<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
{X} QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1993
OR
{ } TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________to__________________
Commission File Number 1-7477
CRSS INC.
(Exact Name of registrant as specified in its Charter)
<TABLE>
<S> <C>
DELAWARE 74-1677382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1177 WEST LOOP SOUTH, SUITE 800, HOUSTON, TEXAS 77027
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (713) 552-2000
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of Common Stock Outstanding at February 4, 1994
- ---------------------------- ------------------------------------
$1 Par Value 12,776,808
<PAGE> 2
CRSS INC. AND SUBSIDIARIES
FORM 10-Q
DECEMBER 31, 1993
INDEX
PAGE
----
NUMBER
- ------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet-
December 31, 1993 and June 30, 1993 . . . . . . . . . . . . . . 1
Consolidated Statement of Operations-Three and
Six Months Ended December 31, 1993 and 1992 . . . . . . . . . . . 2
Consolidated Statement of Cash Flows-Six Months Ended
December 31, 1993 and 1992 . . . . . . . . . . . . . . . . . . . 3
Notes to Consolidated Financial Statements . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . . 6
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . 11
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM I. CONSOLIDATED FINANCIAL STATEMENTS
CRSS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
December 31, 1993 June 30, 1993
----------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12,216 $ 49,327
Receivables, net 124,120 118,032
Deferred income taxes 14,477 14,591
Prepaid expenses and other assets 6,141 2,749
Net current assets from discontinued operations 5,159 5,497
-------- --------
Total current assets 162,113 190,196
Property and equipment, net 87,575 90,475
Net noncurrent assets from discontinued operations 9,747 9,747
Other assets:
Long-term investments 65,788 29,810
Deferred charges and other 3,990 3,858
-------- --------
69,778 33,668
-------- --------
$329,213 $324,086
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $68,030 $68,053
Current portion of long-term obligations 12,194 2,595
Amounts billed in excess of revenues
recognized on contracts in process 16,709 25,813
Other current liabilities 18,318 22,836
-------- --------
Total current liabilities 115,251 119,297
Non-recourse project financing 62,093 63,238
Other long-term obligations 13,876 12,798
Deferred income taxes 36,576 35,275
Minority interest in common stock of subsidiary subject to put 13,209 7,084
Shareholders' equity:
Preferred stock, no par value, 2,000,000 shares authorized
but unissued - -
Common stock, $l.00 par value, 50,000,000 shares authorized;
issued December 31, 1993 - 16,308,000 shares and
June 30, 1993 - 16,289,000 shares 16,308 16,289
Additional paid-in capital 68,172 68,054
Retained earnings 30,693 29,244
-------- --------
115,173 113,587
Treasury stock, at cost, 3,559,000 shares at December 31, 1993
and June 30, 1993 (26,826) (26,822)
Other (139) (371)
-------- --------
88,208 86,394
-------- --------
$329,213 $324,086
======== ========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
1
<PAGE> 4
CRSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended
December 31, December 31,
1993 1992 1993 1992
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Gross revenues $148,102 $151,376 $292,193 $269,580
Subcontract and procurement costs 93,457 85,624 180,564 149,860
-------- -------- -------- --------
Operating revenues 54,645 65,752 111,629 119,720
Costs and expenses:
Direct 29,330 30,669 59,914 58,810
Operating 25,713 30,321 51,368 59,417
-------- -------- -------- --------
55,043 60,990 111,282 118,227
Equity income in affiliates 4,632 2,179 7,586 3,024
Operating income from continuing operations 4,234 6,941 7,933 4,517
Other income (expense):
Non-operating income 205 817 490 1,848
Interest expense (1,967) (1,971) (3,856) (3,928)
Minority interest (279) (915) (468) (959)
-------- -------- -------- --------
(2,041) (2,069) (3,834) (3,039)
-------- -------- -------- --------
Earnings from continuing operations before income tax 2,193 4,872 4,099 1,478
Income tax 1,009 2,091 1,885 665
-------- -------- -------- --------
Earnings from continuing operations 1,184 2,781 2,214 813
Cumulative effect of changes in accounting principles - - - (8,575)
-------- -------- -------- --------
Net earnings (loss) $ 1,184 $ 2,781 $ 2,214 ($ 7,762)
======== ======== ======== ========
Primary and fully diluted earnings per common share :
Earnings from continuing operations $ 0.09 $ 0.21 $ 0.17 $ 0.06
Net earnings (loss) $ 0.09 $ 0.21 $ 0.17 ($ 0.59)
Weighted average common shares outstanding 13,013 13,075 13,010 13,212
======== ======== ======== ========
Dividends per common share $ 0.03 $ 0.03 $ 0.06 $ 0.06
======== ======== ======== ========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
2
<PAGE> 5
CRSS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS) SIX MONTHS ENDED
DECEMBER 31,
1993 1992
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 2,214 $ 813
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Deferred income taxes 1,415 366
Depreciation and amortization 3,795 4,242
Equity income in affiliates (7,586) (3,024)
Increase in receivables (6,088) (27,556)
Increase in prepaid expenses, deferred charges and other assets (3,524) (954)
Increase (decrease) in accounts payable and accrued expenses (23) 32,088
Increase (decrease) in amounts billed in excess of revenues
recognized on contracts in process (9,104) 4,065
Increase (decrease) in other current liabilities (4,518) 2,924
Distributions from affiliates 3,244 1,300
Other operating activities 344 29
-------- --------
Net cash provided by (used in) operating activities (19,831) 14,293
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (966) (2,288)
Investment in affiliates (24,300) (7,077)
Advances to discontinued operations - (900)
Payments and distributions from discontinued operations 338 4,515
Other investing activities (42) (471)
-------- --------
Net cash used in investing activities (24,970) (6,221)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term borrowings 9,500 -
Payments on long-term obligations (1,046) (1,788)
Purchase of treasury shares - (1,355)
Dividends paid on common stock (764) (769)
-------- --------
Net cash provided by (used in) financing activities 7,690 (3,912)
-------- --------
Net increase (decrease) in cash and cash equivalents (37,111) 4,160
Cash and cash equivalents at beginning of period 49,327 31,233
-------- --------
Cash and cash equivalents at end of period $ 12,216 $ 35,393
======== ========
</TABLE>
See Notes to Unaudited Consolidated Financial Statements.
3
<PAGE> 6
CRSS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited Consolidated Financial
Statements contain all adjustments necessary to present fairly the financial
position of CRSS Inc. and subsidiaries ("Company") as of December 31, 1993, the
results of operations for the three and six months ended December 31, 1993 and
1992 and cash flows for the six months ended December 31, 1993 and 1992. All
adjustments are of a normal recurring nature. These unaudited Consolidated
Financial Statements should be read in conjunction with the audited
Consolidated Financial Statements included in the June 30, 1993 Annual Report
to Shareholders. The results of operations for the three and six month periods
ended December 31, 1993 are not necessarily indicative of the results to be
expected for the full fiscal year. Certain amounts in the prior period
Consolidated Financial Statements have been reclassified to conform to the
current year presentation.
NOTE 2. UNCONSOLIDATED AFFILIATES
CRSS Capital Inc. ("CRSS Capital") has a 50.0 percent partnership interest in
the Hopewell, Appomattox, and Naheola facilities and a 47.5 percent partnership
interest in the Westwood facility. The partnership interests are accounted for
using the equity method.
Summarized financial information of the power and cogeneration limited
partnerships at 100 percent follows. Summarized financial information for the
three and six months ended December 31, 1992 includes results for the Westwood
and Hopewell facilities in addition to results for the Appomattox facility
beginning on the acquisition date of October 27, 1992. Summarized financial
information for the three and six months ended December 31, 1993 also includes
results for the Naheola facility which became operational in March 1993.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
(dollars in thousands) December 31, 1993 December 31, 1992
----------------- -----------------
<S> <C> <C>
Operating revenues $ 54,807 $ 23,986
Earnings from operations 20,685 10,517
Net earnings 9,325 4,307
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
December 31, 1993 December 31, 1992
----------------- -----------------
<S> <C> <C>
Operating revenues $ 89,546 $ 39,712
Earnings from operations 38,374 17,786
Net earnings 15,237 6,018
</TABLE>
CRSS Capital also has a 100 percent interest in the three 18-megawatt Viking
facilities, the accounts of which are consolidated in the CRSS Consolidated
Financial Statements.
4
<PAGE> 7
NOTE 3. SUBSEQUENT EVENT
On January 31, 1994, the Company (via redemption by CRSS Capital) repurchased
all of the common stock of CRSS Capital owned by Paribas North America, Inc.,
the 19 percent minority interest owner. The purchase price of $17,000,000 was
funded from available cash in addition to borrowings of $13,000,000 obtained
under the revolving credit facility maintained by the Company.
The acquisition will be accounted for using the purchase method of accounting.
The following unaudited proforma condensed consolidated balance sheet as of
December 31, 1993, which gives effect to the acquisition as if it had occurred
on that date, reflects adjustments made to the historical financial statements
for, (i) the $17,000,000 purchase price paid for minority interest of
$13,209,000 with resulting goodwill of $3,791,000 and (ii) borrowings of
$13,000,000 to finance the acquisition.
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Cash and cash equivalents $ 8,216
Receivables, net 124,120
Other current assets 25,777
----------
Total current assets 158,113
Property and equipment, net 87,575
Long-term investments 65,788
Deferred charges and other noncurrent assets 17,528
----------
$329,004
==========
Accounts payable and accrued expenses $ 68,030
Other current liabilities 47,221
----------
Total current liabilities 115,251
Non-recourse project financing 62,093
Other long-term obligations 26,876
Deferred income taxes 36,576
Shareholders' equity 88,208
----------
$ 329,004
==========
</TABLE>
5
<PAGE> 8
The following unaudited proforma consolidated results of operations for the six
months ended December 31, 1993 and for the year ended June 30, 1993, which give
effect to the acquisition as if it had occurred on July 1, 1992, reflects
adjustments made to the historical financial statements for, (i) amortization
of goodwill ($3,791,000) over a 20 year period, (ii) interest expense on
additional borrowings of $13,000,000 at a rate of 4.875 percent per annum
(LIBOR plus 1.125 percent), (iii) additional 19 percent of net earnings of CRSS
Capital, and (iv) related income tax adjustments.
<TABLE>
<CAPTION>
Six months ended Year ended
(in thousands) December 31,1993 June 30, 1993
---------------- -------------
<S> <C> <C>
Gross revenues $292,193 $ 546,304
Subcontract and procurement costs 180,564 298,238
---------- ---------
Operating revenues 111,629 248,066
Costs and expenses:
Direct 59,914 126,870
Operating 51,463 118,179
---------- ---------
111,377 245,049
Equity income in affiliates 7,586 8,038
---------- ---------
Operating income 7,838 11,055
Non-operating income 490 3,739
Interest expense (4,173) (8,462)
---------- ---------
Earnings from continuing operations
before income tax 4,155 6,332
Income tax (1,765) (2,549)
---------- ---------
Earnings from continuing operations $ 2,390 $ 3,783
========== =========
Primary and fully diluted earnings per common
share from continuing operations $ 0.18 $ 0.29
========== =========
Weighted average shares outstanding 13,010 13,138
========== =========
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
CONTINUING OPERATIONS
Consolidated gross revenues from continuing operations for the second quarter
of fiscal 1994 were $148.1 million versus $151.4 million for the corresponding
quarter of the prior fiscal year. Gross revenues for the six months ended
December 31, 1993 were $292.2 million versus $269.6 million for the
corresponding period of the prior fiscal year. The three and six months ended
December 31, 1992 included revenue earned by CRSS Capital, the independent
power and cogeneration subsidiary, in conjunction with the completion of
project development activities and term financing for the $70.6 million
Appomattox Cogeneration facility ("Appomattox") at the Stone Container
Corporation pulp and paper mill in Hopewell, Virginia. Partially offsetting
the decrease for the three
6
<PAGE> 9
months ended December 31, 1993, and contributing significantly to the
increase for the six months ended December 31, 1993 was higher gross revenues
attributable to CRSS Services, Inc. ("CRSS Services"), the design and
construction subsidiary. The increase in gross revenue for CRSS Services is
due primarily to an increase in the mix of projects with relatively higher
levels of subcontract and procurement pass-through costs.
Consolidated operating revenues from continuing operations for the three months
ended December 31, 1993 were $54.6 million compared with $65.8 million for the
corresponding period of the prior year, representing a decrease of $11.2
million, or 17 percent. The decrease is primarily due to revenue earned by
CRSS Capital during the three months ended December 31, 1992 in conjunction
with the Appomattox transaction discussed above. Also contributing to the
decrease in operating revenues is the lower volume of activity during the
second quarter of the current year for CRSS Services.
For the six months ended December 31, 1993, consolidated operating revenues
from continuing operations were $111.6 million compared with $119.7 million for
the corresponding period of the prior year, representing a decrease of $8.1
million, or 7 percent. The decrease is primarily due to the revenue earned by
CRSS Capital during the prior year in conjunction with the Appomattox
transaction discussed above. Partially offsetting the decrease is an increase
in operating revenues earned by CRSS Services, which is attributable to a
higher volume of current year- to-date activity, despite the decrease in second
quarter volume noted above.
Direct costs and expenses for the three months ended December 31, 1993 of $29.3
million were $1.4 million, or 5 percent, lower than the prior year amount of
$30.7 million. For the six months ended December 31, 1993, direct costs and
expenses were $59.9 million compared with $58.8 million for the corresponding
period of the prior year, an increase of $1.1 million, or 2 percent. The
fluctuations in direct costs and expenses are consistent with the fluctuations
in the design and construction activities for the three and six months ended
December 31, 1993, as discussed above.
Operating costs and expenses for the quarter ended December 31, 1993 were $25.7
million compared to $30.3 million for the corresponding quarter of the prior
year, a decrease of $4.6 million, or 15 percent. For the six months ended
December 31, 1993, operating costs and expenses were $51.4 million versus $59.4
million for the corresponding period of the prior year, a decrease of $8.0
million, or 14 percent. The decreases are primarily due to the cost reduction
program completed during fiscal 1993. Additionally, the three and six months
ended December 31, 1992 included costs incurred by CRSS Capital in conjunction
with the Appomattox transaction discussed above. The six months ended December
31, 1992 also included higher than expected severance related amounts,
recognized during the first quarter of fiscal 1993, associated with the cost
reduction program announced in August 1992.
Equity income in affiliates increased from $2.2 million for the three months
ended December 31, 1992 to $4.6 million for the three months ended December 31,
1993, an increase of $2.4 million, or 113 percent. For the six months ended
December 31, 1993, equity income in affiliates was $7.6 million compared to
$3.0 million for the six months ended December 31, 1992, an increase of $4.6
million, or 151 percent . The increases are primarily due to earnings from the
Naheola cogeneration facility, which became operational during the fourth
quarter of fiscal 1993. Also contributing to the increases were improved
operating results at the Hopewell cogeneration facility, coupled with the
additional current year earnings of the Appomattox cogeneration facility, which
was acquired October 27, 1992.
7
<PAGE> 10
Non-operating income for the three months ended December 31, 1993 was $0.2
million compared to $0.8 million for the three months ended December 31, 1992.
For the six months ended December 31, 1993, non-operating income was $0.5
million compared to $1.8 million for the corresponding period of the prior
year. The three and six months ended December 31, 1992 included interest
income from the guaranteed interest contract which was sold during the third
quarter of fiscal 1993. Also contributing to the decreases are lower cash
balances available for investment during the current year.
The consolidated earnings from continuing operations for the second quarter
ended December 31, 1993 were $1.2 million, or $0.09 per share, compared to
earnings from continuing operations of $2.8 million, or $0.21 per share, for
the corresponding period of the prior year. The decrease in second quarter
earnings is primarily due to the income generated in the prior year in
conjunction with the Appomattox transaction discussed above.
The consolidated earnings from continuing operations for the six months ended
December 31, 1993 were $2.2 million, or $0.17 per share, compared to earnings
from continuing operations of $0.8 million, or $0.06 per share, for the
corresponding period of the prior year. The increase is primarily due to the
lower operating costs resulting from the cost reduction program completed
during fiscal 1993 in addition to the significant increase in earnings
attributable to the power and cogeneration partnerships.
CONSOLIDATED RESULTS
The consolidated net earnings for the second quarter ended December 31, 1993,
were $1.2 million or, $0.09 per share versus net earnings of $2.8 million, or
$0.21 per share for the corresponding period of the prior year.
The consolidated net earnings for the six months ended December 31, 1993 were
$2.2 million, or $0.17 per share, compared to a net loss of $7.8 million, or
$0.59 per share, for the corresponding period of the prior year. The net loss
for the six months ended December 31, 1992 included an $8.6 million, or $0.64
per share, charge related to the adoption of new accounting standards related
to accounting for income taxes, postretirement benefits and postemployment
benefits.
BACKLOG
Gross revenue backlog of CRSS Services at December 31, 1993 was $419.4 million
compared with $468.3 million at September 30, 1993 and $584.5 million at
December 31, 1992. Operating revenue backlog at December 31, 1993 was $171.2
million compared with $177.2 million at September 30, 1993 and $180.0 million
at December 31, 1992. The decrease in gross revenue backlog is consistent with
the near completion of certain turnkey engineering, procurement and
construction projects, primarily in the Power market of CRS Sirrine Engineers
(a subsidiary of CRSS Services), coupled with delays in sales orders as
indicated by the decrease in operating revenue backlog. Operating revenue new
orders totalled $47.6 million and $84.6 million during the three and six months
ended December 31, 1993, respectively. The new orders were derived primarily
from the public/institutional, consumer and technology, and pulp and paper
markets. Operating revenue backlog by segment follows:
8
<PAGE> 11
<TABLE>
<CAPTION>
(dollars in thousands)
December 31, September 30, December 31,
1993 1993 1992
----------- ------------- ------------
<S> <C> <C> <C>
Public/Institutional $ 104,257 $ 97,250 $ 90,543
Consumer and technology 38,417 40,629 21,660
Pulp and paper 14,098 20,433 32,895
Power 11,860 14,942 26,624
Corporate 2,600 3,900 8,244
---------- ---------- ----------
Total $ 171,232 $ 177,154 $ 179,966
========== ========== ==========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1993, totalled $47.0 million, which included
$12.2 million in cash and cash equivalents. As of June 30, 1993, working
capital was $70.9 million, which included cash and cash equivalents of $49.3
million. The $37.1 million decrease in cash and cash equivalents for the
period from June 30, 1993 to December 31, 1993 is due primarily to, (i) the
$30.0 million equity contribution made by CRSS Capital to the Naheola
Cogeneration Limited Partnership (of which CRSS's portion was $24.3 million),
and (ii) the timing of cash receipts and payments. Partially offsetting the
decrease in cash and cash equivalents is $9.5 million of short-term borrowings
obtained under the Company's revolving credit facility as further discussed
below, in addition to $3.2 million of partnership distributions received by
CRSS Capital.
At December 31, 1993, cash totalling $9.9 million has been reserved for the
Company's captive insurance requirements and CRSS Capital's cash reserve for
plant maintenance on the Viking projects in accordance with the terms of the
non-recourse project financing.
On January 18, 1994, the Company amended and restated its unsecured revolving
credit facility with four banks. The amount of the facility has been increased
to $50.0 million. The amount of facility available for borrowings is reduced
by the amount of all outstanding letters of credit issued thereunder, which
currently totals $16.3 million. The credit facility, which is available
through January 31, 1996, may be used for general corporate purposes subject to
certain restrictive covenants including, among others, liquidity ratio,
tangible net worth, debt and cash flow ratios and limitations on capital
investments. Borrowings under the facility bear interest at prime plus 0 or
0.25 percent (depending on certain financial ratios), or, at the Company's
option, the London Interbank Offered Rate plus 0.75 to 1.50 percent (depending
on certain financial ratios). At December 31, 1993, the Company had $9.5
million of borrowings under the revolving credit facility, which were repaid
during January 1994.
On January 31, 1994, the Company (via redemption by CRSS Capital) repurchased
all of the common stock of CRSS Capital owned by Paribas North America, Inc.,
the 19 percent minority interest owner. The purchase price of $17.0 million
was funded from available cash in addition to borrowings of $13.0 million
obtained under the revolving credit facility.
Management believes that existing cash, cash flow from operations and existing
credit facilities will be sufficient to meet the ongoing requirements of the
operations of the Company. In addition, the above sources can be supplemented
with other external sources of funds to meet additional cash requirements if
necessary.
9
<PAGE> 12
PROFORMA COMBINING BALANCE SHEET
As discussed in Note 2, the Company accounts for CRSS Capital's investment in
fifty percent or less owned power and cogeneration limited partnerships on the
equity method. The following presents a proforma condensed combining balance
sheet of the Company, as of December 31, 1993, assuming the fifty percent or
less owned entities are combined with CRSS Capital:
(dollars in thousands)
<TABLE>
<CAPTION>
CRSS CRSS Unallocated CRSS
Capital Services Corporate Inc.
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $ 81,309 $ (4,445) $ 9,502 $ 86,366
Receivables, net 20,887 115,099 3,284 139,270
Deferred income taxes 1,259 9,921 3,297 14,477
Other current assets 2,805 4,588 6,569 13,962
--------- --------- --------- ---------
Total current assets 106,260 125,163 22,652 254,075
Property, plant and equipment, net 625,353 5,789 6,186 637,328
Other noncurrent assets 11,794 1,904 7,352 21,050
--------- --------- --------- ---------
$ 743,407 $ 132,856 $ 36,190 $ 912,453
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable and accrued expenses $ 25,614 $ 53,166 $ 10,455 $ 89,235
Fees billed but unearned -- 16,709 -- 16,709
Current portion of long-term obligations 19,553 -- 9,965 29,518
Other current liabilities 1,845 6,475 9,998 18,318
--------- --------- --------- ---------
Total current liabilities 47,012 76,350 30,418 153,780
Non-recourse project financing 523,407 -- -- 523,407
Other long-term obligations 24,192 233 13,643 38,068
Deferred income taxes 43,620 (1,088) (5,956) 36,576
Minority interest in common stock
of subsidiary subject to put 13,209 -- -- 13,209
Minority interest in partnerships 59,205 -- -- 59,205
Shareholders' equity 32,762 57,361 (1,915) 88,208
--------- --------- --------- ---------
$ 743,407 $ 132,856 $ 36,190 $ 912,453
========= ========= ========= =========
</TABLE>
10
<PAGE> 13
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
10.1 Amended and Restated Credit Agreement dated as of
January 18, 1994 among CRSS Inc. and NationsBank of
Texas, N.A. as agent, ABN AMRO Bank N.V., Texas
Commerce Bank National Association, and First
Interstate Bank of Texas, N.A.
(b) Report on Form 8-K
The Company filed a report on Form 8-K dated January 31,
1994 reporting the repurchase (via redemption by CRSS Capital)
of all of the common stock of CRSS Capital owned by Paribas
North America, Inc., the 19 percent minority interest owner.
An unaudited proforma condensed consolidated balance sheet as
of December 31, 1993, and unaudited proforma consolidated
statements of operations for the six months ended December 31,
1993 and for the year ended June 30, 1993 were filed giving
effect to the transaction.
11
<PAGE> 14
CRSS INC. AND SUBSIDIARIES
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.
CRSS Inc.
______________________________
(Registrant)
Date February 7, 1994 /s/ BRUCE W. WILKINSON
______________________________
Bruce W. Wilkinson
Chairman,
Chief Executive Officer
and Director
Date February 7, 1994 /s/ WILLIAM J. GARDINER
______________________________
William J. Gardiner
Senior Vice President/Chief
Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)
12
<PAGE> 1
AMENDED AND RESTATED
CREDIT AGREEMENT
among
CRSS INC.,
Borrower
NATIONSBANK OF TEXAS, N.A.,
Agent
and
THE LENDERS NAMED HEREIN,
Lenders
$50,000,000
AS OF JANUARY 18, 1994
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . . . . 10
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.1 Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.2 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3 LC Subfacility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.4 Reduction or Termination . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.1 Notes and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.2 Interest and Principal Payments . . . . . . . . . . . . . . . . . . . . . 14
3.3 Interest Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.7 Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.9 Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.10 Conversions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.11 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.12 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . 17
3.13 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.14 Booking Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.15 Basis Unavailable or Inadequate for LIBOR Rate . . . . . . . . . . . . . . 18
3.16 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.17 Change in Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.18 Funding Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.19 Extension of Termination Date . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1 Treatment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2 Agency Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3 LC Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4 Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5 Facility Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 5 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 20
6.1 Purpose of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . 20
6.2 Corporate Existence, Good Standing, and Authority . . . . . . . . . . . . 20
6.3 Material Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.4 Authorization and Contravention . . . . . . . . . . . . . . . . . . . . . 20
6.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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<TABLE>
<S> <C> <C>
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.11 Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.12 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 22
6.14 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.16 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.1 Items to be Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.4 Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8 Maintenance of Existence, Assets, and Business . . . . . . . . . . . . . . 24
7.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.10 Preservation and Protection of Rights . . . . . . . . . . . . . . . . . . 24
7.11 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.13 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.14 Repurchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 8 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.2 Prepayment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . 26
8.3 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.4 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.5 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8.6 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 26
8.7 Compliance with Laws and Documents . . . . . . . . . . . . . . . . . . . . 26
8.8 Loans, Advances, and Investments . . . . . . . . . . . . . . . . . . . . . 26
8.9 Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . 27
8.10 Mergers and Dissolutions . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.12 Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . . . . . . 28
8.13 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 9 FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1 Cash Flow Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3 Liquidity Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 10 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.1 Payment of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.3 Debtor Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.4 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . . . . 29
10.5 Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.6 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.7 Ownership of Other Companies . . . . . . . . . . . . . . . . . . . . . . . 29
10.8 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . 30
10.9 SEC Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . 30
10.10 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.11 LCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.12 Validity and Enforceability of Loan Papers . . . . . . . . . . . . . . . . 30
SECTION 11 RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.1 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.2 Company Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.3 Performance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.4 Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.5 Course of Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.6 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.7 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 31
11.8 Diminution in Value of Collateral . . . . . . . . . . . . . . . . . . . . 31
SECTION 12 AGREEMENT AMONG LENDERS . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.1 Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
12.3 Proportionate Absorption of Losses . . . . . . . . . . . . . . . . . . . . 33
12.4 Delegation of Duties; Reliance . . . . . . . . . . . . . . . . . . . . . . 33
12.5 Limitation of Agent's Liability . . . . . . . . . . . . . . . . . . . . . 33
12.6 Default; Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.7 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . 34
12.8 Relationship of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.9 Foreign Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
12.10 Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 13 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.1 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.2 Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.3 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.4 Form and Number of Documents . . . . . . . . . . . . . . . . . . . . . . . 35
13.5 Exceptions to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 35
13.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.8 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.9 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
13.10 Venue; Service of Process; Jury Trial . . . . . . . . . . . . . . . . . . 36
13.11 Amendments, Consents, Conflicts, and Waivers . . . . . . . . . . . . . . . 37
13.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
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<TABLE>
<S> <C> <C>
13.14 Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . 38
13.15 Discharge Only Upon Payment in Full; Reinstatement
in Certain Circumstances . . . . . . . . . . . . . . . . . . . . . . . . 39
13.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
SCHEDULES AND EXHIBITS
<TABLE>
<S> <C>
SCHEDULE 1 Parties; Addresses; Committed Sums; Wiring Information
SCHEDULE 2 Material Companies
SCHEDULE 3 Existing SPPEs
SCHEDULE 5 Conditions Precedent
SCHEDULE 6.2 Jurisdictions of Incorporation and Business
SCHEDULE 6.3 Corporate Structure
SCHEDULE 6.7 Litigation
SCHEDULE 6.11 Permitted Liens
SCHEDULE 6.13 Transactions with Affiliates
EXHIBIT A Promissory Note
EXHIBIT B Guaranty
EXHIBIT C Notice of Borrowing
EXHIBIT D Notice of LC
EXHIBIT E Notice of Conversion
EXHIBIT F Compliance Certificate
EXHIBIT G Assignment
</TABLE>
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<PAGE> 6
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
January 18, 1994, among CRSS INC., a Delaware corporation ("BORROWER"), Lenders
(defined below), and NationsBank of Texas, N.A., as Agent for itself and the
other Lenders.
WHEREAS, Borrower, Agent and Lenders are party to that certain Credit
Agreement dated as of February 1, 1993 (as heretofore amended, the "EXISTING
AGREEMENT"); and
WHEREAS, Borrower has requested various modifications to the Existing
Agreement, including, without limitation, an increase in the amount of
available credit to an amount not to exceed $50,000,000;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Borrower, Agent and
Lenders agree that the Existing Agreement is hereby amended and restated to
read in its entirety as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 Definitions. As used in the Loan Papers:
AFFILIATE of any Person means any other individual or entity who
directly or indirectly controls, or is controlled by, or is under common
control with, that Person. For purposes of this definition only, "control,"
"controlled by," and "under common control with" mean possession, directly or
indirectly, of power to direct (or cause the direction of) management or
policies (whether through ownership of voting securities, by contract, or
otherwise).
AGENT means NationsBank of Texas, N.A., and its successor or
successors as agent for Lenders under this Agreement.
AGREEMENT means this Amended and Restated Credit Agreement, as
amended, supplemented, and restated from time to time.
APPLICABLE MARGIN means, for any day, the margin of interest over the
Base Rate or the LIBOR Rate, as the case may be, that is applicable when any
interest rate is determined under this agreement. The Applicable Margin is
subject to adjustment (upwards or downwards, as appropriate) based on the ratio
of Funded Debt to Cash Flow, as follows:
<TABLE>
<CAPTION>
Applicable
Margin for Applicable Margin
Base Rate for LIBOR Rate
Ratio of Funded Debt to Cash Flow Borrowings Borrowings
--------------------------------- ---------- ----------
<S> <C> <C>
Less than or equal to 1.0 to 1.0 0.000% 0.750%
Greater than 1.0 to 1.0 but less 0.000% 1.125%
than or equal to 2.0 to 1.0
Greater than 2.0 to 1.0 0.250% 1.500%
</TABLE>
1
<PAGE> 7
Cash Flow is calculated for the most recently completed four fiscal quarters of
Borrower and Funded Debt is calculated as of the last day of such four fiscal
quarter period. The ratio shall be deemed to be greater than 1.0 to 1.0 but
less than 2.0 to 1.0 until delivery of Financial Statements for the fiscal
quarter of Borrower ending March 31, 1994, as required by SECTION 7.1, and the
related Compliance Certificate. Upon such delivery, the ratio applicable to
any Advance made thereafter shall be determined from such Financial Statements
and shall thereafter be determined from the Current Financials and any related
Compliance Certificate. If Borrower ever fails to timely furnish to Agent the
Financial Statements required by SECTION 7.1 and any related Compliance
Certificate, then the maximum Applicable Margin shall apply until Borrower
furnishes such Financial Statements and Compliance Certificate to Agent.
APPLICABLE PERCENTAGE means, for any day, the commitment fee
percentage that is applicable when any commitment fee is determined under this
Agreement. The Applicable Percentage is subject to adjustment (upwards or
downwards, as appropriate) based on the ratio of Funded Debt to Cash Flow, as
follows:
<TABLE>
<CAPTION>
Ratio of Funded Debt to Applicable
Cash Flow Percentage
--------- ----------
<S> <C>
Less than or equal to 1.0 to 1.0 0.250%
Greater than 1.0 to 1.0 but less 0.250%
than or equal to 2.0 to 1.0
Greater than 2.0 to 1.0 0.375%
</TABLE>
Cash Flow is calculated for the most recently completed four fiscal quarters of
Borrower and Funded Debt is calculated as of the last day of such four fiscal
quarter period. The ratio shall be deemed to be greater than 1.0 to 1.0 but
less than 2.0 to 1.0 until delivery of Financial Statements for the fiscal
quarter of Borrower ending March 31, 1994, as required by SECTION 7.1, and the
related Compliance Certificate. Upon such delivery, the ratio applicable to
any Advance made thereafter shall be determined from such Financial Statements
and shall thereafter be determined from the Current Financials and any related
Compliance Certificate. If Borrower ever fails to timely furnish to Agent the
Financial Statements required by SECTION 7.1 and any related Compliance
Certificate, then the maximum Applicable Percentage shall apply until Borrower
furnishes such Financial Statements and Compliance Certificate to Agent.
BASE RATE means, for any day, the greater of (a) the annual interest
rate most recently announced by Agent as its prime rate in effect at its
principal office in Dallas, Texas, automatically fluctuating upward and
downward with and at the time specified in each announcement without special
notice to Borrower or any other Person (which prime rate may not necessarily
represent the lowest or best rate actually charged to a customer), and (b) the
sum of the Federal Funds Rate plus 0.5%.
BASE RATE BORROWING means a Borrowing bearing interest at the Base
Rate.
BORROWER is defined in the preamble to this Agreement.
BORROWING means any amount disbursed (a) by one or more Lenders to or
on behalf of Borrower under the Loan Papers, whether such amount constitutes an
original disbursement of funds, the continuation of an amount outstanding, or
payment under an LC (until such payment is reimbursed in accordance with the
applicable LC Agreement) or (b) by any Lender in accordance with, and to
satisfy the obligations of any Company under, any Loan Paper.
BORROWING DATE is defined in SECTION 2.2(A).
2
<PAGE> 8
BUSINESS DAY means (a) for all purposes, any day other than Saturday,
Sunday, and any other day that commercial banks are authorized by Law to be
closed in Dallas, Texas, or New York, New York, and (b) for purposes of any
LIBOR Rate Borrowing, a day that commercial banks are open for domestic or
international business in London.
CAPITAL LEASE means any capital lease or sublease that has been (or
under GAAP should be) capitalized on a balance sheet.
CASH FLOW means, when determined, the sum of:
(a) CRSS Capital Cash Flow, plus
(b) an amount calculated in accordance with GAAP on a consolidated
basis for Borrower and its Consolidated Subsidiaries
(excluding CRSS Capital, Inc.) as follows:
(i) recurring earnings from continuing operations,
excluding extraordinary gains and losses and before
taxes (for the most recently-completed four fiscal
quarters of Borrower)
adjusted by
(ii) deducting cash taxes paid or adding cash tax refunds
received (in either case, for the most
recently-completed four fiscal quarters of Borrower)
plus
(iii) depreciation and amortization expense (for the most
recently-completed four fiscal quarters of Borrower)
minus
(iv) all cash dividends paid and all cash purchases of
treasury stock during the four most
recently-completed fiscal quarters of Borrower.
CASH SOURCES means, when determined, the sum of:
(a) CRSS Capital Cash Flow, plus
(b) an amount calculated on a consolidated basis for Borrower and
its Consolidated Subsidiaries (excluding CRSS Capital, Inc.)
as follows:
(i) recurring earnings from continuing operations,
excluding extraordinary gains and losses and before
taxes (for the most recently-completed four fiscal
quarters of Borrower)
adjusted by
(ii) deducting cash taxes paid or adding cash tax refunds
received (in either case, for the most
recently-completed four fiscal quarters of Borrower)
plus
3
<PAGE> 9
(iii) depreciation and amortization expense (for the most
recently-completed four fiscal quarters of Borrower)
plus or minus (as the case may be)
(iv) other non-cash operating items.
CASH USES means, when determined, an amount calculated as follows on a
consolidated basis for Borrower and its Consolidated Subsidiaries (excluding
CRSS Capital, Inc., unless and until it becomes a wholly-owned Subsidiary of
Borrower):
(a) 33% of the sum of (i) the then-existing Principal Debt, and
(ii) 50% of the then-existing Total Letter of Credit Exposure
(other than the Lakewood LC Exposure)
plus
(b) Funded Debt due within one year (excluding the Obligation,
reimbursement obligations on undrawn letters of credit, and
Funded Debt as to which no recourse to any such Company exists
other than recourse only to specific assets of a direct or
indirect Subsidiary of CRSS Capital, Inc.)
plus
(c) capital expenditures during the four most recently-completed
fiscal quarters of Borrower
plus
(d) the greater of (i) zero, and (ii) 33% of the sum of (x) all
Obligatory Payments scheduled to be made in the next 12
months, plus (y) 50% of all Obligatory Payments scheduled to
be made after the 12th succeeding month, but on or before the
Termination Date, minus (z) Unencumbered Cash of Borrower and
its Consolidated Subsidiaries
plus
(e) all cash dividends paid during the four most
recently-completed fiscal quarters of Borrower
plus
(f) all cash purchases of treasury stock during the four most
recently-completed fiscal quarters of Borrower.
CODE means the Internal Revenue Code of 1986, as amended, and related
rules and regulations.
COMMITMENT PERCENTAGE means the proportion that a Lender's Committed
Sum bears to the aggregate Committed Sums of all Lenders.
COMMITMENT USAGE means, when determined and without duplication, the
sum of (a) the Principal Debt and (b) the Lenders' LC Exposure.
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COMMITTED SUM means the amounts (which are subject to reduction and
cancellation as provided in this Agreement) stated beside a Lender's name on
SCHEDULE 1 as most recently amended under this Agreement.
COMPANIES means, when determined, Borrower and each of its
Subsidiaries.
COMPLIANCE CERTIFICATE means a certificate signed by a Responsible
Officer of Borrower, substantially in the form of EXHIBIT F.
CONSOLIDATED DEBT means, when determined, recourse Funded Debt of
Borrower and the Consolidated Subsidiaries, calculated on a consolidated basis
(including, without limitation, 100% of Total Letter of Credit Exposure, other
than the Lakewood LC Exposure and exposure on letters of credit issued in lieu
of retainage on project payments or as performance guaranties, and 50% of
exposure on letters of credit issued in lieu of retainage on project payments
or as performance guaranties).
CONSOLIDATED NET WORTH means, when determined, the consolidated
stockholders' equity of Borrower and the Consolidated Subsidiaries, calculated
in accordance with GAAP but excluding currency translation adjustments.
CONSOLIDATED SUBSIDIARY means, when determined, any Person whose
financial accounts should be consolidated with the financial accounts of
Borrower in accordance with GAAP.
CONSOLIDATED TANGIBLE NET WORTH means, when determined, the
consolidated stockholders' equity of Borrower and the Consolidated
Subsidiaries, calculated in accordance with GAAP but excluding currency
translation adjustments, minus (i) all write-ups of assets of a going concern
business made within twelve months after the acquisition of such business
subsequent to September 30, 1993, in the book value of any asset owned by
Borrower or any Consolidated Subsidiary, and (ii) all unamortized debt discount
and expense, unamortized deferred charges (including deferred taxes), goodwill,
patents, trademarks, service marks, trade names, copyrights, organization or
developmental expenses, and other intangible assets.
CRSS CAPITAL CASH FLOW means, when determined, recurring cash flow of
CRSS Capital, Inc. in the form of Distributions and administrative fees from
SPPEs (less actual expenses of CRSS Capital, Inc. and cash advances made by
CRSS Capital, Inc. to any SPPE (in each case, for the four most
recently-completed four fiscal quarters of Borrower)).
CURRENT FINANCIALS means, when determined, the consolidated Financial
Statements of Borrower and its Subsidiaries most recently delivered to Agent
under SECTIONS 5, 7.1(A), or 7.1(B), as the case may be.
DEBT means (without duplication), for any Person, (a) all obligations
required by GAAP to be classified upon such Person's balance sheet as
liabilities, (b) liabilities secured (or for which the holder of the Debt has
an existing Right, contingent or otherwise, to be so secured) by any Lien
existing on property owned or acquired by that Person, (c) obligations that
have been (or under GAAP should be) capitalized for financial reporting
purposes, and (d) all guaranties, endorsements, and other contingent
obligations with respect to Debt of others (other than endorsements for
collection or deposit in the ordinary course of business).
DEBTOR RELIEF LAWS means the Bankruptcy Code of the United States of
America and all other applicable liquidation, conservatorship, bankruptcy,
fraudulent transfer, moratorium, rearrangement, receivership, insolvency,
reorganization, suspension of payments, or similar Laws from time to time in
effect affecting the Rights of creditors.
DEFAULT is defined in SECTION 10.
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DEFAULT RATE means an annual rate of interest equal from day to day to
the lesser of (a) the Base Rate plus 2% and (b) the Maximum Rate.
DETERMINING LENDERS means, when determined, any combination of Lenders
holding at least 66.7% of the aggregate Committed Sums or, if any Borrowings
are unpaid, 66.7% of the Principal Debt.
DISTRIBUTION for any Person means, with respect to any shares of any
capital stock or other equity securities issued by that Person, (a) the
retirement, redemption, purchase, or other acquisition for value of those
securities, (b) the declaration or payment of any dividend on or with respect
to those securities, (c) any loan or advance by that Person to, or other
investment by that Person in, the holder of any of those securities, and (d)
any other payment by that Person with respect to those securities.
EMPLOYEE PLAN means an employee pension benefit plan covered by Title
IV of ERISA and established or maintained by any Company.
ENVIRONMENTAL LAW means any Law that relates to the pollution or
protection of the environment or to Hazardous Substances.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and related rules and regulations.
ERISA AFFILIATE means any Person that, for purposes of Title IV of
ERISA, is a member of Borrower's controlled group or is under common control
with Borrower within the meaning of Section 414 of the Code.
EXHIBIT means an exhibit attached to this Agreement unless otherwise
specified.
EXISTING BANK DEBT means all Debt owed by any Company arising under
the $40,000,000 Credit Agreement dated as of February 1, 1993, among Borrower,
the banks listed therein, and NationsBank of Texas, N.A., as agent.
EXISTING SPPES means each entity listed on SCHEDULE 3.
FEDERAL FUNDS RATE means, for any day, the annual rate (rounded
upwards, if necessary, to the nearest 0.01%) determined (which determination is
conclusive and binding, absent manifest error) by Agent to be equal to the
weighted average of the rates on overnight federal funds transactions with
member banks of the Federal Reserve System arranged by federal funds brokers
published for such day by the Federal Reserve Bank of New York on the next
Business Day; provided, however, that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be the rate for such transactions
published for the preceding Business Day, or (b) if those rates are not
published for any Business Day, the average of the quotations at approximately
10:00 a.m. (Dallas, Texas time) on such Business Day received by Agent from
three Federal funds brokers of recognized standing selected by Agent in its
sole discretion.
FINANCIAL STATEMENTS means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared in
accordance with GAAP. Profit and loss statements and statements of cash flow
must be in comparative form to the corresponding period of the preceding fiscal
year, and balance sheets and reconciliations of capital and surplus must be in
comparative form to the prior year-end figures.
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FUNDED DEBT means, as of the date of determination, the following:
(i) all obligations for borrowed money (whether as a direct obligor on a
promissory note, a reimbursement obligor on a letter of credit, a guarantor, or
otherwise) plus (but without duplication) (ii) all Capital Lease obligations
calculated in accordance with GAAP.
FUNDING LOSS means any loss (excluding loss of anticipated profit, if
any) or expense that any Lender reasonably incurs because (a) Borrower fails or
refuses (for any reason whatsoever other than a default by Agent or the Lender
claiming such loss or expense) to take any Borrowing that it has requested
under this Agreement, or (b) Borrower prepays or pays any LIBOR Rate Borrowing
or converts any LIBOR Rate Borrowing to a Base Rate Borrowing, in each case,
before the last day of the applicable Interest Period.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time.
GUARANTOR means each direct or indirect wholly-owned Subsidiary of
Borrower that (i) owns at least 5% of Borrower's consolidated assets, (ii)
contributed at least 5% of Borrower's consolidated earnings before interest and
taxes, calculated for the four fiscal quarters of Borrower most recently
completed, or (iii) accounted for at least 5% of Consolidated Tangible Net
Worth. Borrower's Form 10-Q or Form 10-K, whichever was most recently filed
with the Securities and Exchange Commission, shall resolve any dispute among
the parties hereto as to the applicability of any of the foregoing clauses. As
of the date hereof, the following Companies are Guarantors: CRSS Services,
Inc., CRSS Architects, Inc., CRSS Constructors, Inc., CRS Sirrine Engineers,
Inc., and CRSS Constructors International, Inc.
GUARANTY means a guaranty substantially in the form of EXHIBIT B.
HAZARDOUS SUBSTANCE means any substance (a) the presence of which
requires removal, remediation, or investigation under any Environmental Law, or
(b) that is defined or classified as a hazardous waste, hazardous material,
pollutant, contaminant, or toxic or hazardous substance under any Environmental
Law.
INTEREST PERIOD is determined in accordance with SECTION 3.9.
LAKEWOOD LC means that LC issued by Agent on behalf of Borrower under
this Agreement in the approximate amount of $23,000,000 in connection with the
Lakewood cogeneration project and any renewal thereof or replacement therefor.
LAKEWOOD LC EXPOSURE means the face amount of the Lakewood LC.
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, and
interpretations of any Tribunal.
LC means a letter of credit issued by Agent under this Agreement and
an LC Agreement.
LC AGREEMENT means a letter of credit application and agreement (in
form and substance satisfactory to Agent) submitted by Borrower to Agent for an
LC for the account of any Company.
LC SUBFACILITY means a subfacility for the issuance of LCs, as
described in SECTION 2.3.
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LENDERS means the financial institutions named on SCHEDULE 1 or on the
most recently amended SCHEDULE 1, if any, delivered by Agent under this
Agreement, and, subject to this Agreement, their respective successors and
assigns (but not any Participant who is not otherwise a party to this
Agreement).
LENDERS' LC EXPOSURE means, without duplication, the sum of (a) the
aggregate face amount of all undrawn and uncancelled LCs, plus (b) the
aggregate unpaid reimbursement obligations of Borrower under drawings or drafts
under any LC; provided that for purposes of calculations under SECTIONS 9.1,
9.2 AND 9.4, Lenders' LC Exposure shall not include the Lakewood LC Exposure.
LIBOR RATE means, with respect to a LIBOR Rate Borrowing for the
relevant Interest Period, the annual interest rate (rounded upward, if
necessary, to the nearest 0.01%) equal to the quotient obtained by dividing (a)
the rate that deposits in United States dollars are offered by Agent to banks
in the London interbank market at approximately 11:00 a.m. (London time) two
Business Days before the first day of the applicable Interest Period in an
amount comparable to the amount of the LIBOR Rate Borrowing and having a
maturity approximately equal to the applicable Interest Period; by (b) one
minus the Reserve Requirement (expressed as a decimal) applicable to the
relevant Interest Period.
LIBOR RATE BORROWING means a Borrowing bearing interest at the sum of
the LIBOR Rate plus the Applicable Margin.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind, and any other
Right of or arrangement with any creditor to have its claim satisfied out of
any property or assets, or the proceeds therefrom, before the general creditors
of the owner thereof.
LITIGATION means any action by or before any Tribunal.
LOAN PAPERS means (a) this Agreement, certificates delivered under
this Agreement, and Exhibits and Schedules to this Agreement, (b) all
agreements, documents, and instruments in favor of Agent or Lenders (or Agent
on behalf of Lenders) ever delivered under this Agreement or otherwise
delivered in connection with all or any part of the Obligation, (c) all LCs and
LC Agreements, and (d) all renewals, extensions, and restatements of, and
amendments and supplements to, any of the foregoing.
MATERIAL ADVERSE EVENT means any circumstance or event that,
individually or collectively, would reasonably be expected to result in any
material and adverse effect on (a) the ability of any Company to perform any of
its payment or other material obligations under the Loan Papers or the ability
of Agent or any Lender to enforce any of those obligations or any of their
respective Rights under the Loan Papers, or (b) the financial condition of the
Companies as a whole as represented to Lenders in the Current Financials.
MATERIAL COMPANY means each Company listed on SCHEDULE 2 (as amended
from time to time as approved by Determining Lenders).
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for a Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest that,
under applicable Law, that Lender is permitted to contract for, charge, take,
reserve, or receive on the Obligation.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code to which any Company
or any ERISA Affiliate is making, or has made, or is accruing, or has accrued,
an obligation to make contributions.
NOTES is defined in SECTION 3.1(A).
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NOTICE OF BORROWING means a notice substantially in the form of
EXHIBIT C.
NOTICE OF CONVERSION is defined in SECTION 3.10.
NOTICE OF LC is defined in SECTION 2.3(A).
OBLIGATION means all present and future indebtedness, liabilities, and
obligations, and all renewals, increases, and extensions thereof, or any part
thereof, now or hereafter owed to Agent or any Lender by any Company under any
Loan Paper, together with all interest accruing thereon, fees, costs, and
expenses (including, without limitation, all reasonable attorneys' fees and
expenses incurred in the enforcement or collection thereof) payable under the
Loan Papers or in connection with the protection of Rights under the Loan
Papers.
OBLIGATORY PAYMENTS means all equity infusions, stock repurchases, and
similar investment-related payments required to be made by any Company
(excluding CRSS Capital, Inc., and its Subsidiaries, unless and until CRSS
Capital, Inc., becomes a wholly-owned Subsidiary of Borrower).
PARTICIPANT is defined in SECTION 13.14(B).
PARIBAS means Paribas North America, Inc.
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
PERMITTED LIENS means Liens described on SCHEDULE 6.11.
PERSON means any individual, entity, or Tribunal.
POTENTIAL DEFAULT means the occurrence of any event or existence of
any circumstance that would, with the giving of notice or lapse of time or
both, become a Default.
PRINCIPAL DEBT means, when determined, the aggregate unpaid principal
balance of all Borrowings.
PRO RATA and PRO RATA PART means, when determined for any Lender, the
proportion that the Principal Debt owed to it bears to the aggregate Principal
Debt owed to all Lenders.
PURCHASER is defined in SECTION 13.14(C).
REPORTABLE EVENT has the meaning specified in Section 4043 of ERISA in
connection with an Employee Plan, excluding events for which the notice
requirement is waived under applicable PBGC regulations.
REPRESENTATIVES means representatives, officers, directors, employees,
attorneys, and agents.
RESERVE REQUIREMENT means, with respect to any LIBOR Rate Borrowing
for the relevant Interest Period, the maximum aggregate reserve requirements
(including all basic, supplemental, emergency, special, marginal, and other
reserves required by applicable Law) applicable to a member bank of the Federal
Reserve System for eurocurrency fundings or liabilities.
RESPONSIBLE OFFICER means the chairman, president, chief executive
officer, chief financial officer, treasurer, or assistant treasurer of
Borrower.
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RIGHTS means rights, remedies, powers, privileges, and benefits.
SCHEDULE means a schedule attached to this Agreement unless specified
otherwise.
SPPE means a special-purpose project entity in which CRSS Capital,
Inc. has an ownership interest, including the Existing SPPEs.
SUBSIDIARY of any Person means any entity of which at least 50% (in
number of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person.
TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon that Person, its income, or any of its
properties, franchises, or assets.
TERMINATION DATE means the earlier of (a) January 31, 1996, (subject,
however, to the annual extension of such anniversary date under SECTION 3.19),
(b) the effective date that Lenders' commitments to lend under this Agreement
are otherwise cancelled or terminated in accordance with this Agreement, and
(c) if Borrower fails to timely comply with SECTION 7.14, January 31, 1995.
TOTAL COMMITMENT means, when determined, the sum of all Committed Sums
for all Lenders (as reduced or cancelled under this Agreement) then in effect.
TOTAL LETTER OF CREDIT EXPOSURE means, without duplication, the sum of
(a) the aggregate face amount of all undrawn and uncancelled letters of credit
issued for the account of any Company by any Person, plus (b) the aggregate
unpaid reimbursement obligations of the Companies under drawings or drafts
under any letter of credit; provided that for purposes of calculations under
SECTION 9, Total Letter of Credit Exposure shall not include the Lakewood LC
Exposure.
TRIBUNAL means any (a) local, state, or federal judicial, executive,
or legislative instrumentality, (b) private arbitration board or panel, or (c)
central bank.
TYPE means any type of Borrowing determined with respect to the
applicable interest option.
UCP means (a) as to any LC issued through and including December 31,
1993, the Uniform Customs and Practices for Documentary Credit (1983 version),
International Chamber of Commerce Publication No. 400 (as amended or modified)
and (b) as to any LC issued from and after January 1, 1994, the Uniform Customs
and Practices for Documentary Credit (1993 version), International Chamber of
Commerce Publication No. 500 (as amended or modified).
UNENCUMBERED CASH means cash, cash equivalents maturing within one
year from the date of acquisition, and readily marketable liquid investments
maturing within one year from the date of acquisition, in each case which is
not subject to or the subject of any escrow agreement, any segregated purpose,
or any other transfer restraint, and which, if not owned by Borrower, can be
freely transferred (by dividend, loan, or otherwise) to Borrower without the
consent or approval of any Person (other than the board of directors of the
transferor).
1.2 Number and Gender of Words. The singular number includes the
plural where appropriate and vice versa, and words of any gender include each
other gender where appropriate.
1.3 Accounting Principles. All accounting and financial terms
used in the Loan Papers and the compliance with each financial covenant therein
will be determined in accordance with GAAP, and all accounting
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principles will be applied on a consistent basis so that the accounting
principles in a current period are comparable in all material respects to those
applied during the preceding comparable period.
SECTION 2 COMMITMENT.
2.1 Credit Facility. Subject to the provisions in the Loan
Papers, each Lender severally and not jointly agrees to lend to Borrower its
Commitment Percentage of one or more Borrowings, which Borrower may borrow,
repay, and reborrow under this Agreement. Borrowings are subject to the
following conditions:
(a) Each Borrowing must occur on a Business Day and no
later than the Business Day immediately preceding the Termination
Date;
(b) Each Borrowing must be in an amount not less than (i)
$500,000 or a greater integral multiple of $100,000 (if a Base Rate
Borrowing), or (ii) $2,000,000 or a greater integral multiple of
$500,000 (if a LIBOR Rate Borrowing); and
(c) When determined, the Commitment Usage (i) may not
exceed the Total Commitment, and (ii) for any Lender may not exceed
such Lender's Committed Sum.
2.2 Borrowing Procedure. The following procedures apply to
Borrowings (other than drawings under an LC):
(a) Borrower may request a Borrowing by submitting a
Notice of Borrowing to Agent. A Notice of Borrowing submitted by
Borrower to Agent is irrevocable and binding on Borrower. It must be
received by Agent no later than 11:00 a.m. Dallas, Texas, time (i) on
the third Business Day preceding the date on which funds are requested
(the "BORROWING DATE") for any LIBOR Rate Borrowing or (ii) on the
Borrowing Date for any Base Rate Borrowing. Agent shall promptly
notify each Lender of its receipt of any Notice of Borrowing and its
contents and, as soon after receipt thereof as is reasonably
practical, deliver a copy of the Notice of Borrowing to each Lender;
(b) Each Lender shall remit its Commitment Percentage of
each requested Borrowing by wire transfer to Agent pursuant to Agent's
wire transfer instructions on SCHEDULE 1 (or as otherwise directed by
Agent) in funds that are available for immediate use by Agent by 2:00
p.m. Dallas, Texas, time on the applicable Borrowing Date. Subject to
receipt of such funds, Agent shall (unless to its actual knowledge any
of the applicable conditions precedent have not been satisfied by
Borrower or waived by Determining Lenders) make such funds available
to Borrower as directed in the Notice of Borrowing; and
(c) Absent contrary written notice from a Lender, Agent
may assume that each Lender has made its Commitment Percentage of the
requested Borrowing available to Agent on the applicable Borrowing
Date, and Agent may, in reliance upon such assumption (but shall not
be required to), make available to Borrower a corresponding amount.
If a Lender fails to make its Commitment Percentage of any requested
Borrowing available to Agent on the applicable Borrowing Date, Agent
may recover the applicable amount on demand (i) from that Lender,
together with interest at the Federal Funds Rate during the period
commencing on the date the amount was made available to Borrower by
Agent and ending on (but excluding) the date Agent recovers the amount
from that Lender, or (ii), if that Lender fails to pay its amount upon
demand, then from Borrower, together with interest at an annual
interest rate equal to the rate applicable to the requested Borrowing
during the period commencing on the Borrowing Date and ending on (but
excluding) the date Agent recovers the amount from Borrower. No
Lender is responsible for the failure of any other Lender to make its
Commitment Percentage of any Borrowing.
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2.3 LC Subfacility.
(a) Subject to the terms and conditions of this Agreement
and applicable Law, Agent agrees to issue LCs upon Borrower's delivery
of a request therefor substantially in the form of EXHIBIT D (a
"NOTICE OF LC") and an LC Agreement no later than 10:00 a.m. Dallas,
Texas, time three Business Days before the requested LC is to be
issued. When determined, (i) the Commitment Usage may not exceed the
Total Commitment, and (ii) the Lenders' LC Exposure may not exceed the
sum of $25,000,000 plus the Lakewood LC Exposure. Furthermore, each
LC must expire within 13 months after issuance (provided, however,
that LCs may be self-extending with up to 120 days' cancellation
notice by Agent to the beneficiary).
(b) Immediately upon Agent's issuance of any LC, Agent
shall be deemed to have sold and transferred to each other Lender, and
each other Lender shall be deemed irrevocably and unconditionally to
have purchased and received from Agent, without recourse or warranty,
an undivided interest and participation (to the extent of such
Lender's Commitment Percentage) in the LC and all applicable Rights of
Agent in the LC (other than Rights to receive and retain certain fees
provided for in SECTION 4.3). Agent shall provide a copy of each LC
to each other Lender promptly after issuance.
(c) To induce Agent to issue and maintain LCs, and to
induce Lenders to participate in issued LCs, Borrower agrees to pay or
reimburse Agent (i) on the date when any draft or draw request is
presented under any LC, the amount paid or to be paid by Agent and
(ii) promptly, upon demand, the amount of any additional fees Agent
customarily charges for the application and issuance of an LC, for
amending LC Agreements, for honoring drafts and draw requests, and
taking similar action in connection with letters of credit. If
Borrower has not reimbursed Agent for any drafts or draws paid or to
be paid within 24 hours following Agent's demand for reimbursement,
Agent is irrevocably authorized to fund Borrower's reimbursement
obligations as a Borrowing if proceeds are available (and the proceeds
of such Borrowing shall be advanced directly to Agent in payment of
Borrower's unpaid reimbursement obligations). If funds cannot be
advanced hereunder, then Borrower's reimbursement obligation shall
constitute a demand obligation. Borrower's obligations under this
SECTION 2.3(C) are absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim, or defense
to payment that Borrower may have at any time against Agent or any
other Person. Agent shall promptly distribute reimbursement payments
received from Borrower to all Lenders according to their Pro Rata
Part. From the date Borrower first knows that a draw has occurred
(whether by notice from Agent or otherwise) to the date paid, unpaid
reimbursement amounts accrue interest that is payable on demand at the
Default Rate.
(d) Agent shall promptly notify Borrower of the date and
amount of any draft or draw request presented for honor under any LC
(but failure to give notice will not affect Borrower's obligations
under this Agreement). Agent shall pay the requested amount upon
presentment of a draft or draw request unless presentment on its face
does not comply with the terms of the applicable LC. When making
payment, Agent may disregard (i) any default or potential default that
has occurred under any other agreement and (ii) obligations under any
other agreement that have or have not been performed by the
beneficiary or any other Person (and Agent is not liable for any of
those obligations). Agent and Lenders are not responsible for, and
Borrower's reimbursement obligations for honored drafts and draws may
not be affected by, any matter or event whatsoever (including, without
limitation, the validity or genuineness of documents or endorsements,
even if the documents should in fact prove to be in any respect
invalid, fraudulent, or forged), or any dispute among any Company, the
beneficiary of any LC, or any other Person to whom any LC may be
transferred, or any claims whatsoever of any Company against any
beneficiary of any LC or its transferee. However, nothing in this
Agreement (including,
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without limitation, this SECTION 2.3) constitutes a waiver of
Borrower's Rights to assert any claim or defense based upon the gross
negligence or willful misconduct of Agent or any Lender.
(e) If Borrower fails to reimburse Agent as provided in
SECTION 2.3(C) within 24 hours after Agent's demand for reimbursement,
Agent shall promptly notify each Lender of Borrower's failure, of the
date and amount paid, and of each Lender's Commitment Percentage of
the unreimbursed amount. Each Lender shall promptly and
unconditionally make available to Agent in immediately available funds
its Commitment Percentage of the unpaid reimbursement obligation.
Funds are due and payable to Agent before the close of business on the
Business Day when Agent gives notice to each Lender of Borrower's
reimbursement failure (if notice is given before 2:00 p.m. Dallas,
Texas, time) or on the next succeeding Business Day (if notice is
given after 2:00 p.m. Dallas, Texas, time). All amounts payable by
any Lender accrue interest at the Federal Funds Rate from the day the
applicable draft or draw is paid by Agent to (but not including) the
date the amount is paid by the Lender to Agent. The obligations of
Lenders to make payments to Agent with respect to LC's are irrevocable
and are not subject to any qualification or exception whatsoever
(other than Agent's gross negligence or willful misconduct),
including, without limitation, (i) any lack of validity or
enforceability of, or the termination of, this Agreement or any of the
Loan Papers; (ii) the existence of any claim, setoff, defense, or
other Right that Borrower may have at any time against a beneficiary
named in an LC, any transferee of any LC (or any Person for whom any
such transferee may be acting), Agent, any Lender, or any other
Person, whether in connection with this Agreement, any LC, the
transactions contemplated by this Agreement, or any unrelated
transactions (including any underlying transaction between Borrower
and the beneficiary named in any such LC); (iii) any draft,
certificate, or any other document presented under the LC is forged,
fraudulent, invalid, or insufficient in any respect or any statement
therein is untrue or inaccurate in any respect; and (iv) the
occurrence of any Potential Default or Default.
(f) Borrower acknowledges that each LC is deemed issued
upon delivery to its beneficiary or Borrower. If Borrower requests
any LC be delivered to Borrower rather than the beneficiary, and
Borrower subsequently cancels that LC, Borrower agrees to return it to
Agent together with Borrower's written certification that it has never
been delivered to its beneficiary. If any LC is delivered to its
beneficiary under Borrower's instructions, Borrower's cancellation is
ineffective without Agent's receipt of the beneficiary's written
consent and the LC. BORROWER AGREES THAT IT SHALL INDEMNIFY AGENT FOR
ALL LOSSES, COSTS, DAMAGES, EXPENSES, AND REASONABLE ATTORNEYS' FEES
SUFFERED OR INCURRED BY AGENT RESULTING FROM ANY DISPUTE CONCERNING
BORROWER'S CANCELLATION OF ANY LC (OTHER THAN AS A RESULT OF AGENT'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT).
(g) Agent agrees with each Lender and Borrower that it
will exercise and give the same care and attention to each LC as it
gives to its other letters of credit. Each Lender and Borrower agree
that, in paying any draft or draw under any LC, Agent has no
responsibility to obtain any document (other than any documents
expressly required by the respective LC) or to ascertain or inquire as
to the validity or accuracy of any document or the authority of the
Person delivering any document. Neither Agent nor its Representatives
may be liable to any Lender or any Company for any LC's use or for any
acts or omissions of any beneficiary of any LC. Any action, inaction,
error, delay, or omission taken or suffered by Agent or any of its
Representatives in connection with any LC, applicable draws, drafts,
or documents, or the transmission, dispatch, or delivery of any
related message or advice, if in good faith and in conformity with
applicable Laws and in accordance with the standards of care specified
in the UCP, shall be binding upon the Companies and Lenders and shall
not place Agent or any of its Representatives under any resulting
liability to any Company or any Lender. Agent's actions taken or
omitted or to be taken in connection with any LC will not create for
Agent any resulting liability to any Lender or any Company if taken or
omitted in the absence of gross negligence or willful misconduct.
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(h) On the Termination Date, upon the occurrence and
continuance of any Default under SECTION 10.3, or upon any demand by
Agent upon the occurrence and continuance of any other Default,
Borrower shall provide to Agent, for the benefit of Lenders, cash
collateral in an amount equal to the then-existing Lenders' LC
Exposure (which Agent agrees to return to Borrower upon the subsequent
cure of the applicable Default).
(i) BORROWER AGREES TO PROTECT, INDEMNIFY, PAY, AND SAVE
AGENT AND EACH LENDER HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) THAT AGENT OR ANY LENDER MAY
INCUR OR BE SUBJECT TO AS A CONSEQUENCE, DIRECT OR INDIRECT, OF THE
ISSUANCE OF ANY LC OR THE FAILURE OF AGENT TO HONOR A DRAFT OR DRAW
REQUEST UNDER ANY LC AS A RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT
OR WRONG) OF ANY PRESENT OR FUTURE TRIBUNAL. However, Borrower has no
liability to indemnify Agent or any Lender for liability arising out
of the gross negligence or willful misconduct of Agent or any Lender.
(j) Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not
incorporated into this Agreement in any manner. The fees and other
amounts payable with respect to each LC are as provided in this
Agreement, drafts and draws under each LC are part of the Obligation,
and the terms of this Agreement control any conflict between the terms
of this Agreement and any LC Agreement.
2.4 Reduction or Termination. Without premium or penalty,
and upon giving at least three Business Days' prior written and irrevocable
notice to Agent, Borrower may terminate all or part of the unused portion of
the Total Commitment. Each partial termination must be in an amount of not
less than $5,000,000 or a greater integral multiple of $1,000,000, and shall be
Pro Rata among all Lenders. Once terminated, the Committed Sum may not be
increased. If not previously reduced by partial terminations to an amount less
than or equal to $40,000,000, the Total Committed Amount shall be automatically
reduced (without further action by any Person) from $50,000,000 to $40,000,000
upon the earlier to occur of (a) January 31, 1995, and (b) Borrower's failure
to timely comply with SECTION 7.14.
SECTION 3 TERMS OF PAYMENT.
3.1 Notes and Payments.
(a) Principal Debt shall be evidenced by promissory notes
substantially in the form of EXHIBIT A (collectively, and as renewed,
amended, extended, supplemented, and restated, the "NOTES"), one
payable to each Lender in the stated principal amount of its Committed
Sum.
(b) Borrower must make each payment and prepayment on the
Obligation to Agent's principal office in Dallas, Texas in funds that
will be available for immediate use by Agent by 12:00 noon Dallas,
Texas, time on the day due. Agent shall pay to each Lender any
payment or prepayment to which that Lender is entitled on the same day
Agent receives the funds from Borrower if Agent receives the payment
or prepayment before 12:00 noon Dallas, Texas, time, and otherwise
before 12:00 noon Dallas, Texas, time on the following Business Day.
If and to the extent that Agent does not make payments to Lenders when
due, unpaid amounts shall accrue interest at the Federal Funds Rate
from the due date until (but not including) the payment date.
3.2 Interest and Principal Payments.
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(a) Accrued interest on each LIBOR Rate Borrowing is due
and payable on the last day of its respective Interest Period.
Accrued interest on each Base Rate Borrowing is due and payable on
each March 31, June 30, September 30, and December 31 (commencing
March 31, 1994) and on the Termination Date.
(b) All unpaid Principal Debt is due and payable on the
Termination Date.
(c) If (i) the Commitment Usage ever exceeds the Total
Commitment or (ii) the sum of the Principal Debt plus the Lenders' LC
Exposure, ever exceeds the Total Commitment, then Borrower shall
prepay the Principal Debt, in at least the amount of that excess,
together with (x) all accrued and unpaid interest on the principal
amount so prepaid and (y) any resulting Funding Loss.
(d) Borrower shall promptly pay to Agent, for application
against the Obligation, 100% of the cash proceeds (or proceeds in the
form of cash equivalents) received by any Company (other than CRSS
Capital, Inc., or any of its Subsidiaries, unless and until CRSS
Capital, Inc., becomes a wholly-owned Subsidiary of Borrower) from any
asset disposition outside the ordinary course of business involving
consideration of at least $1,000,000.
(e) Borrower may voluntarily prepay all or any part of
the Principal Debt at any time without premium or penalty, subject to
the following conditions:
(i) Agent must receive Borrower's written
prepayment notice (which shall specify the prepayment date and
the Type and amount of the Borrowing(s) to be prepaid, and
which shall constitute an irrevocable and binding obligation
of Borrower to make a prepayment on the designated date) by
10:00 a.m. Dallas, Texas, time on (A) the third Business Day
preceding the date of prepayment of a LIBOR Rate Borrowing and
(B) the Business Day preceding the date of prepayment of a
Base Rate Borrowing;
(ii) each partial prepayment must be in a minimum
amount of at least $2,000,000 or a greater integral multiple
of $500,000 (if a LIBOR Rate Borrowing), or $500,000 or a
greater integral multiple of $100,000 (if a Base Rate
Borrowing);
(iii) all accrued interest on the Obligation so
prepaid must also be paid in full on the date of prepayment;
and
(iv) Borrower shall pay any related Funding Loss
upon demand.
3.3 Interest Options. Except where specifically otherwise
provided, Borrowings bear interest at an annual rate equal to the lesser of (a)
the Base Rate or the LIBOR Rate, as the case may be (in each case as designated
by Borrower), plus the Applicable Margin, and (b) the Maximum Rate. Each
change in the Base Rate, Maximum Rate, and Applicable Margin is effective,
without notice to Borrower or any other Person, upon the effective date of
change.
3.4 Quotation of Rates. A representative of Borrower may call
Agent before delivering a Notice of Borrowing to receive an indication of the
interest rates then in effect, but the indicated rates will not bind Agent or
Lenders or affect the interest rate that is actually in effect when Borrower
delivers its Notice of Borrowing or on the Borrowing Date.
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3.5 Default Rate. To the extent permitted by Law, all past-due
payments of the Obligation and accrued interest thereon bears interest from
maturity (stated or by acceleration) at the Default Rate until paid, regardless
whether payment is made before or after entry of a judgment.
3.6 Interest Recapture. If the designated rate applicable to any
Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is
limited to the Maximum Rate, but any subsequent reductions in the designated
rate shall not reduce the interest rate thereon below the Maximum Rate until
the total amount of accrued interest equals the amount of interest that would
have accrued if that designated rate had always been in effect. If at maturity
(stated or by acceleration), or at final payment of the Notes, the total
interest paid or accrued is less than the interest that would have accrued if
the designated rates had always been in effect, then, at that time and to the
extent permitted by Law, Borrower shall pay an amount equal to the difference
between (a) the lesser of the amount of interest that would have accrued if the
designated rates had always been in effect and the amount of interest that
would have accrued if the Maximum Rate had always been in effect, and (b) the
amount of interest actually paid or accrued on the Notes.
3.7 Interest Calculations.
(a) Interest will be calculated on the basis of actual
number of days (including the first day but excluding the last day)
elapsed but computed as if each calendar year consisted of 360 days
for LIBOR Rate Borrowings (unless the calculation would result in an
interest rate greater than the Maximum Rate, in which event interest
will be calculated on the basis of a year of 365 or 366 days, as the
case may be), and 365 or 366 days, as the case may be, for Base Rate
Borrowings. All interest rate determinations and calculations by
Agent are rebuttably, but presumptively, correct.
(b) The provisions of this Agreement relating to
calculation of the Base Rate and the LIBOR Rate are included only for
the purpose of determining the rate of interest or other amounts to be
paid under this Agreement that are based upon those rates. Each
Lender may fund and maintain its funding of all or any part of each
Borrowing as it selects.
3.8 Maximum Rate. Regardless of any provision contained in any
Loan Paper, no Lender is entitled to contract for, charge, take, reserve,
receive, or apply, as interest on all or any part of the Obligation any amount
in excess of the Maximum Rate, and, if Lenders ever do so, then any excess
shall be deemed and treated as a partial prepayment of principal and any
remaining excess shall be refunded to Borrower. In determining if the interest
paid or payable exceeds the Maximum Rate, Borrower and Lenders shall, to the
maximum extent permitted under applicable Law, (a) treat all Borrowings as but
a single extension of credit (and Lenders and Borrower agree that such is the
case and that provision in this Agreement for multiple Borrowings is for
convenience only), (b) characterize any nonprincipal payment as an expense,
fee, or premium rather than as interest, (c) exclude voluntary prepayments and
their effects, and (d) amortize, prorate, allocate, and spread the total amount
of interest throughout the entire contemplated term of the Obligation.
However, if the Obligation is paid in full before the end of its full
contemplated term, and if the interest received for its actual period of
existence exceeds the Maximum Amount, Lenders shall refund any excess (and
Lenders may not, to the extent permitted by Law, be subject to any penalties
provided by any Laws for contracting for, charging, taking, reserving, or
receiving interest in excess of the Maximum Amount). If the Laws of the State
of Texas are applicable for purposes of determining the "Maximum Rate" or the
"Maximum Amount," then those terms mean the "indicated rate ceiling" from time
to time in effect under Article 1.04, Title 79, Revised Civil Statutes of
Texas, as amended. Borrower agrees that Chapter 15, Subtitle 79, Revised Civil
Statutes of Texas, 1925, as amended (which regulates certain revolving credit
loan accounts and revolving tri-party accounts), does not govern or apply to
the Obligation.
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3.9 Interest Periods. When Borrower requests any LIBOR Rate
Borrowing, Borrower may elect the applicable interest period (each an "INTEREST
PERIOD"), which may be, at Borrower's option, one, two, or three months for
LIBOR Rate Borrowings, subject to the following conditions: (a) the initial
Interest Period for a LIBOR Rate Borrowing commences on the applicable
Borrowing Date or conversion date, and each subsequent Interest Period
applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR Rate
Borrowing begins on a day for which no numerically corresponding Business Day
in the calendar month at the end of the Interest Period exists, then the
Interest Period ends on the last Business Day of that calendar month; (c) no
Interest Period for any portion of Principal Debt may extend beyond the
Termination Date; and (d) no more than six Interest Periods may be in effect at
one time.
3.10 Conversions. Subject to the dollar limits and denominations
of SECTION 2.1, Borrower may (a) convert a LIBOR Rate Borrowing on the last day
of the applicable Interest Period to a Base Rate Borrowing, (b) convert a Base
Rate Borrowing at any time to a LIBOR Rate Borrowing, and (c) elect a new
Interest Period for a LIBOR Rate Borrowing, by giving notice substantially in
the form of EXHIBIT E (a "NOTICE OF CONVERSION") to Agent no later than 12:00
noon Dallas, Texas, time on the third Business Day before the conversion date
or the last day of the Interest Period, as the case may be (for conversion to a
LIBOR Rate Borrowing or election of a new Interest Period), and no later than
10:00 a.m. Dallas, Texas, time one Business Day before the last day of the
Interest Period (for conversion to a Base Rate Borrowing). Absent Borrower's
notice of conversion or election of a new Interest Period, a LIBOR Rate
Borrowing shall be deemed converted to a Base Rate Borrowing effective when the
applicable Interest Period expires.
3.11 Order of Application.
(a) If no Default or Potential Default has occurred and
is continuing, any payment shall be applied to the Obligation in the
order and manner as Borrower may direct.
(b) If a Default or Potential Default has occurred and is
continuing or if Borrower fails to give direction, any payment
(including proceeds from the exercise of any Rights) shall be applied
in the following order: (i) to all fees and expenses for which Agent
or Lenders have not been paid or reimbursed in accordance with the
Loan Papers; (ii) to accrued interest on the Principal Debt; (iii) to
any LC reimbursement obligations that are due and payable and that
remain unfunded by any Borrowing; (iv) to the remaining Principal Debt
in the order as Determining Lenders may elect (but Determining Lenders
agree to apply proceeds in an order that will minimize any Funding
Loss); (v) to the remaining Obligation in the order and manner
Determining Lenders deem appropriate; and (vi) as a deposit with
Agent, for the benefit of Lenders, as security for and payment of any
subsequent LC reimbursement obligations.
3.12 Sharing of Payments, Etc.. If any Lender obtains any payment
(whether voluntary, involuntary, or otherwise, including, without limitation,
as a result of exercising its Rights under SECTION 3.13) that exceeds its
combined Pro Rata part of the Total Commitment, then that Lender shall purchase
from the other Lenders participations that will cause the purchasing Lender to
share the excess payment ratably with each other Lender. If all or any portion
of any excess payment is subsequently recovered from the purchasing Lender,
then the purchase shall be rescinded and the purchase price restored to the
extent of the recovery. Borrower agrees that any Lender purchasing a
participation from another Lender under this section may, to the fullest extent
permitted by Law, exercise all of its Rights of payment (including the Right of
offset) with respect to that participation as fully as if that Lender were the
direct creditor of Borrower in the amount of that participation.
3.13 Offset. Upon the occurrence and during the continuance of a
Default, each Lender is entitled to exercise (for the benefit of all Lenders in
accordance with SECTION 3.12) the Rights of offset and banker's Lien against
each and every account and other property, or any interest therein, that any
Company may now or
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hereafter have with, or which is now or hereafter in the possession of, that
Lender to the extent of the full amount of the Obligation owed to that Lender.
3.14 Booking Borrowings. To the extent permitted by Law, any
Lender may make, carry, or transfer its Borrowings at, to, or for the account
of any of its branch offices or the office of any of its Affiliates. However,
no Affiliate is entitled to receive any greater payment under SECTION 3.16 than
the transferor Lender would have been entitled to receive with respect to those
Borrowings.
3.15 Basis Unavailable or Inadequate for LIBOR Rate. If, on or
before any date when a LIBOR Rate is to be determined for a Borrowing, Agent or
any Lender determines (and Determining Lenders agree with that determination)
that the basis for determining the applicable rate is not available or that the
resulting rate does not accurately reflect the cost to Lenders of making or
converting Borrowings at that rate for the applicable Interest Period, then
Agent shall promptly notify Borrower and Lenders of that determination (which
is conclusive and binding on Borrower absent manifest error) and the applicable
Borrowing shall bear interest at the Base Rate. Until Agent notifies Borrower
that those circumstances no longer exist, Lenders' commitments under this
Agreement to make, or to convert to, LIBOR Rate Borrowings are suspended.
3.16 Additional Costs.
(a) With respect to any LIBOR Rate Borrowing, (i) if any
present or future Law imposes, modifies, or deems applicable (or if
compliance by any Lender with any requirement of any Tribunal results
in) any requirement that any reserves (including, without limitation,
any marginal, emergency, supplemental, or special reserves) be
maintained, and if (ii) those reserves reduce any sums receivable by
that Lender under this Agreement or increase the costs incurred by
that Lender in advancing or maintaining any portion of any LIBOR Rate
Borrowing, then (iii) that Lender (through Agent) shall deliver to
Borrower a certificate setting forth in reasonable detail the
calculation of the amount necessary to compensate it for its reduction
or increase (which certificate is rebuttably, but presumptively,
correct), and (iv) Borrower shall promptly pay that amount to that
Lender upon demand.
(b) With respect to any Borrowing or any LC, if any
present or future Law regarding capital adequacy or compliance by
Agent (as issuer of LCs) or any Lender with any request, directive, or
requirement now existing or hereafter imposed by any Tribunal
regarding capital adequacy, or any change in its written policies or
in the risk category of this transaction, reduces the rate of return
on its capital as a consequence of its obligations under this
Agreement to a level below that which it otherwise could have achieved
(taking into consideration its policies with respect to capital
adequacy) by an amount deemed by it to be material (and it may, in
determining the amount, utilize reasonable assumptions and allocations
of costs and expenses and use any reasonable averaging or attribution
method), then Agent or that Lender (through Agent) shall notify
Borrower and deliver to Borrower a certificate setting forth in
reasonable detail the calculation of the amount necessary to
compensate it (which certificate is rebuttably, but presumptively,
correct), and Borrower shall promptly pay that amount to Agent or that
Lender upon demand.
3.17 Change in Laws. If any Law makes it unlawful for any Lender
to make or maintain LIBOR Rate Borrowings, then that Lender shall promptly
notify Borrower and Agent, and (a) as to undisbursed funds, such requested
Borrowing shall be made as a Base Rate Borrowing, and (b), as to any
outstanding Borrowing, (i) if maintaining the Borrowing until the last day of
the applicable Interest Period is unlawful, it shall be converted to a Base
Rate Borrowing as of the date of notice, and Borrower shall pay any related
Funding Loss, or (ii) if not prohibited by Law, the Borrowing shall be
converted to a Base Rate Borrowing as of the last day of the applicable
Interest Period, or (iii) if any conversion will not resolve the unlawfulness,
Borrower shall promptly prepay the LIBOR Rate Borrowing, without penalty,
together with any related Funding Loss.
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3.18 Funding Loss. BORROWER AGREES TO INDEMNIFY EACH LENDER
AGAINST, AND PAY TO IT UPON DEMAND, ANY FUNDING LOSS INCURRED BY THAT LENDER.
When any Lender demands that Borrower pay any Funding Loss, that Lender shall
deliver to Borrower and Agent a certificate setting forth in reasonable detail
the basis for imposing Funding Loss and the calculation of the amount, which
calculation is rebuttably, but presumptively, correct.
3.19 Extension of Termination Date. If no Default has occurred and
is continuing, Borrower may request one-year extensions of the then-existing
Termination Date by making such request in writing to Agent and each Lender
during the month of October of any year. The then- existing Termination Date
shall be extended for one year only if Agent and each Lender consent in writing
to such extension before the following December 31.
SECTION 4 FEES.
4.1 Treatment of Fees. The fees described in this SECTION 4 (a)
do not constitute compensation for the use, detention, or forbearance of money,
(b) are in addition to, and not in lieu of, interest and expenses otherwise
described in this Agreement, (c) are payable in accordance with SECTION 3.1,
(d) are non-refundable, (e) to the fullest extent permitted by Law, bear
interest, if not paid when due, at the Default Rate, and (f) are calculated on
the basis of actual number of days (including the first day but excluding the
last day) elapsed, but computed as if each calendar year consisted of 360 days,
unless computation would result in an interest rate in excess of the Maximum
Rate in which event the computation is made on the basis of a year of 365 or
366 days, as the case may be.
4.2 Agency Fees. Borrower shall pay to Agent, solely for its own
account, the fees described in the letter agreement between Borrower and Agent
dated as of the date of this Agreement.
4.3 LC Fees. Each Notice of LC shall be accompanied by a fee
equal to the greater of (a) the generally-prevailing minimum letter of credit
fee charged by Agent for issuing letters of credit in approximately the amount
of the applicable LC and (b)(i) the Applicable Margin for LIBOR Rate Borrowings
on the issue date, minus 0.125% (provided that the Applicable Margin used to
determine the fee for the Lakewood LC shall never be less than 1.125%),
multiplied by (ii) the face amount of the LC, multiplied by (iii) a fraction,
the numerator of which is the number of months from the issuance date to the
expiry date (and rounded up to the nearest whole month) and the denominator of
which is 12. Of the aggregate fee payment per LC, Agent shall retain for its
own account the first 1/8% of the fee, and shall promptly distribute to each
Lender its Commitment Percentage of the remainder.
4.4 Commitment Fee. Borrower shall pay to Agent (who shall
promptly distribute to each Lender its Commitment Percentage thereof) a
commitment fee, payable in arrears on each March 31, June 30, September 30, and
December 31 (commencing March 31, 1994), and on the Termination Date, equal to
the Applicable Percentage (per annum) and calculated on an amount equal to the
then-existing Total Commitment.
4.5 Facility Fees. Borrower shall pay to Agent, for the benefit
of Lenders, the fees described in the letter agreement between Borrower and
Agent dated as of the date of this Agreement, which Agent shall pay to Lender
in accordance with the letter agreements between Agent and each Lender dated as
of the date of this Agreement.
SECTION 5 CONDITIONS PRECEDENT. Lenders will not be obligated to fund
the initial Borrowing, and Agent will not be obligated to issue the initial LC,
unless Agent has received all of the items described on SCHEDULE 5, each in
form and substance acceptable to Agent and its counsel. In addition, Lenders
will not be
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obligated to fund (as opposed to continue or convert) any Borrowing (other than
a Borrowing under SECTION 2.3(C)), and Agent will not be obligated to issue any
LC, as the case may be, unless on the applicable Borrowing Date or issue date
(and after giving effect to the requested Borrowing or LC), as the case may be:
(a) Agent shall have timely received a Notice of Borrowing or a Notice of LC
(together with the applicable LC Agreement), as the case may be; (b) Agent
shall have received any applicable LC fee; (c) all of the representations and
warranties of the Companies in the Loan Papers are true and correct in all
material respects (except to the extent that (i) the representations and
warranties speak to a specific date or (ii) the facts on which the
representations and warranties are based have been changed by transactions
contemplated or permitted by this Agreement); (d) no Material Adverse Event
shall have occurred; (e) no Default or Potential Default shall have occurred
and be continuing; and (f) the funding of the Borrowing and issuance of the LC,
as the case may be, is permitted by Law. Each Notice of Borrowing and Notice
of LC delivered to Agent constitutes the representation and warranty by
Borrower to Agent that the statements in CLAUSES (C), (D), (E), and (to its
knowledge) (F) above are true and correct in all respects. Each condition
precedent in this Agreement (including, without limitation, matters listed on
SCHEDULE 5) is material to the transactions contemplated by this Agreement, and
time is of the essence with respect to each condition precedent. Subject to
the prior approval of Determining Lenders, Lenders may fund any Borrowing, and
Agent may issue any LC, without all conditions being satisfied, but, to the
extent permitted by Law, that funding and issuance shall not be deemed to be a
waiver of the requirement that each condition precedent be satisfied as a
prerequisite for any subsequent funding or issuance, unless Determining Lenders
specifically waive each item in writing.
SECTION 6 REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants to Agent and Lenders as follows:
6.1 Purpose of Credit Facility. Borrower will use proceeds of
Borrowings and LCs for working capital and general corporate purposes of the
Companies (including, without limitation, investment activity permitted by
SECTION 8.8). No Company is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying any "margin stock" within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System, as amended. No part of the
proceeds of any Borrowing will be used, directly or indirectly, for a purpose
that violates any Law, including without limitation, the provisions of
Regulation U.
6.2 Corporate Existence, Good Standing, and Authority. Each
Material Company is duly organized, validly existing, and in good standing
under the Laws of its jurisdiction of incorporation as identified on SCHEDULE
6.2, and transacts business as a foreign corporation in those jurisdictions
identified on SCHEDULE 6.2 or as otherwise disclosed in writing to Agent and
Lenders from time to time after the date of this Agreement. Except where
failure would reasonably be expected to constitute a Material Adverse Event,
each Company (a) is duly qualified to transact business and is in good standing
as a foreign corporation in each jurisdiction where the nature and extent of
its business and properties require due qualification and good standing and (b)
possesses all requisite authority, power, licenses, permits, and franchises to
conduct its business as is now being, or is contemplated by this Agreement to
be, conducted.
6.3 Material Companies. All of the outstanding shares of capital
stock (or similar voting interests) of the Material Companies are duly
authorized, validly issued, fully paid, and nonassessable, and are owned of
record and beneficially as set forth on SCHEDULE 6.3, free and clear of any
Liens, restrictions, claims, or Rights of another Person, other than Permitted
Liens, and are not subject to any warrant, option, or other acquisition Right
of any Person (other than employees pursuant to employee incentive plans) or
subject to any transfer restriction except for restrictions imposed by
securities Laws and general corporate Laws.
6.4 Authorization and Contravention. The execution and delivery
by each Company of each Loan Paper to which it is a party and the performance
by it of its obligations thereunder (a) are within its corporate
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power, (b) have been duly authorized by all necessary corporate action, (c)
require no action by or in respect of, or filing with, any Tribunal (other than
any action or filing that has been taken or made on or before the initial
Borrowing Date), (d) do not violate any provision of its charter or bylaws, (e)
do not violate any provision of Law applicable to it, other than violations
that individually or collectively would not reasonably be expected to
constitute a Material Adverse Event, (f) do not violate any agreements to which
it is a party, other than violations (i) of agreements, documents, and
instruments executed in connection with the Existing Bank Debt (which will be
cured by paying off the Existing Bank Debt, if any) or (ii) that individually
or collectively would not reasonably be expected to constitute a Material
Adverse Event, or (g) will not result in the creation or imposition of any Lien
on any asset of any Company, other than Liens in favor of Agent and Lenders
pursuant to any Loan Paper.
6.5 Binding Effect. Upon execution and delivery by all parties
thereto, each Loan Paper will constitute a legal and binding obligation of each
Company party thereto, enforceable against it in accordance with its terms,
except as enforceability may be limited by applicable Debtor Relief Laws and
general principles of equity.
6.6 Financial Statements. The Current Financials were prepared in
accordance with GAAP and present fairly, in all material respects, the
consolidated financial condition, results of operations, and cash flows of the
Companies as of, and for the portion of the fiscal year ending on the date or
dates thereof (subject only to normal year-end adjustments). All material
liabilities of the Companies as of the date or dates of the Current Financials
are reflected therein or in the notes thereto in accordance with GAAP. Except
for transactions (i) directly related to, or specifically contemplated by, the
Loan Papers, or (ii) that individually or collectively would not reasonably be
expected to constitute a Material Adverse Event, no subsequent changes have
occurred in the consolidated financial condition of the Companies from that
shown in the Current Financials, nor has any Company incurred any subsequent
liability (including, without limitation, any liability under any Environmental
Law).
6.7 Litigation. Except as disclosed on SCHEDULE 6.7 and as
otherwise disclosed in writing to Agent and Lenders from time to time after the
date of this Agreement (if the matters disclosed thereon are approved by
Determining Lenders), no Company is subject to, or aware of the threat (in
writing) of, any Litigation that would reasonably be expected to constitute a
Material Adverse Event. No outstanding or unpaid judgments against any
Material Company exist.
6.8 Taxes. Except where failure to file or pay would not
reasonably be expected to constitute a Material Adverse Event, all Tax returns
of each Company required to be filed have been filed (or extensions have been
granted) before delinquency, and all Taxes imposed upon each Company that are
due and payable have been paid before delinquency, other than Taxes for which
the criteria for Permitted Liens (as specified in ITEM 6 OF SCHEDULE 6.11) have
been satisfied or which are being contested in good faith by lawful proceedings
diligently conducted, against which reserve or other provision required by GAAP
has been made.
6.9 Environmental Matters. Borrower (a) knows of no environmental
condition or circumstance adversely affecting any Company's properties or
operations that would reasonably be expected to constitute a Material Adverse
Event, (b) has not received any report of any Company's violations of any
Environmental Law that individually or collectively would reasonably be
expected to constitute a Material Adverse Event, and (c) knows of no obligation
of any Company to remedy any violations of any Environmental Law that
individually or collectively would reasonably be expected to constitute a
Material Adverse Event. No facility of any Company is used for, or to the
knowledge of Borrower or any Guarantor has been used for, storage, treatment,
or disposal of any Hazardous Substance in violation of any applicable
Environmental Law, other than violations that individually or collectively
would not reasonably be expected to constitute a Material Adverse Event.
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<PAGE> 27
6.10 Employee Benefit Plans. (a) No Employee Plan has incurred an
"accumulated funding deficiency" (as defined in section 302 of ERISA or section
412 of the Code), (b) no Material Company has incurred liability under ERISA to
the PBGC in connection with any Employee Plan, (c) no Material Company has
withdrawn in whole or in part from participation in a Multiemployer Plan, (d)
no Material Company has engaged in any "prohibited transaction" (as defined in
section 406 of ERISA or section 4975 of the Code), and (e) no Reportable Event
has occurred.
6.11 Properties; Liens. Each Material Company has (i) good and
indefeasible title to the material real property, (ii) a vested leasehold
interest in the material leaseholds, and (iii) good title to the material
personal properties reflected on the Current Financials (except for property
that is obsolete or that has been disposed in the ordinary course of business
or, after the date of this Agreement, as otherwise permitted by SECTION 8.10).
Except for Permitted Liens (including, without limitation, any Lien securing
Debt permitted by this Agreement incurred for the purchase or capital lease of
one or more assets if such Lien encumbers only the assets so purchased or
leased), no Lien exists on any property of any Material Company, and the
execution, delivery, performance, or observance of the Loan Papers will not
require or result in the creation of any Lien on any Material Company's
property, other than Liens in favor of Agent and Lenders.
6.12 Government Regulations. No Company is subject to regulation
under the Investment Company Act of 1940, as amended, or the Public Utility
Holding Company Act of 1935, as amended.
6.13 Transactions with Affiliates. Except as disclosed on SCHEDULE
6.13 or as otherwise disclosed in writing to Agent and Lenders from time to
time (if the matters disclosed thereon are approved by Determining Lenders), no
Material Company is a party to a material transaction with any of its
Affiliates (excluding other Companies), other than transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate. For purposes of this
SECTION 6.13, a transaction is "material" if it requires a Material Company to
pay more than $2,000,000 during the term of the governing agreement.
6.14 Material Agreements. No default or (to Borrower's knowledge)
potential default exists on the part of any Company under any material
agreement to which it is a party, other than defaults or potential defaults
that would not reasonably be expected to constitute a Material Adverse Event.
6.15 Insurance. Each Material Company maintains with what are, to
Borrower's knowledge, financially sound, responsible, and reputable insurance
companies or associations (or, as to workers' compensation or similar
insurance, with an insurance fund or by self-insurance authorized by the
jurisdictions in which it operates) insurance concerning its properties and
businesses against casualties and contingencies and of types and in amounts
(and with self-insurance, co-insurance, and deductibles) as is customary in the
case of similar businesses similarly situated.
6.16 Labor Matters. No actual or (to Borrower's knowledge)
threatened strikes, labor disputes, slow downs, walkouts, or other concerted
interruptions of operations by the employees of any Material Company exist.
Hours worked by and payment made to employees of the Companies have not been in
violation of the Fair Labor Standards Act or any other applicable Law dealing
with labor matters, other than violations that individually or collectively
would not reasonably be expected to constitute a Material Adverse Event. All
payments due from any Company for employee health and welfare insurance have
been paid or accrued as a liability on its books.
6.17 Full Disclosure. All information previously furnished by any
Company to Agent in connection with the Loan Papers was, and all information
hereafter furnished by any Company to Agent will be, taken as a whole, true and
accurate in all material respects or based on reasonable estimates on the date
the information is stated or certified.
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<PAGE> 28
SECTION 7 AFFIRMATIVE COVENANTS. So long as Lenders are committed to
fund Borrowings and Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid in full, unless Borrower receives a
prior written consent to the contrary by Agent on behalf of Determining
Lenders, Borrower covenants and agrees as follows:
7.1 Items to be Furnished. Borrower shall cause the following to
be furnished to Agent:
(a) Promptly after preparation, and no later than 90 days
after the last day of each fiscal year of Borrower, Financial
Statements showing the consolidated and consolidating financial
condition and results of operations of the Companies as of, and for
the year ended on, that last day, accompanied by:
(i) the unqualified opinion of a firm of
nationally-recognized independent certified
public accountants, based on an audit using
generally accepted auditing standards, that
the Financial Statements were prepared in
accordance with GAAP and present fairly, in
all material respects, the consolidated
financial condition and results of operations
of the Companies,
(ii) a certificate from the accounting firm to
Agent indicating that during its audit it
obtained no knowledge of any Default or
Potential Default or, if it obtained
knowledge, the nature and period of existence
thereof, and
(iii) a Compliance Certificate with respect to the
Financial Statements.
(b) Promptly after preparation, and no later than 60 days
after the last day of each fiscal quarter of Borrower, Financial
Statements showing the consolidated and consolidating financial
condition and results of operations of the Companies for the fiscal
quarter and for the period from the beginning of the current fiscal
year to the last day of the fiscal quarter, accompanied by a
Compliance Certificate with respect to the Financial Statements.
(c) Notice, promptly after Borrower knows or has reason
to know, of (i) the institution of any Litigation that could
reasonably be expected to constitute a Material Adverse Event, (ii)
the receipt by any Company of notice of any violation or alleged
violation of any Environmental Law (which individually or collectively
with other violations or allegations could reasonably be expected to
constitute a Material Adverse Event), or (iii) a Default or Potential
Default, specifying the nature thereof and what action Borrower or any
other Company has taken, is taking, or proposes to take.
(d) Within fifteen days after filing, true, correct, and
complete copies of all material reports or filings filed by or on
behalf of any Company with the Securities and Exchange Commission
(including, without limitation, copies of each Form 10-K, Form 10-Q,
Form S-8).
(e) Promptly upon reasonable request by Agent or
Determining Lenders (through Agent), information not otherwise
required to be furnished under the Loan Papers and not otherwise
required to be kept confidential in accordance with any agreement or
applicable Law (and any disclosure of such information by any Company
will not constitute waiver of any attorney-client privilege)
respecting the business affairs, assets, and liabilities of the
Companies and opinions, certifications, and documents in addition to
those mentioned in this Agreement.
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<PAGE> 29
7.2 Use of Proceeds. Borrower shall use the proceeds of
Borrowings only for the purposes represented in this Agreement.
7.3 Books and Records. Borrower shall cause each Company to
maintain books, records, and accounts necessary to prepare financial statements
in accordance with GAAP.
7.4 Inspections. Upon reasonable notice, Borrower shall cause
each Company to allow Agent (or its Representatives) during business hours or
at other reasonable times to inspect under supervision of such Company any of
its properties, to review reports, files, and other records not otherwise
required to be kept confidential in accordance with any agreement or applicable
Law (and any disclosure of such information by any Company will not constitute
waiver of any attorney-client privilege) and to make and take away copies, and,
subject to SECTION 13.16, to discuss any of its affairs, conditions, and
finances with its other creditors, directors, officers, employees, or
representatives from time to time.
7.5 Taxes. Borrower shall cause each Company to promptly pay when
due any and all Taxes (i) other than Taxes which are being contested in good
faith by lawful proceedings diligently conducted, against which reserve or
other provision required by GAAP has been made, and in respect of which levy
and execution of any Lien have been and continue to be stayed, or (ii) except
where failure to pay would not reasonably be expected to constitute a Material
Adverse Event.
7.6 Payment of Obligations. Borrower shall cause each Company to
promptly pay (or renew and extend) all of its obligations as they become due
(unless (i) the obligations are being contested in good faith by appropriate
proceedings or (ii) failure to pay would not constitute a Material Adverse
Event).
7.7 Expenses. Borrower shall promptly pay upon demand (a) all
costs, fees, and expenses paid or incurred by Agent incident to the amendment,
extension or renewal of any Loan Paper (including, but not limited to, the
reasonable fees and expenses of Agent's counsel in connection with the
negotiation, preparation, delivery, and execution of any such amendment,
extension or renewal document and any related waiver or consent) and (b) all
costs and expenses of Lenders and Agent incurred by Agent or any Lender in
connection with the enforcement of the obligations of any Company arising under
the Loan Papers or the exercise of any Rights arising under the Loan Papers
(including, but not limited to, reasonable attorneys' fees and court costs),
all of which shall be a part of the Obligation and if not paid within ten days
after demand, shall bear interest at the Default Rate until paid.
7.8 Maintenance of Existence, Assets, and Business. Except as
otherwise permitted by SECTION 8.10, or except where failure would not
reasonably be expected to constitute a Material Adverse Event, Borrower shall
cause each Company to (a) maintain its corporate existence and good standing in
its state of incorporation and its authority to transact business in all other
jurisdictions where required by the nature and extent of its business and
properties; (b) maintain all licenses, permits, and franchises necessary for
its business from time to time; (iii) keep all of its assets that are useful in
and necessary to its business from time to time in good working order and
condition (ordinary wear and tear excepted) and make all necessary repairs and
replacements.
7.9 Insurance. Borrower shall cause each Material Company, at its
cost and expense, to maintain insurance in such amounts, and covering such
risks, as is ordinary and customary for similar Persons in the industry. At
Agent's request, Borrower shall cause each Material Company to deliver to Agent
certificates of insurance for each policy of insurance and evidence of payment
of all premiums.
7.10 Preservation and Protection of Rights. Borrower shall cause
each Company to take such action as Agent or Determining Lenders may reasonably
deem necessary or appropriate to preserve the validity and enforceability of
the Rights of Agent and Lenders under any Loan Paper.
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<PAGE> 30
7.11 Environmental Laws. Borrower shall cause each Company to
conduct its business so as to comply with all applicable Environmental Laws and
shall promptly take corrective action to remedy any violation of any
Environmental Law that would reasonably be expected to constitute a Material
Adverse Event.
7.12 Subsidiaries. Borrower shall cause each of its Subsidiaries
that becomes a Guarantor after the date of this Agreement (whether as a result
of acquisition, creation, or otherwise) to execute and deliver a Guaranty
within 10 days after becoming a Guarantor.
7.13 Indemnification. BORROWER SHALL INDEMNIFY, PROTECT, AND HOLD
AGENT AND LENDERS AND THEIR RESPECTIVE PARENTS, SUBSIDIARIES, DIRECTORS,
OFFICERS, EMPLOYEES, REPRESENTATIVES, AGENTS, SUCCESSORS, PERMITTED ASSIGNS,
AND ATTORNEYS (COLLECTIVELY, THE "INDEMNIFIED PARTIES") HARMLESS FROM AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, CLAIMS, AND PROCEEDINGS AND ALL COSTS, EXPENSES
(INCLUDING, WITHOUT LIMITATION, ALL REASONABLE ATTORNEYS' FEES AND LEGAL
EXPENSES WHETHER OR NOT SUIT IS BROUGHT), AND REASONABLE DISBURSEMENTS OF ANY
KIND OR NATURE (THE "INDEMNIFIED LIABILITIES") THAT MAY AT ANY TIME BE IMPOSED
ON, INCURRED BY, OR ASSERTED AGAINST THE INDEMNIFIED PARTIES, IN ANY WAY
RELATING TO OR ARISING OUT OF (A) THE DIRECT OR INDIRECT RESULT OF THE
VIOLATION BY ANY COMPANY OF ANY ENVIRONMENTAL LAW, (B) ANY COMPANY'S
GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE,
DISCHARGE, DISPOSAL, OR PRESENCE IN CONNECTION WITH ITS PROPERTIES OF A
HAZARDOUS SUBSTANCE (INCLUDING, WITHOUT LIMITATION, (I) ALL DAMAGES FROM ANY
USE, GENERATION, MANUFACTURE, PRODUCTION, STORAGE, RELEASE, THREATENED RELEASE,
DISCHARGE, DISPOSAL, OR PRESENCE, OR (II) THE COSTS OF ANY ENVIRONMENTAL
INVESTIGATION, MONITORING, REPAIR, CLEANUP, OR DETOXIFICATION AND THE
PREPARATION AND IMPLEMENTATION OF ANY CLOSURE, REMEDIAL, OR OTHER PLANS), OR
(C) THE LOAN PAPERS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN. HOWEVER,
ALTHOUGH EACH INDEMNIFIED PARTY HAS THE RIGHT TO BE INDEMNIFIED UNDER THE LOAN
PAPERS FOR ITS OWN ORDINARY NEGLIGENCE, NO INDEMNIFIED PARTY HAS THE RIGHT TO
BE INDEMNIFIED UNDER THE LOAN PAPERS FOR ITS OWN FRAUD, GROSS NEGLIGENCE, OR
WILLFUL MISCONDUCT. THE PROVISIONS OF AND UNDERTAKINGS AND INDEMNIFICATION SET
FORTH IN THIS PARAGRAPH SHALL SURVIVE THE SATISFACTION AND PAYMENT OF THE
OBLIGATION AND TERMINATION OF THIS AGREEMENT.
7.14 Repurchase. On or before March 31, 1994, Borrower shall
purchase from Paribas the interest in CRSS Capital, Inc. owned by Paribas for
not more than $17,000,000. Borrower shall notify Agent of such purchase
promptly upon its completion. If the terms of this SECTION 7.14 are not timely
satisfied, (a) the Termination Date shall be January 31, 1995, in accordance
with the definition of Termination Date in SECTION 1.1 (unless Lender's
commitments to lend under this Agreement are otherwise cancelled or terminate
earlier in accordance with this Agreement), (b) the Total Committed Amount
shall automatically reduce to $40,000,000 in accordance with SECTION 2.4, and
(c) Borrower shall in good faith renegotiate with Agent the financial covenants
contained in this Agreement.
SECTION 8 NEGATIVE COVENANTS. So long as Lenders are committed to fund
Borrowings and Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid in full, unless Borrower receives a
prior written consent to the contrary by Agent on behalf of Determining
Lenders, Borrower covenants and agrees as follows:
8.1 Taxes. Borrower may not permit any Company, directly or
indirectly, to use any portion of the proceeds of any Borrowing to pay the
wages of employees, unless a timely payment to or deposit with the United
States of America of all amounts of Tax required to be deducted and withheld
with respect to such wages is also made.
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8.2 Prepayment of Obligations. Borrower may not permit any
Company (other than CRSS Capital, Inc., or any of its Subsidiaries, unless and
until CRSS Capital, Inc., becomes a wholly-owned Subsidiary of Borrower) to
voluntarily prepay principal of, or interest on, any of its recourse Funded
Debt (other than the Obligation), or any Funded Debt of any other Person
(including, without limitation, any other Company), or make any Obligatory
Payment, if a Default or Potential Default exists.
8.3 Employee Benefit Plans. Borrower may not permit any Material
Company to (a) engage in any "prohibited transaction" (as defined in section
406 of ERISA or section 4975 of the Code), (b) incur any "accumulated funding
deficiency" (as defined in section 302 of ERISA or section 412 of the Code)
with respect to any Employee Plan, (c) permit any Employee Plan to be subject
to involuntary termination proceedings, or (d) fully or partially withdraw from
any Multiemployer Plan.
8.4 Debt.
(a) Borrower may not -- and may not permit its direct or
indirect wholly-owned Subsidiaries to -- create, incur, or suffer to exist any
secured recourse Funded Debt in excess of $2,000,000 in the aggregate for all
such Companies.
(b) Borrower may not permit its direct or indirect
wholly-owned Subsidiaries to create, incur, or suffer to exist any recourse
Funded Debt (secured or unsecured) in excess of $5,000,000 in the aggregate for
all such Companies.
8.5 Liens. Except as contemplated by SECTION 8.4, Borrower may
not permit any Material Company to (a) create, incur, or suffer or permit to
be created or incurred or to exist any Lien upon any of its assets, or upon any
capital stock issued by any direct or indirect Subsidiary of Borrower, except
Permitted Liens, or (b) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits it from creating or incurring
any Lien on any of its assets, or upon any capital stock issued by any direct
or indirect Subsidiary of Borrower, other than the Loan Papers and operating
leases or Capital Leases (so long as any Lien prohibition under leases is
limited to the leased property).
8.6 Transactions with Affiliates. Borrower may not permit any
Material Company to enter into any material transaction with any of its
Affiliates (excluding other Companies), other than transactions in the ordinary
course of business and upon fair and reasonable terms not materially less
favorable than it could obtain or could become entitled to in an arm's-length
transaction with a Person that was not its Affiliate. For purposes of this
SECTION 8.6, a transaction is "material" if it requires any Material Company to
pay more than $2,000,000 during the term of the agreement governing such
transaction.
8.7 Compliance with Laws and Documents. Borrower may not permit
any Company to (a) violate the provisions of any Laws applicable to it or of
any agreement to which it is a party if such violations individually or
collectively would reasonably be expected to constitute a Material Adverse
Event, (b) violate the provisions of its charter or bylaws, or (c) repeal,
replace, or amend any provision of its charter or bylaws if that action would
reasonably be expected to constitute a Material Adverse Event.
8.8 Loans, Advances, and Investments. Except as permitted by
SECTION 8.9 or SECTION 8.10, Borrower may not permit any Company to make any
loan, advance, extension of credit, or capital contribution to, make any
investment in, or purchase or commit to purchase any stock or other securities
of, or interests in, any other Person, other than
26
<PAGE> 32
(a) marketable obligations issued or unconditionally guaranteed by
the United States Government or issued by any of its agencies
and backed by the full faith and credit of the United States
of America (and investments in mutual funds investing
primarily in those obligations);
(b) certificates of deposit or banker's acceptances that are fully
insured by the Federal Deposit Insurance Corporation or are
issued by commercial banks having combined capital, surplus,
and undivided profits of not less than $250,000,000 (as shown
on its most recently published statement of condition);
(c) commercial paper and similar obligations rated "P-2" or better
by Moody's Investors Service, Inc. ("MOODY'S"), or "A-2" or
better by Standard & Poors Corporation ("S&P");
(d) senior debt obligations of issuers whose short-term
obligations are rated "P-2" or better by Moody's or "A-2" or
better by S&P, or whose long-term obligations are rated "Baa2"
or better by Moody's or "BBB" or better by S&P;
(e) investments by Borrower or any Company in, and advances by
Borrower or any Company to, Borrower's direct and indirect
wholly- owned Subsidiaries (regardless of whether they are
Guarantors);
(f) investments in Borrower, and advances to Borrower, by any
other Company;
(g) demand deposit accounts maintained in the ordinary course of
business;
(h) other investments (including investments in, and advances to,
non-wholly-owned Affiliates of Borrower) existing on the date
of this Agreement and described in Borrower's Form 10-Q for
its fiscal quarter ended September 30, 1993;
(i) the repurchase described in SECTION 7.14;
(j) unless and until CRSS Capital, Inc., becomes a wholly-owned
Subsidiary of Borrower, loans, advances, extensions of credit,
capital contributions, investments, purchases or commitments
to purchase stock or other securities or interests in, any
other Person by CRSS Capital, Inc., or any of its
Subsidiaries, in the ordinary course of business;
(k) subject to the prior delivery of a Compliance Certificate
indicating that no breach of any financial covenant in SECTION
9 or any other Default or Potential Default exists or will
exist immediately after making such investment, investments in
SPPEs made after the date of this Agreement; and
(l) as long as no Default or Potential Default exists, other
investments made after February 1, 1993, aggregating no more
than $5,000,000 (provided, however, that such amount shall be
reduced by amounts paid in connection with treasury stock
purchases).
8.9 Dividends and Distributions. Borrower may not declare any
Distribution if any Event of Default then exists or will exist as a result of
payment thereof. Borrower may not permit any Company to enter into or permit
to exist any arrangement or agreement that prohibits it from paying dividends
or other distributions to its shareholders other than any such arrangement or
agreement entered into by any Company that is a direct or indirect Subsidiary
of CRSS Capital, Inc., with and for the benefit of holders of such Company's
non-recourse Debt.
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8.10 Mergers and Dissolutions. Borrower may not permit any Company
to merge or consolidate with any other Person or liquidate, wind up, or
dissolve (or suffer any liquidation or dissolution) except that a direct or
indirect Subsidiary of Borrower may merge with and into Borrower or any other
direct or indirect Subsidiary of Borrower (provided, however, that if the
non-surviving Company has executed a Guaranty, the surviving Company must
deliver to Agent, within 10 Business Days following consummation of such
merger, written evidence that it has assumed the obligations under such
Guaranty).
8.11 Assignment. Borrower may not permit any Company to assign or
transfer any of its Rights, duties, or obligations under any of the Loan
Papers.
8.12 Fiscal Year and Accounting Methods. Borrower may not permit
any Company to change its fiscal year or its method of accounting (other than
immaterial changes in methods or as required by GAAP).
8.13 Government Regulations. Borrower may not permit any Company
to conduct its business in a way that it becomes regulated under the Investment
Company Act of 1940, as amended, or the Public Utility Holding Company Act of
1935, as amended.
SECTION 9 FINANCIAL COVENANTS. So long as Lenders are committed to fund
Borrowings and Agent is committed to issue LCs under this Agreement, and
thereafter until the Obligation is paid and performed in full, unless Borrower
receives a prior written consent to the contrary by Agent on behalf of
Determining Lenders, Borrower covenants and agrees as follows:
9.1 Cash Flow Coverage. As calculated at the end of each fiscal
quarter, Borrower shall not permit the ratio of (a) Cash Sources to (b) Cash
Uses to be:
<TABLE>
<CAPTION>
Ratio of Cash Sources to Cash Uses Applicable Period
---------------------------------- -----------------
<S> <C>
Less than 1.0 to 1.0 Through March 31, 1994
Less than 1.10 to 1.0 April 1, 1994 through
June 30, 1994
Less than 1.20 to 1.0 From July 1, 1994
</TABLE>
9.2 Net Worth. As calculated at the end of each fiscal quarter of
Borrower, Borrower shall not permit Consolidated Net Worth to be less than the
sum of (a) $81,500,000, plus (b) 50% of Borrower's consolidated positive net
income earned during each fiscal quarter after September 30, 1993, as reflected
on Financial Statements of Borrower for the preceding fiscal quarter of
Borrower, plus (c) 100% of any addition to paid-in capital after September 30,
1993, resulting from non-cash sources (i.e., acquisitions), plus (iv) 50% of
any addition to paid-in capital after September 30, 1993, resulting from cash
sources (i.e., sales by Borrower of its capital stock other than sales to
employees pursuant to employee incentive plans).
9.3 Liquidity Ratio. As calculated at the end of each fiscal
quarter of Borrower, Borrower may not permit the ratio of (a) the sum of (i)
all Unencumbered Cash of Borrower and its Consolidated Subsidiaries, plus (ii)
the then-existing Total Commitment, minus (iii) the then-existing Principal
Debt, minus (iv) the then-existing Lenders' LC Exposure, to (b) the sum of (i)
100% of all Obligatory Payments scheduled to be made in the next 12 months,
and (ii) 50% of all Obligatory Payments scheduled to be made after the 12th
succeeding month, but on or before the Termination Date, to be less than 1.00
to 1.00.
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9.4 Leverage Ratio. As calculated at the end of each fiscal
quarter of Borrower, Borrower may not permit the ratio of (a) Consolidated Debt
to (b) Consolidated Tangible Net Worth to exceed 0.60 to 1.00.
SECTION 10 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following events:
10.1 Payment of Obligation. The failure or refusal of any Company
to pay (a) any Principal Debt after it becomes due and payable under the Loan
Papers or (b) any other part of the Obligation within 5 Business Days after it
becomes due and payable under the Loan Papers.
10.2 Covenants. The failure or refusal of Borrower (and, if
applicable, any other Company) to punctually and properly perform, observe, and
comply with:
(a) Any covenant, agreement, or condition contained in
SECTIONS 7.2, 7.4, 7.10, 7.12, 7.13, 8.1, 8.2, 8.9, 8.10, 8.11, 9.1,
9.2, 9.3, OR 9.4; or
(b) Any covenant, agreement, or condition contained in
SECTIONS 7.1(A), (B) AND (D), 7.7, 7.9 (FIRST SENTENCE), 8.4, 8.5, OR
8.13, and failure or refusal continues for 10 days; or
(c) Any other covenant, agreement, or condition contained
in any Loan Paper (other than the covenants to pay the Obligation and
the covenants in CLAUSES (A) AND (B) preceding), and failure or
refusal continues for 30 days.
10.3 Debtor Relief. Any Material Company (a) fails to pay its
Debts generally as they become due, (b) voluntarily seeks, consents to, or
acquiesces in the benefit of any Debtor Relief Law, or (c) becomes a party to
or is made the subject of any proceeding provided for by any Debtor Relief Law,
other than as a creditor or claimant, that could suspend or otherwise adversely
affect the Rights of Agent or any Lender granted in the Loan Papers (unless, if
the proceeding is involuntary, the applicable petition is dismissed within 60
days after its filing).
10.4 Judgments and Attachments. Any Material Company fails, within
60 days after entry, to pay, bond, or otherwise discharge any judgment or order
for the payment of money in excess of $1,000,000 (individually or collectively)
or any warrant of attachment, sequestration, or similar proceeding against any
Company's assets having a value (individually or collectively) of $1,000,000,
which is neither (a) stayed on appeal nor (b) diligently contested in good
faith by appropriate proceedings and adequate reserves have been set aside on
its books in accordance with GAAP.
10.5 Government Action. (a) A final non-appealable order is issued
by any Tribunal (including, but not limited to, the United States Justice
Department) seeking to cause any Material Company to divest a significant
portion of its assets under any antitrust, restraint of trade, unfair
competition, industry regulation, or similar Laws, or (b) any Tribunal
condemns, seizes, or otherwise appropriates, or takes custody or control of all
or any substantial portion of the assets of any Material Company.
10.6 Misrepresentation. Any material representation or warranty
made by any Company contained in any Loan Paper at any time proves to have been
materially incorrect when made.
10.7 Ownership of Other Companies. Borrower fails to own, directly
or indirectly, beneficially and of record, with power to vote, 100% of the
issued and outstanding shares of capital stock of any Company that has executed
a Guaranty (except as a result of a transaction permitted by SECTION 8.10).
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<PAGE> 35
10.8 Default Under Other Agreements. (a) Any Company fails to pay
when due (after lapse of any applicable grace period) any recourse Funded Debt
in excess (individually or collectively) of $2,000,000; (b) any default exists
under any agreement for Debt (other than Debt as to which no recourse to a
Company exists other than recourse only to specific assets of that Company) to
which a Company is a party, the effect of which is to cause, or to permit any
Person (other than a Company) to cause, an amount in excess (individually or
collectively) of $2,000,000 to become due and payable by any Company before its
stated maturity; or (c) any recourse Funded Debt in excess (individually or
collectively) of $2,000,000 is declared to be due and payable or required to be
prepaid by any Company before its stated maturity.
10.9 SEC Reporting Requirements. Borrower fails to comply with any
reporting requirements of the Securities Exchange Act of 1934, as amended, for
which the failure to report would constitute a Material Adverse Event.
10.10 Change in Control. (a) Any Person or "group" (as defined in
the Securities Exchange Act of 1934, as amended) of Persons shall have acquired
beneficial ownership of 30% or more of the outstanding shares of common stock
of Borrower or (b) during any period of 12 consecutive calendar months,
individuals who were directors of Borrower on the first day of such period
shall cease to constitute a majority of the board of directors of Borrower.
10.11 LCs. Agent is served with, or becomes subject to, a court
order, injunction, or other process or decree restraining or seeking to
restrain it from paying any amount under any LC and either (a) a drawing has
occurred under the LC for which Borrower has refused to reimburse Agent for
payment or (b) the expiration date of the LC has occurred but the right of any
beneficiary thereunder to draw under the LC has been extended past the
expiration date in connection with the pendency of the related court action or
proceeding and Borrower has failed to deposit with Agent cash collateral in an
amount equal to Agent's maximum exposure under the LC.
10.12 Validity and Enforceability of Loan Papers. Except in
accordance with its terms or as otherwise expressly permitted by this
Agreement, any Loan Paper after its execution and delivery ceases to be in full
force and effect in any material respect or is declared to be null and void or
its validity or enforceability is contested by any Company party thereto or any
Company denies in writing that it has any further liability or obligations
under any Loan Paper to which it is a party.
SECTION 11 RIGHTS AND REMEDIES.
11.1 Remedies Upon Default.
(a) If a Default exists under SECTION 10.3, the commitment to
extend credit under this Agreement automatically terminates, the
entire unpaid balance of the Obligation automatically becomes due and
payable without any action of any kind whatsoever, and Borrower must
provide cash collateral in an amount equal to the then-existing
Lenders' LC Exposure.
(b) If any Default exists, subject to the terms of SECTION
12.5(B), Agent may (with the consent of, and must, upon the request
of, Determining Lenders), do any one or more of the following: (i) if
the maturity of the Obligation has not already been accelerated under
SECTION 11.1(A), declare the entire unpaid balance of all or any part
of the Obligation immediately due and payable, whereupon it is due and
payable; (ii) terminate the commitments of Lenders to extend credit
under this Agreement; (iii) reduce any claim to judgment; (iv) to the
extent permitted by Law, exercise (or request each Lender to, and each
Lender is entitled to, exercise) the Rights of offset or banker's Lien
against the interest of any Company in and to every account and other
property of any Company that are in the possession of Agent or any
Lender to the extent of the full amount of the Obligation (and to the
extent permitted by Law, each
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Company is deemed directly obligated to each Lender in the full amount
of the Obligation for this purpose); (v) demand Borrower to provide
cash collateral in an amount equal to the then-existing Lenders' LC
Exposure in accordance with SECTION 2.3(I); and (vi) exercise any and
all other legal or equitable Rights afforded by the Loan Papers, the
Laws of the State of Texas, or any other applicable jurisdiction.
(c) If, in reliance on SECTION 12.5(B), Agent refuses to take
any action under SECTION 11.1(B) at the request of Determining
Lenders, then Determining Lenders may take that action.
11.2 Company Waivers. TO THE EXTENT PERMITTED BY LAW, EACH COMPANY
WAIVES PRESENTMENT AND DEMAND FOR PAYMENT, PROTEST, NOTICE OF INTENTION TO
ACCELERATE, NOTICE OF ACCELERATION, AND NOTICE OF PROTEST AND NONPAYMENT, AND
AGREES THAT ITS LIABILITY WITH RESPECT TO ALL OR ANY PART OF THE OBLIGATION IS
NOT AFFECTED BY ANY RENEWAL OR EXTENSION IN THE TIME OF PAYMENT OF ALL OR ANY
PART OF THE OBLIGATION, BY ANY INDULGENCE, OR BY ANY RELEASE OR CHANGE IN ANY
SECURITY FOR THE PAYMENT OF ALL OR ANY PART OF THE OBLIGATION.
11.3 Performance by Agent. If any covenant, duty, or agreement of
any Company is not performed in accordance with the terms of the Loan Papers,
Agent may, during the continuance of a Default, at its option (but subject to
the approval of Determining Lenders), perform or attempt to perform that
covenant, duty, or agreement on behalf of that Company (and any amount expended
by Agent in its performance or attempted performance is payable by the
Companies, jointly and severally, to Agent on demand, becomes part of the
Obligation, and bears interest at the Default Rate from the date of Agent's
expenditure until paid). However, Agent does not assume and shall never have,
except by its express written consent, any liability or responsibility for the
performance of any covenant, duty, or agreement of any Company.
11.4 Not in Control. None of the covenants or other provisions
contained in any Loan Paper shall, or shall be deemed to, give Agent or Lenders
the Right to exercise control over the assets (including, without limitation,
real property), affairs, or management of any Company; the power of Agent and
Lenders is limited to the Right to exercise the remedies provided in this
SECTION 11.
11.5 Course of Dealing. The acceptance by Agent or Lenders of any
partial payment on the Obligation shall not be deemed to be a waiver of any
Default then existing. No waiver by Agent, Determining Lenders, or Lenders of
any Default shall be deemed to be a waiver of any other then-existing or
subsequent Default. No delay or omission by Agent, Determining Lenders, or
Lenders in exercising any Right under the Loan Papers may impair that Right or
be construed as a waiver thereof or any acquiescence therein, nor may any
single or partial exercise of any Right preclude other or further exercise
thereof or the exercise of any other Right under the Loan Papers or otherwise.
11.6 Cumulative Rights. All Rights available to Agent, Determining
Lenders, and Lenders under the Loan Papers are cumulative of and in addition to
all other Rights granted to Agent, Determining Lenders, and Lenders at law or
in equity, whether or not the Obligation is due and payable and whether or not
Agent, Determining Lenders, or Lenders have instituted any suit for collection,
foreclosure, or other action in connection with the Loan Papers.
11.7 Application of Proceeds. Any and all proceeds ever received
by Agent or Lenders from the exercise of any Rights pertaining to the
Obligation shall be applied to the Obligation in accordance with SECTION 3.
11.8 Diminution in Value of Collateral. Neither Agent nor any
Lender has any liability or responsibility whatsoever for any diminution in or
loss of value of any collateral hereafter securing payment or
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performance of all or any part of the Obligation (other than diminution in or
loss of value caused by its gross negligence or willful misconduct).
SECTION 12 AGREEMENT AMONG LENDERS.
12.1 Agent.
(a) Each Lender appoints Agent (and Agent accepts
appointment) as its nominee and agent, in its name and on its behalf:
(i) to act as its nominee and on its behalf in and under all Loan
Papers; (ii) to arrange the means whereby its funds are to be made
available to Borrower under the Loan Papers; (iii) to take any action
that it properly requests under the Loan Papers (subject to the
concurrence of other Lenders as may be required under the Loan
Papers); (iv) to receive all documents and items to be furnished to it
under the Loan Papers; (v) to promptly distribute to it all material
information, requests, documents, and items received from Borrower
under the Loan Papers; (vi) to promptly distribute to it its ratable
part of each payment or prepayment in accordance with the terms of the
Loan Papers; and (vii) to deliver to the appropriate Persons requests,
demands, approvals, and consents received from it. However, Agent may
not be required to take any action that exposes Agent to personal
liability or that is contrary to any Loan Paper or applicable Law.
(b) If the initial or any successor Agent ever ceases to be a
party to this Agreement or if the initial or any successor Agent ever
resigns (whether voluntarily or at the request of Determining
Lenders), then Determining Lenders shall appoint the successor Agent
from among the Lenders (other than the resigning Agent). If
Determining Lenders fail to appoint a successor Agent within 30 days
after the resigning Agent has given notice of resignation or
Determining Lenders have removed the resigning Agent, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent,
which must be a commercial bank having a combined capital and surplus
of at least $1,000,000,000 (as shown on its most recently published
statement of condition). Upon its acceptance of appointment as
successor Agent, the successor Agent succeeds to and becomes vested
with all of the Rights of the prior Agent, and the prior Agent is
discharged from its duties and obligations of Agent under the Loan
Papers (but, when used in connection with LCs issued and outstanding
before the appointment of the successor Agent, "Agent" shall continue
to refer solely to NationsBank of Texas, N.A. (but, any LCs issued or
renewed after the appointment of any successor Agent shall be issued
or renewed by the successor Agent)), and each Lender shall execute the
documents as any Lender, the resigning or removed Agent, or the
successor Agent may reasonably request to reflect the change. After
any Agent's resignation or removal as Agent under the Loan Papers, the
provisions of this SECTION 12 inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under the Loan
Papers.
(c) Agent, in its capacity as a Lender, has the same Rights
under the Loan Papers as any other Lender and may exercise those
Rights as if it were not acting as Agent; the term "Lender" shall,
unless the context otherwise indicates, include Agent; and Agent's
resignation or removal shall not impair or otherwise affect any Rights
that it has or may have in its capacity as an individual Lender. Each
Lender and Borrower agree that Agent is not a fiduciary for Lenders or
for Borrower but simply is acting in the capacity described in this
Agreement to alleviate administrative burdens for Borrower and
Lenders, that Agent has no duties or responsibilities to Lenders or
Borrower except those expressly set forth in the Loan Papers, and that
Agent in its capacity as a Lender has all Rights of any other Lender.
(d) Agent or any Lender may now or hereafter be engaged
in one or more loan, letter of credit, leasing, or other financing
transactions with Borrower, act as trustee or depositary for Borrower,
or otherwise be engaged in other transactions with Borrower
(collectively, the "OTHER ACTIVITIES") not the subject of the Loan
Papers. Without limiting the Rights of Lenders specifically set forth
in the Loan
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Papers, neither Agent nor any Lender is responsible to account to the
other Lenders for those other activities, and neither Agent nor any
Lender shall have any interest in any other activities, any present or
future guaranties by or for the account of Borrower that are not
contemplated or included in the Loan Papers, any present or future
offset exercised by Agent or any Lender in respect of those other
activities, any present or future property taken as security for any
of those other activities, or any property now or hereafter in Agent's
or any Lender's possession or control that may be or become security
for the obligations of Borrower arising under the Loan Papers by
reason of the general description of indebtedness secured or of
property contained in any other agreements, documents, or instruments
related to any of those other activities (but, if any payments in
respect of those guaranties or that property or the proceeds thereof
shall be applied by Agent or any Lender to reduce the Obligation, then
each Lender is entitled to share ratably in the application).
12.2 Expenses. Each Lender shall pay its Pro Rata Part of any
expenses (including, without limitation, court costs, reasonable attorneys'
fees and other costs of collection) incurred by Agent (while acting in such
capacity) in connection with any of the Loan Papers if Agent is not reimbursed
from other sources within 30 days after incurrence. Each Lender is entitled to
receive its Pro Rata Part of any reimbursement that it makes to Agent if Agent
is subsequently reimbursed from other sources.
12.3 Proportionate Absorption of Losses. Except as otherwise
provided in the Loan Papers, nothing in the Loan Papers gives any Lender any
advantage over any other Lender insofar as the Obligation is concerned or to
relieve any Lender from ratably absorbing any losses sustained with respect to
the Obligation (except to the extent unilateral actions or inactions by any
Lender result in Borrower or any other obligor on the Obligation having any
credit, allowance, setoff, defense, or counterclaim solely with respect to all
or any part of that Lender's Pro Rata Part of the Obligation).
12.4 Delegation of Duties; Reliance. Lenders may perform any of
their duties or exercise any of their Rights under the Loan Papers by or
through Agent, and Lenders and Agent may perform any of their duties or
exercise any of their Rights under the Loan Papers by or through their
respective Representatives. Agent, Lenders, and their respective
Representatives (a) are entitled to rely upon (and shall be protected in
relying upon) any written or oral statement believed by it or them to be
genuine and correct and to have been signed or made by the proper Person and,
with respect to legal matters, upon opinion of counsel selected by Agent or
that Lender (but nothing in this CLAUSE (A) permits Agent to rely on (i) oral
statements if a writing is required by this Agreement or (ii) any other writing
if a specific writing is required by this Agreement or any other Loan Paper),
(b) are entitled to deem and treat each Lender as the owner and holder of its
Pro Rata Part of the Principal Debt for all purposes until, subject to SECTION
13.14, written notice of the assignment or transfer is given to and received by
Agent (and, any request, authorization, consent, or approval of any Lender is
conclusive and binding on each subsequent holder, assignee, or transferee of
that Lender's Pro Rata Part of the Principal Debt or Participant therein until
that notice is given and received), (c) are not deemed to have notice of the
occurrence of a Default unless a responsible officer of Agent, who handles
matters associated with the Loan Papers and transactions thereunder, has actual
knowledge or Agent has been notified by a Lender or Borrower, and (d) are
entitled to consult with legal counsel (including counsel for Borrower),
independent accountants, and other experts selected by Agent and are not liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of counsel, accountants, or experts.
12.5 Limitation of Agent's Liability.
(a) Neither Agent nor any of its Representatives may be
liable for any action taken or omitted to be taken by it or them under
the Loan Papers in good faith and believed by it or them to be within
the discretion or power conferred upon it or them by the Loan Papers
or be responsible for the consequences of any error of judgment
(except for fraud, gross negligence, or willful misconduct), and
neither Agent
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nor any of its Representatives has a fiduciary relationship with any
Lender by virtue of the Loan Papers (but nothing in this Agreement
negates the obligation of Agent to account for funds received by it
for the account of any Lender).
(b) Unless indemnified to its satisfaction against loss,
cost, liability, and expense, Agent may not be compelled to do any act
under the Loan Papers or to take any action toward the execution or
enforcement of the powers thereby created or to prosecute or defend
any suit in respect of the Loan Papers. If Agent requests instructions
from Lenders, or Determining Lenders, as the case may be, with respect
to any act or action in connection with any Loan Paper, Agent is
entitled to refrain (without incurring any liability to any Person by
so refraining) from that act or action unless and until it has
received instructions. In no event, however, may Agent or any of its
Representatives be required to take any action that it or they
determine could incur for it or them criminal or onerous civil
liability. Without limiting the generality of the foregoing, no
Lender has any right of action against Agent as a result of Agent's
acting or refraining from acting under this Agreement in accordance
with instructions of Determining Lenders.
(c) Agent is not responsible to any Lender or any Participant
for, and each Lender represents and warrants that it has not relied
upon Agent in respect of, (i) the creditworthiness of any Company and
the risks involved to that Lender, (ii) the effectiveness,
enforceability, genuineness, validity, or the due execution of any
Loan Paper (other than by Agent), (iii) any representation, warranty,
document, certificate, report, or statement made therein (other than
by Agent) or furnished thereunder or in connection therewith, (iv) the
adequacy of any collateral hereafter securing the Obligation or the
existence, priority, or perfection of any Lien hereafter granted or
purported to be granted on the collateral under any Loan Paper, or (v)
observation of or compliance with any of the terms, covenants, or
conditions of any Loan Paper on the part of any Company. EACH LENDER
AGREES TO INDEMNIFY AGENT AND ITS REPRESENTATIVES AND HOLD THEM
HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH LENDER'S PRO RATA PART
OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES, AND REASONABLE
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER THAT MAY BE IMPOSED ON,
ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING TO OR
ARISING OUT OF THE LOAN PAPERS OR ANY ACTION TAKEN OR OMITTED BY THEM
UNDER THE LOAN PAPERS TO THE EXTENT THAT AGENT AND ITS REPRESENTATIVES
ARE NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH AGENT
AND ITS REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS
AGREEMENT FOR ITS OR THEIR OWN ORDINARY NEGLIGENCE, AGENT AND ITS
REPRESENTATIVES DO NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS
AGREEMENT FOR ITS OR THEIR OWN FRAUD, GROSS NEGLIGENCE, OR WILLFUL
MISCONDUCT.
12.6 Default; Collateral. Upon the occurrence and during the
continuance of a Default, Lenders agree to promptly confer in order that
Determining Lenders or Lenders, as the case may be, may agree upon a course of
action for the enforcement of the Rights of Lenders; and Agent is entitled to
refrain from taking any action (without incurring any liability to any Person
for so refraining) unless and until it has received instructions from
Determining Lenders. In actions with respect to any property of Borrower,
Agent is acting for the ratable benefit of each Lender. The Agent shall hold,
for the ratable benefit of all Lenders, any security it receives for the
Obligation or any guaranty of the Obligation it receives upon or in lieu of
foreclosure.
12.7 Limitation of Liability. To the extent permitted by Law, (a)
no Lender or any Participant may incur any liability to any other Lender or
Participant except for acts or omissions in bad faith, and (b) neither Agent
nor any Lender or Participant may incur any liability to any other Person for
any act or omission of any other Lender or any Participant.
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12.8 Relationship of Lenders. Nothing in the Loan Papers may be
construed as creating a partnership or joint venture among Agent and Lenders or
among Lenders.
12.9 Foreign Lenders. Each Lender that is organized under the laws
of any jurisdiction other than the United States of America or any State
thereof (a) represents to Agent and Borrower that (i) under applicable Laws no
Taxes will be required to be withheld by Agent or Borrower with respect to any
payments to be made to it in respect of the Obligation and (ii) it has
furnished to Agent and Borrower two duly completed copies of either U.S.
Internal Revenue Service Form 4224 or Form 1001 (wherein it claims entitlement
to complete exemption from U.S. federal withholding tax on all interest
payments under the Loan Papers), and (b) covenants to (i) provide Agent and
Borrower a new Form 4224 or Form 1001 upon the expiration or obsolescence of
any previously delivered form in accordance with applicable Laws, duly executed
and completed by it, and (ii) comply from time to time with all applicable Laws
with regard to the withholding tax exemption.
12.10 Benefits of Agreement. Except for the representations and
covenants in SECTIONS 12.1(C) AND 12.9 in favor of Borrower, none of the
provisions of this SECTION 12 inure to the benefit of any Company or any other
Person other than Agent and Lenders; consequently, no Company or any other
Person is entitled to rely upon, or to raise as a defense, in any manner
whatsoever, the failure of Agent or any Lender to comply with these provisions.
SECTION 13 MISCELLANEOUS.
13.1 Headings. The headings, captions, and arrangements used in
any of the Loan Papers are, unless specified otherwise, for convenience only
and shall not be deemed to limit, amplify, or modify the terms of the Loan
Papers, nor affect the meaning thereof.
13.2 Nonbusiness Days. Any payment or action that is due under any
Loan Paper on a non-Business Day may be delayed until the next- succeeding
Business Day (but interest shall continue to accrue on any applicable payment
until payment is in fact made) unless the payment concerns a LIBOR Rate
Borrowing, in which case if the next-succeeding Business Day is in the next
calendar month, then such payment shall be made on the next-preceding Business
Day.
13.3 Communications. Unless otherwise specifically provided,
whenever any Loan Paper requires or permits any consent, approval, notice,
request, or demand from one party to another, communication must be in writing
(which may be by telex or telecopy) to be effective and shall be deemed to have
been given (a) if by telex, when transmitted to the telex number and the
appropriate answerback is received, (b) if by telecopy, when transmitted to the
appropriate telecopy number (and all communications sent by telecopy must be
confirmed promptly thereafter by telephone; but any requirement in this
parenthetical shall not affect the date when the telecopy shall be deemed to
have been delivered), (c) if by mail, on the third Business Day after it is
enclosed in an envelope and properly addressed, stamped, sealed, and deposited
in the appropriate official postal service, or (d) if by any other means, when
actually delivered. Until changed by notice pursuant to this Agreement, the
address (and telecopy number) for each party to a Loan Paper is set forth on
SCHEDULE 1.
13.4 Form and Number of Documents. The form, substance, and number
of counterparts of each writing to be furnished under any provision of this
Agreement must be satisfactory to Agent and its counsel.
13.5 Exceptions to Covenants. No Company may take or fail to take
any action that is permitted as an exception to any of the covenants contained
in any Loan Paper if that action or omission would result in the breach of any
other covenant contained in any Loan Paper.
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13.6 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Loan Papers survive all
closings under the Loan Papers and, except as otherwise indicated, are not
affected by any investigation made by any party.
13.7 Governing Law. The Laws (other than conflict-of-laws
provisions) of the State of Texas and of the United States of America govern
the Rights and duties of the parties to the Loan Papers and the validity,
construction, enforcement, and interpretation of the Loan Papers.
13.8 Invalid Provisions. Any provision in any Loan Paper held to
be illegal, invalid, or unenforceable is fully severable; the appropriate Loan
Paper shall be construed and enforced as if that provision had never been
included; and the remaining provisions shall remain in full force and effect
and shall not be affected by the severed provision. Agent, Lenders, and each
Company party to the affected Loan Paper agree to negotiate, in good faith, the
terms of a replacement provision as similar to the severed provision as may be
possible and be legal, valid, and enforceable.
13.9 Entirety. A credit agreement in which the amount involved
exceeds $50,000 in value is not enforceable unless the agreement is in writing
and signed by the party to be bound or by that party's authorized
representative. The rights and obligations of the Companies, lenders, and
agent shall be determined solely from written agreements, documents, and
instruments, and any prior oral agreements among the parties are superseded by
and merged into those writings. THIS AGREEMENT AND THE OTHER WRITTEN LOAN
PAPERS (EACH AS AMENDED IN WRITING FROM TIME TO TIME) EXECUTED BY ANY COMPANY,
ANY LENDER, OR AGENT REPRESENT THE FINAL AGREEMENT AMONG THE COMPANIES,
LENDERS, AND AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. This paragraph is included in
this Agreement under Section 26.02 of the Texas Business and Commerce Code, as
amended from time to time.
13.10 Venue; Service of Process; Jury Trial. EACH PARTY TO ANY LOAN
PAPER, IN EACH CASE FOR ITSELF, ITS SUCCESSORS AND ASSIGNS, (A) IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE
STATE OF TEXAS, (B) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
LITIGATION ARISING OUT OF OR IN CONNECTION WITH THE LOAN PAPERS AND THE
OBLIGATION BROUGHT IN DISTRICT COURTS OF HARRIS COUNTY, TEXAS, OR IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION, (C)
IRREVOCABLY WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY OF THE
AFOREMENTIONED COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D)
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THOSE COURTS IN
ANY LITIGATION BY THE MAILING OF COPIES THEREOF BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND-DELIVERY, OR BY DELIVERY BY A
NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE
UPON DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS SET FORTH IN THIS AGREEMENT,
AND (E) IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY LOAN PAPER. The scope of each of the foregoing waivers is
intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims, and
all other common law and statutory claims. Borrower, for itself and each of
the other Companies, acknowledges that these waivers are a material inducement
to Agent's and each Lender's agreement to enter into a business relationship,
that Agent and each Lender has already relied on these waivers in entering into
this Agreement, and that Agent and each Lender will continue to rely on each of
these waivers in related future dealings. Borrower, for itself and each of the
other Companies, further warrants and represents that it has reviewed these
waivers with its legal counsel, and that it knowingly and voluntarily agrees to
each waiver following consultation with legal counsel. THE WAIVERS IN THIS
SECTION 13.10 ARE IRREVOCABLE, MEANING THAT THEY MAY NOT BE MODIFIED EITHER
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ORALLY OR IN WRITING, AND THESE WAIVERS SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, SUPPLEMENTS, AND REPLACEMENTS TO OR OF THIS OR ANY OTHER LOAN
PAPER. In the event of Litigation, this Agreement may be filed as a written
consent to a trial by the court.
13.11 Amendments, Consents, Conflicts, and Waivers.
(a) Unless otherwise specifically provided, (i) this
Agreement may be amended only by an instrument in writing executed
jointly by Borrower, Agent, and Determining Lenders and supplemented
only by documents delivered or to be delivered in accordance with the
express terms of this Agreement, and (ii) the other Loan Papers may
only be the subject of an amendment, modification, or waiver that has
been approved by Determining Lenders.
(b) Any amendment to or consent or waiver under this
Agreement or any Loan Paper that purports to accomplish any of the
following must be by an instrument in writing executed by Borrower and
Agent and executed (or approved, as the case may be) by each Lender:
(i) extends the due date or decreases the amount of any scheduled
payment of the Obligation beyond the date specified in the Loan
Papers; (ii) decreases any rate or amount of interest, fees, or other
sums payable to Agent or Lenders under this Agreement (except such
reductions as are contemplated by this Agreement); (iii) changes the
definition of "APPLICABLE MARGIN," "COMMITMENT PERCENTAGE,"
"COMMITMENT USAGE," "COMMITTED SUM," "DETERMINING LENDERS,"
"GUARANTOR", "TERMINATION DATE," or "TOTAL COMMITMENT"; (iv) increases
any one or more Lenders' Committed Sums; (v) waives compliance with,
amends, or releases (in whole or in part) any Guaranty or releases (in
whole or in part) any collateral, if any, for the Obligation; or (vi)
changes this CLAUSE (B) or any other matter specifically requiring the
consent of all Lenders under this Agreement.
(c) Any conflict or ambiguity between the terms and
provisions of this Agreement and terms and provisions in any other
Loan Paper is controlled by the terms and provisions of this
Agreement.
(d) No course of dealing or any failure or delay by
Agent, any Lender, or any of their respective Representatives with
respect to exercising any Right of Agent or any Lender under this
Agreement operates as a waiver thereof. A waiver must be in writing
and signed by Agent and Lenders (or Determining Lenders, if permitted
under this Agreement) to be effective, and a waiver will be effective
only in the specific instance and for the specific purpose for which
it is given.
13.12 Multiple Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which shall be deemed an original for
all purposes and all of which constitute, collectively, one agreement; but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one counterpart. Each Lender need not execute the same
counterpart so long as identical counterparts are executed by Borrower, each
Lender, and Agent. Subject to SECTION 5, this Agreement shall become effective
when counterparts of this Agreement have been executed and delivered to Agent
by each Lender, Agent, and Borrower, or, in the case only of Lenders, when
Agent has received telecopied, telexed, or other evidence satisfactory to it
that each Lender has executed and is delivering to Agent a counterpart of this
Agreement.
13.13 Taxes. Any Taxes payable by Agent or any Lender or ruled (by
a Tribunal) payable by Agent or any Lender in respect of this Agreement or any
other Loan Paper shall be paid by Borrower, together with interest and
penalties, if any (except for Taxes payable on the overall net income of Agent
or that Lender and except for interest and penalties incurred as a result of
the gross negligence or willful misconduct of Agent or any Lender). Agent or
that Lender (through Agent) shall notify Borrower and deliver to Borrower a
certificate setting forth in reasonable detail the calculation of the amount of
payable Taxes, which certificate is rebuttably, but
37
<PAGE> 43
presumptively, correct), and Borrower shall promptly pay that amount to Agent
for its account or the account of that Lender, as the case may be. If Agent or
that Lender subsequently receives a refund of the Taxes paid to it by Borrower,
then the recipient shall promptly pay the refund to Borrower.
13.14 Successors and Assigns; Participations.
(a) This Agreement is binding upon, and inures to the
benefit of the parties to this Agreement and their respective
successors and permitted assigns. No Company may, directly or
indirectly, assign or transfer, or attempt to assign or transfer, any
of its Rights, duties, or obligations under any Loan Papers without
the express written consent of all Lenders. No Lender may transfer,
pledge, assign, sell any participation in, or otherwise encumber its
portion of the Obligation except as permitted by this SECTION 13.14.
(b) Subject to the provisions of this section and in
accordance with applicable Law, any Lender may, in the ordinary course
of its commercial banking business, at any time sell to one or more
Persons (each a "PARTICIPANT") participating interests in its portion
of the Obligation. The selling Lender shall remain a "Lender" under
this Agreement (and the Participant shall not constitute a "Lender"
under this Agreement) and its obligations under this Agreement shall
remain unchanged. The selling Lender shall remain solely responsible
for the performance of its obligations under the Loan Papers and shall
remain the holder of its share of the Principal Debt for all purposes
under this Agreement. Borrower and Agent shall continue to deal
solely and directly with the selling Lender in connection with that
Lender's Rights and obligations under the Loan Papers. Participants
have no Rights under the Loan Papers, other than certain voting Rights
as provided below. Subject to the following, each Lender is entitled
to obtain (on behalf of its Participants) the benefits of SECTION 3
with respect to all participations in its part of the Obligation
outstanding from time to time so long as Borrower is not obligated to
pay any amount in excess of the amount that would be due to that
Lender under SECTION 3 calculated as though no participation had been
made. No Lender may sell any participating interest under which the
Participant has any Rights to approve any amendment, modification, or
waiver of any Loan Paper, except to the extent the amendment,
modification, or waiver extends the due date for payment of any
principal, interest, or fees due under the Loan Papers, reduces the
interest rate or the amount of principal or fees applicable to the
Obligation (except reductions contemplated by this Agreement), or
releases any Guaranty or collateral, if any, for the Obligation.
However, if a Participant is entitled to the benefits of SECTION 3 or
a Lender grants Rights to its Participants to approve amendments to or
waivers of the Loan Papers respecting the matters described in the
previous sentence, then that Lender must include a voting mechanism in
the relevant participation agreement whereby a majority of its portion
of the Obligation (whether held by it or participated) shall control
the vote for all of that Lender's portion of the Obligation. Except
in the case of the sale of a participating interest to another Lender,
the relevant participation agreement shall prohibit the Participant
from transferring, pledging, assigning, selling a participation in, or
otherwise encumbering its portion of the Obligation.
(c) Subject to the provisions of this section, any Lender
may at any time, in the ordinary course of its commercial banking
business and in accordance with applicable Law, (i) without the
consent of Borrower or Agent, assign all of its Rights under the Loan
Papers to any of its Affiliates (each a "PURCHASER") and (ii) if no
Default has occurred and is continuing, upon the prior written consent
of Borrower (which will not be unreasonably withheld) and Agent,
assign all of its Rights under the Loan Papers to any other financial
institution (each of which is also a "PURCHASER"). In each case, the
Purchaser shall assume the transferred Rights and obligations under an
assignment agreement substantially in the form of EXHIBIT G. Upon (i)
delivery of an executed copy of the assignment agreement to Borrower
and Agent and (ii) payment of a fee of $2,500 from the transferor to
Agent, from and after the assignment's effective date (which shall be
after the date of delivery), the Purchaser shall
38
<PAGE> 44
for all purposes be a Lender party to this Agreement and shall have
all the Rights and obligations of a Lender under this Agreement as if
it were an original party to this Agreement with commitments as set
forth in the assignment agreement, and the transferor Lender shall be
released from its obligations under this Agreement, and, except as
provided in the following sentence, no further consent or action by
Borrower, Lenders, or Agent shall be required. Upon the consummation
of any transfer to a Purchaser under this CLAUSE (C), SCHEDULE 1 shall
automatically be deemed to reflect the name, address, and Committed
Sum of such Purchaser, Agent shall deliver to Borrower and Lenders an
amended SCHEDULE 1 reflecting those changes, Borrower shall execute
and deliver to the Purchaser (and the transferor Lender, if
applicable) a Note in the face amount of its Committed Sum following
transfer, and the transferor Lender shall return to Borrower the Note
previously delivered to it under this Agreement. A Purchaser is
subject to all the provisions in this section and to SECTION 12.10 as
if it were a Lender signatory to this Agreement as of the date of this
Agreement.
(d) Any Lender may at any time, without the consent of
Borrower or Agent, assign all or any part of its Rights under the Loan
Papers to a Federal Reserve Bank without releasing the transferor
Lender from its obligations thereunder.
(e) Notwithstanding any contrary provision in this
Agreement, a Lender may not sell or participate any of its interests
for a purchase price that, directly or indirectly, reflects a discount
from face value, without first offering the sale or participation to
the other Lenders on a Pro Rata basis.
13.15 Discharge Only Upon Payment in Full; Reinstatement in Certain
Circumstances. Each Company's obligations under the Loan Papers remain in full
force and effect until the Total Commitment is terminated and the Obligation is
paid in full (except for provisions under the Loan Papers expressly intended to
survive payment of the Obligation and termination of the Loan Papers). If at
any time any payment of the principal of or interest on any Note or any other
amount payable by Borrower or any other obligor on the Obligation under any
Loan Paper is rescinded or must otherwise be restored or returned upon the
insolvency, bankruptcy, or reorganization of Borrower or otherwise, the
obligations of each Company under the Loan Papers with respect to that payment
shall be reinstated as though the payment had been due but not made at that
time.
13.16 Confidentiality. Agent and each Lender shall hold
confidential all non-public information obtained pursuant to or in connection
with this Agreement in accordance with safe and sound banking practices and may
make disclosure to any of its examiners, Affiliates, outside auditors, counsel,
and other professional advisors in connection with this Agreement or pursuant
to legal process. Agent or such Lender will attempt to notify Borrower of any
request by any Tribunal (other than any request in connection with an
examination of Agent or such Lender by such Tribunal) for disclosure of
non-public information at least 3 Business Days prior to disclosing such
information.
[Remainder of page intentionally blank. Signature page(s) follow.]
39
<PAGE> 45
EXECUTED as of the day and year first mentioned.
CRSS INC.,
as Borrower
By:_____________________________________
John St. Wrba
Assistant Treasurer
NATIONSBANK OF TEXAS, N.A.,
as Agent and a Lender
By:_____________________________________
Boyd P. Gentry
Senior Vice President
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as a Lender
By:_____________________________________
Ray Kingsbury
Vice President
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:_____________________________________
Kari K. Smith
Vice President
ABN AMRO BANK N.V.,
as a Lender
By:_____________________________________
Charles W. Randall
Group Vice President
By:_____________________________________
Kenneth S. Womack
Assistant Vice President
40
<PAGE> 46
SCHEDULE 1
(As of January 18, 1994)
PARTIES; ADDRESSES; COMMITTED SUMS; WIRING INFORMATION
Borrower and other Companies
CRSS Inc.
1177 West Loop South, Suite 800
Houston, Texas 22427
Attn: John St. Wrba
Assistant Treasurer
FAX: 713/623-8051
Each other Company
c/o CRSS Inc.
Agent
NationsBank of Texas, N.A.
700 Louisiana
P.O. Box 2518
Houston, Texas 77252-2518
Attn: Boyd P. Gentry
Senior Vice President
FAX: 713/247-6719
copy to:
Johnson & Gibbs, P.C.
1001 Fannin, Suite 1200
Houston, Texas 77002
Attn: F. Walter Bistline, Jr.
FAX: 713/752-3788
1
<PAGE> 47
<TABLE>
<CAPTION> Committed Sums Effective
Lenders Initial Committed Sums February 1, 1995
- ------- ---------------------- ----------------
<S> <C> <C>
NationsBank of Texas, N.A. $15,000,000 $12,000,000
700 Louisiana
P.O. Box 2518
Houston, Texas 77252-2518
Attn: Boyd P. Gentry
Senior Vice President
FAX: 713/247-6719
Texas Commerce Bank National Association $14,000,000 $11,200,000
712 Main Street, 5th Floor
Houston, Texas 77002
Attn: Ray Kingsbury
Vice President
FAX: 713/236-6004
First Interstate Bank of Texas, N.A. $12,000,000 $9,600,000
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Attn: Kari K. Smith,
Vice President
FAX: 713/250-7029
ABN AMRO Bank N.V. $9,000,000 $7,200,000
Three Riverway, Suite 1600
Houston, Texas 77056
Attn: Kenneth S. Womack
Assistant Vice President
FAX: 713/629-7533
--------------- ---------------
$50,000,000 $40,000,000
</TABLE>
2
<PAGE> 48
Wiring Information
CRSS INC.
Location of account: Texas Commerce Bank National Association
ABA #: 113000609
Account No.: 0010-013-0310
NATIONSBANK OF TEXAS, N.A.
Location of account: NationsBank of Texas, N.A. (Dallas, Texas)
ABA #: 111000025
Attention: Commercial Loans FTA Acct. #0180019828 (ref. CRSS)
ABN AMRO BANK N.V.
Location of account: ABN AMRO Bank N.V. (New York, New York)
ABA #: 026009580
Account No.: 651001071541 for further credit to ABN AMRO Bank N.V.
(Houston)
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
Location of account: Texas Commerce Bank National Association
(Houston, Texas)
ABA #: 113000609
Account No.: Loan Operations Clearing Account #13681
FIRST INTERSTATE BANK OF TEXAS, N.A.
Location of account: First Interstate Bank of Texas, N.A.
(Houston, Texas)
ABA #: 113001064
Credit to Commercial Loan No. 18519606
Attention: Debbie Van Ness
Reference: CRSS Inc.
3
<PAGE> 49
SCHEDULE 2
MATERIAL COMPANIES
CRSS Inc.
CRSS Services, Inc.
CRS Sirrine Engineers, Inc.
CRSS Architects, Inc.
CRSS Constructors, Inc.
CRSS Capital, Inc.
4
<PAGE> 50
SCHEDULE 5
CONDITIONS PRECEDENT
<TABLE>
<CAPTION>
Responsible Party Document
<S> <C> <C>
J&G 1. Agreement
J&G a. Schedule 1 - Parties; Addresses; Committed Sums; Wiring Information
Borrower b. Schedule 2 - Material Companies
J&G c. Schedule 5 - Conditions Precedent
Borrower d. Schedule 6.2 - Jurisdictions of Incorporation and Business
Borrower e. Schedule 6.3 - Corporate Structure
Borrower f. Schedule 6.7 - Litigation
J&G g. Schedule 6.11 - Permitted Liens
Borrower h. Schedule 6.13 - Transactions with Affiliates
J&G i. Exhibit A - Promissory Note
J&G j. Exhibit B - Guaranty
J&G k. Exhibit C - Notice of Borrowing
J&G l. Exhibit D - Notice of LC
J&G m. Exhibit E - Notice of Conversion
J&G n. Exhibit F - Compliance Certificate; Calculation Worksheet
J&G o. Exhibit G - Assignment
J&G 2. Notes to each Lender
a. NationsBank of Texas, N.A.
b. ABN AMRO Bank N.V.
c. Texas Commerce Bank National Association
d. First Interstate Bank of Texas, N.A.
Borrower 3. Notice of Borrowing
Borrower 4. Notice of LC
J&G 5. Guaranty executed by each Guarantor
J&G 6. Officers' Certificates (confirming continued accuracy of Certificates dated
February 1, 1993, and attaching new Board resolutions)
a. Borrower
b. CRSS Services, Inc.
c. CRSS Architects, Inc.
d. CRSS Constructors, Inc.
e. CRS Sirrine Engineers, Inc.
f. CRSS Capital, Inc.
J&G 7. Officers' Certificate (regarding articles, by-laws, incumbency and
resolutions) for CRSS Constructors International, Inc.
</TABLE>
1
<PAGE> 51
<TABLE>
<S> <C> <C>
J&G 8. State Certificates (Borrower) - each dated after January 1, 1994
a. Good Standing/Existence - Delaware
b. Good Standing - Texas
c. Authority to transact business - Texas
J&G 9. State Certificates (CRSS Services, Inc.) - each dated after January 1, 1994
a. Good Standing/Existence - Delaware
b. Compliance - South Carolina
c. Authority to transact business - South Carolina
J&G 10. State Certificates (CRSS Architects, Inc.) - each dated after January 1, 1994
a. Good Standing/Existence - California
b. Good Standing - Texas
c. Authority to transact business - Texas
J&G 11. State Certificates (CRSS Constructors, Inc.) - each dated after January 1, 1994
a. Good Standing/Existence - Delaware
b. Good Standing - Colorado
c. Authority to transact business - Colorado
d. Good Standing - Texas
e. Authority to transact business - Texas
J&G 12. State Certificates (CRS Sirrine Engineers, Inc.) - each dated after January 1, 1994
a. Compliance - South Carolina
b. Existence - South Carolina
J&G 13. State Certificates (CRSS Capital, Inc.) - each dated after January 1, 1994
a. Good Standing/Existence - Delaware
b. Good Standing - Texas
c. Authority to transact business - Texas
J&G 14. State Certificates (CRSS Constructors International, Inc.) - each dated after January 1, 1994
a. Good Standing/Existence - Delaware
b. Good Standing - Texas
c. Authority to transact business - Texas
Borrower 15. Legal opinion of Frank Perrone, general counsel to the Companies
J&G 16. UCC Lien Search Reports:
a. Borrower (Colorado and Texas)
b. CRSS Services, Inc. (South Carolina)
c. CRSS Architects, Inc. (Texas)
d. CRSS Constructors, Inc. (Colorado and Texas)
e. CRS Sirrine Engineers, Inc. (South Carolina)
f. CRSS Capital, Inc. (Texas)
g. CRSS Constructors International, Inc. (Delaware and Texas)
</TABLE>
2
<PAGE> 52
<TABLE>
<S> <C> <C>
Borrower 17. Borrower's Form 10-K for fiscal year ended June 30,
1993, and Form 10-Q for fiscal quarter ended
September 30, 1993
Agent 18. Fee letters referred to in SECTIONS 4.2 AND 4.5 of
Agreement
Borrower 19. Payment of all fees then due Agent or Lenders
</TABLE>
3
<PAGE> 53
SCHEDULE 6.2
JURISDICTIONS OF INCORPORATION AND BUSINESS
<TABLE>
<CAPTION>
INCORPORATED
COMPANY OR ORGANIZED IN: DOES BUSINESS IN:
- ------- --------------- ----------------
<S> <C> <C>
CRSS Inc. Delaware Alabama
Arizona
California
Colorado
Connecticut
Delaware
Florida
Georgia
Illinois
Indiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
New Jersey
New Mexico
New York
North Carolina
Ohio
Oregon
Pennsylvania
South Carolina
Tennessee
Texas (*, **)
Virginia
Washington
Wisconsin
Wyoming
Washington, D.C.
Puerto Rico
CRS Sirrine Engineers, Inc. South Carolina Alabama
Arizona
Arkansas
California
Colorado
Connecticut
Florida
</TABLE>
1
<PAGE> 54
<TABLE>
<S> <C> <C>
Georgia
Idaho
Indiana
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
New Jersey
New Mexico
North Carolina
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina (*, **)
Tennessee
Texas
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Puerto Rico
Ontario
British Columbia
CRSS Architects, Inc. California Alabama
Arizona
California
Colorado
Connecticut
Florida
Georgia
Illinois
Indiana
Kentucky
Louisiana
Maine
Maryland
Michigan
Missouri
New Jersey
New York
Ohio
Oklahoma
</TABLE>
2
<PAGE> 55
<TABLE>
<S> <C> <C>
South Carolina
Tennessee
Texas (*, **)
Virginia
Washington
Washington, D.C.
CRSS Constructors, Inc. Delaware Alabama
Arizona
Arkansas
California
Colorado (*)
Delaware
Florida
Georgia
Illinois
Indiana
Iowa
Kansas
Maine
Maryland
Massachusetts
Michigan
Minnesota
Missouri
Montana
Nebraska
Nevada
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
South Carolina
Tennessee
Texas (**)
Utah
Virginia
Washington
Wisconsin
Wyoming
Washington, D.C.
CRSS Services, Inc. Delaware Delaware
North Carolina
South Carolina (*, **)
</TABLE>
3
<PAGE> 56
<TABLE>
<S> <C> <C>
Texas
CRSS Capital, Inc. Delaware Delaware
South Carolina
Texas (*, **)
CRSS Constructors International, Inc. Delaware Texas (*, **)
</TABLE>
* Indicates state in which principal place of business is located.
** Indicates state in which chief executive office is located.
4
<PAGE> 57
SCHEDULE 6.3
CORPORATE STRUCTURE
<TABLE>
<CAPTION>
PARENT SUBSIDIARY % Ownership
- ------ ---------- -----------
<S> <C> <C> <C>
CRSS Inc. CRSS Capital, Inc. 81%*
CRSS Services, Inc. 100%
CRSS Services, Inc. CRS Sirrine Engineers, Inc. 100%
CRSS Architects, Inc. 100%
CRSS Constructors International, Inc. 100%
CRSS Constructors International, Inc. CRSS Constructors, Inc. 100%
</TABLE>
* The other 19% is owned by Paribas North America, Inc.; see SECTION 7.14.
See also schematic drawing on next page.
1
<PAGE> 58
CRSS INC.
|
________________________|_______________________
| |
| |
100% | | 81%
CRSS SERVICES, INC. CRSS CAPITAL, INC.
|
|
|
|
|
| 100%
|________________ CRS SIRRINE ENGINEERS, INC.
|
|
|
| 100%
|________________ CRSS ARCHITECTS, INC.
|
|
|
| 100%
|________________ CRSS CONSTRUCTORS INTERNATIONAL, INC.
|
| 100%
|
CRSS CONSTRUCTORS, INC.
2
<PAGE> 59
SCHEDULE 6.7
LITIGATION
NONE
3
<PAGE> 60
SCHEDULE 6.11
PERMITTED LIENS
1. Liens now or hereafter securing the Obligation.
2. Any Lien securing Debt permitted hereunder incurred for the purchase
or capital lease of one or more assets if such Lien encumbers only the
assets so purchased or leased.
3. Pledges or deposits made to secure payment of workers' compensation,
unemployment insurance, or other forms of governmental insurance or
benefits or to participate in any fund in connection with workers'
compensation, unemployment insurance, pensions, or other social
security programs.
4. Good-faith pledges or deposits made to secure performance of bids,
tenders, contracts (other than for the repayment of borrowed money),
or leases, or to secure statutory obligations, surety or appeal bonds,
or indemnity, performance, or other similar bonds in the ordinary
course of business.
5. Encumbrances and restrictions on the use of real property which do not
materially impair the use thereof.
6. The following, if either (a) no amounts are due and payable and no
Lien has been filed or agreed to or (b) the validity or amount thereof
is being contested in good faith by lawful proceedings diligently
conducted, reserve or other provision required by GAAP has been made,
levy and execution thereon have been (and continue to be) stayed or
payment thereof is covered in full (subject to the customary
deductible) by insurance, or (c) with respect to CLAUSES (A) - (C)
below, such Liens secure amounts not in excess of $300,000 in the
aggregate and on a consolidated basis at any time, and neither the
value nor use of the property in the Company's business in question
are materially affected:
a. Liens for Taxes;
b. Liens upon, and defects of title to, property, including any
attachment of property or other legal process prior to
adjudication of a dispute on the merits;
c. Liens imposed by operation of law (including, without
limitation, Liens of mechanics, materialmen, warehousemen,
carriers, and landlords, and similar Liens); and
d. Adverse judgments on appeal.
7. Liens encumbering assets of any SPPE which is a Subsidiary of CRSS
Capital, Inc., and securing the repayment of such Subsidiary's
non-recourse (other than recourse to the encumbered assets) Debt.
8. Any interest or title of a lessor in assets being leased to a Company.
9. Any Lien securing Debt permitted hereunder which exists on any asset
prior to the acquisition thereof by a Company and which was not
created in contemplation of such acquisition.
10. Liens securing a judgment or order for the payment of money not in
excess of $1,000,000.
1
<PAGE> 61
11. Liens evidenced by the following financing statements:
Filed against Borrower:
Filed with Secretary of the State of Texas:
Financing Statement No. 88-00219126 filed on September 20,
1988, securing the interest of Vanguard Financial Services
Corp. in a leased Sharp copier.
Financing Statement No. 88-00219127 filed on September 20,
1988, securing the interest of Vanguard Financial Services
Corp. in a leased Sharp copier.
Financing Statement No. 90-00133371 filed on June 18, 1990,
securing the interest of Suburban Trust and Savings Bank
(assignee of El Camino Resources, Ltd.) in certain leased
Liebert equipment.
Financing Statement No. 90-00133373 filed on June 18, 1990,
securing the interest of Suburban Trust and Savings Bank
(assignee of El Camino Resources, Ltd.) in certain leased
Hitachi equipment.
Financing Statement No. 90-00142640 filed on June 28, 1990,
securing the interest of El Camino Resources, Ltd., in a
leased IBM printer.
Financing Statement No. 90-00145486 filed on July 2, 1990,
securing the interest of El Camino Resources, Ltd. (assignee
of Hitachi Data Systems), in "All right, title and interest
in, to and under (1) Master Purchase Agreement No. Q0100/A,
dated June 4, 1990, between debtor and secured party; (2) all
payments due and to become due under said Agreement; (3) all
computer and peripheral equipment subject to said Agreement."
Financing Statement No. 90-00149985 filed on July 9, 1990,
securing the interest of Suburban Trust and Savings Bank
(assignee of El Camino Resources, Ltd.) in certain leased IBM
equipment.
Financing Statement No. 90-00165513 filed on July 30, 1990,
securing the interest of Suburban Trust and Savings Bank
(assignee of El Camino Resources, Ltd.) in certain leased IBM
equipment.
Financing Statement No. 90-00169277 filed on August 6, 1990,
securing the interest of NEMLC Leasing Corporation (assignee
of LDI Financial Services Corp.) in certain leased office
furniture and equipment.
Financing Statement No. 90-00192599 filed on September 10,
1990, securing the interest of Suburban Trust and Savings Bank
(assignee of El Camino Resources, Ltd.) in certain leased IBM
equipment.
Financing Statement No. 90-00193937 filed on September 10,
1990, securing the interest of El Camino Resources, Ltd., in
certain leased IBM equipment.
2
<PAGE> 62
Financing Statement No. 90-00214934 filed on October 9, 1990,
securing the interest of NEMLC Leasing Corporation (assignee
of LDI Financial Services Corp.) in certain leased office
furniture and equipment.
Financing Statement No. 91-00005315 filed on January 11, 1991,
securing the interest of NEMLC Leasing Corporation (assignee
of LDI Financial Services Corp.) in certain leased office
furniture and equipment.
Financing Statement No. 91-00012969 filed on January 25, 1991,
securing the interest of LDI Financial Services Corp. in
certain leased office furniture and equipment.
Financing Statement No. 91-00041156 filed on March 8, 1991,
securing the interest of Bank of Highland Park (assignee of El
Camino Resources, Ltd.) in certain leased computer equipment.
Financing Statement No. 91-00075415 filed on April 23, 1991,
securing the interest of El Camino Resources, Ltd., in certain
leased IBM computer equipment.
Financing Statement No. 91-00075416 filed on April 23, 1991,
securing the interest of El Camino Resources, Ltd., in certain
leased IBM computer equipment.
Financing Statement No. 91-00075427 filed on April 23, 1991,
securing the interest of El Camino Resources, Ltd., in certain
leased IBM computer equipment.
Financing Statement No. 91-00108104 filed on June 3, 1991,
securing the interest of BOT Financial Corporation (assignee
of LDI Financial Services Corp.) in certain leased office
furniture and equipment.
Financing Statement No. 91-00108105 filed on June 3, 1991,
securing the interest of BOT Financial Corporation (assignee
of LDI Financial Services Corp.) in certain leased office
furniture and equipment.
Financing Statement No. 91-00127877 filed on July 1, 1991,
securing the interest of Orix Credit Alliance, Inc., in a
leased soft-serve ice cream machine.
Financing Statement No. 91-00140704 filed on July 19, 1991,
securing the interest of El Camino Resources, Ltd., in certain
leased IBM computer equipment.
Financing Statement No. 91-00140705 filed on July 19, 1991,
securing the interest of Phoenix Leasing Incorporated
(assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 91-00140706 filed on July 19, 1991,
securing the interest of Phoenix Leasing Incorporated
(assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 91-00148175 filed on July 29, 1991,
securing the interest of El Camino Resources, Ltd., in certain
leased IBM computer equipment.
3
<PAGE> 63
Financing Statement No. 91-00148179 filed on July 29, 1991,
securing the interest of Phoenix Leasing Incorporated
(assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 91-00174378 filed on September 9,
1991, securing the interest of El Camino Resources, Ltd., in
certain leased computer equipment.
Financing Statement No. 91-00185455 filed on September 23,
1991, securing the interest of Phoenix Leasing Incorporated
(assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 91-00185458 filed on September 23,
1991, securing the interest of Phoenix Leasing Incorporated
(assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 91-00219365 filed on November 14,
1991, securing the interest of Liberty Federal Savings Bank
(assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 92-00012591 filed on January 21, 1992,
securing the interest of The CIT Group/Equipment Financing,
Inc. (assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 92-00046815 filed on March 10, 1992,
securing the interest of El Camino Resources, Ltd., in certain
leased IBM computer equipment.
Financing Statement No. 92-00067053 filed on April 6, 1992,
securing the interest of Phoenix Leasing Incorporated
(assignee of El Camino Resources, Ltd.) in certain leased
computer equipment.
Financing Statement No. 92-00169472 filed on August 24, 1992,
securing the interest of LDI Corporation in certain leased
equipment.
Financing Statement No. 92-00174593 filed on September 4,
1992, securing the interest of Comdisco, Inc., in certain
leased equipment.
Filed with Secretary of the State of Colorado (discovered during UCC
lien search against CRSS Constructors, Inc.):
Financing Statement No. 912030480 filed on April 24, 1991,
securing the interest of El Camino Resources, Ltd. in certain
leased IBM computer equipment.
Financing Statement No. 922024992 filed on April 10, 1992,
securing the interest of Phoenix Leasing Incorporated
(assignee of El Camino Resources) in certain leased computer
equipment.
Filed against CRSS Constructors, Inc:
Filed with Secretary of the State of Colorado:
4
<PAGE> 64
Financing Statement No. 922030003 filed on April 28, 1992,
securing the interest of Bankers Leasing Association, Inc., in
certain leased equipment.
Financing Statement No. 882009095 filed on February 25, 1988,
securing the interest of Grantree Furniture Rental in certain
leased office furniture.
Filed with Secretary of the State of Texas:
Financing Statement No. 91-00120829 filed on June 20, 1991,
securing the interest of Texas Commerce Bank National
Association (assignee of Lane Equipment Company) in certain
ice machine equipment.
Filed against CRSS Capital, Inc:
Filed with Secretary of the State of Texas:
Financing Statement No. 88-00237937 filed on October 13, 1988,
securing the interest of Transco Energy Marketing Company in a
certain zero coupon bond issued by the United States of
America having a value of $5,000,000 at maturity on May 15,
2006, together with related products and proceeds.
Filed against CRS Sirrine Engineers, Inc:
Filed with Secretary of the State of South Carolina:
Financing Statement No. 90-045047 filed on August 27, 1990,
securing the interest of NEMLC Leasing Corporation (assignee
of LDI Financial Services Corp.) in certain leased office
furniture and equipment.
Financing Statement No. 90-052802 filed on October 9, 1990,
securing the interest of LDI Financial Services Corp. in
certain leased office furniture and equipment; assigned to
NEMLC Leasing Corporation pursuant to Financing Statement
Assignment No. 90-064611 filed on December 13, 1990.
Additional leased office furniture and equipment added as
collateral pursuant to Financing Statement Amendment No.
91-000407 filed on January 2, 1991.
Financing Statement No. 91-001435 filed on January 8, 1991,
securing the interest of LDI Financial Services Corp. in
certain leased office furniture and equipment; assigned to
NEMLC Leasing Corporation pursuant to Financing Statement
Amendment No. 91-020903 filed on April 25, 1991.
Financing Statement No. 91-029393 filed on June 14, 1991,
securing the interest of BOT Financial Corporation (assignee
of LDI Financial Services Corp.) in certain leased office
furniture and equipment.
5
<PAGE> 65
Financing Statement No. 91-032419 filed on July 1, 1991,
securing the interest of Industrial Truck Sales & Service,
Inc., in a Clark LP Gas Powered Lift Truck and accessories.
Financing Statement No. 92-030401 filed on June 29, 1992,
securing the interest of NationsBanc Leasing Corporation of
Georgia in certain leased office and computer equipment.
Financing Statement No. 93-0111-135321A filed on January 11,
1993, securing the interest of Barclays Bank PLC, New York
Branch, as agent, in, among other things, accounts, general
intangibles, chattel paper, instruments, contracts rights, and
other property in which the secured party has acquired an
interest pursuant to a certain Receivables Purchase Agreement
dated as of January 14, 1993, among debtor, various financial
institutions, and secured party.
Financing Statement No. 93-0111-140840A filed on January 11,
1993, securing the interest of Barclays Bank PLC, New York
Branch, as agent, in, among other things, accounts, general
intangibles, chattel paper, instruments, contracts rights, and
other property in which the secured party has acquired an
interest pursuant to a certain Receivables Purchase Agreement
dated as of January 14, 1993, among debtor, Sheffield
Receivables Corporation, and secured party.
Financing Statement No. 930726-144545A filed on June 11, 1993,
securing the interest of Associates Leasing, Inc., in certain
Motorola Products together with attachments, accessories,
replacement parts, and repairs.
Financing Statement No. 930211-112348A filed on February 11,
1993, securing the interest of CCA Financial, Inc., in certain
Intergraph IP2020 workstations.
Filed with Secretary of the State of Texas (discovered during UCC lien
search against CRSS Inc.):
Financing Statement No. 91-00012969 filed on January 25, 1991,
securing the interest of LDI Financial Services Corp. in
certain leased office furniture and equipment.
6
<PAGE> 66
SCHEDULE 6.13
TRANSACTIONS WITH AFFILIATES
NONE
7
<PAGE> 67
EXHIBIT A
PROMISSORY NOTE
$________________ Houston, Texas As of ____________, 1994
FOR VALUE RECEIVED, CRSS INC. ("MAKER"), hereby promises to pay to the
order of ___________________ ("PAYEE") on or before the Termination Date, the
principal amount of __________________________________________________ AND
NO/100 DOLLARS ($___________________) or so much thereof as may be disbursed
and outstanding hereunder, together with interest, as hereinafter described.
This note has been executed and delivered under, and is subject to the
terms of, the Amended and Restated Credit Agreement of even date herewith (as
amended, supplemented, and replaced, the "CREDIT AGREEMENT"), among Maker,
Agent, and the Lenders named therein (including, without limitation, Payee) and
is one of the "Notes" referred to therein. Unless defined herein or the
context otherwise requires, capitalized terms used herein have the meaning
given to such terms in the Credit Agreement. Reference is made to the Credit
Agreement for provisions affecting this note regarding applicable interest
rates, principal and interest payment dates, final maturity, voluntary and
mandatory prepayments, acceleration of maturity, exercise of Rights, payment of
attorneys' fees, court costs and other costs of collection, certain waivers by
Maker and others now or hereafter obligated for payment of any sums due
hereunder, and security for the payment hereof. This note is a Loan Paper and,
therefore, this note is subject to the applicable provisions of SECTION 13 of
the Credit Agreement, all of which applicable provisions are incorporated
herein by reference the same as if set forth herein verbatim.
Specific reference is made to SECTION 3.8 of the Credit Agreement for
usury savings provisions.
This note is being executed and delivered, and is intended to be
performed, in the State of Texas, and the Laws of such State and of the United
States of America shall govern the Rights and duties of Maker and Payee and the
validity, construction, enforcement, and interpretation hereof.
CRSS INC.
By:_____________________________________
Name:_____________________________
Title:____________________________
<PAGE> 68
EXHIBIT B
GUARANTY
THIS GUARANTY (as amended or restated, this "GUARANTY") is executed as
of _______________, 1994, by each of the undersigned (each a "GUARANTOR" and
collectively the "GUARANTORS") for the benefit of NationsBank of Texas, N.A.,
as Agent for the Lenders now or hereafter party to the Credit Agreement, as
hereinafter defined.
RECITALS
A. CRSS Inc. ("BORROWER"), Agent, and Lenders have executed an
amended and restated credit agreement of even date herewith (as amended,
supplemented, or restated, the "CREDIT AGREEMENT"), together with certain other
Loan Papers.
B. Each Guarantor is a direct or indirect wholly-owned Subsidiary of
Borrower.
C. Each Guarantor may benefit by Borrower's execution of the Credit
Agreement as a result of terms therein that permit each Guarantor to be the
indirect recipient of funds advanced by Lenders to Borrower under the Credit
Agreement or the account party of LCs issued by Agent pursuant thereto.
D. It is expressly understood among Borrower, Guarantors, Agent, and
Lenders that the execution and delivery of this Guaranty is a requirement to
Agent's and Lenders' execution of the Credit Agreement and the other Loan
Papers and is an integral part of the transactions contemplated by the Loan
Papers and a condition precedent to Lenders' obligations to extend credit under
the Credit Agreement and Agent's obligation to issue LCs under the Credit
Agreement.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, each Guarantor hereby jointly and severally
guarantees to Lenders the prompt payment at maturity (by acceleration or
otherwise), and at all times thereafter, of the Guaranteed Indebtedness
(hereinafter defined), this Guaranty being upon the following terms and
conditions:
1. Unless otherwise defined herein, all capitalized terms have the
meanings given to such terms in the Credit Agreement.
2. The term "BORROWER" shall include, without limitation, Borrower,
Borrower as a debtor-in-possession, and any receiver, trustee, liquidator,
conservator, custodian, or similar party hereafter appointed for Borrower or
all or substantially all of its assets pursuant to any liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, or similar Debtor Relief Law from time to time in
effect affecting the rights of creditors generally.
3. The term "GUARANTEED INDEBTEDNESS" means the Obligation as defined
in the Credit Agreement (including, without limitation, amounts that would
become due but for operation of any applicable provision of Title 11 of the
United States Code (including, without limitation, 11 U.S.C. Section Section
502 and 506)), together with all pre- and post-maturity interest thereon
(including, without limitation, all post-petition interest if Borrower or any
Consolidated Subsidiary voluntarily or involuntarily files for bankruptcy
protection) and any and all costs, attorneys' fees and expenses
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<PAGE> 69
reasonably incurred by Agent or any Lender to enforce Borrower's, any
Guarantor's, or any other obligor's, payment of any of the foregoing
indebtedness.
4. This instrument shall be an absolute, irrevocable, and continuing
guaranty, and the circumstance that at any time or from time to time the
Guaranteed Indebtedness may be paid in full shall not affect the obligation of
any Guarantor with respect to the Guaranteed Indebtedness of Borrower to
Lenders thereafter incurred; provided that any Guarantor may give written
notice to Agent and each Lender that such Guarantor will not be liable
hereunder for any indebtedness of Borrower incurred after the giving of such
notice (which notice shall not be deemed to have been given until actually
received by Agent and each Lender), and in such event such Guarantor shall
remain liable on its obligations hereunder until the payment in full of (a) the
Guaranteed Indebtedness as it exists at the date of the giving of such notice,
and (b) credit extended after such notice pursuant to the Credit Agreement or
pursuant to any obligation of Agent or any Lender under any other commitment or
agreement made to or with Borrower prior to the giving of such notice.
Notwithstanding any contrary provision herein, each Guarantor's aggregate
payments in respect of the Guaranteed Indebtedness shall be limited, to the
extent, if any, required so that its obligations under this Guaranty shall not
be subject to avoidance under any Debtor Relief Law. In determining the
limitations, if any, on the amount of any Guarantor's obligations hereunder
pursuant to the preceding sentence, any rights of subrogation or contribution
which such Guarantor may have hereunder or under applicable Law shall be taken
into account.
5. If any Guarantor becomes liable for any indebtedness owing by
Borrower to Agent or any Lender, by endorsement or otherwise, other than under
this Guaranty, such liability shall not be in any manner impaired or affected
hereby, and the rights of Agent or Lenders hereunder shall be cumulative of any
and all other rights that Agent or Lenders may ever have against such
Guarantor. The exercise by Agent or Lenders of any right or remedy hereunder
or under any other agreement, document, or instrument, or at law or in equity,
shall not preclude the concurrent or subsequent exercise of any other right or
remedy. No Guarantor will assert, enforce or otherwise exercise (a) any right
of subrogation to any of the rights or liens of the Agent or Lenders or any
other beneficiary against the Borrower or any other obligor on the Guaranteed
Indebtedness or any collateral or other security, or (b) any right of recourse,
reimbursement, subrogation, contribution, indemnification or similar right
against the Borrower or any other obligor on all or any part of the Guaranteed
Indebtedness or any guarantor thereof, and each Guarantor irrevocably waives
any and all of the foregoing rights (whether such rights arise in equity, under
contract, by statute, under common law or otherwise).
6. Upon the occurrence and continuance of a Default, each Guarantor
shall, on demand and without further notice of dishonor, without any notice
having been given to it previous to such demand of the acceptance by Agent or
Lenders of this Guaranty, and without any notice having been given to it
previous to such demand of the creating or incurring of such indebtedness, pay
the amount of the Guaranteed Indebtedness then due and payable to Agent and
Lenders, and it shall not be necessary for Agent or Lenders, in order to
enforce such payment by any Guarantor, first or contemporaneously to institute
suit or exhaust remedies against Borrower or others liable on such
indebtedness, or to enforce rights against any security ever given to secure
such indebtedness.
7. All principal of and interest on all indebtedness, liabilities,
and obligations of Borrower to any Guarantor (the "SUBORDINATED DEBT"), whether
direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several,
or joint and several, now or hereafter existing, due or to become due to such
Guarantor, or held or to be held by such Guarantor, whether created directly or
acquired by assignment or otherwise, and whether evidenced by written
instrument or not, shall be
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<PAGE> 70
expressly subordinated to the final payment in full of the Guaranteed
Indebtedness. Each Guarantor agrees not to receive or accept any payment from
Borrower with respect to the Subordinated Debt at any time a Default has
occurred and is continuing; and, in the event any Guarantor receives any
payment on the Subordinated Debt in violation of the foregoing, such Guarantor
will hold any such payment in trust for Agent and Lenders and forthwith turn it
over to Agent, in the form received (with any necessary endorsements), to be
applied to the Guaranteed Indebtedness.
8. Each Guarantor hereby agrees that its obligations under the terms
of this Guaranty shall not be released, diminished, impaired, reduced, or
affected by the occurrence of any one or more of the following events: (a)
Agent's or Lenders' taking or accepting of any other security or guaranty for
any or all of the Guaranteed Indebtedness; (b) any release, surrender,
exchange, subordination, or loss of any security at any time existing in
connection with any or all of the Guaranteed Indebtedness; (c) any full or
partial release of the liability of any other obligor on the Obligation; (d)
the insolvency, bankruptcy, or lack of corporate power of Borrower, any of the
undersigned, or any party at any time liable for the payment of any or all of
the Guaranteed Indebtedness, whether now existing or hereafter occurring; (e)
any renewal, extension, or rearrangement of the payment of any or all of the
Guaranteed Indebtedness, either with or without notice to or consent of any
Guarantor, or any adjustment, indulgence, forbearance, or compromise that may
be granted or given by Agent or any Lender to Borrower, any Guarantor, or any
other obligor on the Obligation; (f) any neglect, delay, omission, failure, or
refusal of Agent or any Lender to take or prosecute any action for the
collection of any or all of the Guaranteed Indebtedness or to foreclose or take
or prosecute any action in connection with any instrument or agreement
evidencing or securing any or all of the Guaranteed Indebtedness; (g) any
failure of Agent or any Lender to notify any Guarantor of any renewal,
extension, or assignment of any or all of the Guaranteed Indebtedness, or the
release of any security or of any other action taken or refrained from being
taken by Agent or any Lender against Borrower or any new agreement between
Agent, any Lender, and Borrower, it being understood that neither Agent nor any
Lender shall be required to give any Guarantor any notice of any kind under any
circumstances whatsoever with respect to or in connection with the Guaranteed
Indebtedness, other than any notice required to be given to such Guarantor
elsewhere herein; (h) the unenforceability of any part of the Guaranteed
Indebtedness against Borrower by reason of the fact that the Guaranteed
Indebtedness exceeds the amount permitted by law, the act of creating the
Guaranteed Indebtedness, or any part thereof, is ultra vires, or the officers
creating same exceeded their authority or violated their fiduciary duties in
connection therewith; or (i) any payment of the Obligation to Agent or Lenders
is held to constitute a preference under any Debtor Relief Law or if for any
other reason Agent or any Lender is required to refund such payment or make
payment to someone else (and in each such instance this Guaranty shall be
reinstated in an amount equal to such payment).
9. Each Guarantor hereby waives all rights by which it might be
entitled to require suit on an accrued right of action in respect of any of the
Guaranteed Indebtedness or require suit against Borrower or others, whether
arising pursuant to Section 34.02 of the Texas Business and Commerce Code, as
amended (regarding such Guarantor's right to require Agent or Lenders to sue
Borrower on accrued right of action following such Guarantor's written notice
to Agent or Lenders), Section 17.001 of the Texas Civil Practice and Remedies
Code, as amended (allowing suit against such Guarantor without suit against
Borrower, but precluding entry of judgment against such Guarantor prior to
entry of judgment against Borrower), Rule 31 of the Texas Rules of Civil
Procedure, as amended (requiring Agent or Lenders to join Borrower in any suit
against such Guarantor unless judgment has been previously entered against
Borrower), or otherwise.
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10. Each Guarantor acknowledges that certain representations and
warranties set forth in the Credit Agreement are in respect of it, and each
Guarantor reaffirms that each such representation and warranty is true and
correct. Furthermore, each Guarantor represents and warrants to Agent and
Lenders that its liability and obligation hereunder may reasonably be expected
to benefit it directly or indirectly.
11. Each Guarantor acknowledges that certain covenants set forth in
the Credit Agreement are in respect of it or shall be imposed upon it, and each
Guarantor covenants and agrees to promptly and properly perform, observe, and
comply with each such covenant. Furthermore, each Guarantor shall, jointly and
severally, indemnify, protect, and hold Agent and Lenders and their respective
parents, subsidiaries, directors, officers, employees, representatives, agents,
successors, permitted assigns, and attorneys (collectively, the "INDEMNIFIED
PARTIES") harmless from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, and proceedings
and all costs, expenses (including, without limitation, all reasonable
attorneys' fees and legal expenses whether or not suit is brought), and
reasonable disbursements of any kind or nature (the "INDEMNIFIED LIABILITIES")
that may at any time be imposed on, incurred by, or asserted against the
indemnified parties, in any way relating to or arising out of (a) the direct or
indirect result of the violation by any Company of any Environmental Law, (b)
any Company's generation, manufacture, production, storage, release, threatened
release, discharge, disposal, or presence in connection with its properties of
a Hazardous Substance (including, without limitation, (i) all damages from any
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal, or presence, or (ii) the costs of any environmental
investigation, monitoring, repair, cleanup, or detoxification and the
preparation and implementation of any closure, remedial, or other plans), or
(c) the Loan Papers or any of the transactions contemplated therein. However,
although each indemnified party has the Right to be indemnified under the Loan
Papers for its own ordinary negligence, no indemnified party has the Right to
be indemnified under the Loan Papers for its own fraud, gross negligence, or
willful misconduct. The provisions of and undertakings and indemnification set
forth in this paragraph shall survive the satisfaction and payment of the
Obligation and termination of this Guaranty.
12. Each Guarantor confirms that it has executed and delivered this
Guaranty after reviewing the terms and conditions of the Credit Agreement and
such other documents and information as it has deemed appropriate in order to
make its own credit analysis and decision to execute and deliver this
Guaranty. Each Guarantor confirms that it has made its own independent
investigation with respect to Borrower's and each other Guarantor's
creditworthiness and is not executing and delivering this Guaranty in reliance
on any representation or warranty by Agent or any Lender as to such
creditworthiness. Each Guarantor expressly assumes all responsibilities to
remain informed of the financial condition of Borrower and any circumstances
affecting (a) Borrower's ability to perform under the Credit Agreement and the
other Loan Papers to which it is a party or (b) any collateral securing all or
any part of the Guaranteed Indebtedness.
13. The Guaranteed Indebtedness shall not be reduced, discharged, or
released because or by reason of any existing or future offset, claim, or
defense (except for the defense of complete and final payment of the Guaranteed
Indebtedness) of Borrower or any other party against Agent or Lenders or
against payment of the Guaranteed Indebtedness, whether such offset, claim, or
defense arises in connection with the Guaranteed Indebtedness or otherwise.
14. This Guaranty is for the benefit of Agent and Lenders and their
respective successors and assigns. Each Guarantor acknowledges that in the
event of an assignment of the Guaranteed Indebtedness or any part thereof in
accordance with the Credit Agreement, the rights and benefits
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<PAGE> 72
hereunder, to the extent applicable to the indebtedness so assigned, may be
transferred with such indebtedness. This Guaranty is binding on each Guarantor
and its successors and permitted assigns.
15. This Guaranty is a Loan Paper and, therefore, this Guaranty is
subject to the applicable provisions of SECTION 13 of the Credit Agreement, all
of which applicable provisions are incorporated herein by reference the same as
if set forth herein verbatim.
This Guaranty is executed as of the first date set forth herein.
CRSS SERVICES, INC.
CRS SIRRINE ENGINEERS, INC.
By:_____________________________________
William J. Gardiner,
Vice President of each of the
above corporations
CRSS ARCHITECTS, INC.
CRSS CONSTRUCTORS, INC.
By:_____________________________________
John St. Wrba,
Assistant Treasurer of each of the
above corporations
CRSS CONSTRUCTORS INTERNATIONAL, INC.
By:_____________________________________
John St. Wrba,
Vice President
B-5
<PAGE> 73
EXHIBIT C
NOTICE OF BORROWING
______________, 19__
NationsBank of Texas, N.A.,
as Agent for the Lenders as defined
in the Credit Agreement referred to below
Corporate Banking Group
700 Louisiana, 8th Floor
Houston, Texas 77002
Attn: Boyd P. Gentry
Fax: (713) 247-6719
Reference is made to the Amended and Restated Credit Agreement dated
as of January 18, 1994 (as amended, supplemented, or replaced from time to
time, the "CREDIT AGREEMENT"), among the the undersigned, the Lenders named
therein, and NationsBank of Texas, N.A., as Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Credit Agreement. The undersigned hereby gives you notice
pursuant to SECTION 2.2(A) of the Credit Agreement that it requests a Borrowing
under the Credit Agreement, and in that connection sets forth below the terms
on which such Borrowing is requested to be made:
(A) Borrowing Date of Borrowing (a Business Day) _______________________
(B) Principal Amount of Borrowing* _______________________
(C) Type of Borrowing** _______________________
(D) For LIBOR Rate Borrowing, Interest Period
and the last day thereof*** _______________________
Borrower hereby certifies that the following statements are true and
correct on the date hereof, and will be true and correct on the Borrowing Date
specified herein after giving effect to such Borrowing:
(a) all of the representations and warranties in the Loan Papers
are true and correct in all material respects (except to the extent
that (i) the representations and warranties speak to a specific date
or (ii) the facts on which such representations and warranties are
based have been changed by transactions contemplated or permitted by
the Credit Agreement);
(b) no change in the financial condition of any Company which
could be a Material Adverse Event has occurred; and
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<PAGE> 74
NationsBank of Texas, N.A., as Agent
Page 2
________________, 19___
(c) no Default or Potential Default has occurred and is continuing.
Very truly yours,
CRSS INC.
By:_____________________________________
Name:_____________________________
Title:____________________________
* Not less than $500,000 or a greater integral multiple of $100,000 (if
a Base Rate Borrowing); not less than $2,000,000 or a greater integral
multiple of $500,000 (if a LIBOR Rate Borrowing).
** LIBOR Rate Borrowing or Base Rate Borrowing.
*** LIBOR Rate Borrowing -- 1, 2, or 3 months.
In no event may the Interest Period end after the Termination Date.
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EXHIBIT D
NOTICE OF LC
______________, 19__
NationsBank of Texas, N.A.,
as Agent for the Lenders as defined
in the Credit Agreement referred to below
Corporate Banking Group
700 Louisiana, 8th Floor
Houston, Texas 77002
Attn: Boyd P. Gentry
Fax: (713) 247-6719
Reference is made to the Amended and Restated Credit Agreement dated
as of January 18, 1994 (as amended, supplemented, or restated, the "CREDIT
AGREEMENT"), among the undersigned, the Lenders named therein, and NationsBank
of Texas, N.A., as Agent. Unless otherwise defined herein, all capitalized
terms have the meanings given to such terms in the Credit Agreement.
The undersigned hereby gives you notice pursuant to SECTION 2.3(A) of
the Credit Agreement that it requests the issuance of an LC under the LC
Subfacility, and in that connection sets forth below the terms on which such LC
is requested to be issued:
(A) Face amount of the LC* ____________________
(B) Date on which the LC is to be issued (a Business Day) ____________________
(C) Expiration date of the LC** ____________________
* Not greater than the lesser of (a) an amount which when added to the
existing LC Exposure does not exceed $25,000,000 or (b) the unused and
available portion of the Total Commitment.
** Not later than 13 months after issuance (subject to self-extension
with up to 120 days' cancellation notice by Agent to the beneficiary).
Accompanying this notice is a duly executed and properly completed LC
Agreement in the form requested by Agent, together with the payment of any LC
fees due and payable pursuant to SECTION 4.3 of the Credit Agreement.
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<PAGE> 76
NationsBank of Texas, N.A., as Agent
Page 2
_______________, 19__
Borrower hereby certifies that the following statements are true and
correct on the date hereof, and will be true and correct on the date specified
herein for issuance of the LC after giving effect to the issuance of such LC:
(a) all of the representations and warranties in the Loan Papers
are true and correct in all material respects (except to the extent
that (i) the representations and warranties speak to a specific date
or (ii) the facts on which such representations and warranties are
based have been changed by transactions contemplated or permitted by
the Credit Agreement);
(b) no Material Adverse Event has occurred; and
(c) no Default or Potential Default has occurred and is continuing.
Very truly yours,
CRSS INC.
By:_____________________________________
Name:_____________________________
Title:____________________________
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<PAGE> 77
EXHIBIT E
NOTICE OF CONVERSION
______________, 19__
NationsBank of Texas, N.A.,
as Agent for the Lenders as defined
in the Credit Agreement referred to below
Corporate Banking Group
700 Louisiana, 8th Floor
Houston, Texas 77002
Attn: Boyd P. Gentry
Fax: (713) 247-6719
Reference is made to the Amended and Restated Credit Agreement dated
as of January 18, 1994 (as amended, supplemented, or restated, the "CREDIT
AGREEMENT"), among the undersigned, the Lenders named therein, and NationsBank
of Texas, N.A., as Agent. Unless otherwise defined herein, all capitalized
terms have the meanings given to such terms in the Credit Agreement.
The undersigned hereby gives you notice pursuant to SECTION 3.10 of
the Credit Agreement that it elects to convert a Borrowing under the Credit
Agreement from one Type to another Type or elects a new Interest Period for a
LIBOR Rate Borrowing, and in that connection sets forth below the terms on
which such election is requested to be made:
(A) Date of conversion or last day of
applicable Interest Period (a Business Day)___________________________
(B) Type** and Principal Amount* of Existing
Borrowing being converted_____________________________________________
(C) New Type of Borrowing selected**______________________________________
(D) For conversion to a LIBOR Rate Borrowing, the
Interest Period selected and the last day thereof***__________________
(E) Type** and Principal Amount* of Existing Borrowing
Being Continued_______________________________________________________
(F) For continuation of a LIBOR Rate Borrowing, the
Interest Period selected and the last day thereof***__________________
Very truly yours,
CRSS INC.
By:_____________________________________
Name:_____________________________
Title:____________________________
* Not less than $500,000 or a greater integral multiple of $100,000 (if
a Base Rate Borrowing); not less than $2,000,000 or a greater integral
multiple of $500,000 (if a LIBOR Rate Borrowing).
** LIBOR Rate Borrowing or Base Rate Borrowing.
*** 1, 2, or 3 months. The Interest Period may not end after the
Termination Date.
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<PAGE> 78
EXHIBIT F
COMPLIANCE CERTIFICATE
FOR _____________ ENDED _____________, 19__
NationsBank of Texas, N.A.,
as Agent for the Lenders as defined
in the Credit Agreement referred to below
Corporate Banking Group
700 Louisiana, 8th Floor
Houston, Texas 77002
Attn: Boyd P. Gentry
Fax: (713) 247-6719
Reference is made to the Amended and Restated Credit Agreement dated
as of January 18, 1994 (as amended, supplemented, or restated, the "CREDIT
AGREEMENT"), among CRSS Inc., the Lenders named therein, and NationsBank of
Texas, N.A., as Agent. Unless otherwise defined herein, all capitalized terms
have the meanings given to such terms in the Credit Agreement.
This certificate is delivered pursuant to SECTION {7.1(A)} {7.1(B)}
{8.8(K)} of the Credit Agreement.
I certify to Agent that I am a Responsible Officer of Borrower on the
date hereof and that:
{Insert the following Paragraph 1 in Compliance Certificate delivered
under SECTION 7.1}.
1. The Financial Statements attached hereto were prepared in
accordance with GAAP (except for the omission of footnotes from Financial
Statements delivered pursuant to SECTION 7.1(B)) and present fairly, in all
material respects, the consolidated and consolidating financial condition and
results of operations of the Companies as of, and for the _____________________
ending on ______________, 19____ (the "SUBJECT PERIOD"). During the Subject
Period, no Default has occurred which has not been cured or waived (except for
any Defaults set forth on the attached schedule). Evidence of compliance by
Borrower with the financial covenants of SECTION 9 of the Credit Agreement as
of the last day of the Subject Period is set forth on the calculation worksheet
attached as ANNEX I to this Certificate.
{Insert the following Paragraph 1 in Compliance Certificate delivered
under SECTION 8.8(K)}.
1. Borrower proposes to make the following investment under SECTION
8.8(K) of the Credit Agreement (the "Proposed Investment"):
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
No Default has occurred which has not been cured or waived since the date of
the last Compliance Certificate delivered under the Credit Agreement. Evidence
of compliance by Borrower with the financial covenants of SECTION 9 of the
Credit Agreement immediately after making the Proposed Investment is set forth
on the calculation worksheet attached as ANNEX I to this Certificate.
F-1
<PAGE> 79
2. This certificate is being delivered on behalf of Borrower. No
person or entity other than Agent and Lenders (collectively, the "SUBJECT
RECIPIENTS") shall be entitled to receive or rely upon this certificate for any
purpose. The Subject Recipients agree by their acceptance hereof that (a) they
shall look solely to Borrower for any loss, cost, damage, expense, claim,
demand, suit or cause of action arising out of or relating in any way to this
certificate or its preparation and delivery, and (b) the undersigned shall not
under any circumstances have any personal liability whatsoever for the
preparation or execution of this certificate.
Very truly yours,
By:_____________________________________
Name:_____________________________
Title:____________________________
F-2
<PAGE> 80
ANNEX I TO EXHIBIT F
FINANCIAL COVENANTS CALCULATION WORKSHEET
SECTION 9.1: CASH FLOW COVERAGE (calculated as follows on a consolidated
basis for Borrower and its Consolidated Subsidiaries (excluding CRSS Capital,
Inc., unless and until it becomes a wholly-owned Subsidiary of Borrower):
<TABLE>
<S> <C> <C>
1. Recurring earnings from continuing operations, excluding
extraordinary gains and losses and before taxes (for the
most recently-completed four fiscal quarters of Borrower) $______________
2. Cash Taxes Paid or Cash Tax Refunds Received (for the most
recently-completed four fiscal quarters of Borrower) $______________
3. Depreciation and amortization expense (for the most
recently-completed four fiscal quarters of Borrower) $______________
4. Other non-cash operating items $______________
5. CRSS Capital, Inc. Cash Flow $______________
a. Distributions from SPPEs $______________
b. Administrative Fees from SPPEs $______________
c. SPPE Administrative Expenses $______________
(a + b - c) $______________
6. Total Cash Sources (1 + or - 2 + 3 + or - 4 + 5) $______________
7. 33% of the sum of (i) Principal Debt, and (ii) 50% of LC Exposure $______________
8. Funded Debt due within one year (excluding the Obligation, reimbursement
obligations on undrawn letters of credit, and Funded Debt as to which no
recourse to any such Company exists other than recourse only to specific
assets of a direct or indirect Subsidiary of CRSS Capital, Inc.) $______________
9. Capital expenditures during the four most recently-
completed fiscal quarters of Borrower $______________
10. The greater of (i) zero, and (ii) 33% of the sum of (x) all Obligatory
Payments scheduled to be made in the next 12 months, and (y) 50% of all
Obligatory Payments scheduled to be made after the 12th succeeding month,
but on or before the Termination Date, minus Unencumbered Cash of Borrower
and its Consolidated Subsidiaries $______________
11. All cash dividends paid during the four most recently-
completed fiscal quarters of Borrower $______________
12. All cash purchases of treasury stock during the four most
recently-completed fiscal quarters of Borrower
</TABLE>
IF-1
<PAGE> 81
<TABLE>
<S> <C> <C>
13. Total Cash Uses (7 + 8 + 9 + 10 + 11 + 12) $______________
14. Ratio of 6 to 13 __.___ to 1.00
15. Minimum Ratio: Through March 31, 1994 1.00 to 1.00
April 1, 1994 through June 30, 1994 1.10 to 1.00
From July 1, 1994 1.20 to 1.00
SECTION 9.2: NET WORTH
Actual:
1. Consolidated stockholders' equity of Borrower and its
Consolidated Subsidiaries, calculated in accordance with GAAP $_______________
2. Currency translation adjustments $_______________
3. Adjusted consolidated stockholders' equity (1 + or - 2) $_______________
Minimum Required:
4. Base $81,500,000
5. 50% of Borrower's consolidated positive net income earned during
each fiscal quarter after September 30, 1993 $_______________
6. 100% of any addition to paid-in capital after September 30, 1993,
resulting from non-cash sources (i.e., acquisitions) $_______________
7. 50% of any addition to paid-in capital after September 30, 1993, resulting
from cash sources (i.e., sales by Borrower of its capital stock
other than sales to employees pursuant to employee incentive plans) $_______________
8. Required minimum consolidated stockholders' equity (4 + 5 + 6 + 7) $_______________
SECTION 9.3: LIQUIDITY RATIO
1. All Unencumbered Cash of Borrower and its Consolidated Subsidiaries $_______________
2. Total Commitment $_______________
3. Principal Debt $_______________
4. LC Exposure $_______________
5. Subtotal (1 + 2 - 3 - 4) $_______________
6. The sum of (i) 100% of all Obligatory Payments scheduled to be made
in the next 12 months, and (ii) 50% of all Obligatory Payments
scheduled to be made after the 12th succeeding month, but on or
before the Termination Date $_______________
7. Ratio of 5 to 6 ___.___ to 1.00
</TABLE>
IF-2
<PAGE> 82
<TABLE>
<S> <C> <C>
8. Minimum Ratio 1.00 to 1.00
SECTION 9.4: LEVERAGE RATIO
1. Recourse Funded Debt of Borrower and its
Consolidated Subsidiariescalculated on a
consolidated basis
a. borrowed money $________________
b. capital lease obligations $________________
Sub-total $________________
2. 50% of reimbursement obligations with respect
to letters of credit issued in lieu of retainage
on project payments and as performance
guaranties $________________
3. Adjusted Consolidated Debt (1 - 2) $________________
4. Adjusted consolidated stockholders' equity $________________
5. Write-ups of assets of a going concern business
made within twelve months after the acquisition
of such business) subsequent to September 30, 1993,
in the book value of any asset owned by Borrower
or any Consolidated Subsidiary $________________
6. Unamortized debt discount and expense, unamortized
deferred charges (including deferred taxes),
goodwill, patents, trademarks, service marks,
trade names, copyrights, organization or
developmental expenses, and other intangible
assets $________________
7. Consolidated Tangible Net Worth (4 - 5 - 6) $________________
8. Ratio of 3 to 7 __.___ to 1.00
9. Maximum permitted ratio 0.60 to 1.00
</TABLE>
CASH FLOW TO FUNDED DEBT PRICING FORMULA. Cash Flow is calculated in
accordance with GAAP on a consolidated basis for Borrower and its Consolidated
Subsidiaries (excluding CRSS Capital, Inc., unless and until it becomes a
wholly-owned Subsidiary of Borrower) for the most recently completed four
fiscal quarters of Borrower. Funded Debt is calculated as of the last day of
such four fiscal quarter period.
<TABLE>
<S> <C> <C>
1. Recurring earnings from continuing operations,
excluding extraordinary gains and losses and
before taxes (for the most recently-completed
four fiscal quarters of Borrower) $________________
2. Cash Taxes Paid or Cash Tax Refunds Received
(for the most recently-completed four fiscal
quarters of Borrower) $________________
3. Depreciation and amortization expense (for the
most recently-completed four fiscal quarters
of Borrower) $________________
</TABLE>
IF-3
<PAGE> 83
<TABLE>
<S> <C> <C>
4. All cash dividends paid and all cash purchases of treasury
stock during the four most recently-completed fiscal
quarters of Borrower
$______________
5. CRSS Capital, Inc. Cash Flow
a. Distributions from SPPEs
$______________
b. Administrative Fees from SPPEs
$______________
c. SPPE Administrative Expenses
$______________
(a + b - c)
$______________
6. Total Cash Flow (1 + or - 2 + 3 - 4 + 5)
$______________
7. Recourse Funded Debt of Borrower and its Consolidated
Subsidiaries calculated on a consolidated basis
a. borrowed money
b. capital lease obligations $______________
Sub-total $______________
8. Ratio of 6 to 7 $______________
9. Applicable Margin __.___ to 1.00
</TABLE>
<TABLE>
<CAPTION>
Applicable Applicable
Margin for Margin for
Base Rate LIBOR Rate
Ratio of Funded Debt to Cash Flow Borrowings Borrowings
--------------------------------- ---------- ----------
<S> <C> <C>
Less than or equal to 1.0 to 1.0 0.000% 0.750%
Greater than 1.0 to 1.0 but less 0.000% 1.125%
than or equal to 2.0 to 1.0
Greater than 2.0 to 1.0 0.250% 1.500%
</TABLE>
10. Applicable Percentage
<TABLE>
<CAPTION>
Ratio of Funded Debt to Applicable
Cash Flow Percentage
--------- ----------
<S> <C>
Less than or equal to 1.0 to 1.0 0.250%
Greater than 1.0 to 1.0 but less 0.250%
than or equal to 2.0 to 1.0
Greater than 2.0 to 1.0 0.375%
</TABLE>
IF-4
<PAGE> 84
EXHIBIT G
ASSIGNMENT
Reference is made to the Amended and Restated Credit Agreement dated
as of January 18, 1994 (as amended through the date hereof, the "CREDIT
AGREEMENT"), among CRSS Inc. ("BORROWER"), NationsBank of Texas, N.A., as agent
("AGENT"), and NationsBank of Texas, N.A., and the other financial institutions
party thereto from time to time (collectively, "LENDERS"). Capitalized terms
used herein and not otherwise defined shall have the meanings given to such
terms in the Credit Agreement.
______________________ (the "ASSIGNOR"), and _______________________
(the "ASSIGNEE") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee (without
recourse to the Assignor) all of its Rights under the Loan Papers, and the
Assignee hereby purchases and accepts from the Assignor such Rights and assumes
all of the obligations of the Assignor under Loan Papers, including, without
limitation, (a) all Borrowings funded by the Assignor and outstanding on the
Effective Date (as defined below), together with interest accruing thereon on
and after the Effective Date, (b) all LCs issued and uncancelled as of the
Effective Date, and (c) the commitment fee (as described in SECTION 4.4 of the
Credit Agreement) that is earned by Lenders from and after the Effective Date
and paid by Borrower after the Effective Date. From and after the Effective
Date, (x) the Assignee shall be a party to the Credit Agreement and have the
rights and obligations of a Lender thereunder and under the other Loan Papers
and (y) the Assignor shall relinquish its rights and be released from its
obligations under the Credit Agreement and the other Loan Papers.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties, or
representations made by Borrower or any other Company in or in connection with
the Credit Agreement or any other Loan Paper or the execution, legality,
validity, enforceability, genuineness, sufficiency, collectibility, or value of
the Credit Agreement or any other Loan Paper, other than that it is the sole
legal and beneficial owner of the interest being assigned by it hereunder and
that such interest is free and clear of any claim, encumbrance, or
participation; (b) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or any other
Company or the performance or observance by Borrower or any other Company of
any of its respective obligations under the Credit Agreement or any other Loan
Paper; (c) represents and warrants that (i) it possesses all requisite
authority and power to execute, deliver, and comply with the terms of the Loan
Papers (including, without limitation, this Assignment), (ii) the Credit
Agreement and the instruments contemplated therein constitute the entire
agreement between Borrower, Agent, and Lenders [include following proviso if
Agent is Assignor: (provided, however, that Assignor and Borrower have
executed a fee letter dated as of January 18, 1994, that does not inure to the
benefit of any Lender or Assignee)], (iii) the Credit Agreement has not been
amended, and (iv) to its knowledge, no Default or Potential Default has
occurred pursuant to the Loan Papers; and (d) attaches the Note held by it and
requests that Agent exchange such Note for a new Note executed by Borrower and
payable to the Assignee in a principal amount equal to $_________________.
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment; (b) confirms that it has received a
copy of the Credit Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment; (c) agrees that it will, independently and without reliance
upon Agent, the Assignor, or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement; (d)
appoints and authorizes Agent to take such action as agent on its behalf and to
exercise such powers under the Credit Agreement as are delegated to Agent by
G-1
<PAGE> 85
the terms thereof, together with such powers as are reasonably incidental
thereto; (e) agrees that it will perform in accordance with their terms all the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; (f) represents and warrants that it does not
consider any amount paid by it to the Assignor hereunder a loan by it to the
Assignor; and (g) (i) represents and warrants to the Assignor that under
applicable laws and treaties no taxes will be required to be withheld by Agent,
Borrower, or the Assignor with respect to any payments to be made to the
Assignor in respect of the Obligation, (ii) attaches hereto two duly completed
copies of either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein the Assignee claims entitlement to complete
exemption from U.S. federal withholding tax on all interest payments made on
the Obligation), and (iii) agrees to provide to the Assignor, Agent, and
Borrower a new Form 4224 or Form 1001 upon the obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments duly executed and completed by the
Assignee, and to comply from time to time with all applicable U.S. laws and
regulations with regard to such withholding tax exemption.(1)
4. The effective date for this Assignment shall be ______________,
19___ (the "EFFECTIVE DATE").
5. From and after the Effective Date, Agent shall make all payments
in respect of the interest assigned hereby (including payments of principal,
interest, fees, and other amounts) to the Assignee. The Assignor and the
Assignee shall make all appropriate adjustments in payments for periods prior
to the Effective Date by Agent or with respect to the making of this assignment
directly between themselves.
6. This Assignment shall be governed by and construed in accordance
with the laws of the State of _____________.
7. This Assignment (a) embodies the entire agreement between the
parties, supersedes all prior agreements and understandings, if any, relating
to the subject matter hereof, and may be amended only by an instrument in
writing executed jointly by an authorized officer of each party hereto, (b) is
not intended to evidence a "purchase" or "sale" of a "security" within the
meaning of any Law, and (c) may be executed in a number of identical
counterparts, each of which shall be deemed an original for all purposes and
all of which shall constitute, collectively, one agreement; but, in making
proof of this Assignment, it shall not be necessary to reproduce or account for
more than one such counterpart.
8. Any amounts due hereunder from the Assignor to the Assignee shall
be wire transferred by the Assignor to Assignee's account at
____________________, ABA #________, for credit to ________________________,
Attention: ______________________; Reference: CRSS. Any amounts due
hereunder from the Assignee to the Assignor shall be wire transferred by the
Assignee to the Assignor's account at _____________________, ABA #___________,
for credit to ________________________, Attention: ______________________;
Reference: CRSS. For purposes of amending SCHEDULE 1 to the Credit Agreement,
the Assignee's address, contact person, and facsimile number are as follows:
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
Attention: _____________________
FAX: _____________________
__________________________________
(1) Clause (g) may be deleted if Assignee is not a foreign entity.
G-2
<PAGE> 86
EXECUTED as of _________, 19___, with an "Effective Date" of
___________, 19___.
ASSIGNOR ASSIGNEE
By: By:___________________________________
Name: Name:___________________________
Title: Title:__________________________
CONSENTED TO:(2)
NATIONSBANK OF TEXAS, N.A., CRSS INC.
as Agent as Borrower
By: By:___________________________________
Name: Name:___________________________
Title: Title:__________________________
__________________________________
(2) Consent not required if Assignee is Affiliate of Assignor.
G-3
