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EXHIBIT 10.24
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT is made and entered into
effective as of this 3rd day of November, 1995 (this "Amendment") among THE GNI
GROUP, INC., a Delaware corporation ("GNI"), DISPOSAL SYSTEMS, INC., a Delaware
corporation ("DSI"), formerly known as GNI/Disposal Systems, Inc., RESOURCE
TRANSPORTATION SERVICES, INC., a Delaware corporation ("RTS"), doing business
in Texas under the name GNI/Resource Transportation Service, Inc., CHEMICAL
RESOURCE PROCESSING, INC., a Delaware corporation ("CRP"), DISPOSAL SYSTEMS OF
CORPUS CHRISTI, INC., a Delaware corporation ("Newco") (GNI, RTS, CRP and Newco
being, collectively, the "Loan Parties"), the address for each for purposes
hereof being 0000 Xxxxxxxxxxxx Xxxx, X.X. Xxx 000, Xxxx Xxxx, Xxxxx 00000-0000
and NATIONSBANK OF TEXAS, N.A., a national banking association (the "Lender"),
formerly known as NCNB TEXAS NATIONAL BANK, the address for purposes hereof
being 700 Louisiana, X.X. Xxx 0000, Xxxxxxx, Xxxxx 00000-0000.
W I T N E S S E T H
WHEREAS, GNI, RTS, CRP and the Lender entered into that certain Credit
Agreement dated as of June 30, 1993 as amended by Amendment No. 1 dated as of
March 15, 1994, Second Amendment to Credit Agreement dated as of August 31,
1994 and Third Amendment to Credit Agreement dated as of December 31, 1994, and
the Loan Parties and the Lender entered into that certain Fourth Amendment to
Credit Agreement dated as of March 3, 1995 and that certain Fifth Amendment to
Credit Agreement dated as of March 31, 1995 (collectively, the "Credit
Agreement"), pursuant to which the Lender agreed to make certain loans and
issue letters of credit to the Loan Parties; and
WHEREAS, GNI has requested that the Lender increase the Facility B
Commitment to $10,000,000, issue a letter of credit for the benefit of Texas
Natural Resources Conservation Commission (the "TNRCC Letter of Credit") and
amend certain terms and provisions of the Credit Agreement, and the Lender is
agreeable to increasing the Facility B Commitment, issuing the TNRCC Letter of
Credit and making such amendments;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and the mutual benefits, covenants and agreements herein
expressed, the Loan Parties and the Lender now agree to amend the Credit
Agreement as follows:
1. All capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
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2. The definitions of "Agreement", "Applicable Margin", "Facility B
Borrowing Base", "Facility B Commitment", "Facility B Termination Date" and
"Note B" in Section 1.02 of the Credit Agreement are hereby amended in their
entirety to hereafter read as follows:
"Agreement" shall mean this Credit Agreement and all exhibits and
schedules hereto, as amended by Amendment No. 1 dated as of March 15,
1994, Second Amendment to Credit Agreement dated as of August 31, 1994,
the Third Amendment, the Fourth Amendment, the Fifth Amendment and the
Sixth Amendment, as the same may from time to time be amended or
supplemented.
"Applicable Margin" shall mean, with respect to Facility A,
Facility B and Facility C, the following per annum interest rate as
applicable based upon the Cash Flow Leverage (calculated as of the last
day of each fiscal quarter of the Borrower as provided in Section 8.28
to be effective for the period commencing as of the 45th day of the
immediately following fiscal quarter of GNI to and including the 44th
day of the next fiscal quarter):
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Cash Flow Leverage Base Rate Loans Eurodollar Loans
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less than 2.0 to 1.0 0% 1.75%
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greater than or equal to 0% 2.50%
2.0 to 1.0, but less than
or equal to 3.0 to 1.0
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greater than 3.0 to 1.0 0.50% 2.75%
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"Facility B Borrowing Base" shall mean, at the time of a
Borrowing Base Determination, an amount equal to the sum of (a) 80% of
the aggregate amount of all Eligible Accounts Receivable after contra
and cross netting such Eligible Accounts Receivable against accounts
payable and Inventory due to account debtors in respect of exchanges,
advances, or otherwise and further reducing the result of such
computation by the aggregate amount of the Borrowing Base, if any,
attributable to any Accounts Receivable which (i) have been collected,
charged-off, or otherwise compromised since the date of the most recent
previous Borrowing Base Determination, (ii) may have declined materially
in value because of a material Adverse Effect or other event, or (iii)
for any reason are not subject to a valid and perfected first priority
Lien in favor of the Lender, (b) the lesser of (i) $1,000,000 or (ii)
50% of the aggregate value (being, as to each item of Eligible
Inventory, the lower of cost or market value as of the relevant date) of
Eligible Inventory and (c) the Xxxxx Product Line Value.
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"Facility B Commitment" shall mean the aggregate amount of
$10,000,000, less reductions pursuant to Section 5.03.
"Facility B Termination Date" shall mean 2:00 p.m., Houston,
Texas time on October 31, 1997.
"Note B" shall mean that certain promissory note dated November
3, 1995 in the face amount of $10,000,000, executed by GNI, payable to
the order of the Lender and in substantially the form attached as
Exhibit A to the Sixth Amendment, together with deferrals, renewals,
extensions or rearrangements thereof, which is a renewal and
rearrangement but not novation of the existing Note B.
3. Section 1.02 of the Credit Agreement is further amended by adding
the following definitions where appropriate:
"Xxxxx Product Line Value" shall mean the amount of the Purchase
Price (as defined in the GNI - Dupont Agreement for the purchase of
Dupont's acetonitrile business to be entered into substantially
contemporaneously with the Sixth Amendment, but not to exceed
$3,250,000) which will reduce quarterly by $200,000 on the last day of
each 3 month period commencing April 30, 1996. The Xxxxx Product Line
Value will reduce to zero upon the earlier of (a) the date of a public
or private debt or equity placement of any of the Loan Parties or (b)
July 31, 1996.
"EBIT" shall mean, for any period, the sum of consolidated net
income of GNI and its Subsidiaries for such period plus interest expense
and taxes to the extent deducted from the calculation of consolidated
net income in such period.
"Sixth Amendment" shall mean the Sixth Amendment to Credit
Agreement dated as of November 3, 1995 among the Loan Parties and the
Lender.
4. Section 4.08 of the Credit Agreement is hereby amended by adding
the following subsection (c):
"(c) GNI shall pay to the Lender a monthly fee in the amount of
$10,000 each month commencing on the date of the Sixth Amendment and on
the same day of each month thereafter until the Xxxxx Product Line Value
equals zero; provided that GNI shall pay to the Lender an aggregate
amount hereunder not less than $40,000."
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5. The Lender and the Loan Parties agree that the TNRCC Letter of
Credit is not issued under Facility B, but that the Loan Parties agree that
GNI's reimbursement obligation in connection with the TNRCC Letter of Credit is
intended to be secured by the Security Instruments and guaranteed by the
Guaranty Agreements.
6. Section 8.23 of the Credit Agreement is hereby amended to read as
follows:
"Section 8.23 Tangible Net Worth. Maintain, at all times, on a
consolidated basis for GNI and all Subsidiaries, tangible net worth
(being (a) total assets, based upon GAAP, exclusive of (i) any equity
security other than Liquid Investments, (ii) any cash surrender value of
any life insurance policies, and (iii) any franchises, licenses,
Permits, patents, patent applications, patent rights, copyrights,
trademarks, trade names, goodwill, experimental or organizational
expense, or other like intangibles less (b) the amount of all
Indebtedness, except for Indebtedness that is contractually subordinated
to the Obligations on terms satisfactory to the Lender ("Subordinated
Debt") on a balance sheet prepared as of the date of determination of
Tangible Net Worth and in accordance with GAAP,) equal to no less than
$20,000,000; provided that such minimum amount required shall be
increased quarterly, on a cumulative basis, the first such increase to
occur on December 31, 1995 and as of the last day of each calendar
quarter thereafter, by (x) an aggregate amount equal to 80% of positive
income, if any, from operations of GNI and all Subsidiaries on a
consolidated basis, after provision for federal income tax, for the
three-month period ending on such date, and (y) an aggregate amount
equal to 100% of the net proceeds from the issuance, in a public or
private transaction, of any Subordinated Debt or shares of capital stock
of any of the Loan Parties, other than the issuance of any such capital
stock to one or more of the Loan Parties, for the three-month period
ending on such date."
7. Section 8.25 of the Credit Agreement is hereby amended to read as
follows:
"Section 8.25 Debt Coverage Ratio. Maintain, as of the close of
each calendar quarter for the twelve-month period ending on such date, a
ratio of EBIT for such twelve-month period to the sum of current
maturities of long term Indebtedness and interest expense for such
twelve-month period of at least 1.25 to 1.0."
8. Article VIII is further hereby amended by adding the following
new Section 8.28:
"Section 8.28 Cash Flow Leverage. Maintain, as of the close of
each calendar quarter for the twelve-month period ending on such date, a
ratio, on a consolidated basis for GNI and all Subsidiaries, of the sum
of the Obligations and
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other senior funded debt of GNI and all Subsidiaries outstanding on such
date to EBIT for such twelve-month period of no greater than 3.50 to
1.00. For purposes of this Section, "senior funded debt" shall mean all
interest bearing Indebtedness except for Subordinated Debt."
9. This Amendment shall become binding on the Lender when, and only
when, the Lender shall have received each of the following in form and
substance satisfactory to the Lender or its counsel:
(a) counterparts of this Amendment executed by the Loan
Parties and the Lender;
(b) copies of corporate resolutions approving this Amendment
and authorizing the transactions contemplated herein, duly adopted by
the board of directors of each Loan Party, accompanied by certificates
of the secretary or an assistant secretary of the relevant Loan Party to
the effect that such copies are true and correct copies of resolutions
duly adopted at a meeting or by unanimous consent of the board of
directors of the relevant Loan Party, and that such resolutions
constitute all the resolutions adopted with respect to such transactions
have not been amended, modified or revoked in any respect, and are in
full force and effect;
(c) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Lender may
reasonably request.
10. The parties hereto hereby acknowledge and agree that, except as
specifically supplemented and amended, changed or modified hereby, the Credit
Agreement shall remain in full force and effect in accordance with its terms.
Each Loan Party hereby confirms and ratifies its liability under its respective
Security Instrument and Guaranty Agreement in all respects to which it is a
party. Each Security Instrument and Guaranty Agreement shall remain
enforceable against each Loan Party which is a party thereto in accordance with
its terms and shall secure or guarantee all of the Obligations, including
without limitation, the Obligations under the new Note B and shall secure or
guarantee the reimbursement obligation of GNI in connection with the TNRCC
Letter of Credit.
11. The Loan Parties hereby reaffirm that as of the date of this
Amendment, the representations and warranties contained in the Loan Documents
are true and correct on the date hereof as though made on and as of the date of
this Amendment.
12. The Loan Parties represent and warrant that (a) the execution,
delivery and performance of this Amendment are within the corporate power and
authority of the Loan Parties
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and have been duly authorized by appropriate proceedings, (b) the Liens under
the Security Instruments are valid and subsisting and secure the Loan Parties'
obligations under the Loan Documents as amended hereby and the reimbursement
obligation of GNI in connection with the TNRCC Letter of Credit, and (c) this
Amendment constitutes a legal, valid, and binding obligation of the Loan Parties
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and general principles of equity.
13. This Amendment shall be construed in accordance with and governed
by the laws of the United States of America and the State of Texas.
14. THE CREDIT AGREEMENT, THIS AMENDMENT, THE WAIVER, THE NOTES, THE
GUARANTY AGREEMENTS, THE LETTER OF CREDIT AGREEMENTS, THE SECURITY INSTRUMENTS
AND THE OTHER WRITTEN DOCUMENTS REFERRED TO IN THE CREDIT AGREEMENT OR EXECUTED
IN CONNECTION WITH OR AS SECURITY FOR THE NOTES REPRESENT, COLLECTIVELY, THE
FINAL AGREEMENT AMONG THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN OR ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed effective as of the date first above written.
LOAN PARTIES: THE GNI GROUP, INC.
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By:___________________________________
Name: Xxxxx X. Xxxxxx, III
Title: Chief Financial Officer
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DISPOSAL SYSTEMS, INC.
By:___________________________________
Name: Xxxxx X. Xxxxxx, III
Title: Vice President
RESOURCE TRANSPORTATION SERVICES, INC.
By:___________________________________
Name: Xxxxx X. Xxxxxx, III
Title: Vice President
CHEMICAL RESOURCE PROCESSING, INC.
By:__________________________________
Name: Xxxxx X. Xxxxxx, III
Title: Vice President
DISPOSAL SYSTEMS OF CORPUS CHRISTI, INC.
By:__________________________________
Name: Xxxxx X. Xxxxxx, III
Title: Vice President
LENDER: NATIONSBANK OF TEXAS, N.A.
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By:___________________________________
Name: Xxxxxxx Xxxxxxx
Title: Vice President
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