<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, 1994
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)
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)
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.
<TABLE>
<CAPTION>
Class of Common Stock Outstanding at February 7, 1995
- --------------------- -------------------------------
<S> <C>
$1 Par Value 12,786,912
</TABLE>
<PAGE> 2
CRSS INC. AND SUBSIDIARIES
FORM 10-Q
DECEMBER 31, 1994
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
-----------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CRSS Inc.
Consolidated Balance Sheet-
December 31, 1994 and June 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Statement of Operations-Three and
Six Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Consolidated Statement of Cash Flows-Three and Six
Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Equity Investment Partnerships of CRSS Inc.
Combined Balance Sheet-
December 31, 1994 and June 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Combined Statement of Operations-Three and
Six Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Combined Statement of Cash Flows-Three and Six
Months Ended December 31, 1994 and 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
CRSS INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, June 30,
(DOLLARS IN THOUSANDS) 1994 1994
------------ --------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 16,201 $ 2,229
Accounts receivable 5,326 4,664
Deferred income taxes 1,959 1,959
Other current assets 7,953 5,546
Net current assets from discontinued operations 9,797 36,621
-------- --------
Total current assets 41,236 51,019
Property, plant and equipment, net 76,426 78,043
Net noncurrent assets from discontinued operations 7,326 7,326
Other assets:
Equity investment in partnerships 60,231 61,538
Other noncurrent assets 12,800 12,746
-------- --------
73,031 74,284
-------- --------
$198,019 $210,672
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 972 $ 946
Current portion of long-term obligations 3,153 3,096
Other current liabilities 5,943 9,510
-------- --------
Total current liabilities 10,068 13,552
Non-recourse project financing 59,715 60,937
Other long-term obligations 7,956 7,845
Deferred income taxes 41,558 40,452
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, 1994 - 16,609,000 shares
and June 30, 1994 - 16,492,000 16,609 16,492
Additional paid-in capital 70,234 69,253
Retained earnings 21,779 29,184
-------- --------
108,622 114,929
Treasury stock, at cost, 3,841,000 shares at
December 31, 1994 and 3,574,000 shares at June 30, 1994 (29,840) (26,946)
Other (60) (97)
-------- --------
78,722 87,886
-------- --------
$198,019 $210,672
======== ========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements
1
<PAGE> 4
CRSS INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
---------------------- --------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1994 1993 1994 1993
-------- -------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Electricity and steam sales $ 6,485 $ 6,274 $12,786 $12,767
Operations and administrative service fees 867 1,221 1,676 2,116
Other revenues 25 26 52 51
-------- -------- ------- -------
7,377 7,521 14,514 14,934
Costs and expenses:
Plant operations 5,651 5,739 11,174 10,507
General and administrative 2,495 2,598 4,978 4,173
Marketing and project development 632 847 998 1,282
-------- -------- ------- -------
8,778 9,184 17,150 15,962
Equity income in partnerships 5,371 4,632 9,455 7,586
-------- -------- ------- -------
Operating income from continuing operations 3,970 2,969 6,819 6,558
Other income (expense):
Non-operating income 216 7 481 190
Interest expense (1,760) (1,881) (3,557) (3,770)
Minority interest in earnings - (279) - (468)
-------- -------- ------- -------
(1,544) (2,153) (3,076) (4,048)
-------- -------- ------- -------
Earnings from continuing operations before income tax 2,426 816 3,743 2,510
Income tax expense 1,068 351 1,647 1,080
-------- -------- ------- -------
Earnings from continuing operations 1,358 465 2,096 1,430
Earnings (loss) from discontinued operations, net of
income tax benefit of $3,277 for the six months ended
December 31, 1994 and expense of $658 and $806
for the three and six months ended December 31, 1993,
respectively - 719 (8,723) 784
-------- -------- ------- -------
Net earnings (loss) $ 1,358 $ 1,184 $(6,627) $ 2,214
======== ======== ======= =======
Primary and fully diluted earnings (loss) per common share:
Earnings from continuing operations $ 0.10 $ 0.04 $ 0.16 $ 0.11
Net earnings (loss) $ 0.10 $ 0.09 $ (0.50) $ 0.17
======== ======== ======= =======
Weighted average common shares outstanding 13,094 13,013 13,142 13,010
======== ======== ======= =======
Dividends per common share $ 0.03 $ 0.03 $ 0.03 $ 0.03
======== ======== ======= =======
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
2
<PAGE> 5
CRSS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
--------------------------
(DOLLARS IN THOUSANDS) 1994 1993
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Earnings from continuing operations $ 2,167 $ 1,430
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Deferred income taxes 1,149 2,451
Depreciation and amortization 1,667 1,646
Equity income in partnerships (9,487) (7,586)
Increase in receivables (662) (351)
Increase in other current assets (2,394) (1,752)
Decrease in accounts payable and other current
liabilities (3,261) (452)
Distributions from partnerships 10,762 3,244
Payments to discontinued operations (23,954) (3,722)
Other operating activities 87 99
--------- --------
Net cash used in operating activities (23,926) (4,993)
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in investments in affiliates - (30,000)
Payments from discontinued operations - 338
Proceeds from sale of discontinued operations 41,983 -
--------- --------
Net cash provided by (used in) investing activities 41,983 (29,662)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term obligations (1,145) (1,046)
Proceeds from short-term borrowings - 9,500
Proceeds from exercise of stock options 725 111
Purchase of treasury shares (2,885) -
Contributions from minority interest - 5,700
Dividends paid on common stock (780) (764)
--------- --------
Net cash provided by (used in) financing activities (4,085) 13,501
--------- --------
Net increase (decrease) in cash and cash equivalents 13,972 (21,154)
Cash and cash equivalents at beginning of period 2,229 28,220
--------- --------
Cash and cash equivalents at end of period $ 16,201 $ 7,066
========= ========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
3
<PAGE> 6
EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, June 30,
(DOLLARS IN THOUSANDS) 1994 1994
------------ ---------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 35,171 $ 51,304
Accounts receivable 16,774 18,272
Accounts receivable from affiliates 2,672 2,735
Prepaid expenses and other assets 2,650 2,874
--------- ---------
Total current assets 57,267 75,185
Restricted cash 57,823 47,392
Property, plant and equipment, net 483,006 488,525
Power purchase agreement, net 57,122 60,030
Other noncurrent assets 978 1,014
--------- ---------
$ 656,196 $ 672,146
========= =========
Liabilities and Partners' Capital
Current liabilities:
Accounts payable $ 1,040 $ 72
Accounts and notes payable to affiliates 5,639 5,699
Current portion of long-term obligations 28,455 27,626
Operations and maintenance reserves 3,686 4,508
Other current liabilities 12,261 15,202
--------- ---------
Total current liabilities 51,081 53,107
Non-recourse project financing 444,052 460,989
Other long-term obligations 40,218 34,661
Partners' capital 120,845 123,389
--------- ---------
$ 656,196 $ 672,146
========= =========
Supplemental information:
Partners' capital $ 120,845 $ 123,389
Attributable to other partners (60,614) (61,851)
--------- ---------
CRSS' equity investment in partnerships $ 60,231 $ 61,538
========= =========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements
4
<PAGE> 7
EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
----------------------- ----------------------
(DOLLARS IN THOUSANDS) 1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Electricity and steam sales $ 45,087 $ 45,158 $ 89,290 $ 89,928
Costs and expenses:
Plant operations 22,255 21,400 45,758 47,451
General and administrative 1,409 2,977 2,711 4,105
-------- -------- -------- --------
23,664 24,377 48,469 51,556
-------- -------- -------- --------
Operating income 21,423 20,781 40,821 38,372
Interest expense (10,653) (11,359) (21,806) (23,136)
-------- -------- -------- --------
Net earnings $ 10,770 $ 9,422 $ 19,015 $ 15,236
======== ======== ======== ========
Supplemental information:
Net earnings $ 10,770 $ 9,422 $ 19,015 $ 15,236
Attributable to other partners (5,399) (4,790) (9,560) (7,650)
-------- -------- -------- --------
CRSS' equity income in partnerships $ 5,371 $ 4,632 $ 9,455 $ 7,586
======== ======== ======== ========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
5
<PAGE> 8
EQUITY INVESTMENT PARTNERSHIPS OF CRSS INC.
COMBINED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
------------------------
(DOLLARS IN THOUSANDS) 1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 19,015 $ 15,236
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Depreciation and amortization 14,796 13,926
Loss on replacement of equipment - 189
Decrease in receivables 1,561 7,450
(Increase) decrease in prepaid expenses and other assets 225 (1,324)
Increase (decrease) in accounts payable and other current
liabilities (1,056) 4,438
-------- --------
Net cash provided by operating activities 34,541 39,915
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (6,332) (8,156)
Increase in restricted cash (10,431) (6,103)
-------- --------
Net cash used in investing activities (16,763) (14,259)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on non-recourse project financing (16,107) (37,232)
Proceeds from non-recourse project financing - 3,220
Increase in other long-term obligations 3,757 5,773
Contributions from partners - 30,000
Distributions to partners (21,561) (6,487)
-------- --------
Net cash used in financing activities (33,911) (4,726)
-------- --------
Net increase (decrease) in cash and cash equivalents (16,133) 20,930
Cash and cash equivalents at beginning of period 51,304 11,144
-------- --------
Cash and cash equivalents at end of period $ 35,171 $ 32,074
======== ========
</TABLE>
See Notes to Unaudited Consolidated and Combined Financial Statements.
6
<PAGE> 9
CRSS INC.
NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The Consolidated Financial Statements include the accounts of CRSS Inc.
("CRSS") and its wholly-owned subsidiary, CRSS Capital, Inc. ("CRSS Capital"),
collectively referred to herein as the "Company".
The Combined Financial Statements include the accounts of the four less than
majority-owned power and cogeneration limited partnerships in which CRSS
Capital has equity interests ranging from 47.5 percent to 50 percent: Hopewell
Cogeneration Limited Partnership ("Hopewell"), Naheola Cogeneration Limited
Partnership ("Naheola"), Appomattox Cogeneration Limited Partnership
("Appomattox"), and Westwood Energy Properties Limited Partnership
("Westwood"), collectively referred to herein as the "Partnerships".
In the opinion of management, the accompanying unaudited Consolidated and
Combined Financial Statements contain all adjustments necessary to present
fairly the respective financial positions of the Company and the Partnerships
as of December 31, 1994, the results of operations for the three and six months
ended December 31, 1994 and 1993 and cash flows for the six months ended
December 31, 1994 and 1993. All adjustments are of a normal recurring nature.
These unaudited Consolidated and Combined Financial Statements should be read
in conjunction with the audited Consolidated and Combined Financial Statements
included in the June 30, 1994 Annual Report to Shareholders. The results of
operations for the three and six months ended December 31, 1994 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. DISCONTINUED OPERATIONS
As of June 30, 1994, the design, engineering and construction management
segment was reflected as discontinued operations in conjunction with the
Company's plan to dispose of this business.
On July 21, 1994, the Company sold CRSS Architects, Inc. to Hellmuth, Obata &
Kassabaum, Inc. ("HOK"). Total consideration amounted to $6.8 million,
consisting of $4.8 million in cash at closing and a $2.0 million sharing of
future net cash distributions from the Peace Shield project, of which $0.6
million was received during the six months ended December 31, 1994.
On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc. to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs was $33.5 million in
cash, representing $14.0 million over the aggregate book value at June 30, 1994
of the business acquired. An additional purchase price adjustment for an
increase in the aggregate book value of the businesses acquired between June
30, 1994 and the closing date of July 29, 1994 has not yet been finalized,
however an additional $3.4 million was received from Jacobs during the three
months ended December 31, 1994.
7
<PAGE> 10
Net assets from discontinued operations at December 31, 1994 consists primarily
of the assets and liabilities of the retained power plant contracts (primarily
receivables and payables), cash of $7.9 million held by CRSS's captive
insurance company net of claims reserves of $6.9 million, NaTec's investment in
the White River Nahcolite Minerals joint venture, deferred taxes, legal claims
reserves and accrued discontinuance costs.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
GENERAL
Electricity sales, steam sales and plant operations expense included in the
Company's Consolidated Statement of Operations consist of the revenues and
costs associated with the three Viking cogeneration facilities. These projects
are wholly-owned by CRSS Capital. Equity income in partnerships includes CRSS
Capital's interest in cogeneration facilities that are less than majority-owned
and are accounted for using the equity method. These partnerships include the
Hopewell, Naheola, Westwood, and Appomattox facilities. Operations and
administrative service fees arise from management services provided by CRSS
Capital to each project in which it maintains an ownership interest. Costs
associated with providing these services are included in general and
administrative expense. In addition to the components discussed previously,
costs and expenses included general and administrative overhead costs as well
as expenses related to the Company's project development efforts.
CONTINUING OPERATIONS
Consolidated earnings from continuing operations for the three months ended
December 31, 1994 were $1.4 million, or $0.10 per share, compared to $0.5
million, or $0.04 per share, for the three months ended December 31, 1993. For
the six months ended December 31,1994, consolidated earnings from continuing
operations were $2.1 million, or $0.16 per share, compared to $1.4 million, or
$0.11 per share for the six months ended December 31,1993.
Total revenues for the three months ended December 31, 1994 of $7.4 million
were consistent with the corresponding period of the prior year. For the six
months ended December 31, 1994, total revenues were $14.5 million compared to
$14.9 million for the six months ended December 31, 1993. The decrease was
primarily attributable to lower operations and maintenance services provided by
the Company to the Hopewell project during the current year.
Plant operations costs of $5.7 million for the three months ended December
31,1994 were consistent with prior year costs for the same period. Higher wood
fuel prices during the first quarter of the year resulted in an increase in
plant operations costs of $0.7 million for the six months ended December
31,1994 as compared to the six months ended December 31, 1993. The higher wood
fuel prices were attributable to difficulties in procuring adequate wood
supplies during the period.
General and administrative expenses for the quarter ended December 31, 1994
were consistent with the quarter ended December 31,1993. General and
administrative expenses for the six months ended December 31, 1994 of $5.0
million, were $0.8 million higher than the prior year amount of $4.2 million.
The increase is due to the prior year amount including
8
<PAGE> 11
expense reimbursements of $1.6 million related to a developmental project.
Excluding the effect of this reimbursement, general and administrative expenses
for the six months ended December 31, 1994 would have been lower than the prior
year.
Marketing and project development costs for the three months ended December 31,
1994 were $0.6 million compared to $0.8 million for the three months ended
December 31, 1993. For the six months ended December 31, 1994, marketing and
project development costs were $1.0 million compared to $1.3 million for the
corresponding period of the prior year. The decreases in current year costs
are primarily due to expense reimbursements received related to a current
developmental project.
Non-operating income increased $0.2 million and $0.3 million for the three and
six months ended December 31,1994, respectively, as compared to the
corresponding periods of the prior year. The increases are due to higher cash
balances available for investment in addition to higher rates of interest
during the current year. Interest expense, which is primarily related to the
long-term non-recourse debt used to finance the Viking cogeneration facilities,
was $0.1 million lower for the quarter ended December 31, 1994, and $0.2
million lower for the six months ended December 31, 1994 as compared to the
prior year amounts. The decreases are due to reductions in the outstanding
principal balances on the non-recourse debt.
Minority interest in earnings of $0.3 million and $0.5 million for the three
and six months ended December 31, 1993, respectively, represents the minority
interest in CRSS Capital previously owned by Paribas North America, Inc.
("Paribas"). The Company (via redemption by CRSS Capital) repurchased all of
the common stock of CRSS Capital owned by Paribas on January 31, 1994 resulting
in CRSS Capital becoming wholly-owned by the Company.
EQUITY INCOME IN PARTNERSHIPS
Equity income in partnerships reflects CRSS Capital's 50 percent interest in
the Hopewell, Naheola, and Appomattox power and cogeneration facilities and the
47.5 percent interest in the Westwood facility.
Equity income in partnerships increased from $4.6 million for the three months
ended December 31, 1993 to $5.4 million for the three months ended December 31,
1994, an increase of $0.7 million, or 16 percent. The increase is primarily
due to improved operating results at the Hopewell and Naheola facilities in
addition to a retroactive rate adjustment at the Appomattox facility. Equity
income in partnerships for the six months ended December 31, 1994 was $9.5
million compared to $7.6 million for the six months ended December 31, 1993,
representing an increase of $1.9 million, or 25 percent. In addition to the
items noted above, the increase for the six months ended December 31, 1994 is
primarily related to the Westwood project, which experienced an unscheduled
outage during the first quarter of the prior fiscal year.
DISCONTINUED OPERATIONS
Earnings from discontinued operations for the three and six months ended
December 31, 1993 reflect the operating results of the design, engineering and
construction management segment which was classified as discontinued operations
as of June 30, 1994, in conjunction with the Company's plan to dispose of this
business. As further discussed below under "Liquidity and Capital Resources",
the Company sold its primary subsidiaries related to this business segment
during the first quarter of fiscal year 1995. As part of the sale
transactions, CRSS retained certain assets and liabilities, the majority of
which relate to four power plant engineering, procurement, and construction
contracts which were substantially complete or in the later stages of
completion. Additionally, the Company agreed to indemnify the
9
<PAGE> 12
purchasers against certain legal claims. During the three months ended
September 30, 1994, the Company recorded an additional reserve of $9.5 million
for the discontinued design, engineering and construction management segment
related to changes in the estimates to complete these power plant contracts and
for additional legal claims reserves.
The Company is continuing discussions with several parties for the disposition
of its holdings in NaTec Resources, Inc. ("NaTec"), the discontinued acid
rain/pollution control segment. Based on these discussions, the Company
increased its provision for the estimated loss on disposal of NaTec by an
additional $2.5 million during the three months ended September 30, 1994.
CONSOLIDATED RESULTS
Consolidated net earnings for the three months ended December 31, 1994, was
$1.4 million or, $0.10 per share versus net earnings of $1.2 million, or $0.09
per share for the corresponding period of the prior year. For the six months
ended December 31, 1994, consolidated net loss was $6.7 million, or $0.50 per
share versus net earnings of $2.2 million, or $0.17 per share for the six
months ended December 31,1993.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1994, totalled $31.2 million, which included
$16.2 million in cash and cash equivalents. As of June 30, 1994, working
capital was $37.5 million, which included cash and cash equivalents of $2.2
million. The $14.0 million increase in cash and cash equivalents for the
period from June 30, 1994 to December 31, 1994 is primarily due to the sale of
the discontinued design, engineering and construction management segment, as
further discussed below, and distributions from the equity investment
partnerships of $10.7 million.
On July 21, 1994, the Company sold CRSS Architects, Inc. to Hellmuth, Obata &
Kassabaum, Inc. ("HOK"). Total consideration amounted to $6.8 million,
consisting of $4.8 million in cash at closing and a $2.0 million sharing of
future net cash distributions from the Peace Shield project, of which $0.6
million was received during the six months ended December 31, 1994.
On July 29, 1994, the Company sold its engineering and construction management
operations, consisting primarily of CRSS Constructors, Inc. and certain assets
and liabilities of CRS Sirrine Engineers, Inc., to Jacobs Engineering Group,
Inc. ("Jacobs"). Total consideration paid by Jacobs was $33.5 million in
cash, representing $14.0 million over the aggregate book value at June 30, 1994
of the business acquired. An additional purchase price adjustment for an
increase in the aggregate book value of the businesses acquired between June
30, 1994 and the closing date of July 29, 1994 has not yet been finalized,
however an additional $3.4 million was received from Jacobs during the three
months ended December 31, 1994.
Cash payments related to the discontinued operations during the six months
ended December 31, 1994 of $24.0 million consisted of working capital
requirements of the businesses prior to the sale, severance and other employee
related costs, legal fees and settlements, costs related to the retained power
plant engineering, procurement, and construction contracts, and closing costs.
The Company maintains a letter of credit facility with two banks. The facility
may be used to fund draws under existing outstanding letters of credit issued
thereunder, which totalled $32.3 million at December 31, 1994. The credit
facility, which is available through July 1,
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<PAGE> 13
1995 is subject to certain restrictive covenants including, among others,
liquidity ratio, tangible net worth, and limitations on capital investments.
The Company's non-recourse project financing represents long-term non-recourse
debt related to the Viking projects. The notes provide for interest payments
at 11.15 percent per annum due in quarterly installments of principal and
interest through the year 2009. The Company has entered into negotiations with
the lenders for the restructuring of the debt.
At December 31, 1994 cash totalling $0.6 million has been reserved for plant
maintenance on the Viking projects in accordance with the terms of the
non-recourse project financing. An additional $0.7 million is reserved for
debt service.
The Company has received a formal call notice on its interest in the Naheola
partnership from its partner, James River Corporation, for fair value. The
project, which includes a chemical recovery boiler and cogeneration assets
located at James River's Naheola Mill in Pennington, Alabama, has been in
operation since March 1993. The timing and the actual call price has not yet
been determined, pending a formal update of the financial projections and
operating assumptions remaining in the project, which runs through 2013.
Management believes that existing cash, cash flow from operations and project
distributions, 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.
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
10.1 Credit Agreement (Letter of Credit Facility) dated December
30, 1994 among CRSS Inc., NationsBank of Texas, N.A. as agent
and Texas Commerce Bank National Association
27.1 Financial data schedule.
(b) Report on Form 8-K
None
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, 1995 /s/ Bruce W. Wilkinson
Bruce W. Wilkinson
Chief Executive Officer and
Chairman of the Board
Date February 7, 1995 /s/ William J. Gardiner
William J. Gardiner
Senior Vice President/Chief
Financial Officer and
Treasurer (Principal
Financial and Accounting
Officer)
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<S> <C>
10.1 Credit Agreement (Letter of Credit Facility) dated December 30, 1994 among CRSS Inc., NationsBank
of Texas, N.A. as agent and Texas Commerce Bank National Association
27.1 Financial data schedule
</TABLE>
<PAGE> 1
CREDIT AGREEMENT
(Letter of Credit Facility)
among
CRSS INC.,
Borrower
NATIONSBANK OF TEXAS, N.A.,
Agent
and
THE LENDERS NAMED HEREIN,
Lenders
$32,266,052.21
AS OF DECEMBER 30, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 No Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.3 LC Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Reduction or Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 Interest and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.3 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.4 Interest Recapture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.5 Interest Calculations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.7 Order of Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.8 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.9 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.10 Booking Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.11 Additional Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.1 Treatment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 LC Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Upfront Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.6 Performance Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 6 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.1 Purpose of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Corporate Existence, Good Standing, and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Material Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.4 Authorization and Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.9 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.11 Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.12 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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6.13 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.14 Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.16 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 7 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.1 Items to be Furnished . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.2 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.4 Inspections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.6 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.8 Maintenance of Existence, Assets, and Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.10 Preservation and Protection of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.11 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.13 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Prepayment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.5 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.6 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.7 Compliance with Laws and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.8 Loans, Advances, and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.9 Dividends and Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.10 Mergers and Dissolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.11 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.12 Fiscal Year and Accounting Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.13 Government Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9 FINANCIAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.1 CRSS Capital's Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.2 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
9.3 Liquidity Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 10 DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.1 Payment of Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.3 Debtor Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.4 Judgments and Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.5 Government Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.6 Misrepresentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.7 Ownership of Other Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.8 Default Under Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
10.9 SEC Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.10 Change in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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10.11 LCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.12 Validity and Enforceability of Loan Papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.13 Lakewood LC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 11 RIGHTS AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.1 Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11.2 Company Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.3 Performance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.4 Not in Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.5 Course of Dealing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.6 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.7 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.8 Diminution in Value of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 12 AGREEMENT AMONG LENDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.1 Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.3 Proportionate Absorption of Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.4 Delegation of Duties; Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.5 Limitation of Agent's Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.6 Default; Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.7 Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.8 Relationship of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.9 Foreign Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.10 Benefits of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 13 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.1 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.2 Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.3 Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.4 Form and Number of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.5 Exceptions to Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.6 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
13.8 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.9 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.10 Venue; Service of Process; Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.11 Amendments, Consents, Conflicts, and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13.12 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.13 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.14 Successors and Assigns; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.15 Discharge Only Upon Payment in Full; Reinstatement in Certain Circumstances . . . . . . . . . . . . . . . 30
13.16 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
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SCHEDULES AND EXHIBITS
SCHEDULE 1 Parties; Addresses; Committed Sums; Wiring Information
SCHEDULE 2 Material Companies
SCHEDULE 2.3 Existing LCs
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
SCHEDULE 7.12 Guarantors and Restricted Subsidiaries
SCHEDULE 8.4 Permitted Debt
EXHIBIT A Guaranty
EXHIBIT B Notice of LC
EXHIBIT C Compliance Certificate
EXHIBIT D Assignment
(iv)
<PAGE> 6
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of December 30, 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.
A. Borrower, Agent, and Lenders are party to the Existing Credit
Agreement (defined below).
B. The Existing Credit Agreement will terminate December 30,
1994, and the Existing LCs (defined below) will be
outstanding.
C. Borrower has requested the Agent and Lenders continue the
Existing LCs under this Agreement on similar terms and
conditions as those imposed under the Existing Credit
Agreement.
D. Agent and Lenders are willing to so continue the Existing LCs,
on the terms and conditions set out in this Agreement, it
being understood that Borrower and the Companies are not
entitled to any Borrowings under this Agreement.
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 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 Credit Agreement, as amended, supplemented, and
restated from time to time.
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%.
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.
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BUSINESS DAY means 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.
CAPITAL LEASE means any capital lease or sublease that has been (or
under GAAP should be) capitalized on a balance sheet.
CLOSING DATE means the date on which this Agreement and the Loan
Papers are executed.
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.
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 C.
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.
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), 7.1(B), 7.1(C) as the case may be.
CRSS CAPITAL means CRSS Capital, Inc., a Delaware corporation.
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.
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.
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DETERMINING LENDERS means, when determined, any combination of Lenders
holding at least 100% of the aggregate Committed Sums.
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 CREDIT AGREEMENT means the $50,000,000 Amended and Restated
Credit Agreement dated as of January 18, 1994, among Borrower, the banks listed
therein, and NationsBank of Texas, N.A., as agent, as amended, supplemented,
and restated from time to time.
EXISTING BANK DEBT means all Debt owed by any Company arising under
the Existing Credit Agreement.
EXISTING LCS means the LCs listed on SCHEDULE 2.3 and any renewals of
those LCs permitted under the terms of this Agreement.
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.
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.
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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 Subsidiary listed as a Guarantor on SCHEDULE 7.12
and any other Subsidiary which Borrower designates as a Guarantor and which
executes a Guaranty.
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.
LAKEWOOD LC means that LC issued by Agent on behalf of Borrower under
this Agreement in the approximate amount of $23,220,000 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
under 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 FACILITY means the facility for the issuance of LCs, as described
in SECTION 2.3.
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 under drawings or drafts under any
LC; provided that for purposes of calculations under SECTION 9, Lenders' LC
Exposure shall not include the Lakewood LC Exposure.
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.
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<PAGE> 10
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.
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.
PARTICIPANT is defined in SECTION 13.14(B).
PBGC means the Pension Benefit Guaranty Corporation, or any successor
thereof, established under ERISA.
PERMITTED DEBT means the Obligation and the Debt listed on SCHEDULE
8.4.
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 such Lender's Committed Sum bears to the Total Commitment.
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.
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RESPONSIBLE OFFICER means the chairman, president, chief executive
officer, chief financial officer, treasurer, or assistant treasurer of
Borrower.
RESTRICTED SUBSIDIARY means each entity listed as a Restricted
Subsidiary on SCHEDULE 7.12 and any Subsidiary which is not a Guarantor.
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 has
an ownership interest.
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) July 1, 1995, and (b) the
effective date that Lenders' commitments under this Agreement are otherwise
cancelled or terminated in accordance with this Agreement.
TOTAL COMMITMENT means, when determined, the sum of all Committed Sums
for all Lenders (as reduced or cancelled under this Agreement) then in effect.
TRIBUNAL means any (a) local, state, or federal judicial, executive,
or legislative instrumentality, (b) private arbitration board or panel, or (c)
central bank.
UCP means 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 and cash equivalents maturing within 90
days 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 is owned by Borrower, CRSS Capital, or CRSS Services, Inc.
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 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 No Credit Facility. Neither Borrower nor any Company may
request (or are entitled to) Borrowings under this Agreement.
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2.2 [Reserved].
2.3 LC Facility.
(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 B (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, the Commitment Usage may not exceed the
Total Commitment. 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). The Lakewood
LC may only be renewed if the Determining Lenders consent to such
renewal. Agent may, from time to time as they expire, renew (but not
increase) the other Existing LCs for as many as 13 months at each
renewal.
(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 or before the first Business Day following
Agent's receipt of any draft or draw request 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. 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 and Lenders 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, 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.
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(e) If Borrower fails to timely reimburse Agent as
provided in SECTION 2.3(C), 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 12:00 noon
Dallas, Texas, time) or on the next succeeding Business Day (if notice
is given after 12:00 noon 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.
(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 or
Potential Default, Borrower shall provide to Agent, for the benefit of
Lenders, cash collateral in an amount
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<PAGE> 14
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
$1,000,000 or a greater integral multiple of $500,000, and shall be Pro Rata
among all Lenders. Once terminated, the Committed Sum may not be increased.
The Total Commitment shall be automatically reduced (without further action by
any such Person) upon the cancellation (without having been drawn upon) or
expiration (unless renewed in accordance with this Agreement) of any Existing
LC, or upon payment of any reimbursement obligation under any Existing LC, in
each case the Total Commitment shall be reduced by an amount equal to the
amount of such Existing LC or payment, provided that, such expirations,
cancellations, or payments will not reduce the Total Commitment to an amount
less than $15,000,000.
SECTION 3 TERMS OF PAYMENT.
3.1 Payments. 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 Payments. Unless otherwise provided in this
Agreement, each portion of the Obligation is due and payable on the Termination
Date.
3.3 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.
3.4 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
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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.
3.5 Interest Calculations. 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
(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). All interest rate determinations and
calculations by Agent are rebuttably, but presumptively, correct.
3.6 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.
3.7 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 any accrued interest on any portion of the
Obligation; (iii) to any LC reimbursement obligations that are due and
payable and that remain unpaid 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.
3.8 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 3.9) 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
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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.
3.9 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 3.8) 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 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.
3.10 Booking Obligations. To the extent permitted by Law, any
Lender may make, carry, or transfer its portion of the Obligation 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 portions of the Obligation.
3.11 Additional Costs.
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.
SECTION 4 FEES.
4.1 Treatment of Fees. The fees described in this SECTION 4.1 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 [Reserved].
4.3 LC Fees. As a condition to the issuance or extension of an
LC, Borrower shall pay to Agent 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)
1.375%, 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 greater of $350 or the first 1/8% of the fee,
and shall promptly distribute to each Lender its Commitment Percentage of the
remainder. This fee shall be
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paid by Borrower to Agent quarterly in advance and Borrower is not entitled to
a refund of any portion of the fee paid for a quarter during which the LC is
cancelled or otherwise terminated.
4.4 Facility Fee. Borrower shall pay to Agent (who shall promptly
distribute to each Lender its Commitment Percentage thereof) a commitment fee,
payable in arrears on the last Business Day of each calendar quarter (beginning
March 31, 1995) and on the Termination Date, equal to 0.375% per annum and
calculated on an amount equal to the average daily outstanding Total Commitment
during such quarter.
4.5 Upfront Fee. Borrower shall pay to Agent (who shall promptly
distribute to each Lender its Commitment Percentage thereof) a fee, payable on
the Closing Date equal to 0.05% per annum and calculated on an amount equal to
the then- existing Total Commitment.
4.6 Performance Fee. Borrower shall pay to Agent (who shall
promptly distribute to each Lender its Commitment Percentage thereof) a
performance fee equal to 0.04% per annum and calculated on an amount equal to
the then-existing Total Commitment. This performance fee shall be payable
January 15, 1995, January 31, 1995, and February 15, 1995, in each case, only
if the Lakewood LC remains uncanceled and unsurrendered on such date.
SECTION 5 CONDITIONS PRECEDENT. Agent will not be obligated to issue or
continue any 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, Agent will not be obligated to issue any LC unless on the issue date
(and after giving effect to the requested LC): (a) Agent shall have timely
received a Notice of LC (together with the applicable LC Agreement); (b) Agent
shall have received any applicable LC fee or the portion of that fee then due;
(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 issuance of the LC is permitted by
Law. Each 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, Agent may issue any LC,
without all conditions being satisfied, but, to the extent permitted by Law,
that issuance shall not be deemed to be a waiver of the requirement that each
condition precedent be satisfied as a prerequisite for any subsequent 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 LCs for general
corporate purposes of the Companies. 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 Obligation 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
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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 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, (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.
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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.
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 $500,000 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
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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.
SECTION 7 AFFIRMATIVE COVENANTS. So long as 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) Promptly after preparation, and no later than 15 days
after the last day of each month (beginning with the month ending
December 31, 1994), Financial Statements showing the consolidated and
consolidating financial condition and results of operations of the
Companies for the month and for the period from the beginning of the
current fiscal year to the last day of that month (including, but not
limited to, an unconsolidated cash flow summary for Borrower for such
period and an unconsolidated cash flow forecast for Borrower for at
least the next two months), accompanied by a Compliance Certificate
with respect to the Financial Statements.
(d) 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
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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.
(e) Within 15 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).
(f) 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.
7.2 Use of Proceeds. Borrower shall use the credit under this
Agreement 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
negotiation, preparation, delivery, and execution of this Agreement and any
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 this Agreement and 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
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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.
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 may create new Subsidiaries (whether
as a result of acquisition, creation, or otherwise) and shall designate each
new Subsidiary as either a Guarantor or a Restricted Subsidiary. Borrower
shall notify Agent (in writing) of its creation and designation of each new
Subsidiary. Borrower shall cause each of its Subsidiaries that becomes a
Guarantor to execute and deliver a Guaranty within ten (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.
SECTION 8 NEGATIVE COVENANTS. So long as 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:
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8.1 Taxes. Borrower may not permit any Company, directly or
indirectly, to use any portion of the Obligation 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.
8.2 Prepayment of Obligations. Borrower may not permit any
Company 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. Borrower may not permit any Company to create, incur,
or suffer to exist any Debt (other than the Permitted Debt).
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 $500,000 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, while the Lakewood LC is outstanding, 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
(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
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undivided profits of not less than $250,000,000 (as shown on
its most recently published statement of condition); and
(c) demand deposit accounts maintained in the ordinary course of
business.
In the case of (a) and (b), above, the term of the obligation, certificate, or
acceptance may not exceed 90 days.
8.9 Dividends and Distributions. Notwithstanding any contrary
provision in any Loan Paper, neither Borrower nor any Company may declare any
Distribution to any Restricted Subsidiary. 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, with and for the benefit of holders of such Company's
non-recourse Debt.
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 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 CRSS Capital's Cash. Borrower shall cause CRSS Capital to
cause all SPPEs and all of its (CRSS Capital's) other Subsidiaries to,
immediately upon such items becoming subject to their respective control, cause
all cash and cash equivalents maturing within 90 days from the date of
acquisition, to be transferred, by dividend, distribution, or otherwise, to
CRSS Capital.
9.2 Net Worth. As calculated at the end of each fiscal quarter of
Borrower (beginning December 31, 1994), Borrower may not permit Consolidated
Net Worth to be less than the sum of (a) $77,000,000, plus (b) 50% of
Borrower's consolidated positive net income earned during each fiscal quarter
after December 31, 1994, 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 December 31, 1994, resulting from non-cash sources (i.e.,
acquisitions), plus (iv) 50% of any addition to paid-in capital after December
31, 1994, resulting from cash sources (i.e., sales by Borrower of its capital
stock other than sales to employees pursuant to employee incentive plans).
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9.3 Liquidity Ratio. Borrower may not permit the amount of all
Unencumbered Cash (a) while the Lakewood LC is outstanding, to be less than
$10,000,000, and (b) after the Lakewood LC has been canceled and surrendered,
to be less than an amount equal to the product of the then outstanding Lenders'
LC Exposure multiplied by 0.33.
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 any part of the Obligation when 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 any covenant, agreement, or condition contained in any Loan Paper.
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.
10.4 Judgments and Attachments. Any Material Company fails to pay,
bond, or otherwise discharge any final 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).
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 $500,000; (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 $500,000 to become due and payable by any Company before its
stated maturity; or (c) any recourse Funded Debt in excess (individually or
collectively) of $500,000 is declared to be due and payable or required to be
prepaid by any Company before its stated maturity.
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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.
10.13 Lakewood LC. A draft or draw request is presented under the
Lakewood LC and Borrower does not timely pay or reimburse Agent as provided
under SECTION 2.3(C). The Lakewood LC has not been canceled and surrendered on
or before 5:00 p.m. central standard time on February 16, 1995.
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 and of this Agent
to issue or continue LCs 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 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.
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(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 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).
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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 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
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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 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).
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(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.
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
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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).
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.
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.
26
<PAGE> 32
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
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,
27
<PAGE> 33
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 "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 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.
28
<PAGE> 34
(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 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.
29
<PAGE> 35
(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.]
30
<PAGE> 36
EXECUTED as of the day and year first mentioned.
CRSS INC.,
as Borrower
By:__________________________
William J. Gardiner
Senior Vice President
NATIONSBANK OF TEXAS, N.A.,
as Agent and a Lender
By:__________________________
C. Todd Kulp
Vice President
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
as a Lender
By:__________________________
Curt Karges
Senior Vice President
31
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<S> <C>
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<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> DEC-31-1994
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0
0
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