-LIABILITY-AND-EQUITY> 40,363,995
<SALES> 7,719,983
<TOTAL-REVENUES> 7,719,983
<CGS> 3,829,869
<TOTAL-COSTS> 3,829,869
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 116,644
<INCOME-PRETAX> 12,014
<INCOME-TAX> 0
<INCOME-CONTINUING> 12,014
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,014
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
