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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER: 0-10735
THE GNI GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0232338
(State or other jurisdiction of (I.R.S.) Employer
incorporation or organization) Identification No.)
2525 BATTLEGROUND ROAD
DEER PARK, TEXAS 77536
(Address of principal executive offices)
(Zip Code)
(281) 930-0350
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the registrant's Class A voting common
stock, $.01 par value per share, as of April 1, 1999 was 571,429. There were no
shares outstanding of the registrant's Class B non-voting common stock, $.01 par
value per share, as of April 1, 1999.
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INDEX
THE GNI GROUP, INC.
<TABLE>
<CAPTION>
Page
PART I - FINANCIAL INFORMATION Number
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Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
March 31, 1999 and June 30, 1998 1
Consolidated Statements of Operations
Three and Nine Months ended March 31,
1999 and March 31, 1998 2
Consolidated Statements of Cash Flows
Nine Months ended March 31, 1999
and March 31, 1998 3
Notes to Consolidated Financial
Statements 4-5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 6-13
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote
of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Item 21. Exhibits and Financial Statement Schedules 14
</TABLE>
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CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
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THE GNI GROUP, INC. March 31, June 30,
1999 1998
ASSETS ------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and time deposits $ 516,099 $ 208,257
Accounts receivable, less allowance of approximately $279,000
for 3/31/99 and $229,000 for 6/30/98 10,118,935 7,022,323
Inventory -- 478,886
Prepaid expenses and other assets 1,514,029 1,232,555
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TOTAL CURRENT ASSETS 12,149,063 8,942,021
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PROPERTY, PLANT AND EQUIPMENT 61,288,600 55,541,764
Less accumulated depreciation (23,871,081) (19,628,867)
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NET PROPERTY, PLANT AND EQUIPMENT 37,417,519 35,912,897
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Restricted time deposits 1,501,511 1,451,253
Deferred tax asset, net 4,078,145 360,165
Intangible assets, net 17,398,740 18,193,364
Other assets,net 5,775,417 4,016,866
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TOTAL ASSETS $ 78,320,395 $ 68,876,566
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,635,781 $ 3,299,930
Accrued liabilities 3,983,877 2,987,625
Federal income taxes payable -- 190,005
Current portion of long-term debt -- 2,147,826
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TOTAL CURRENT LIABILITIES 7,619,658 8,625,386
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Accrued liabilities 1,697,333 2,700,484
Long-term debt, less current portion 83,326,421 32,016,606
Series A preferred stock 18,500,000 --
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STOCKHOLDERS' EQUITY:
Common stock, $.01 par value. Authorized 20,000,000 shares,
no shares outstanding at 3/31/99 and 6,674,709 -- 66,747
issued at 6/30/98
Class A common stock, $.01 par value
Authorized 1,500,000 shares; issued 571,429 shares at 3/31/99 5,714 --
and no shares issued at 6/30/98
Class B common stock, $.01 par value -- --
Authorized 1,500,000 shares, no shares outstanding at 3/31/99 and
No shares issued at 6/30/98
Additional paid-in capital 3,994,303 21,156,898
Retained earnings (accumulated deficit) (36,823,034) 4,357,451
Less cost of treasury stock (40,184 shares) -- (47,006)
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TOTAL STOCKHOLDERS' EQUITY (32,823,017) 25,534,090
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 78,320,395 $ 68,876,566
============ ============
</TABLE>
Notes to Consolidated Financial Statements are an integral part of these
statements.
NOTE: The Balance Sheet at March 31, 1999 is unaudited. The Balance Sheet at
June 30, 1998 has been derived from the audited financial statements at that
date.
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CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
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THE GNI GROUP, INC. Three Months Ended Nine Months Ended
March 31, March 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
REVENUES $ 9,497,603 $ 11,036,712 $ 27,021,506 $ 32,635,770
COST AND EXPENSES:
Cost of services 5,099,602 6,250,779 15,872,372 18,362,235
Selling, general and administrative 1,237,974 1,279,656 4,428,380 3,821,436
Depreciation and amortization 2,166,494 1,827,552 6,100,452 5,384,523
------------ ------------ ------------ ------------
TOTAL COST AND EXPENSES 8,504,070 9,357,987 26,401,204 27,568,194
------------ ------------ ------------ ------------
OPERATING INCOME 993,533 1,678,725 620,302 5,067,576
------------ ------------ ------------ ------------
Interest income 16,733 22,935 54,743 84,180
Interest expense 2,089,442 962,053 5,860,192 2,934,796
Other income (expense) (11,459) 385 (6,724) 107,155
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE TAX (1,090,635) 739,992 (5,191,871) 2,324,115
------------ ------------ ------------ ------------
Income tax (benefit) (354,378) 299,968 (1,671,605) 899,068
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (736,257) 440,024 (3,520,266) 1,425,047
============ ============ ============ ============
Extraordinary item, net of tax benefit -- -- 3,920,936 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) (736,257) 440,024 (7,441,202) 1,425,047
============ ============ ============ ============
</TABLE>
Notes to Consolidated Financial Statements are an integral part of these
statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
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THE GNI GROUP, INC. Nine Months Ended
March 31,
1999 1998
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Cash flows from operating activities:
NET INCOME $ (7,441,202) $ 1,425,047
Adjustments to reconcile income from
continuing operations to net cash provided
by operating activities:
Depreciation and amortization 6,100,452 5,384,523
Deferred taxes (3,717,980) 98,163
Write-off of deferred loan costs 1,140,708 --
Debt retirement costs 4,800,103 --
Gain on sale of assets -- (4,500)
Change in assets and liabilities, net of acquisition:
Increase in accounts receivable (2,150,520) (2,142,711)
Decrease in inventory 478,886 215,508
Increase in prepaid expenses and other (242,581) (303,595)
Increase in other assets (126,568) (874,410)
Decrease in accounts payable (569,926) (261,502)
Decrease in accrued liabilities (50,903) (486,715)
Increase (decrease) in income taxes payable (200,000) 631,700
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (1,979,531) 3,681,508
============ ============
Cash flows from investing activities:
Increase in restricted time deposits (50,257) (49,555)
Payment of cash in connection with business acquisition (482,353) --
Proceeds from sale of assets -- 4,500
Purchases of fixed assets (5,696,836) (5,536,221)
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NET CASH USED IN INVESTING ACTIVITIES (6,229,446) (5,581,276)
============ ============
Cash flows from financing activities:
Cash proceeds from notes payable 702,233 920,782
Net cash from exercise of stock options -- 105,000
Net proceeds from issuance of Senior Notes 72,750,000 --
Purchase of GNI equity (50,727,953) --
Equity Contribution 22,500,000 --
Deferred loan costs (1,772,581) --
Merger fees and expenses (3,596,242) --
Subordinated notes make-whole premium (3,590,000) --
Net proceeds from revolving line 8,326,421 2,700,000
Principal payments of long-term debt and notes payable (36,075,059) (2,546,021)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 8,516,819 1,179,761
============ ============
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 307,842 (720,007)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 208,257 807,387
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 516,099 $ 87,380
============ ============
</TABLE>
Notes to Consolidated Financial Statements are an integral part of these
statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THE GNI GROUP, INC. March 31, 1999
SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The financial statements include the accounts of the Company and its
subsidiaries, all of which are wholly-owned. All significant intercompany
transactions are eliminated.
The Consolidated Balance Sheet as of March 31, 1999 and the related
Statements of Operations for the three and nine month periods ended March 31,
1999 and 1998, and Statements of Cash Flows for the nine month period ended
March 31, 1999 and 1998 are unaudited; in the opinion of management, all
adjustments necessary for a fair presentation of such financial statements have
been included. Such adjustments consisted of normal, recurring items. Interim
results are not necessarily indicative of results for a full year. The financial
statements and Notes are presented as permitted by Form 10-Q and do not contain
certain information included in the Company's Annual Financial Statements and
Notes.
Statement of Cash Flows
For purposes of reporting cash flows, cash and time deposits include cash on
hand and certificates of deposit.
Acquisitions
On September 25, 1998, a wholly-owned subsidiary of the Company, GNI
Technical Services, Inc., purchased substantially all of the assets and assumed
certain liabilities of Moheat, Inc. ("Moheat") for cash consideration of
approximately $480,000. Moheat is engaged in the site management and disposal of
hazardous waste, primarily as a contractor to the U. S. government.
Merger
On July 29, 1998, the Company completed an offering of $75 million of
10.875% Senior Notes due 2005. The net proceeds from the offering, together with
an equity investment in the Company of $22.5 million by 399 Venture Partners,
Inc. and certain members of the Company's management, were used to purchase the
Company's issued and outstanding Common Stock, pay a cash consideration to
holders of options and warrants to purchase Common Stock, repay the existing
bank indebtedness and senior subordinated notes, and pay related fees and
expenses (the "Merger Transactions").
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Effective July 28, 1998, in connection with the Merger Transactions, the
Company entered into a revolving credit facility with NationsBank, N.A. with
respect to senior secured credit facilities which provides for (i) revolving
loans in the aggregate amount of up to $12 million, subject to a borrowing base
formula and certain asset appraisals, with a $3 million sublimit for the
issuance of standby and commercial letters of credit and (ii) the Company's
existing $1.5 million automatically renewable, stand-by letter of credit, the
reimbursement obligations of which are quaranteed by WMX Technologies, Inc. The
Revolving Credit Facility has an initial term ending July 31, 2001, with one
year renewal options thereafter.
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MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Pursuant to a Merger Agreement dated February 12, 1998, and amended on June
17, 1998, between the Company and Green I Acquisition Corp. ("Green I"), a
company formed by 399 Venture Partners, Inc. ("399"), Green I merged with and
into the Company, with the Company as the surviving corporation (the "Merger").
Immediately following the Merger, each share of GNI common stock was canceled
and converted into the right to receive $7.00 in cash, other than certain shares
held by management and other than shares held by stockholders who were entitled
to, and who perfected their, appraisal rights. Each option and warrant to
purchase GNI common stock outstanding immediately prior to the effective date
was canceled and the holder thereof received $7.00 per share in cash, net of the
application option or warrant exercise price. The Company mailed a proxy
statement with respect to the Merger on June 24, 1998 for a stockholders'
meeting on July 23, 1998. On July 23, 1998, a majority of the Company's
stockholders approved the Merger. On July 28, 1998, the Merger became effective.
The Merger was financed by an offering of $75 million of 10.875% Senior
Notes due 2005, together with an equity investment in the Company of
approximately $22.5 million by 399 and certain members of GNI's management (the
Merger together with the equity and debt financing arrangements described
herein, the "Recapitalization"). In conjunction with the Recapitalization, the
Company entered into a new $12 million senior secured revolving facility (the
"Revolving Credit Facility") with NationsBank, N.A. which is available for
working capital requirements, capital expenditures and other general corporate
purposes and permitted acquisitions, subject to a borrowing base formula and
certain asset appraisals.
On September 25, 1998, a wholly-owned subsidiary of the Company, GNI
Technical Services, Inc., purchased substantially all of the assets and assumed
certain liabilities of Moheat, Inc. ("Moheat") for cash consideration of
approximately $480,000. Moheat is engaged in the site management and disposal of
hazardous waste, primarily as a contractor to the U. S. government.
RESULTS OF OPERATIONS-
FISCAL 1999 THIRD QUARTER COMPARED WITH FISCAL 1998 THIRD QUARTER
Revenues. Revenues decreased by $1.5 million, or 14%, from $11.0 million in
the third quarter of Fiscal 1998 to $9.5 million for the comparable Fiscal 1999
period. This decrease was attributable to a decline in revenues from both the
treatment and disposal operation of the company and the chemical manufacturing
and processing operation. Revenues from the Company's treatment and disposal
operation decreased by approximately $0.5 million or 7.1% from $6.7 million in
the Fiscal 1998 third quarter to $6.2 million in the Fiscal 1999 third quarter,
primarily due to decreased deepwell disposal volumes and transportation
revenues. Deepwell disposal volumes decreased in the Fiscal 1999 period due to a
decline in the volumes generated
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by several large deepwell disposal customers and the loss of certain
non-hazardous deepwell disposal volumes to less costly treatment alternatives.
Transportation revenues included in treatment and disposal operations, declined
by 36% to $1.0 million compared to the Fiscal 1998 third quarter of $1.5
million. This decrease follows the decline in deepwell disposal volumes in
Fiscal 1999. Other treatment and disposal revenues increased to $2.1 million in
the third quarter of Fiscal 1999 versus $1.1 million in the comparable period of
Fiscal 1998. The increase is attributable to the Moheat acquisition and an
increase in special project revenues involving containerized waste and fuels
blending.
Chemical manufacturing revenues decreased by approximately $1.1 million, or
24.6%, from $4.3 million in the third quarter of Fiscal 1998 to $3.2 million for
the comparable Fiscal 1999 period. Chemical manufacturing revenues were
benefited in the Fiscal 1999 quarter by the sale and assignment of a long-term
supply agreement owned by the Company. This sale contributed approximately $1.1
million to the quarterly revenue in Fiscal 1999. The total decline in chemical
manufacturing revenues was due to a continuing delay in the start-up of two
large projects due to capital construction issues. The projects are being run in
the fourth quarter of Fiscal 1999. The fluctuation in chemical manufacturing
revenues is primarily due to customer decisions related to timing of projects.
Therefore, custom manufacturing and processing revenues may vary from quarter to
quarter.
Cost of Services. Cost of services decreased as a percent of revenues from
56.6% during the third quarter of Fiscal 1998 to 53.7% for the comparable period
in Fiscal 1999. This decrease is primarily the result of the personnel
reductions which occurred near the end of the first quarter of Fiscal 1999 and
other direct cost savings associated with operational changes in the Company's
deepwell disposal business.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased as a percentage of revenues from
11.6% in the third quarter of Fiscal 1998 to 13.0% in the third quarter of
Fiscal 1999. As many of the cost elements in this category are fixed, the
percentage will increase as revenue declines. SG&A decreased by approximately
$42,000 or 3.3% from $1.28 million in the third quarter of Fiscal 1998 to $1.24
million in the comparable quarter of Fiscal 1999 due to personnel reductions.
Depreciation and Amortization Expenses. Depreciation and amortization
increased by approximately $339,000, or 18.5%, from $1.8 million in the third
quarter of Fiscal 1998 to $2.2 million in the third quarter of Fiscal 1999
primarily due to capital improvements made by the Company during Fiscal 1998 and
the first three quarters of Fiscal 1999.
Net Interest Expense. Net interest expense increased by $1.2 million, or
122.0%, from $.9 million in the third quarter of Fiscal 1998 to $2.1 million in
the third quarter of Fiscal 1999. This increase resulted from higher average
levels of indebtedness during the Fiscal 1999 period. The higher level of
indebtedness in the Fiscal 1999 period was a result of the issuance of the
10.875% Senior Notes due 2005 in connection with the recapitalization
transaction completed by the Company on July 28, 1998.
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Net Income (Loss). The Company recorded a net loss of approximately $736,000
for the third quarter of Fiscal 1999 compared to net income of approximately
$440,000 for the third quarter of Fiscal 1998.
Inflation did not have a material impact on the Company's revenues or
income for either the third quarter of Fiscal 1999 or Fiscal 1998. Further, it
is not expected that inflation will have a material impact during the upcoming
quarters for either the Company's revenues or income.
FISCAL 1999 NINE MONTHS COMPARED TO FISCAL 1998 NINE MONTHS
Revenues. Revenues decreased by $5.6 million, or 17.2%, from $32.6 million
for the first nine months of Fiscal 1998 to $27.0 million for the comparable
period of Fiscal 1999. This decrease was primarily attributable to (i) a
decrease in revenues from the Company's treatment and disposal operation, and
(ii) chemical manufacturing revenues that were below expected levels. Revenues
from the Company's treatment and disposal operations decreased by approximately
$2.9 million, or 14.6%, from $19.9 million in the first nine months of Fiscal
1998 to $17.0 million in the first nine months of Fiscal 1999, primarily due to
decreased deepwell disposal volumes. Deepwell disposal volumes decreased in the
Fiscal 1999 period due to several factors: (i) unusually dry weather conditions
for most of Fiscal 1999, (ii) a decline in the volumes generated by several
large deepwell disposal customers compared with prior periods, and (iii) the
loss of certain non-hazardous deepwell disposal volumes to less costly treatment
alternatives. Transportation revenues also decreased by $1.3 million, or 32.5%,
from $4.0 million for the first nine months of Fiscal 1998 to $2.7 million for
the comparable Fiscal 1999 period. This decrease in transportation revenues is
primarily attributable to the decrease in deepwell disposal volumes during the
Fiscal 1999 period.
Chemical manufacturing revenues decreased by approximately $2.7 million, or
21.4%, from $12.7 million during the first nine months of Fiscal 1998 to $10.0
million for the comparable Fiscal 1999 period. This decrease was primarily due
to one customer moving their custom manufacturing in-house in response to
slower-than-expected market penetration for several of that customer's chemical
products which opened up in-house manufacturing capacity. Chemical manufacturing
revenues were benefited in the current period by the sale and assignment of a
long-term supply agreement owned by the Company. This sale contributed
approximately $1.1 million to revenue in the third quarter of Fiscal 1999.
Chemical manufacturing revenues also vary from period to period due to customer
decisions relating to timing of projects. The Company's strategy is to foster
long-term relationships in its manufacturing and processing business, thereby
minimizing the effects of customer timing decisions.
Cost of Services. Cost of services increased as a percent of revenues from
56.3% during the first nine months of Fiscal 1998 to 58.7% for the comparable
Fiscal 1999 period. Cost of services decreased by $2.5 million, or 13.6%, from
$18.4 million for the first nine months of Fiscal 1998 to $15.9 million for the
first nine months of Fiscal 1999. The increase of cost of services as a percent
of revenue and the decrease in actual cost of services together reflect the
combination of the relatively fixed cost nature of the Company's cost of
services and the lower
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revenues in the Fiscal 1999 period. Included within the cost of services figure
for Fiscal 1999 were non-recurring personnel reduction costs of approximately
$249,000.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased as a percentage of revenues from
11.7% in the first nine months of Fiscal 1998 to 16.4% in the comparable Fiscal
1999 period. SG&A increased by approximately $0.6 million, or 15.9%, from $3.8
million in the first nine months of Fiscal 1998 to $4.4 million for the
comparable period in Fiscal 1999. This increase was due primarily to (i) the
inclusion in the first quarter of Fiscal 1999 of personnel reduction costs and
non-recurring transactions costs of approximately $232,000 and $673,000,
respectively, and (ii) lower revenues in the Fiscal 1999 period compared to
Fiscal 1998. Excluding the non-recurring charges, SG&A decreased by
approximately $299,000, or 7.8%, from Fiscal 1998 to Fiscal 1999.
Depreciation and Amortization Expenses. Depreciation and amortization
increased by approximately $716,000, or 13.3%, from $5.4 million in the first
nine months of Fiscal 1998 to $6.1 million in the comparable Fiscal 1999 period
primarily due to the capital improvements made by the Company to its facilities
during Fiscal 1998 and Fiscal 1999.
Net Interest Expense. Net interest expense increased by $3.1 million, or
111.9%, from $2.7 million in the first nine months of Fiscal 1998 to $5.8
million for the comparable Fiscal 1999 period. This increase resulted from
higher average levels of indebtedness during the Fiscal 1999 period. The higher
level of indebtedness in the Fiscal 1999 period was a result of the issuance of
the 10.875% Senior Notes due 2005 in connection with the recapitalization
transaction completed by the Company on July 28, 1998.
Income (Loss) Before Extraordinary Item. The Company recorded a loss before
extraordinary item of $3.5 million for the first nine months of Fiscal 1999
compared to income before extraordinary item of $1.4 million for the comparable
Fiscal 1998 period.
Net Income (Loss). The Company recorded a net loss of $7.4 million for the
first nine months of Fiscal 1999 compared to net income of $1.4 million for the
comparable Fiscal 1998 period. The Company recorded an extraordinary charge in
the amount of $3.9 million, net of tax benefit, in connection with the
recapitalization transaction completed by the Company on July 28, 1998.
Inflation did not have a material impact on the Company's revenues or income
for either the Fiscal 1999 or 1998 periods. Further, it is not expected that
inflation will have a material impact during the upcoming quarters for either
the Company's revenues or income.
LIQUIDITY AND CAPITAL RESOURCES
For the first nine months of Fiscal 1999 the Company used $2.0 million in
net cash from operations compared with providing $3.7 million for the comparable
Fiscal 1998 period. This decrease of approximately $5.7 million was attributable
to several factors, some of which were offsetting: (i) a net loss in the Fiscal
1999 period as compared with net income in the Fiscal 1998 period, (ii) the
incurrence of debt retirement costs in the Fiscal 1999 period, without a
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corresponding expense in the Fiscal 1998 period, (iii) a slight increase in
accounts receivable, net of acquisition, in the Fiscal 1999 period, (iv) a
larger decrease in inventory for the Fiscal 1999 period compared with the Fiscal
1998 period, (v) a larger decrease in accounts payable, net of acquisition, for
the Fiscal 1999 period, and (vi) a smaller decrease in accrued liabilities in
the Fiscal 1999 period. Item (ii) above relates to the Recapitalization that
closed during the first quarter of fiscal 1999. As a part of the accounting
treatment for the Recapitalization, the Company's deferred tax asset increased
by approximately $3.7 million and existing deferred loan costs as well as debt
retirement costs were written-off.
During the first nine months of Fiscal 1999 and Fiscal 1998, the Company's
net cash used in investing activities was $6.2 million and $5.6 million,
respectively. For Fiscal 1999, the main components were the cash payment of
approximately $480,000 made for a business acquisition during the period and
capital expenditures during the first nine months of Fiscal 1999. The Company's
capital expenditures during the first nine months of Fiscal 1999 and Fiscal 1998
were $5.7 million and $5.5 million, respectively. In the first nine months of
Fiscal 1999, capital expenditures included approximately $1.5 million spent to
bring the Company's facilities into compliance with new environmental
regulations regarding air emissions. These regulatory-related capital
expenditures represent a continuation of projects originally anticipated to be
completed by the end of the Company's Fiscal 1998. Also, during the first nine
months of Fiscal 1999, the Company incurred customer-related capital
expenditures of approximately $2.6 million, approximately $0.5 million of which
related to the Navy contract to blend and recycle a fuel mixture as a
subcontractor to Battelle Memorial Institute. This capital will be recovered
over the life of the Navy contract. The balance of the customer-related capital
expenditures were incurred on behalf of a major specialty chemical customer and
represented a slippage in the completion of construction modifications to GNI's
chemical plant for this particular project, which was originally anticipated to
be completed by the end of the Company's Fiscal 1998. The capital expenditures
incurred for this plant modification will be recovered over the term of the
particular contract. Capital expenditures for fixed assets for the Fiscal 1998
periods were primarily related to general improvements to the Company's chemical
manufacturing and treatment and disposal facilities. For the first nine months
of Fiscal 1999, the Company's financing activities provided net cash of $8.5
million compared with $1.2 million in the fiscal 1997 period. For the fiscal
1999 period, the main components of financing activities were the various
financing steps that comprised the Recapitalization.
During the first nine months of Fiscal 1999, accounts receivable increased
by approximately $3.1 million primarily due to the Company's Moheat acquisition
which closed on September 25, 1998 and the timing of customer receipts. During
the first nine months of Fiscal 1999, accounts payable increased by
approximately $336,000, primarily due to the addition of accounts payable
related to the Company's acquisition of Moheat.
Effective July 28, 1998, the Company entered into a revolving credit
facility with NationsBank, N.A. ("Lender") with respect to senior secured credit
facilities which provides for revolving loans in the aggregate amount of up to
$12 million, subject to a borrowing base formula and certain asset appraisals,
with a $3 million sublimit for the issuance of standby and commercial letters of
credit (the "Revolving Credit Facility"). Availability under the Revolving
Credit Facility is calculated based on a borrowing base formula tied to (i) 85%
of eligible
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accounts receivable plus (ii) an amount based on the Company's fixed assets.
Amounts borrowed under the Revolving Credit Facility will be due in full on July
31, 2001, unless extended. Until the Company provided the Lender with financial
statements for the quarter ended September 30, 1998, amounts borrowed under the
Revolving Credit Facility bear interest, at the option of the Company, at either
(i) the Lender's Base Rate plus 1.00% or (ii) LIBOR plus 2.75%. Thereafter, such
applicable margins are subject to reduction based upon the Company's Interest
Coverage Ratio (as defined in the Revolving Credit Facility.) The Revolving
Credit Facility contains standard financial and restrictive covenants for
facilities of this type. As of March 31, 1999 the Company's Revolving Credit
Facility had an outstanding balance of approximately $8.3 million and
approximately $0.5 million of letters of credit outstanding, leaving
approximately $2.0 million of availability.
The Company's ability to make scheduled payments of principal of and
interest on, or to refinance its indebtedness, or to fund planned capital
expenditures will depend on its future performance, which is subject to general
economic, financial, competitive, legislative, regulatory and other factors that
are beyond its control. Based upon the Company's current level of operations,
management believes that cash flow from operations and available cash, together
with available borrowings under the Revolving Credit Facility, will be adequate
to meet the Company's liquidity needs for the next several years. However, there
can be no assurance that the Company's businesses will generate sufficient cash
flow from operations, or that future borrowings will be available under the
Revolving Credit Facility in an amount sufficient to enable the Company to
service its indebtedness, or to fund its other liquidity needs.
YEAR 2000
Background. The Year 2000 issue refers to the inability of certain
date-sensitive computer chips, software and systems to recognize a two-digit
date field as belonging to the 21st century. Many computer software programs, as
well as certain hardware and equipment containing date-sensitive data, were
structured to utilize a two-digit date field. Accordingly, these programs may
not be able to properly recognize dates in the year 2000 and later, which could
result in significant system and equipment failures. This is a significant issue
for most if not all companies, with far reaching implications, some of which
cannot be anticipated or predicted with any degree of certainty. The Company
recognizes that it must take action to ensure that its operations will not be
adversely impacted by Year 2000 software failures.
The Company's State of Readiness. An initial systems survey of the Company
was completed in April, 1998 and revealed that several of the Company's
administrative applications and plant systems possess Year 2000 problems. The
Company has implemented a remediation plan to address the issues in a timely
manner. To date, the remediation plan is partially complete, with the remainder
to be completed by September 30, 1999. The remaining cost of bringing the
evaluated systems into compliance is estimated to be between $75,000 and
$100,000, including all software upgrade fees and installation costs.
Embedded Technology. The Company has focused its assessments to date on the
information technology systems. To date the Company's assessments indicate that,
due to the nature of the Company's operations, the non-information technology
systems (i.e. embedded technology such
11
<PAGE> 14
as microcontrollers) do not represent a significant area of risk relative to
Year 2000 readiness. The Company's operations do not include capital intensive
equipment with embedded microcontrollers.
Contingency Plan. The Company has not, to date, implemented a Year 2000
contingency plan. As explained above, the Company has initiated action to
identify and resolve Year 2000 problems. The Company will develop and implement
a contingency plan in the event the Company's present course of action to solve
the Year 2000 problem should fall behind schedule.
The cost and time estimated for the Year 2000 problem are based on the
Company's best estimates. There can be no guarantee that these estimates will be
achieved and that planned results will be achieved. Risks include, but are not
limited to, the retention of internal and external resources dedicated to the
problem and the timely delivery of software corrections from external vendors.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information
("SFAS 131"). SFAS 131 establishes standards for the way that public companies
report, in their annual financial statements, certain information about their
operating segments, their products and services, the geographic area in which
they operate and their major customers. The Company believes that the adoption
of this statement will not have a material impact on the Company's financial
statements, as the Company considers itself to be in one business segment.
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS
133"). SFAS 133 establishes new accounting and reporting standards requiring
that all derivative instruments (including certain derivative instruments
embedded in other contracts) be recorded in the balance sheet as either an asset
or liability measured at its fair value. The statement requires that changes in
the derivative's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Special accounting for qualifying hedges
allows a derivative's gains and losses to offset related results on the hedged
item in the income statement and requires that a company must formally document,
designate and assess the effectiveness of transactions that receive hedge
accounting. This statement is effective for all fiscal years beginning after
June 15, 1999. The Company has not yet determined the impact, if any, this
standard will have on its financial position or results of operations, and plans
to adopt this standard during the year ending June 30, 2000.
DIVIDEND POLICY
The Company does not pay any cash dividends on its common stock and does not
have any plans to do so in the future. The Company intends to continue a policy
of retaining income for use in its business.
12
<PAGE> 15
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Quarterly Report on Form 10-Q including
any forecasts, projections and descriptions of revenues and cash flows expected
to be generated pursuant to long-term outsourcing to manufacture specialty
chemicals for major chemical customers, anticipated costs savings and synergies
referred to herein including statements contained herein regarding the
development or possible assumed future results of operations, markets for the
Company's services, regulatory developments, any statements preceded by,
followed by or that include the words "believes," "expects," "may," "estimates,"
"will," "should," "intends," "regarded to be," "plans," or "anticipates," or
similar expressions, or the negative thereof, and other statements regarding
matters that are not historical facts, are or may constitute forward-looking
statements (as such term is defined in the Private Securities Litigation Reform
Act of 1995). Because such statements are subject to risks and uncertainties,
actual results may differ materially from those expressed or implied by such
forward-looking statements. The risks and uncertainties that may cause actual
results to differ include, among others, effectiveness of management's
strategies and decisions, general economic conditions, risks associated with
acquisitions, fluctuations in operating results, changes in applicable federal,
state and local laws and regulations, especially environmental regulations,
alternate and emerging technologies, competition and pricing pressures,
overcapacity in the waste management industry, the Company's ability to deal
with Year 2000 issues, and uncertainties of litigation. As a result of these
factors, among others, the Company's revenues and cash flow could vary
significantly from quarter to quarter, and past financial performance should not
be considered a reliable indicator of future performance. No assurance can be
given that these are all of the factors that could cause results to vary
materially from the forward-looking statements. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on the
Company's behalf are expressly qualified in their entirety by the cautionary
statements set forth or referred to above in this paragraph. Investors are
cautioned not to place undue reliance on such statements, which speak only as of
the date hereof. The Company undertakes no obligation to release publicly any
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events,
except as may be required by federal securities laws.
13
<PAGE> 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submissions of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
Item 21. Exhibits and Financial Statement Schedules
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<S> <C>
10.1 -First Amendment to and Assignment of Deed
of Trust dated effective as of July 28, 1998
among Disposal Systems of Corpus Christi,
Inc., a subsidiary of the company, and
NationsBank, N.A.
10.2 -Sixth Amendment to and Assignment of Second
Lien Deed of Trust dated effective as of
July 28, 1998 among Disposal Systems, Inc.,
a subsidiary of the company, and
NationsBank, N.A.
10.3 -Eighth Amendment to and Assignment of Deed
of Trust dated effective as of July 28, 1998
among Disposal Systems, Inc., a subsidiary
of the company, and NationsBank, N.A.
10.4 -Tenth Amendment to and Assignment of Deed
of Trust dated effective as of July 28, 1998
among Disposal Systems, Inc., a subsidiary
of the company, and NationsBank, N.A.
</TABLE>
14
<PAGE> 17
SIGNATURES
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.
THE GNI GROUP, INC.
Date: May 17, 1999 /s/ Carl V Rush, Jr. Carl V Rush, Jr.
--------------------- ---------------------- President and CEO
Date: May 17, 1999 /s/ Bruce D. Tobecksen Bruce D. Tobecksen
---------------------- ----------------------- Chief Financial Officer
15
<PAGE> 18
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Exhibit
------ -------
<S> <C>
10.1 -First Amendment to and Assignment of Deed
of Trust dated effective as of July 28, 1998
among Disposal Systems of Corpus Christi,
Inc., a subsidiary of the company, and
NationsBank, N.A.
10.2 -Sixth Amendment to and Assignment of Second
Lien Deed of Trust dated effective as of
July 28, 1998 among Disposal Systems, Inc.,
a subsidiary of the company, and
NationsBank, N.A.
10.3 -Eighth Amendment to and Assignment of Deed
of Trust dated effective as of July 28, 1998
among Disposal Systems, Inc., a subsidiary
of the company, and NationsBank, N.A.
10.4 -Tenth Amendment to and Assignment of Deed
of Trust dated effective as of July 28, 1998
among Disposal Systems, Inc., a subsidiary
of the company, and NationsBank, N.A.
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 10.1
FIRST AMENDMENT TO AND ASSIGNMENT OF DEED OF TRUST
(WITH SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES)
(Disposal Systems of Corpus Christi, Inc.)
THIS FIRST AMENDMENT TO AND ASSIGNMENT OF DEED OF TRUST (WITH SECURITY
AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES) (this "First Amendment") is made
and entered into effective as of the 28th day of July, 1998, by and between
DISPOSAL SYSTEMS OF CORPUS CHRISTI, INC., a Delaware corporation, formerly known
as GNI/Disposal Systems, Inc. ("Grantor") and NATIONSBANK, N.A., a national
banking association (successor in interest by merger of NationsBank of Texas,
N.A. (which was formerly known as NCNB Texas National Bank), assignee from
Federal Deposit Insurance Corporation, as receiver of First RepublicBank
Houston, N.A., both in its individual capacity as assignor ("Assignor") and in
its capacity as administrative agent ("Agent") for itself and the other Lenders
(as defined in the Loan and Security Agreement, as defined below), if any, from
time to time party to the Loan and Security Agreement ("Beneficiary").
W I T N E S S E T H:
WHEREAS, Grantor has executed the Deed of Trust (with Security
Agreement and Assignment of Rents and Leases) dated March 3, 1995, to Michael
Hord, Trustee, for the benefit of Assignor, recorded March 22, 1995 under
Document No. 954775 of the Official Public Records of Real Property of Nueces
County, Texas (the "Deed of Trust"), covering the real property and other
property described therein (except to the extent any of such property has been
released from the lien and security interest of the Deed of Trust by
documentation duly executed and recorded in the appropriate jurisdiction, the
"Property") to secure the payment and performance of certain indebtedness and
obligations as more fully described in the Deed of Trust, reference to which is
herein made for all purposes;
WHEREAS, The GNI Group, Inc. ("GNI"), GNI Chemicals Corporation,
Disposal Systems, Inc., Disposal Systems of Corpus Christi, Inc., Resource
Transportation Services, Inc. and Gulf Nuclear of Louisiana, Inc., collectively
as borrowers, and Beneficiary have entered into that certain Amended and
Restated Loan and Security Agreement dated effective as of July 28, 1998 ("Loan
and Security Agreement");
WHEREAS, the Loan and Security Agreement, among other things, amends,
restates and renews, but does not extinguish, the obligations owing to Assignor
under the certain Credit Agreement dated June 30, 1993 (as amended to date, the
"Existing Credit Agreement") previously executed and entered into among GNI,
certain of its subsidiaries and Assignor;
<PAGE> 2
WHEREAS, pursuant to the Loan and Security Agreement, Assignor wishes
to assign to Agent, for the benefit of Assignor and the other Lenders, its
interest in the Deed of Trust, together with all documents and instruments
evidencing or securing the obligations provided for in the Existing Credit
Agreement;
WHEREAS, upon such assignment, Grantor and Agent desire to amend the
Deed of Trust so as to amend certain definitions and revise the description of
the obligations and indebtedness secured thereby;
NOW, THEREFORE, in consideration of the foregoing, the benefits to be
derived by Grantor, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Words and terms used herein which are defined in the
Deed of Trust are used herein as defined in the Deed of Trust, except as
specifically modified by the terms of this First Amendment.
2. Assignment Provisions.
(a) Each of Assignor, in its individual capacity as lender
under the Existing Credit Agreement, and GNI and each of its
subsidiaries party to the Existing Credit Agreement, acknowledge and
agree that (i) the rights and obligations of such parties to the
Existing Credit Agreement and under or in respect to the "Loan
Documents" referred to therein (and the liens and security interests
securing all such obligations) are assigned and transferred to
Agent, for the benefit of the Lenders under the Loan and Security
Agreement, (ii) the Loan and Security Agreement constitutes a
renewal, extension, modification and restatement in its entirety of
the Existing Credit Agreement (and not a novation thereof) and that
the liens and security interests created thereunder, and under the
Loan Documents referred to therein, secure the Secured Obligations
under the Loan and Security Agreement. Assignor hereby sells,
transfers, sets over and assigns to Agent, for the benefit of the
Lenders under the Loan and Security Agreement, all of Assignor's
right, title and interest in and to the following:
(i) the Existing Credit Agreement;
(ii) the Deed of Trust;
(iii) any UCC-1 Financing Statements filed in
connection therewith, including without limitation those
filed with the Official Public Records of Real Property,
Nueces County, Texas; and
<PAGE> 3
(iii) all other related documents executed in
connection with the Existing Credit Agreement and the Deed
of Trust.
(b) Agent hereby accepts the assignment specified in section
1.a. above and assumes all obligations and duties of Assignor under
the Deed of Trust and the Existing Credit Agreement as modified and
restated by the Loan and Security Agreement.
(c) Assignor agrees to execute any additional instruments
which are necessary or appropriate to effectuate the assignment and
transfer contemplated hereby.
2. Amendments to Deed of Trust.
2.1 The term "Beneficiary" hereby is amended to read and mean
NATIONSBANK, N.A., as administrative agent for itself and the other Lenders as
defined in the Loan and Security Agreement, if any, from time to time party to
the Loan and Security Agreement.
2.2 The term "Credit Parties" shall have the meaning of the term
"Borrower" as defined by the Loan and Security Agreement.
2.3 The term "Loan Agreement" shall be amended to be "Loan and
Security Agreement" and shall mean that certain Amended and Restated Loan and
Security Agreement dated effective as of July 28, 1998, by and among The GNI
Group, Inc. ("GNI"), GNI Chemicals Corporation, Disposal Systems, Inc., Disposal
Systems of Corpus Christi, Inc., Resource Transportation Services, Inc. and Gulf
Nuclear of Louisiana, Inc., collectively as borrowers, Agent, and NationsBank,
N.A. and the other Lenders (as defined therein), if any, from time to time party
thereto.
2.4 Paragraphs 1.1 of Article I of the Deed of Trust is hereby
amended and restated to read in its entirety as follows:
"1.1 Notes. Payment of the indebtedness evidenced by the Revolving
Credit Notes, as defined in the Loan and Security Agreement."
2.5 The following Paragraphs 1.3 and 1.4 of Article I of the Deed of
Trust are hereby added to read in their entirety as follows, respectively:
<PAGE> 4
"1.3 Guaranty. Payment and performance of all obligations now owing
or that may hereafter become owing by Grantor under any Guaranty
Agreement in favor of the Beneficiary guaranteeing payment of the
Notes, as may be amended, modified, restated or supplemented from time
to time."
"1.4 Loan and Security Agreement. Performance of all obligations of
Borrower (as such term is defined in the Loan and Security Agreement,
and hereafter used with such meaning) under the terms of the Loan and
Security Agreement, any of the Guaranty Agreements or Security
Documents referred to in the Loan and Security Agreement, and any other
loan agreement, tri-party financing agreement or other agreement
between Grantor and Beneficiary, GNI and any other parties pertaining
to the use of the proceeds of the Notes."
2.6 All references to the Loan Agreement shall be amended to refer
to the Loan and Security Agreement described herein.
2.7 The following sentence is added after the first sentence of
Paragraph 2.9 of the Deed of Trust:
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS
BENEFICIARY FROM THE CONSEQUENCES OF BENEFICIARY'S ACTS OR OMISSIONS,
INCLUDING, WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF
BENEFICIARY."
2.8 The following sentence is added to the end of Paragraph 8.4 of
the Deed of Trust:
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS TRUSTEE
FROM THE CONSEQUENCES OF TRUSTEE'S ACTS OR OMISSIONS, INCLUDING,
WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF TRUSTEE OR
BENEFICIARY."
3. Miscellaneous.
3.1 Counterparts. This First Amendment may be executed in any number
of counterparts and by different parties on separate counterparts.
3.2 Preservation of Deed of Trust. Except as specifically modified
by the terms of this First Amendment or as waived or consented to by Beneficiary
or otherwise by the transactions which are the subject of the Loan and Security
Agreement, all of the terms, provisions, covenants, warranties, and agreements
contained, and all liens and security interests granted, in the Deed of Trust
remain in full force and effect, and the liens and security
<PAGE> 5
interests granted therein are acknowledged to be valid and subsisting liens and
security interests against the Mortgaged Property. Except as otherwise expressly
provided herein, by execution of this First Amendment, Grantor and Beneficiary
do not intend to in any manner impair the indebtedness described in and secured
by the Deed of Trust, or to in any way impair, waive or release the liens and
security interests granted in the Deed of Trust, the purpose of this instrument
being simply (a) to amend the Deed of Trust to the extent herein expressly
provided, and (b) to carry forward all liens and security interests granted in
the Deed of Trust.
3.3 Reaffirmation of Deed of Trust. To secure the Indebtedness (as
defined in the Deed of Trust, as amended hereby) Grantor has granted, bargained,
sold, mortgaged, assigned, transferred, and conveyed and by these presents does
grant, bargain, sell, mortgage, assign, transfer, and convey unto Michael Hord
of Houston, Harris County, Texas, as trustee, for the benefit of the Beneficiary
(in such capacity, together with all successors and assigns, "Trustee") and in
accordance with the Deed of Trust, all of the Grantor's right, title and
interest, whether now owned or hereafter acquired, in and to the Mortgaged
Property.
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances now or hereafter at any time in anywise belonging
or appertaining thereto, unto Trustee, forever to secure the payment of the
Indebtedness and the performance of the agreements and covenants of Grantor
herein and in the Deed of Trust, IN TRUST, NEVERTHELESS, for the benefit of
Beneficiary.
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date first above written.
GRANTOR:
DISPOSAL SYSTEMS OF CORPUS CHRISTI,
INC., a Delaware corporation
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
<PAGE> 6
ASSIGNOR:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its individual
capacity as Assignor
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
BENEFICIARY AND AGENT:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its capacity
as administrative agent for itself and the
other Lenders, if any, party to the Loan and
Security Agreement
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
Before me, an authorized authority, on this day personally appeared
_________________, _______________ of DISPOSAL SYSTEMS OF CORPUS CHRISTI, INC.,
a Delaware corporation, known to me to be the person whose name is subscribed to
the foregoing instrument and acknowledged to me that he executed the same on
behalf of such corporation for the purposes and consideration therein expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
--------------------------------------------
Notary Public in and for The State of Texas
--------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
<PAGE> 7
THE STATE OF TEXAS )
)
COUNTY OF __________ )
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same on behalf
of such national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
--------------------------------------------
Notary Public in and for The State of Texas
--------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
THE STATE OF TEXAS )
)
COUNTY OF __________ )
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, in its capacity as administrative agent for itself and the other
Lenders, if any, from time to time party to the Loan and Security Agreement,
known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same on behalf of such
national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
--------------------------------------------
Notary Public in and for The State of Texas
--------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
<PAGE> 1
EXHIBIT 10.2
SIXTH AMENDMENT TO AND ASSIGNMENT OF SECOND LIEN DEED OF TRUST
(WITH SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES)
(Disposal Systems, Inc.)
THIS SIXTH AMENDMENT TO AND ASSIGNMENT OF SECOND LIEN DEED OF TRUST
(WITH SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES) (this "Sixth
Amendment") is made and entered into effective as of the 28th day of July, 1998,
by and between DISPOSAL SYSTEMS, INC., a Delaware corporation, formerly known as
GNI/Disposal Systems, Inc. ("Grantor") and NATIONSBANK, N.A., a national banking
association (successor in interest by merger of NationsBank of Texas, N.A.
(which was formerly known as NCNB Texas National Bank), both in its individual
capacity as assignor ("Assignor") and in its capacity as administrative agent
("Agent") for itself and the other Lenders (as defined in the Loan and Security
Agreement, as defined below), if any, from time to time party to the Loan and
Security Agreement ("Beneficiary").
W I T N E S S E T H:
WHEREAS, Grantor has executed the Second Lien Deed of Trust (with
Security Agreement and Assignment of Rents and Leases) dated July 25, 1991, to
David G. Dunlap, Trustee, for the benefit of Assignor, recorded under File
Clerk's File No. N261956, Film Code No. 042-10-0424, of the Official Public
Records of Real Property of Harris County, Texas (the "Original Deed of Trust"),
covering the real property and other property described therein (except to the
extent any of such property has been released from the lien and security
interest of the Original Deed of Trust by documentation duly executed and
recorded in the appropriate jurisdiction, the "Property") to secure the payment
and performance of certain indebtedness and obligations as more fully described
in the Original Deed of Trust, reference to which is herein made for all
purposes;
WHEREAS, the Original Deed of Trust was amended pursuant to the First
Amendment to Second Lien Deed of Trust (with Security Agreement and Assignment
of Rents and Leases) dated October 31, 1991, by and between Grantor and NCNB
Texas National Bank, recorded under Clerk's File No. N423785, Film Code No.
###-##-####, of the Official Public Records of Harris County, Texas (the "First
Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Second Amendment to Second Lien Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) dated February 2, 1993, by and between Grantor
and Assignor, recorded under Clerk's File No. P075822, Film Code No.
###-##-####, of the Official Public Records of Harris County, Texas (the "Second
Amendment");
1
<PAGE> 2
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Correction Second Amendment to Second Lien Deed of Trust (with Security
Agreement and Assignment of Rents and Leases) dated February 9, 1993, filed for
record on February 10, 1993 by and between Grantor and Assignor, recorded under
Clerk's File No. P086465 of the Official Public Records of Harris County, Texas
(the "Correction Second Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to
that certain Third Amendment to Second Lien Deed of Trust (with Security
Agreement and Assignment of Rents and Leases) dated June 30, 1993, by and
between Grantor and Assignor, recorded under Clerk's File No. P311672, Film Code
No. ###-##-####, of the Official Public Records of Harris County, Texas (the
"Third Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to
that certain Fourth Amendment to Second Lien Deed of Trust (with Security
Agreement and Assignment of Rents and Leases) dated March 3, 1995, by and
between Grantor and Assignor, recorded under Clerk's File No. R306261, Film Code
No. ###-##-####, of the Official Public Records of Harris County, Texas (the
"Fourth Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Fifth Amendment to Second Lien Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) dated September 23, 1996, by and between Grantor
and Assignor, recorded under Clerk's File No. S134373, Film Code No.
###-##-####, of the Official Public Records of Harris County, Texas (the "Fifth
Amendment", and the Original Deed of Trust, as amended by the First Amendment,
the Second Amendment, the Correction Second Amendment, the Third Amendment, the
Fourth Amendment and the Fifth Amendment, being the "Deed of Trust");
WHEREAS, The GNI Group, Inc. ("GNI"), GNI Chemicals Corporation,
Disposal Systems, Inc., Disposal Systems of Corpus Christi, Inc., Resource
Transportation Services, Inc. and Gulf Nuclear of Louisiana, Inc., collectively
as borrowers, and Beneficiary have entered into that certain Amended and
Restated Loan and Security Agreement dated effective as of July 28, 1998 ("Loan
and Security Agreement");
WHEREAS, the Loan and Security Agreement, among other things, amends,
restates and renews, but does not extinguish, the obligations owing to Assignor
under the certain Credit Agreement dated June 30, 1993 (as amended to date, the
"Existing Credit Agreement") previously executed and entered into among GNI,
certain of its subsidiaries and Assignor;
WHEREAS, pursuant to the Loan and Security Agreement, Assignor wishes
to assign to Agent, for the benefit of Assignor and the other Lenders, its
interest in the Deed of Trust,
2
<PAGE> 3
together with all documents and instruments evidencing or securing the
obligations provided for in the Existing Credit Agreement;
WHEREAS, upon such assignment, Grantor and Agent desire to amend the
Deed of Trust so as to amend certain definitions and revise the description of
the obligations and indebtedness secured thereby;
NOW, THEREFORE, in consideration of the foregoing, the benefits to be
derived by Grantor, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Words and terms used herein which are defined
in the Deed of Trust are used herein as defined in the Deed of Trust, except as
specifically modified by the terms of this Sixth Amendment.
2. Assignment Provisions.
(a) Each of Assignor, in its individual
capacity as lender under the Existing Credit Agreement, and
GNI and each of its subsidiaries party to the Existing Credit
Agreement, acknowledge and agree that (i) the rights and
obligations of such parties to the Existing Credit Agreement
and under or in respect to the "Loan Documents" referred to
therein (and the liens and security interests securing all
such obligations) are assigned and transferred to Agent, for
the benefit of the Lenders under the Loan and Security
Agreement, (ii) the Loan and Security Agreement constitutes a
renewal, extension, modification and restatement in its
entirety of the Existing Credit Agreement (and not a novation
thereof) and that the liens and security interests created
thereunder, and under the Loan Documents referred to therein,
secure the Secured Obligations under the Loan and Security
Agreement. Assignor hereby sells, transfers, sets over and
assigns to Agent, for the benefit of the Lenders under the
Loan and Security Agreement, all of Assignor's right, title
and interest in and to the following:
(i) the Existing Credit Agreement;
(ii) the Deed of Trust;
(iii) any UCC-1 Financing Statements
filed in connection therewith, including without
limitation those filed with the Official Public Records
of Real Property, Harris County, Texas; and
3
<PAGE> 4
(iii) all other related documents
executed in connection with the Existing Credit
Agreement and the Deed of Trust.
(b) Agent hereby accepts the assignment
specified in section 1.a. above and assumes all obligations
and duties of Assignor under the Deed of Trust and the
Existing Credit Agreement as modified and restated by the Loan
and Security Agreement.
(c) Assignor agrees to execute any
additional instruments which are necessary or appropriate to
effectuate the assignment and transfer contemplated hereby.
2. Amendments to Deed of Trust.
2.1 The term "Beneficiary" hereby is amended to read and mean
NATIONSBANK, N.A., as administrative agent for itself and the other Lenders as
defined in the Loan and Security Agreement, if any, from time to time party to
the Loan and Security Agreement.
2.2 The term "Credit Parties" shall have the meaning of the
term "Borrower" as defined by the Loan and Security Agreement.
2.3 The term "Loan Agreement" shall be amended to be "Loan and
Security Agreement" and shall mean that certain Amended and Restated Loan and
Security Agreement dated effective as of July 28, 1998, by and among The GNI
Group, Inc. ("GNI"), GNI Chemicals Corporation, Disposal Systems, Inc., Disposal
Systems of Corpus Christi, Inc., Resource Transportation Services, Inc. and Gulf
Nuclear of Louisiana, Inc., collectively as borrowers, Agent, and NationsBank,
N.A. and the other Lenders (as defined therein), if any, from time to time party
thereto.
2.4 Paragraphs 1.1, 1.2 and 1.3 of Article I of the Deed of
Trust are hereby amended and restated to read in their entirety as follows,
respectively:
"1.1 Notes. Payment of the indebtedness evidenced by the
Revolving Credit Notes, as defined in the Loan and Security Agreement."
"1.2 Guaranty. Payment and performance of all obligations now
owing or that may hereafter become owing by Grantor under any Guaranty
Agreement in favor of the Beneficiary guaranteeing payment of the
Notes, as may be amended, modified, restated or supplemented from time
to time."
4
<PAGE> 5
"1.3 Loan and Security Agreement. Performance of all
obligations of Borrower (as such term is defined in the Loan and
Security Agreement, and hereafter used with such meaning) under the
terms of the Loan and Security Agreement, any of the Guaranty
Agreements or Security Documents referred to in the Loan and Security
Agreement, and any other loan agreement, tri-party financing agreement
or other agreement between Grantor and Beneficiary, GNI and any other
parties pertaining to the use of the proceeds of the Notes."
2.5 All references to the Loan Agreement shall be amended to
refer to the Loan and Security Agreement described herein.
2.6 The following sentence is added after the first sentence
of Paragraph 2.9 of the Deed of Trust:
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS
BENEFICIARY FROM THE CONSEQUENCES OF BENEFICIARY'S ACTS OR OMISSIONS,
INCLUDING, WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF
BENEFICIARY."
2.7 The following sentence is added to the end of Paragraph
8.4 of the Deed of Trust:
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS TRUSTEE
FROM THE CONSEQUENCES OF TRUSTEE'S ACTS OR OMISSIONS, INCLUDING,
WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF TRUSTEE OR
BENEFICIARY."
3. Miscellaneous.
3.1 Counterparts. This Sixth Amendment may be executed in any
number of counterparts and by different parties on separate counterparts.
3.2 Preservation of Deed of Trust. Except as specifically
modified by the terms of this Sixth Amendment or as waived or consented to by
Beneficiary or otherwise by the transactions which are the subject of the Loan
and Security Agreement, all of the terms, provisions, covenants, warranties, and
agreements contained, and all liens and security interests granted, in the Deed
of Trust remain in full force and effect, and the liens and security interests
granted therein are acknowledged to be valid and subsisting liens and security
interests against the Mortgaged Property. Except as otherwise expressly provided
herein, by execution of this Sixth Amendment, Grantor and Beneficiary do not
intend to in any manner
5
<PAGE> 6
impair the indebtedness described in and secured by the Deed of Trust, or to in
any way impair, waive or release the liens and security interests granted in the
Deed of Trust, the purpose of this instrument being simply (a) to amend the Deed
of Trust to the extent herein expressly provided, and (b) to carry forward all
liens and security interests granted in the Deed of Trust.
3.3 Reaffirmation of Deed of Trust. To secure the Indebtedness
(as defined in the Deed of Trust, as amended hereby) Grantor has granted,
bargained, sold, mortgaged, assigned, transferred, and conveyed and by these
presents does grant, bargain, sell, mortgage, assign, transfer, and convey unto
David G. Dunlap of Houston, Harris County, Texas, as trustee, for the benefit of
the Beneficiary (in such capacity, together with all successors and assigns,
"Trustee") and in accordance with the Deed of Trust, all of the Grantor's right,
title and interest, whether now owned or hereafter acquired, in and to the
Mortgaged Property.
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances now or hereafter at any time in anywise belonging
or appertaining thereto, unto Trustee, forever to secure the payment of the
Indebtedness and the performance of the agreements and covenants of Grantor
herein and in the Deed of Trust, IN TRUST, NEVERTHELESS, for the benefit of
Beneficiary.
IN WITNESS WHEREOF, the parties have executed this Sixth Amendment as
of the date first above written.
GRANTOR:
DISPOSAL SYSTEMS, INC., formerly known as
GNI/Disposal Systems, Inc.
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNOR:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its
individual capacity as Assignor
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
6
<PAGE> 7
BENEFICIARY AND AGENT:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its capacity
as administrative agent for itself and the
other Lenders, if any, party to the Loan and
Security Agreement
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
Before me, an authorized authority, on this day personally appeared
________________, __________________ of DISPOSAL SYSTEMS, INC., a Delaware
corporation, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same on behalf
of such corporation for the purposes and consideration therein expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
---------------------------------------
Notary Public in and for The State of Texas
---------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
7
<PAGE> 8
THE STATE OF TEXAS )
)
COUNTY OF )
----------
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same on behalf
of such national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
---------------------------------------
Notary Public in and for The State of Texas
---------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
THE STATE OF TEXAS )
)
COUNTY OF )
----------
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, in its capacity as administrative agent for itself and the other
Lenders, if any, from time to time party to the Loan and Security Agreement,
known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same on behalf of such
national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
---------------------------------------
Notary Public in and for The State of Texas
---------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
8
<PAGE> 1
EXHIBIT 10.3
EIGHTH AMENDMENT TO AND ASSIGNMENT OF DEED OF TRUST
(WITH SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES)
(Disposal Systems, Inc.)
THIS EIGHTH AMENDMENT TO AND ASSIGNMENT OF DEED OF TRUST (WITH SECURITY
AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES) (this "Eighth Amendment") is made
and entered into effective as of the 28th day of July, 1998, by and between
DISPOSAL SYSTEMS, INC., a Delaware corporation, formerly known as GNI/Disposal
Systems, Inc. ("Grantor") and NATIONSBANK, N.A., a national banking association
(successor in interest by merger of NationsBank of Texas, N.A. (which was
formerly known as NCNB Texas National Bank), both in its individual capacity as
assignor ("Assignor") and in its capacity as administrative agent ("Agent") for
itself and the other Lenders (as defined in the Loan and Security Agreement, as
defined below), if any, from time to time party to the Loan and Security
Agreement ("Beneficiary").
W I T N E S S E T H:
WHEREAS, Grantor has executed the Deed of Trust (with Security
Agreement and Assignment of Rents and Leases) dated April 28, 1989, to David G.
Dunlap, Trustee, for the benefit of Assignor, recorded under File Clerk's File
No. M-140261, Film Code No. 145-76-2432, of the Official Public Records of Real
Property of Harris County, Texas (the "Original Deed of Trust"), covering the
real property and other property described therein (except to the extent any of
such property has been released from the lien and security interest of the
Original Deed of Trust by documentation duly executed and recorded in the
appropriate jurisdiction, the "Property") to secure the payment and performance
of certain indebtedness and obligations as more fully described in the Original
Deed of Trust, reference to which is herein made for all purposes;
WHEREAS, the Original Deed of Trust was amended pursuant to the First
Amendment to Deed of Trust (with Security Agreement and Assignment of Rents and
Leases) dated March 15, 1990, by and between Grantor and Assignor, recorded
under Clerk's File No. M588378, Film Code No. 173-77-1899, of the Official
Public Records of Harris County, Texas (the "First Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Second Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated August 15, 1990, by and between Grantor and Assignor,
recorded under Clerk's File No. M787857, Film Code No. 186-62-0002, of the
Official Public Records of Harris County, Texas (the "Second Amendment");
1
<PAGE> 2
WHEREAS, the Original Deed of Trust was further amended pursuant to
that certain Third Amendment to Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) dated October 31, 1991, by and between Grantor
and Assignor, recorded under Clerk's File No. N423330, Film Code No.
###-##-####, of the Official Public Records of Harris County, Texas (the "Third
Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to
that certain Fourth Amendment to Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) dated February 2, 1993, by and between Grantor
and Assignor, recorded under Clerk's File No. P082830, Film Code No.
###-##-####, of the Official Public Records of Harris County, Texas (the "Fourth
Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Fifth Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated June 30, 1993, by and between Grantor and Assignor,
recorded under Clerk's File No. P311670, Film Code No. 163-58-2379, of the
Official Public Records of Harris County, Texas (the "Fifth Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Sixth Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated March 30, 1995, by and between Grantor and Assignor,
recorded under Clerk's File No. R306262, Film Code No. 503-09-1447, of the
Official Public Records of Harris County, Texas (the "Sixth Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Seventh Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated September 23, 1996, by and between Grantor and Assignor,
recorded under Clerk's File No. S13437, Film Code No. 510-16-1550, of the
Official Public Records of Harris County, Texas (the "Seventh Amendment," and
the Original Deed of Trust, as amended by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Sixth Amendment and the Seventh Amendment, being the "Deed of Trust");
WHEREAS, The GNI Group, Inc. ("GNI"), GNI Chemicals Corporation,
Disposal Systems, Inc., Disposal Systems of Corpus Christi, Inc., Resource
Transportation Services, Inc. and Gulf Nuclear of Louisiana, Inc., collectively
as borrowers, and Beneficiary have entered into that certain Amended and
Restated Loan and Security Agreement dated effective as of July 28, 1998 ("Loan
and Security Agreement");
2
<PAGE> 3
WHEREAS, the Loan and Security Agreement, among other things, amends,
restates and renews, but does not extinguish, the obligations owing to Assignor
under the certain Credit Agreement dated June 30, 1993 (as amended to date, the
"Existing Credit Agreement") previously executed and entered into among GNI,
certain of its subsidiaries and Assignor;
WHEREAS, pursuant to the Loan and Security Agreement, Assignor wishes
to assign to Agent, for the benefit of Assignor and the other Lenders, its
interest in the Deed of Trust, together with all documents and instruments
evidencing or securing the obligations provided for in the Existing Credit
Agreement;
WHEREAS, upon such assignment, Grantor and Agent desire to amend the
Deed of Trust so as to amend certain definitions and revise the description of
the obligations and indebtedness secured thereby;
NOW, THEREFORE, in consideration of the foregoing, the benefits to be
derived by Grantor, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Words and terms used herein which are defined
in the Deed of Trust are used herein as defined in the Deed of
Trust, except as specifically modified by the terms of this
Eighth Amendment.
2. Assignment Provisions.
(a) Each of Assignor, in its individual
capacity as lender under the Existing Credit Agreement, and
GNI and each of its subsidiaries party to the Existing Credit
Agreement, acknowledge and agree that (i) the rights and
obligations of such parties to the Existing Credit Agreement
and under or in respect to the "Loan Documents" referred to
therein (and the liens and security interests securing all
such obligations) are assigned and transferred to Agent, for
the benefit of the Lenders under the Loan and Security
Agreement, (ii) the Loan and Security Agreement constitutes a
renewal, extension, modification and restatement in its
entirety of the Existing Credit Agreement (and not a novation
thereof) and that the liens and security interests created
thereunder, and under the Loan Documents referred to therein,
secure the Secured Obligations under the Loan and Security
Agreement. Assignor hereby sells, transfers, sets over and
assigns to Agent, for the benefit of the Lenders under the
Loan and Security Agreement, all of Assignor's right, title
and interest in and to the following:
(i) the Existing Credit Agreement;
(ii) the Deed of Trust;
3
<PAGE> 4
(iii) any UCC-1 Financing Statements filed
in connection therewith, including without
limitation those filed with the Official Public
Records of Real Property, Harris County, Texas;
and
(iii) all other related documents executed
in connection with the Existing Credit Agreement
and the Deed of Trust.
(b) Agent hereby accepts the assignment
specified in section 1.a. above and assumes all obligations
and duties of Assignor under the Deed of Trust and the
Existing Credit Agreement as modified and restated by the Loan
and Security Agreement.
(c) Assignor agrees to execute any
additional instruments which are necessary or appropriate to
effectuate the assignment and transfer contemplated hereby.
2. Amendments to Deed of Trust.
2.1 The term "Beneficiary" hereby is amended to read and mean
NATIONSBANK, N.A., as administrative agent for itself and the other Lenders as
defined in the Loan and Security Agreement, if any, from time to time party to
the Loan and Security Agreement.
2.2 The term "Credit Parties" shall have the meaning of the
term "Borrower" as defined by the Loan and Security Agreement.
2.3 The term "Loan Agreement" shall be amended to be "Loan
and Security Agreement" and shall mean that certain Amended and Restated Loan
and Security Agreement dated effective as of July 28, 1998, by and among The
GNI Group, Inc. ("GNI"), GNI Chemicals Corporation, Disposal Systems, Inc.,
Disposal Systems of Corpus Christi, Inc., Resource Transportation Services,
Inc. and Gulf Nuclear of Louisiana, Inc., collectively as borrowers, Agent, and
NationsBank, N.A. and the other Lenders (as defined therein), if any, from time
to time party thereto.
2.4 Paragraphs 1.1, 1.2 and 1.3 of Article I of the Deed of
Trust are hereby amended and restated to read in their entirety as follows,
respectively:
"1.1 Notes. Payment of the indebtedness evidenced by the
Revolving Credit Notes, as defined in the Loan and Security Agreement."
4
<PAGE> 5
"1.2 Guaranty. Payment and performance of all obligations now
owing or that may hereafter become owing by Grantor under any Guaranty
Agreement in favor of the Beneficiary guaranteeing payment of the
Notes, as may be amended, modified, restated or supplemented from time
to time."
"1.3 Loan and Security Agreement. Performance of all
obligations of Borrower (as such term is defined in the Loan and
Security Agreement, and hereafter used with such meaning) under the
terms of the Loan and Security Agreement, any of the Guaranty
Agreements or Security Documents referred to in the Loan and Security
Agreement, and any other loan agreement, tri-party financing agreement
or other agreement between Grantor and Beneficiary, GNI and any other
parties pertaining to the use of the proceeds of the Notes."
2.5 All references to the Loan Agreement shall be amended to
refer to the Loan and Security Agreement described herein.
2.6 The following sentence is added after the first sentence
of Paragraph 2.9 of the Deed of Trust:
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS
BENEFICIARY FROM THE CONSEQUENCES OF BENEFICIARY'S ACTS OR OMISSIONS,
INCLUDING, WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF
BENEFICIARY."
2.7 The following sentence is added to the end of Paragraph
8.4 of the Deed of Trust:
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS TRUSTEE
FROM THE CONSEQUENCES OF TRUSTEE'S ACTS OR OMISSIONS, INCLUDING,
WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF TRUSTEE OR
BENEFICIARY."
3. Miscellaneous.
3.1 Counterparts. This Eighth Amendment may be executed in any
number of counterparts and by different parties on separate counterparts.
3.2 Preservation of Deed of Trust. Except as specifically
modified by the terms of this Eighth Amendment or as waived or consented to by
Beneficiary or otherwise by
5
<PAGE> 6
the transactions which are the subject of the Loan and Security Agreement, all
of the terms, provisions, covenants, warranties, and agreements contained, and
all liens and security interests granted, in the Deed of Trust remain in full
force and effect, and the liens and security interests granted therein are
acknowledged to be valid and subsisting liens and security interests against the
Mortgaged Property. Except as otherwise expressly provided herein, by execution
of this Eighth Amendment, Grantor and Beneficiary do not intend to in any manner
impair the indebtedness described in and secured by the Deed of Trust, or to in
any way impair, waive or release the liens and security interests granted in the
Deed of Trust, the purpose of this instrument being simply (a) to amend the Deed
of Trust to the extent herein expressly provided, and (b) to carry forward all
liens and security interests granted in the Deed of Trust.
3.3 Reaffirmation of Deed of Trust. To secure the Indebtedness
(as defined in the Deed of Trust, as amended hereby) Grantor has granted,
bargained, sold, mortgaged, assigned, transferred, and conveyed and by these
presents does grant, bargain, sell, mortgage, assign, transfer, and convey unto
David G. Dunlap of Houston, Harris County, Texas, as trustee, for the benefit of
the Beneficiary (in such capacity, together with all successors and assigns,
"Trustee") and in accordance with the Deed of Trust, all of the Grantor's right,
title and interest, whether now owned or hereafter acquired, in and to the
Mortgaged Property.
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances now or hereafter at any time in anywise belonging
or appertaining thereto, unto Trustee, forever to secure the payment of the
Indebtedness and the performance of the agreements and covenants of Grantor
herein and in the Deed of Trust, IN TRUST, NEVERTHELESS, for the benefit of
Beneficiary.
IN WITNESS WHEREOF, the parties have executed this Eighth Amendment as
of the date first above written.
GRANTOR:
DISPOSAL SYSTEMS, INC., formerly known as
GNI/Disposal Systems, Inc.
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
6
<PAGE> 7
ASSIGNOR:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its
individual capacity as Assignor
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BENEFICIARY AND AGENT:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its capacity
as administrative agent for itself and the
other Lenders, if any, party to the Loan and
Security Agreement
By:
-----------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
Before me, an authorized authority, on this day personally appeared
______________, ________________ of DISPOSAL SYSTEMS, INC., a Delaware
corporation, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same on behalf
of such corporation for the purposes and consideration therein expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
-------------------------------------------
Notary Public in and for The State of Texas
-------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
7
<PAGE> 8
THE STATE OF TEXAS )
)
COUNTY OF )
--------------
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same on behalf
of such national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
-------------------------------------------
Notary Public in and for The State of Texas
-------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
THE STATE OF TEXAS )
)
COUNTY OF )
--------------
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, in its capacity as administrative agent for itself and the other
Lenders, if any, from time to time party to the Loan and Security Agreement,
known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same on behalf of such
national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
-------------------------------------------
Notary Public in and for The State of Texas
-------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
8
<PAGE> 1
EXHIBIT 10.4
TENTH AMENDMENT TO AND ASSIGNMENT OF DEED OF TRUST
(WITH SECURITY AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES)
(Disposal Systems, Inc.)
THIS TENTH AMENDMENT TO AND ASSIGNMENT OF DEED OF TRUST (WITH SECURITY
AGREEMENT AND ASSIGNMENT OF RENTS AND LEASES) (this "Tenth Amendment") is made
and entered into effective as of the 28th day of July, 1998, by and between
DISPOSAL SYSTEMS, INC., a Delaware corporation, formerly known as GNI/Disposal
Systems, Inc. ("Grantor") and NATIONSBANK, N.A., a national banking association
(successor in interest by merger of NationsBank of Texas, N.A. (which was
formerly known as NCNB Texas National Bank), assignee from Federal Deposit
Insurance Corporation, as receiver of First RepublicBank Houston, N.A., both in
its individual capacity as assignor ("Assignor") and in its capacity as
administrative agent ("Agent") for itself and the other Lenders (as defined in
the Loan and Security Agreement, as defined below), if any, from time to time
party to the Loan and Security Agreement ("Beneficiary").
W I T N E S S E T H:
WHEREAS, Grantor has executed the Deed of Trust (with Security
Agreement and Assignment of Rents and Leases) dated July 17, 1987, to Mark C.
Kirk, Trustee, for the benefit of Assignor, recorded under File Clerk's File No.
L264411, Film Code No. 188-30-2517, of the Official Public Records of Real
Property of Harris County, Texas and rerecorded under Clerk's File No. L277361,
Film Code No. 188-25-1220 of the Official Public Records of Real Property of
Harris County, Texas (the "Original Deed of Trust"), covering the real property
and other property described therein (except to the extent any of such property
has been released from the lien and security interest of the Original Deed of
Trust by documentation duly executed and recorded in the appropriate
jurisdiction, the "Property") to secure the payment and performance of certain
indebtedness and obligations as more fully described in the Original Deed of
Trust, reference to which is herein made for all purposes;
WHEREAS, the Original Deed of Trust was amended pursuant to the First
Amendment to Deed of Trust (with Security Agreement and Assignment of Rents and
Leases) dated April 28, 1989, by and between Grantor and Assignor, recorded
under Clerk's File No. M11710, Film Code No. 145-78-2246, of the Official Public
Records of Harris County, Texas (the "First Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Second Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated March 15, 1990, by and between Grantor and Assignor,
recorded under Clerk's File No.
1
<PAGE> 2
M590662, Film Code No. 173-80-1142, of the Official Public Records of Harris
County, Texas (the "Second Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to
that certain Third Amendment to Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) dated August 15, 1990, by and between Grantor
and Assignor, recorded under Clerk's File No. M856643, Film Code No.
###-##-####, of the Official Public Records of Harris County, Texas (the "Third
Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to
that certain Fourth Amendment to Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) dated effective October 31, 1990, by and between
Grantor and Assignor, recorded under Clerk's File No. M941763, Film Code No.
###-##-####, of the Official Public Records of Harris County, Texas (the "First
Fourth Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to
that certain Fourth Amendment to Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) dated July 25, 1991, by and between Grantor and
Assignor, recorded under Clerk's File No. N251955, Film Code No. 042-10-0419, of
the Official Public Records of Harris County, Texas (the "Second Fourth
Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Fifth Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated October 31, 1991, by and between Grantor and Assignor,
recorded under Clerk's File No. N423784, Film Code No. 007-58-2450, of the
Official Public Records of Harris County, Texas (the "Fifth Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Sixth Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated February 2, 1993, by and between Grantor and Assignor,
recorded under Clerk's File No.
2
<PAGE> 3
P082831, Film Code No. 119-56-1383, of the Official Public Records of Harris
County, Texas (the "Sixth Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Seventh Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated June 30, 1993, by and between Grantor and Assignor,
recorded under Clerk's File No. P311671, Film Code No. 163-58-2387, of the
Official Public Records of Harris County, Texas (the "Seventh Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Eighth Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated March 3, 1995, by and between Grantor and Assignor,
recorded under Clerk's File No. R306263, Film Code No. 503-09-1452, of the
Official Public Records of Harris County, Texas (the "Eighth Amendment");
WHEREAS, the Original Deed of Trust was further amended pursuant to the
Ninth Amendment to Deed of Trust (with Security Agreement and Assignment of
Rents and Leases) dated September 23, 1996, by and between Grantor and Assignor,
recorded under Clerk's File No. S134375, Film Code No. 510-16-1555, of the
Official Public Records of Harris County, Texas (the "Ninth Amendment", and the
Original Deed of Trust, as amended by the First Amendment, the Second Amendment,
the Third Amendment, the First Fourth Amendment, the Second Fourth Amendment,
the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth
Amendment and the Ninth Amendment being the "Deed of Trust");
WHEREAS, The GNI Group, Inc. ("GNI"), GNI Chemicals Corporation,
Disposal Systems, Inc., Disposal Systems of Corpus Christi, Inc., Resource
Transportation Services, Inc. and Gulf Nuclear of Louisiana, Inc., collectively
as borrowers, and Beneficiary have entered into that certain Amended and
Restated Loan and Security Agreement dated effective as of July 28, 1998 ("Loan
and Security Agreement");
WHEREAS, the Loan and Security Agreement, among other things, amends,
restates and renews, but does not extinguish, the obligations owing to Assignor
under the certain Credit Agreement dated June 30, 1993 (as amended to date, the
"Existing Credit Agreement") previously executed and entered into among GNI,
certain of its subsidiaries and Assignor;
WHEREAS, pursuant to the Loan and Security Agreement, Assignor wishes
to assign to Agent, for the benefit of Assignor and the other Lenders, its
interest in the Deed of Trust, together with all documents and instruments
evidencing or securing the obligations provided for in the Existing Credit
Agreement;
WHEREAS, upon such assignment, Grantor and Agent desire to amend the
Deed of Trust so as to amend certain definitions and revise the description of
the obligations and indebtedness secured thereby;
NOW, THEREFORE, in consideration of the foregoing, the benefits to be
derived by Grantor, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Defined Terms. Words and terms used herein which are defined in the
Deed of Trust are used herein as defined in the Deed of Trust, except as
specifically modified by the terms of this Tenth Amendment.
3
<PAGE> 4
2. Assignment Provisions.
(a) Each of Assignor, in its individual
capacity as lender under the Existing Credit Agreement, and
GNI and each of its subsidiaries party to the Existing Credit
Agreement, acknowledge and agree that (i) the rights and
obligations of such parties to the Existing Credit Agreement
and under or in respect to the "Loan Documents" referred to
therein (and the liens and security interests securing all
such obligations) are assigned and transferred to Agent, for
the benefit of the Lenders under the Loan and Security
Agreement, (ii) the Loan and Security Agreement constitutes a
renewal, extension, modification and restatement in its
entirety of the Existing Credit Agreement (and not a novation
thereof) and that the liens and security interests created
thereunder, and under the Loan Documents referred to therein,
secure the Secured Obligations under the Loan and Security
Agreement. Assignor hereby sells, transfers, sets over and
assigns to Agent, for the benefit of the Lenders under the
Loan and Security Agreement, all of Assignor's right, title
and interest in and to the following:
(i) the Existing Credit Agreement;
(ii) the Deed of Trust;
(iii) any UCC-1 Financing Statements
filed in connection therewith, including
without limitation those filed with the
Official Public Records of Real Property,
Harris County, Texas; and
(iii) all other related documents
executed in connection with the Existing
Credit Agreement and the Deed of Trust.
(b) Agent hereby accepts the assignment
specified in section 1.a. above and assumes all obligations
and duties of Assignor under the Deed of Trust and the
Existing Credit Agreement as modified and restated by the Loan
and Security Agreement.
(c) Assignor agrees to execute any
additional instruments which are necessary or appropriate to
effectuate the assignment and transfer contemplated hereby.
2. Amendments to Deed of Trust.
4
<PAGE> 5
2.1 The term "Beneficiary" hereby is amended to read and mean
NATIONSBANK, N.A., as administrative agent for itself and the other Lenders as
defined in the Loan and Security Agreement, if any, from time to time party to
the Loan and Security Agreement.
2.2 The term "Credit Parties" shall have the meaning of the
term "Borrower" as defined by the Loan and Security Agreement.
2.3 The term "Loan Agreement" shall be amended to be "Loan and
Security Agreement" and shall mean that certain Amended and Restated Loan and
Security Agreement dated effective as of July 28, 1998, by and among The GNI
Group, Inc. ("GNI"), GNI Chemicals Corporation, Disposal Systems, Inc., Disposal
Systems of Corpus Christi, Inc., Resource Transportation Services, Inc. and Gulf
Nuclear of Louisiana, Inc., collectively as borrowers, Agent, and NationsBank,
N.A. and the other Lenders (as defined therein), if any, from time to time party
thereto.
2.4 Paragraphs 1.1, 1.2 and 1.3 of Article I of the Deed of
Trust are hereby amended and restated to read in their entirety as follows,
respectively:
"1.1 Notes. Payment of the indebtedness evidenced by the
Revolving Credit Notes, as defined in the Loan and Security Agreement."
"1.2 Guaranty. Payment and performance of all obligations now
owing or that may hereafter become owing by Grantor under any Guaranty
Agreement in favor of the Beneficiary guaranteeing payment of the
Notes, as may be amended, modified, restated or supplemented from time
to time."
"1.3 Loan and Security Agreement. Performance of all
obligations of Borrower (as such term is defined in the Loan and
Security Agreement, and hereafter used with such meaning) under the
terms of the Loan and Security Agreement, any of the Guaranty
Agreements or Security Documents referred to in the Loan and Security
Agreement, and any other loan agreement, tri-party financing agreement
or other agreement between Grantor and Beneficiary, GNI and any other
parties pertaining to the use of the proceeds of the Notes."
2.5 All references to the Loan Agreement shall be amended to
refer to the Loan and Security Agreement described herein.
2.6 The following sentence is added after the first sentence
of Paragraph 2.9 of the Deed of Trust:
5
<PAGE> 6
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS
BENEFICIARY FROM THE CONSEQUENCES OF BENEFICIARY'S ACTS OR OMISSIONS,
INCLUDING, WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF
BENEFICIARY."
2.7 The following sentence is added to the end of Paragraph
8.6 of the Deed of Trust:
"IT IS EXPRESSLY ACKNOWLEDGED AND AGREED BY GRANTOR THAT THE
INDEMNIFICATION AGREEMENT CONTAINED IN THIS PARAGRAPH PROTECTS TRUSTEE
FROM THE CONSEQUENCES OF TRUSTEE'S ACTS OR OMISSIONS, INCLUDING,
WITHOUT LIMITATION, THE NEGLIGENT ACTS OR OMISSIONS OF TRUSTEE OR
BENEFICIARY."
3. Miscellaneous.
3.1 Counterparts. This Tenth Amendment may be executed in any
number of counterparts and by different parties on separate counterparts.
3.2 Preservation of Deed of Trust. Except as specifically
modified by the terms of this Tenth Amendment or as waived or consented to by
Beneficiary or otherwise by the transactions which are the subject of the Loan
and Security Agreement, all of the terms, provisions, covenants, warranties, and
agreements contained, and all liens and security interests granted, in the Deed
of Trust remain in full force and effect, and the liens and security interests
granted therein are acknowledged to be valid and subsisting liens and security
interests against the Mortgaged Property. Except as otherwise expressly provided
herein, by execution of this Tenth Amendment, Grantor and Beneficiary do not
intend to in any manner impair the indebtedness described in and secured by the
Deed of Trust, or to in any way impair, waive or release the liens and security
interests granted in the Deed of Trust, the purpose of this instrument being
simply (a) to amend the Deed of Trust to the extent herein expressly provided,
and (b) to carry forward all liens and security interests granted in the Deed of
Trust.
3.3 Reaffirmation of Deed of Trust. To secure the Indebtedness
(as defined in the Deed of Trust, as amended hereby) Grantor has granted,
bargained, sold, mortgaged, assigned, transferred, and conveyed and by these
presents does grant, bargain, sell, mortgage, assign, transfer, and convey unto
Mark C. Kirk of Houston, Harris County, Texas, as trustee, for the benefit of
the Beneficiary (in such capacity, together with all successors and assigns,
"Trustee") and in accordance with the Deed of Trust, all of the Grantor's right,
title and interest, whether now owned or hereafter acquired, in and to the
Mortgaged Property.
6
<PAGE> 7
TO HAVE AND TO HOLD the Mortgaged Property, together with the rights,
privileges and appurtenances now or hereafter at any time in anywise belonging
or appertaining thereto, unto Trustee, forever to secure the payment of the
Indebtedness and the performance of the agreements and covenants of Grantor
herein and in the Deed of Trust, IN TRUST, NEVERTHELESS, for the benefit of
Beneficiary.
IN WITNESS WHEREOF, the parties have executed this Tenth Amendment as
of the date first above written.
GRANTOR:
DISPOSAL SYSTEMS, INC., formerly known as
GNI/Disposal Systems, Inc.
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ASSIGNOR:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its
individual capacity as Assignor
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
7
<PAGE> 8
BENEFICIARY AND AGENT:
NATIONSBANK, N.A., successor by merger to
NationsBank of Texas, N.A., in its capacity
as administrative agent for itself and the
other Lenders, if any, party to the Loan and
Security Agreement
By:
-----------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE STATE OF TEXAS )
)
COUNTY OF HARRIS )
Before me, an authorized authority, on this day personally appeared
________________, _________________ of DISPOSAL SYSTEMS, INC., a Delaware
corporation, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same on behalf
of such corporation for the purposes and consideration therein expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
------------------------------------------
Notary Public in and for The State of Texas
------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
8
<PAGE> 9
THE STATE OF TEXAS )
)
COUNTY OF )
----------
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same on behalf
of such national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
------------------------------------------
Notary Public in and for The State of Texas
------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
THE STATE OF TEXAS )
)
COUNTY OF )
---------------
Before me, an authorized authority, on this day personally appeared
______________, ______________ of NATIONSBANK, N.A., a national banking
association, in its capacity as administrative agent for itself and the other
Lenders, if any, from time to time party to the Loan and Security Agreement,
known to me to be the person whose name is subscribed to the foregoing
instrument and acknowledged to me that he executed the same on behalf of such
national banking association for the purposes and consideration therein
expressed.
(Seal) Given under my hand and seal of office this _____ day of
____________, 1999.
------------------------------------------
Notary Public in and for The State of Texas
------------------------------------------
Notary's Printed/Typed Name
My Commission Expires:
----------------
9
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 516,099
<SECURITIES> 0
<RECEIVABLES> 10,397,935
<ALLOWANCES> (279,000)
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<CURRENT-ASSETS> 12,149,063
<PP&E> 61,288,600
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18,500,000
0
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<TOTAL-LIABILITY-AND-EQUITY> (78,320,395)
<SALES> 27,021,506
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