-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EB/1erffDeMkL68yn0D4lXGzb99c3szi8l5MRC4Zoh5xT6nneR9ezHLyu5mR0sEJ IJFHXjel52roZqDKD7SoHw== 0000912057-96-006293.txt : 19960412 0000912057-96-006293.hdr.sgml : 19960412 ACCESSION NUMBER: 0000912057-96-006293 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960229 FILED AS OF DATE: 19960411 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRYENCO SCIENCES INC CENTRAL INDEX KEY: 0000798044 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS, NEC [3679] IRS NUMBER: 521471630 STATE OF INCORPORATION: DE FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14996 FILM NUMBER: 96546176 BUSINESS ADDRESS: STREET 1: 3811 JOLIET ST CITY: DENVER STATE: CO ZIP: 80239 BUSINESS PHONE: 3033716332 MAIL ADDRESS: STREET 1: 3811 JOLIET STREET CITY: DENVER STATE: CO ZIP: 80239 FORMER COMPANY: FORMER CONFORMED NAME: GULF & MISSISSIPPI CORP DATE OF NAME CHANGE: 19920223 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 29, 1996 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 0-14996 -------------------------------- CRYENCO SCIENCES, INC. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) Delaware 52-1471630 - ------------------------------- ---------------------------- (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 3811 Joliet Street, Denver, Colorado 80239 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (303) 371-6332 -------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: Class A common stock, par value $.01 per share; 6,996,997 shares outstanding as of April 11, 1996. CRYENCO SCIENCES, INC. AND SUBSIDIARY TABLE OF CONTENTS Page ---- PART I - FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . 3 Item 1. Introductory Comments. . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheets August 31, 1995 and February 29, 1996 . . . . . . . . . . 4 Consolidated Statements of Operations Three Month and Six Month Periods Ended February 28, 1995 and February 29, 1996. . . . . . . . . . 6 Consolidated Statements of Cash Flows Six Month Periods Ended February 28, 1995 and February 29, 1996 . . . . . . . . . . . . . . . . 7 Notes to Consolidated Financial Statements . . . . . . . . 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . . 11 PART II - OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . 13 Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . 13 Item 4. Submission of Matters to a Vote of Security-Holders. . 14 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 15 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 2 CRYENCO SCIENCES, INC. AND SUBSIDIARY PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS Introductory Comments: The Consolidated Financial Statements included herein have been prepared by Cryenco Sciences, Inc. (the "Company"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to such rules and regulations. It is suggested that these Consolidated Financial Statements be read in conjunction with the financial information set forth in the Company's Annual Report for the fiscal year ended August 31, 1995. 3 CRYENCO SCIENCES, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
AUGUST 31, FEBRUARY 29, 1995 1996 ------------ -------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 632 $ 645 Accounts receivable 2,821 4,207 Costs and estimated earnings in excess of billings on uncompleted contracts 6,707 5,384 Inventories (NOTE 2) 4,208 3,921 Prepaid expenses 116 209 --------- --------- Total current assets 14,484 14,366 Property and equipment: Leasehold improvements 684 684 Machinery and equipment 3,979 4,299 Office furniture and equipment 402 766 --------- --------- 5,065 5,749 Less accumulated depreciation 2,249 2,648 --------- --------- 2,816 3,101 Deferred financing costs 256 131 Organizational costs 103 52 Goodwill 5,375 5,301 Other assets 343 326 --------- --------- Total assets $ 23,377 $ 23,277 --------- --------- --------- ---------
4 CRYENCO SCIENCES, INC. CONSOLIDATED BALANCE SHEETS (In thousands)
AUGUST 31, FEBRUARY 29, 1995 1996 ------------ -------------- (Unaudited) LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,469 $ 2,676 Accrued expenses 877 1,079 Accrued management fees 324 382 Customer deposits 3 37 Current portion of long-term debt (NOTE 3) 1,593 689 Income tax payable 246 375 --------- -------- Total current liabilities 6,512 5,238 Long-term debt, less current portion (NOTE 3) 5,629 6,644 -------- ------- 12,141 11,882 Stockholders' equity: Preferred stock, $0.01 par value, authorized shares - 2,000,000, preferences, limitations and relative rights to be established by the Board of Directors: Series A, nonvoting, 150,000 authorized shares, 67,838 issued and outstanding shares (aggregate liquidation preference of $678,380) 1 1 Common stock, $0.01 par value: Class A, voting, 21,500,000 authorized shares, 6,842,828 and 6,996,997 shares issued and outstanding 68 70 Class B, nonvoting, 1,500,000 authorized shares, none issued or outstanding -- -- Additional paid-in capital 14,022 14,020 Warrants 169 169 Retained earnings (deficit) (3,024) (2,865) --------- -------- Total stockholders' equity 11,236 11,395 --------- -------- Total liabilities and stockholders' equity $ 23,377 $ 23,277 --------- -------- --------- --------
5 CRYENCO SCIENCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited)
THREE MONTHS ENDED THREE MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED FEBRUARY 28, 1995 FEBRUARY 29, 1996 FEBRUARY 28, 1995 FEBRUARY 29, 1996 ------------------ ------------------ ----------------- ----------------- Contract revenue $ 6,279 $ 8,983 $ 11,871 $ 16,296 Cost of revenue 5,174 7,193 9,662 13,139 ---------- ---------- ---------- ---------- Gross profit 1,105 1,790 2,209 3,157 Selling, general and administrative expenses 679 840 1,379 1,539 Research and development expenses 7 229 17 431 Amortization expense 91 86 172 172 ---------- ---------- ---------- ---------- Operating income 328 635 641 1,015 Other (income) expense: Interest income (3) -- (7) (1) Interest expense 245 204 487 440 Other expense, net 26 53 30 104 ---------- ---------- ---------- ---------- Income from operations before income taxes and extraordinary item 60 378 131 472 Income tax expense 21 139 46 174 ---------- ---------- ---------- ---------- Income from operations before extraordinary item 39 239 85 298 Extraordinary item (net of income tax benefit of $54) (NOTE 4) -- (93) -- (93) ---------- ---------- ---------- ---------- Net income $ 39 $ 146 $ 85 $ 205 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Earnings per common and common equivalent share (NOTE 5) Income from operations before extraordinary item $ 0.00 $ 0.03 $ 0.01 $ 0.03 Extraordinary item -- (0.01) -- (0.01) ---------- ---------- ---------- ---------- Net income $ 0.00 $ 0.02 $ 0.01 $ 0.02 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted average number of shares and common equivalent shares outstanding 5,956,898 7,316,766 5,679,003 7,320,111 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
6 CRYENCO SCIENCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
SIX MONTHS ENDED SIX MONTHS ENDED FEBRUARY 28, 1995 FEBRUARY 29, 1996 ----------------- ----------------- OPERATING ACTIVITIES Net income $ 85 $ 205 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 330 399 Amortization 238 378 Changes in operating assets and liabilities: Accounts receivable 640 (1,386) Costs and estimated earnings in excess of billings on uncompleted contracts (916) 1,323 Inventories (2,083) 287 Income taxes 46 93 Prepaid expenses and other assets (218) (169) Accounts payable 1,508 (735) Accrued expenses (121) 202 Customer deposits (556) 33 -------- -------- Net cash provided (used) by operating activities (1,047) 630 -------- -------- INVESTING ACTIVITIES Purchases of property and equipment (781) (380) -------- -------- Net cash (used) by investing activities (781) (380) -------- -------- FINANCING ACTIVITIES Payments of long-term debt (675) (9,679) Borrowings -- 9,486 Dividends paid on preferred stock (41) (44) Sale of common stock and common stock warrants 2,305 -- -------- -------- Net cash provided (used) by financing activities 1,589 (237) -------- -------- Net increase (decrease) in cash and cash equivalents (239) 13 Cash and cash equivalents at beginning of period 779 632 -------- -------- Cash and cash equivalents at end of period $ 540 $ 645 -------- -------- -------- -------- Supplementary disclosure of cash flow information: Cash paid for interest $ 421 $ 377 Cash paid for taxes -- 100 Supplementary disclosures of noncash financing activity: Issuance of common stock in exchange for warrants exercised $ 1 $ 2 Equipment acquired and financed under capital leases -- 304
7 CRYENCO SCIENCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FEBRUARY 29, 1996 (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended February 29, 1996 are not necessarily indicative of the results that may be expected for the year ending August 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended August 31, 1995. 2. INVENTORIES Inventories (in thousands) consisted of the following:
AUGUST 31, FEBRUARY 29, 1995 1996 ---------- ------------ Raw materials $ 3,514 $ 3,293 Finished goods and work-in-process 794 720 ------- ------- 4,308 4,013 Less reserve for obsolescence (100) (92) ------- ------- $ 4,208 $ 3,921 ------- ------- ------- -------
8 3. LONG-TERM DEBT Long-term debt (in thousands) at February 29, 1996 is comprised of the following:
Note payable bearing interest at 14%, subordinated unsecured. Interest is payable quarterly and principal payments of $275,000 are due beginning November 30, 1996. $ 1,700 Revolving credit facility maturing December 31, 1998. Interest is payable monthly at the reference rate (as defined in the loan agreement) plus 0.5% (8.75% at February 29, 1996). 5,065 Other 568 -------- 7,333 Less current portion 689 -------- $ 6,644 -------- --------
In December 1995, the Company entered into a Credit and Security Agreement with FBS Business Finance Corporation ("FBS"). Under the agreement, FBS is providing a revolving loan facility of up to $10,000,000 and a term loan facility of up to $2,960,000, subject to the amount of the Company's borrowing base and manufacturing equipment additions in the fiscal year ending August 31, 1996, respectively. The revolving loan will initially bear interest at the First Bank National Association reference rate (the "Reference Rate") plus 0.5%, while the term loan will initially bear interest at the Reference Rate plus 0.75%. Both loans have provisions for incentive pricing whereby the rates may adjust upward or downward depending upon the future performance of the Company. On January 16, 1996 the Company obtained the initial funding under the revolving loan in the amount of $5,825,000. The proceeds of this loan were used to retire the outstanding Chemical Bank revolving credit facility ($2,200,000), to retire the outstanding Chemical Bank term loan ($2,125,000), to make a partial payment on the outstanding CIT note payable ($500,000), and for general corporate purposes ($1,000,000). 9 4. EXTRAORDINARY ITEM - EARLY EXTINGUISHMENT OF DEBT As a result of the early retirement of the Chemical Bank debt and the partial payment on the CIT note, the Company recognized an extraordinary expense of $93,000 (net of the related tax benefit of $54,000) for the write down of deferred financing expenses related to these debts during the three months ended February 29, 1996. 5. EARNINGS PER SHARE Net earnings per share is computed using the weighted average number of shares of common stock outstanding for the period. When dilutive, stock options and warrants are included as share equivalents using the treasury stock method. In calculating net earnings per share, preferred dividends of $22,293 and $44,586 reduced the net earnings available to common stockholders for the three months and six months ended February 29, 1996, respectively. Fully diluted net earnings per common share is not significantly different from primary net earnings per common share. 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - THREE AND SIX MONTHS ENDED FEBRUARY 28, 1995 AND FEBRUARY 29, 1996 Contract revenue increased 43.1% to $9.0 million for the three months ended February 29, 1996 from $6.3 million for the three months ended February 28, 1995. Contract revenue for the first six months of the 1996 fiscal year increased 37.3% to $16.3 million from $11.9 million for the same period of the preceding year. The quarterly increase is primarily the result of increases in revenue from industrial gas trailers, which increased $1.5 million over the corresponding period in the prior year, and from LNG trailers, which increased $900,000 over the corresponding 1995 period. For the six month period the increase was primarily the result of the increases in revenues from industrial gas trailers and LNG products which increased $3.7 million and $1.3 million, respectively, over the corresponding six month period of the prior year. Gross profit for the three months ended February 29, 1996 increased 62.0% to $1.8 million, or 19.9% of contract revenue, from $1.1 million, or 17.5% of contract revenue, for the three months ended February 28, 1995. Gross profit for the first six months of the 1996 fiscal year increased 42.9% to $3.2 million, or 19.4% of contract revenue, from $2.2 million, or 18.6% of contract revenue, for the same period of the previous year. The gross profit improvement was the result of increased revenue coupled with reductions in warranty costs and unabsorbed manufacturing overhead expenses compared to the same periods of the prior year. Selling, general and administrative expenses increased 23.7% to $840,000 for the three months ended February 29, 1996 from $679,000 for the three months ended February 28, 1995, and decreased as a percentage of contract revenue to 9.4% from 10.8% during the same period. Selling, general and administrative expenses for the first six months of fiscal 1996 increased 11.6% to $1.5 million or 9.4% of contract revenue from $1.4 million or 11.6% of contract revenue compared to the corresponding period in the prior year. The increase is primarily due to increases in numerous administrative areas to support the increased level of business. Research and development costs increased to $229,000 for the three months ended February 29, 1996 from $7,000 for the three months ended February 28, 1995, and to $431,000 for the first six months of 1996 compared to $17,000 for the comparable period of the prior year. This increase is primarily due to the Company's continuing funding of TADOPTR development, LNG product development, and improvements for future trailer production. Amortization expense was essentially unchanged from the prior three month and six month periods. Interest expense for the three months ended February 29, 1996 decreased 16.7% to $204,000 from $245,000 for the three months ended February 28, 1995 and decreased 9.7% to $440,000 for the first six months of the 1996 fiscal year from $487,000 for the same period of the preceding year. This decrease is due to reduced levels of borrowing and amortization of debt issuance costs, combined with slightly lower rates of interest. Other non-operating items resulted in an expense of $53,000 for the three months ended February 29, 1996, compared to $26,000 11 in the comparable period of 1995, and an expense of $104,000 in the first six months of this year compared to $30,000 for the first six months of the 1995 fiscal year. For both periods, the increase in expense was primarily due to cash discounts given to customers for accelerated payments. Income tax expense increased to $139,000 for the three months ended February 29, 1996 from $21,000 for the three months ended February 29, 1995 and to $174,000 for the first six months of the fiscal year from $46,000 for the first six months of the prior year. The expense in both years is the result of taxable income for the periods and estimated annual tax rates. The resulting net income increased to $146,000 for the three months ended February 29, 1996 from $39,000 for the corresponding prior year period, and to $205,000 for the six months ended February 29, 1996 from $85,000 for the corresponding six month period of the prior year. This improvement is the result of the cumulative effect of the above factors. LIQUIDITY AND CAPITAL RESOURCES At February 29, 1996, the Company's working capital was $9.1 million, which represented a current ratio of 2.7 to 1. Also, the Company's outstanding revolving indebtedness under the Credit Agreement with FBS Business Finance Corporation ("FBS") was $5.1 million. At February 29, 1996 the Company's outstanding indebtedness to The CIT Group/Equity Investments, Inc. was $1.7 million which represented subordinated indebtedness. Cash flow from operations for the six months ended February 29, 1996 resulted in cash provided of $630,000 compared to a usage of cash of $1.0 million in the same period of the prior year. In the current year, cash has been provided by increased net income and non-cash expenses, which is only partially offset by the net increase in operating assets and liabilities. In the six months ended February 28, 1995, cash was used to increase inventories and costs and estimated earnings in excess of billings on uncompleted contracts, which was partially offset by the increased level of accounts payable. In December 1995, the Company entered into a Credit and Security Agreement with FBS. Under the agreement, FBS is providing the Company a revolving loan facility of up to $10,000,000 and a term loan facility of up to $2,960,000, subject to the amount of the Company's borrowing base and manufacturing equipment additions in the fiscal year ending August 31, 1996, respectively. The revolving loan initially bears interest at the First Bank National Association reference rate (the "Reference Rate") plus 0.5%, while the term loan will initially bear interest at the Reference Rate plus 0.75%. Both loans have provisions for incentive pricing whereby the rates may adjust upward or downward depending upon the future performance of the Company. As stated above, the Company's outstanding indebtedness under the FBS revolving loan facility was $5.1 million at February 29, 1996. At such date, the Company had not drawn on the FBS term loan facility. 12 The Company believes that its existing capital resources, together with cash flow from operations will be sufficient to meet its short term working capital needs. Additional financing may be required for future expansion of operations, as necessary. 13 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS In November 1995, the Company was one of over 1,100 companies to receive from the United States Environmental Protection Agency (the "EPA") a Notice of Potential Liability and Request for Information for the waste disposal site of Chemical Handling Corporation located in Jefferson County, Colorado. According to the notice, Chemical Handling Corporation operated the site from early 1988 until March 1992, as a solvent recycle and a fuel blender. During this period the Company from time to time contracted with Chemical Handling Corporation for the disposal of a portion of the waste products produced from its manufacturing operations. In March 1992, the EPA gained access to the site, and has undertaken a number of activities to dispose of waste products found there. Following these efforts, the EPA performed a Preliminary Assessment/Site Investigation and determined that no further action need be taken at the site, and it will not be proposed for listing on the National Priorities List of Superfund Sites. Through November 1995, the EPA had incurred in excess of $2.2 million in response costs in association with the cleanup of the site. No estimate is available of the additional costs which may be incurred. In March 1996, the Company received notification from the EPA that it was one of the smaller or "de minimis" generators at this site. With that notification was included an offer from the EPA to resolve alleged civil liability for waste products disposed at this site in return for a payment of $6,800.84. The Company has subsequently executed the Administrative Order on Consent and will make the required payment in a timely fashion. 14 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS The Company held its annual meeting of stockholders on January 25, 1996. The matters submitted to a vote of the Company's stockholders were (i) the election of eight directors, (ii) approval of the Company's 1995 Incentive and Non-Qualified Stock Option Plan and (iii) ratification of the appointment of Ernst & Young LLP as independent auditors for the 1996 fiscal year. The Company's stockholders re-elected the entire Board of Directors consisting of Alfred Schechter, Don M. Harwell, Dale A. Brubaker, Jerome L. Katz, Russell R. Haines, William P. Phelan, Burton J. Ahrens and Ajit G. Hutheesing. The Company's stockholders approved the Company's 1995 Incentive and Non- Qualified Stock Option Plan, which is described in the Company's definitive Proxy Statement which was filed with Securities and Exchange Commission on December 19, 1995, by a vote of 6,500,434 for, 140,454 against and 27,131 abstaining. There were 248,178 broker non-votes with respect to this matter. The Company's stockholders ratified the Board of Director's appointment of Ernst & Young LLP as the Company's independent auditors for the 1996 fiscal year by a vote of 6,511,083 for, 137,101 against and 19,835 abstaining. 15 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit Description of Exhibits ------- ----------------------- 3.1 Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-2, File No. 33-48738, filed on June 19, 1992 (the "S-2 Registration Statement"). 3.2 By-laws of the Company, incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1, File No. 33-7532, filed on July 25, 1986. 3.3 Certificate of Amendment to the Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1995 (the "1995 Annual Report"). 3.4 Certificate of Designation, Preferences and Rights of the Series A Preferred Stock of the Company, incorporated by reference to Exhibit 3.4 to the Company's 1995 Annual Report. 3.5 Corrected Certificate of Amendment of Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.5 to the Company's 1995 Annual Report. 4.1 See Article Fourth of the Restated Certificate of Incorporation, as amended and corrected, of the Company (Exhibit 3.5 hereof), incorporated by reference to Exhibit 4.1 to the Company's 1995 Annual Report. 4.2 Forms of Common Stock and Class B Common Stock certificates of the Company, incorporated by reference to Exhibit 4.3 of the Company's Registration Statement on Form S-4, File No. 33-43782, filed on December 19, 1991. 16 4.3 Registration Rights Agreement dated as of August 30, 1991 among Cryenco Holdings, Inc. ("CHI"), The CIT Group/Equity Investments, Inc. ("CIT"), Chemical Bank and the Investors named therein, incorporated by reference to Exhibit 4.3 to the Company's 1995 Annual Report. 4.4 Warrant Agreement dated as of August 30, 1991 between Chemical Bank, CHI and the Company, incorporated by reference to Exhibit 4.4 to the Company's 1995 Annual Report. 4.5 Letter Agreement dated April 15, 1992 among the Company, CIT and Chemical Bank relating to the Warrants referred to herein at Exhibits 4.8 and 4.9, incorporated by reference to Exhibit 4.9 to the S-2 Registration Statement. 4.6 Letter Agreement dated August 12, 1992 between the Company and Chemical Bank relating to the Warrants referred to herein at Exhibit 4.8, incorporated by reference to Exhibit 4.6 to the Company's 1995 Annual Report. 4.7 Letter Agreement dated August 12, 1992 between the Company and CIT relating to the Warrants referred to herein at Exhibit 4.9, incorporated by reference to Exhibit 4.7 to the Company's 1995 Annual Report. 4.8 Warrants issued to Chemical Bank each dated April 27, 1992, incorporated by reference to Exhibit 4.8 to the Company's 1995 Annual Report. 4.9 Warrants issued to CIT each dated April 27, 1992, incorporated by reference to Exhibit 4.9 to the Company's 1995 Annual Report. 4.10 Warrant issued to Dain Bosworth Incorporated dated August 20, 1992, incorporated by reference to Exhibit 4.12 to the S-2 Registration Statement. 4.11 Warrant Agreement dated as of March 12, 1993 between the Company and Alfred Schechter, incorporated by reference to Exhibit 4.11 to the Company's 1995 Annual Report. 4.12 Warrant Agreement dated as of March 12, 1993 between the 17 Company and Don M. Harwell, incorporated by reference to Exhibit 4.12 to the Company's 1995 Annual Report. 4.13 Warrant Agreement dated as of March 12, 1993 between the Company and Mezzanine Capital Corporation Limited ("MCC"), incorporated by reference to Exhibit 4.13 to the Company's 1995 Annual Report. 4.14 Warrant issued to Alfred Schechter dated March 12, 1993, incorporated by reference to Exhibit 4.14 to the Company's 1995 Annual Report. 4.15 Warrant issued to Don M. Harwell dated March 12, 1993, incorporated by reference to Exhibit 4.15 to the Company's 1995 Annual Report. 4.16 Warrant issued to MCC dated March 12, 1993, incorporated by reference to Exhibit 4.16 to the Company's 1995 Annual Report. 4.17 Letter Agreement dated as of June 9, 1993 between the Company and Alfred Schechter with respect to the Exercise Price for the Warrant referred to herein at Exhibit 4.14, incorporated by reference to Exhibit 4.17 to the Company's 1995 Annual Report. 4.18 Letter Agreement dated as of June 9, 1993 between the Company and Don M. Harwell with respect to the Exercise Price for the Warrant referred to herein at Exhibit 4.15, incorporated by reference to Exhibit 4.18 to the Company's 1995 Annual Report. 4.19 Letter Agreement dated as of June 9, 1993 between the Company and MCC with respect to the Warrant referred to herein at Exhibit 4.16, incorporated by reference to Exhibit 4.19 to the Company's 1995 Annual Report. 4.20 Warrant issued to Chemical Bank dated November 24, 1993, incorporated by reference to Exhibit 4.20 to the Company's 1995 Annual Report. 4.21 Warrant issued to CIT dated November 24, 1993, incorporated by reference to Exhibit 4.21 to the Company's 1995 Annual Report. 18 4.22 Warrant Agreement dated as of January 26, 1995 between the Company and Alfred Schechter, incorporated by reference to Exhibit 4.22 to the Company's 1995 Annual Report. 4.23 Warrant Agreement dated as of January 26, 1995 between the Company and Don M. Harwell, incorporated by reference to Exhibit 4.23 to the Company's 1995 Annual Report. 4.24 Warrant Agreement dated as of January 26, 1995 between the Company and MCC, incorporated by reference to Exhibit 4.24 to the Company's 1995 Annual Report. 4.25 Warrant issued to Alfred Schechter dated January 26, 1995, incorporated by reference to Exhibit 4.25 to the Company's 1995 Annual Report. 4.26 Warrant issued to Don M. Harwell dated January 26, 1995, incorporated by reference to Exhibit 4.26 to the Company's 1995 Annual Report. 4.27 Warrant issued to MCC dated January 26, 1995, incorporated by reference to Exhibit 4.27 to the Company's 1995 Annual Report. 4.28 See the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock of the Company (Exhibit 3.4 hereof), incorporated by reference to Exhibit 4.28 to the Company's 1995 Annual Report. 4.29 Warrant Agreement dated as of June 8, 1994 between the Company and Cryogenic TADOPTR Company, L.P. and the Form of Warrant Certificate issued pursuant thereto, incorporated by reference to Exhibit 4.29 to the Company's 1995 Annual Report. 4.30 Warrant Agreement dated as of December 20, 1994 between the Company and The Edgehill Corporation, incorporated by reference to Exhibit 4.30 to the Company's 1995 Annual Report. 19 4.31 Warrant issued to The Edgehill Corporation dated as of December 20, 1994, incorporated by reference to Exhibit 4.31 to the Company's 1995 Annual Report. 4.32 Registration Rights Agreement dated as of December 20, 1994 among the Company, certain parties named therein and International Capital Partners, Inc., incorporated by reference to Exhibit 4.32 to the Company's 1995 Annual Report. 4.33 Form of Warrant issued to each of International Capital Partners, Inc. and the parties named in the Registration Rights Agreement dated as of December 20, 1994 (Exhibit 4.32 hereof), incorporated by reference to Exhibit 4.33 to the Company's 1995 Annual Report. *10.1 First Amendment dated as of January 16, 1996 between FBS Business Finance Corporation, Cryenco, Inc., the Company and Cryenex, Inc., amending the Credit and Security Agreement dated as of December 19, 1995. *10.2 Letter Agreement dated January 12, 1996 between CIT and FBS Business Finance Corporation. *27 Financial Data Schedule pursuant to Article 5 of Regulation S-X filed with EDGAR filing only. (b) No reports on Form 8-K have been filed during the quarter ended February 29, 1996. ________________ * Filed herewith 20 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. CRYENCO SCIENCES, INC. (Registrant) By: /s/ Alfred Schechter ------------------------------ Alfred Schechter, Chairman of the Board, Chief Executive Officer and President /s/ James A. Raabe ------------------------------ James A. Raabe, Chief Financial Officer April 11, 1996 21 EXHIBIT INDEX Exhibit Description of Exhibits Page ------- ------------------------ ---- 3.1 Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-2, File No. 33-48738, filed on June 19, 1992 (the "S-2 Registration Statement"). 3.2 By-laws of the Company, incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1, File No. 33-7532, filed on July 25, 1986. 3.3 Certificate of Amendment to the Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.3 to the Company's Annual Report on Form 10-K for the fiscal year ended August 31, 1995 (the "1995 Annual Report"). 3.4 Certificate of Designation, Preferences and Rights of the Series A Preferred Stock of the Company, incorporated by reference to Exhibit 3.4 to the Company's 1995 Annual Report. 3.5 Corrected Certificate of Amendment of Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.5 to the Company's 1995 Annual Report. 4.1 See Article Fourth of the Restated Certificate of Incorporation, as amended and corrected, of the Company (Exhibit 3.5 hereof), incorporated by reference to Exhibit 4.1 to the Company's 1995 Annual Report. 4.2 Forms of Common Stock and Class B Common Stock certificates of the Company, incorporated by reference to Exhibit 4.3 of the Company's Registration Statement on Form S-4, File No. 33-43782, filed on December 19, 1991. Exhibit Description of Exhibits Page ------- ----------------------- ---- 4.3 Registration Rights Agreement dated as of August 30, 1991 among Cryenco Holdings, Inc. ("CHI"), The CIT Group/Equity Investments, Inc. ("CIT"), Chemical Bank and the Investors named therein, incorporated by reference to Exhibit 4.3 to the Company's 1995 Annual Report. 4.4 Warrant Agreement dated as of August 30, 1991 between Chemical Bank, CHI and the Company, incorporated by reference to Exhibit 4.4 to the Company's 1995 Annual Report. 4.5 Letter Agreement dated April 15, 1992 among the Company, CIT and Chemical Bank relating to the Warrants referred to herein at Exhibits 4.8 and 4.9, incorporated by reference to Exhibit 4.9 to the S-2 Registration Statement. 4.6 Letter Agreement dated August 12, 1992 between the Company and Chemical Bank relating to the Warrants referred to herein at Exhibit 4.8, incorporated by reference to Exhibit 4.6 to the Company's 1995 Annual Report. 4.7 Letter Agreement dated August 12, 1992 between the Company and CIT relating to the Warrants referred to herein at Exhibit 4.9, incorporated by reference to Exhibit 4.7 to the Company's 1995 Annual Report. 4.8 Warrants issued to Chemical Bank each dated April 27, 1992, incorporated by reference to Exhibit 4.8 to the Company's 1995 Annual Report. 4.9 Warrants issued to CIT each dated April 27, 1992, incorporated by reference to Exhibit 4.9 to the Company's 1995 Annual Report. 4.10 Warrant issued to Dain Bosworth Incorporated dated August 20, 1992, incorporated by reference to Exhibit 4.12 to the S-2 Registration Statement. Exhibit Description of Exhibits Page ------- ----------------------- ---- 4.11 Warrant Agreement dated as of March 12, 1993 between the Company and Alfred Schechter, incorporated by reference to Exhibit 4.11 to the Company's 1995 Annual Report. 4.12 Warrant Agreement dated as of March 12, 1993 between the Company and Don M. Harwell, incorporated by reference to Exhibit 4.12 to the Company's 1995 Annual Report. 4.13 Warrant Agreement dated as of March 12, 1993 between the Company and Mezzanine Capital Corporation Limited ("MCC"), incorporated by reference to Exhibit 4.13 to the Company's 1995 Annual Report. 4.14 Warrant issued to Alfred Schechter dated March 12, 1993, incorporated by reference to Exhibit 4.14 to the Company's 1995 Annual Report. 4.15 Warrant issued to Don M. Harwell dated March 12, 1993, incorporated by reference to Exhibit 4.15 to the Company's 1995 Annual Report. 4.16 Warrant issued to MCC dated March 12, 1993, incorporated by reference to Exhibit 4.16 to the Company's 1995 Annual Report. 4.17 Letter Agreement dated as of June 9, 1993 between the Company and Alfred Schechter with respect to the Exercise Price for the Warrant referred to herein at Exhibit 4.14, incorporated by reference to Exhibit 4.17 to the Company's 1995 Annual Report. 4.18 Letter Agreement dated as of June 9, 1993 between the Company and Don M. Harwell with respect to the Exercise Price for the Warrant referred to herein at Exhibit 4.15, incorporated by reference to Exhibit 4.18 to the Company's 1995 Annual Report. Exhibit Description of Exhibits Page ------- ----------------------- ---- 4.19 Letter Agreement dated as of June 9, 1993 between the Company and MCC with respect to the Warrant referred to herein at Exhibit 4.16, incorporated by reference to Exhibit 4.19 to the Company's 1995 Annual Report. 4.20 Warrant issued to Chemical Bank dated November 24, 1993, incorporated by reference to Exhibit 4.20 to the Company's 1995 Annual Report. 4.21 Warrant issued to CIT dated November 24, 1993, incorporated by reference to Exhibit 4.21 to the Company's 1995 Annual Report. 4.22 Warrant Agreement dated as of January 26, 1995 between the Company and Alfred Schechter, incorporated by reference to Exhibit 4.22 to the Company's 1995 Annual Report. 4.23 Warrant Agreement dated as of January 26, 1995 between the Company and Don M. Harwell, incorporated by reference to Exhibit 4.23 to the Company's 1995 Annual Report. 4.24 Warrant Agreement dated as of January 26, 1995 between the Company and MCC, incorporated by reference to Exhibit 4.24 to the Company's 1995 Annual Report. 4.25 Warrant issued to Alfred Schechter dated January 26, 1995, incorporated by reference to Exhibit 4.25 to the Company's 1995 Annual Report. 4.26 Warrant issued to Don M. Harwell dated January 26, 1995, incorporated by reference to Exhibit 4.26 to the Company's 1995 Annual Report. 4.27 Warrant issued to MCC dated January 26, 1995, incorporated by reference to Exhibit 4.27 to the Company's 1995 Annual Report. Exhibit Description of Exhibits Page ------- ----------------------- ---- 4.28 See the Certificate of Designation, Preferences and Rights of the Series A Preferred Stock of the Company (Exhibit 3.4 hereof), incorporated by reference to Exhibit 4.28 to the Company's 1995 Annual Report. 4.29 Warrant Agreement dated as of June 8, 1994 between the Company and Cryogenic TADOPTR Company, L.P. and the Form of Warrant Certificate issued pursuant thereto, incorporated by reference to Exhibit 4.29 to the Company's 1995 Annual Report. 4.30 Warrant Agreement dated as of December 20, 1994 between the Company and The Edgehill Corporation, incorporated by reference to Exhibit 4.30 to the Company's 1995 Annual Report. 4.31 Warrant issued to The Edgehill Corporation dated as of December 20, 1994, incorporated by reference to Exhibit 4.31 to the Company's 1995 Annual Report. 4.32 Registration Rights Agreement dated as of December 20, 1994 among the Company, certain parties named therein and International Capital Partners, Inc., incorporated by reference to Exhibit 4.32 to the Company's 1995 Annual Report. 4.33 Form of Warrant issued to each of International Capital Partners, Inc. and the parties named in the Registration Rights Agreement dated as of December 20, 1994 (Exhibit 4.32 hereof), incorporated by reference to Exhibit 4.33 to the Company's 1995 Annual Report. *10.1 First Amendment dated as of January 16, 1996 between FBS Business Finance Corporation, Cryenco, Inc., the Company and Cryenex, Inc., amending the Credit and Security Agreement dated as of December 19, 1995. Exhibit Description of Exhibits Page ------- ----------------------- ---- *10.2 Letter Agreement dated January 12 1996 between CIT and FBS Business Finance Corporation. *27 Financial Data Schedule pursuant to Article 5 of Regulation S-X filed with EDGAR filing only. ________________ * Filed herewith EX-10.1 2 EXHIBIT 10.1 FIRST AMENDMENT TO CREDIT AND SECURITY AGREEMENT THIS FIRST AMENDMENT, dated as of January 16, 1996, amends and modifies a certain Credit and Security Agreement, dated as of December 19, 1995 (the "Credit Agreement"), between FBS BUSINESS FINANCE CORPORATION, a Delaware corporation (the "LENDER"), and CRYENCO, INC., a Colorado corporation and CRYENCO SCIENCES, INC., a Delaware corporation (collectively and/or individually the "BORROWER"). Terms not otherwise expressly defined herein shall have the meanings set forth in the Credit Agreement. PRELIMINARY STATEMENT WHEREAS, the Borrower and the Lender desire to amend the Credit Agreement as hereinafter set forth; NOW, THEREFORE, for value received, the Borrower and the Lender agree as follows: ARTICLE I - AMENDMENTS 1.1 BORROWER. The Credit Agreement and SUPPLEMENT A thereto are hereby amended to add Cryenex, Inc., a Delaware corporation, as a "Borrower". All references to the Borrower therein and in any Loan Document shall include Cryenex, Inc. 1.2 DEFINITIONS. The following definitions of the terms "ALT" and "Cryenex" are hereby added to SECTION 1.1 of the Credit Agreement: "ALT": Applied LNG Technologies USA, LLC, a Delaware limited liability company, whose members are Cryenex and Golden Spread Energy, Inc. "CRYENEX": Cryenex, Inc., a Delaware corporation. "REPURCHASE OBLIGATION": The obligation of CSI to repurchase from either The CIT Group/Equity Investments, Inc. or Chemical Bank warrants held by either such entity for issuance of common stock of CSI. 1.3 GRANT OF SECURITY INTEREST. SECTION 3.1 (d) of the Credit Agreement is hereby amended in its entirety to read as follows: (d) General Intangibles (excluding the membership interest of Cryenex in ALT; 1.4 ORGANIZATION. SECTION 4.1 of the Credit Agreement is hereby amended in its entirety to read as follows: 4.1 ORGANIZATION. Each of Cryenco, CSI and Cryenex is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its respective incorporation. Each of Cryenco, CSI and Cryenex is in good standing and is duly qualified to do business in each state where, because of the nature of its respective activities or properties, such qualification is required. On the date hereof, each of Cryenco, CSI and Cryenex conducts business in its own name exclusively and has no trade names, styles or doing business forms except as disclosed on SCHEDULE 4.1. Cryenco's taxpayer identification number is I.D. No. 84-0767496. CSI's taxpayer identification number is I.D. No. 52-1471630. As of January 16, 1996, Cryenex has filed an application for a taxpayer identification number, but no number has been assigned. 1.5 RESTRICTED PAYMENTS. SECTION 6.8 of the Credit Agreement is hereby amended in its entirety to read as follows: 6.8 RESTRICTED PAYMENTS. Purchase or redeem or otherwise acquire for value any shares of the Borrower's stock or any warrants for the issuance of the Borrower's stock (other than the issuance of common stock for warrants), or declare or pay any dividends thereon (other than stock dividends, dividends payable to the Borrower and dividends payable with respect to the preferred stock of CSI which is issued and outstanding as of the date of this Agreement or is issued and outstanding subsequent hereto in the form of dividends on preferred stock of CSI), or make any distribution to stockholders as such (other than the Borrower) or set aside any funds for any such purpose, or prepay, purchase or redeem any subordinated Indebtedness of the Borrower prior to the scheduled maturity thereof (except for prepayments to The CIT Group/Equity Investments, Inc. in respect of the Senior Subordinated Note due 1998 and dated September 3, 1991, issued by the Borrower's predecessors in interest, in the original amount of $2,200,000, as long as any such prepayment is made when there has not occurred and is continuing an Event of Default or an Unmatured Event of Default under this Agreement and so long as any such prepayment would not result in an Event of Default or Unmatured Event of Default) or use any proceeds of Collateral or any proceeds of Loans to make any scheduled payment to The CIT Group/Equity Investments, Inc. in respect of the above-mentioned Senior Subordinated Note at any time when there has occurred and is continuing an Event of Default or an -2- Unmatured Event of Default or if the making of such payment would result in the occurrence of any Event of Default or Unmatured Event of Default; or make any payment to Charterhouse Group International, Inc. in respect of management fees unless and only to the extent that the amount of the Borrowing Base exceeds the amount of the Obligations by at least $500,000 immediately after the payment and PROVIDING FURTHER, that prior to and after the making of any such payment to Charterhouse Group International, Inc., there has not occurred an Event of Default or an Unmatured Event of Default under this Agreement. 1.6 INVESTMENTS. Clause (g) of SECTION 6.10 of the Credit Agreement is hereby amended in its entirety to read as follows: (g) Investments in ALT not exceeding $1,200,000 during the Borrower's 1996 fiscal year, and for any fiscal year thereafter, Investments in ALT which do not exceed in the aggregate the amount by which the consolidated EBITDA of the Borrower during the most recent four consecutive fiscal quarters exceeds the sum of their consolidated unfinanced capital expenditures, cash taxes, interest payments, dividends and mandatory debt retirement payments during the same four consecutive fiscal quarters, by at least 25%, PROVIDED, HOWEVER, that no such Investments shall be permitted after the occurrence and during the continuance of any Event of Default or any Unmatured Event of Default under this Agreement or if such Investment would result in the occurrence of an Event of Default or Unmatured Event of Default, and PROVIDED, FURTHER that Investments in ALT in excess of $490,000 made during the term of this Agreement shall be in the nature of extensions of credit to ALT, which extensions of credit shall be evidenced by one or more promissory notes containing terms and conditions reasonably satisfactory to the Lender and such promissory notes shall be pledged to the Lender to secure payment and performance of the Obligations; 1.7 USE OF PROCEEDS. SECTION 6.16 of the Credit Agreement is hereby amended in its entirety to read as follows: 6.16 USE OF PROCEEDS. Use or permit any proceeds of the Loans to be used (a) either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying any margin stock" within the meaning of Regulation U of the Federal Reserve Board, as amended from time to time, and furnish to the -3- Lender upon request, a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U of the Federal Reserve Board or (b) for purposes other than the working capital needs and general business purposes of Cryenco, including uses permitted by this Agreement. 1.8 EVENTS OF DEFAULT. SECTION 7.1(c) is amended in its entirety to read as follows: (c) ACCELERATION OF OTHER INDEBTEDNESS. Any event or condition shall occur which results in the acceleration of the maturity of any Indebtedness of, or guaranteed by, the Borrower or any other Obligor or in the enforcement of any Repurchase Obligation or enables the holder or holders of such other Indebtedness or any trustee or agent for such holders (any required notice of default having been given and any applicable grace period having expired) to accelerate the maturity of such other Indebtedness or enables the holder of any Repurchase Obligation or any trustee or agent for such holder to enforce any Repurchase Obligation; 1.9 SCHEDULE 6.11. SCHEDULE 6.11 is amended in its entirety in the form attached hereto as AMENDED SCHEDULE 6.11. 1.10 CONSTRUCTION. All references in the Credit Agreement to "this Agreement," "herein" and similar references shall be deemed to refer to the Credit Agreement as amended by this Amendment. ARTICLE II - REPRESENTATIONS AND WARRANTIES 2.1 AUTHORIZATION; VALIDITY AND BINDING EFFECT. To induce the Lender to enter into this Amendment and to make and maintain the Loans under the Credit Agreement as amended hereby, the Borrower hereby warrants and represents to the Lender that it is duly authorized to execute and deliver this Amendment and each other document delivered in connection herewith, and to perform its obligations under the Credit Agreement as amended hereby and each other document delivered in connection herewith, that this Amendment and the other documents delivered in connection herewith constitute the legal, valid and binding obligations of the Borrower, enforceable in accordance with their respective terms, and that the Borrower has taken all action necessary under its Articles of Incorporation, Bylaws and applicable law regarding the transactions contemplated herein. 2.2 AFFIRMATION OF REPRESENTATIONS AND WARRANTIES. The Borrower hereby restates all the representations and warranties in Article IV of the Credit Agreement and affirms to the Lender that such representations and warranties are true and correct as though made on the date hereof the same as if made on the date hereof -4- and fully set forth herein, except for changes that are permitted by the terms of the Credit Agreement. 2.3 WARRANTS. All outstanding warrants for the issuance of common stock of CSI and the holders thereof are listed on SCHEDULE 2.3 hereto. CSI has delivered to the Lender, concurrent with the execution and delivery of this Amendment true, correct and complete copies of all documents with respect to which CSI and Chemical Bank are parties and that embody all agreements between CSI and Chemical Bank with respect to CSI warrants held by Chemical Bank, including all amendments, modifications and supplements to any such documents. 2.4 JOINT VENTURE AGREEMENT. The Borrower has delivered to the Lender true, correct and complete copies of all documents that embody the joint venture agreement for ALT, including all amendments, modifications and supplements thereto. ARTICLE III - CONDITIONS PRECEDENT This Amendment shall become effective on the date first set forth above; PROVIDED, HOWEVER, that the effectiveness of this Amendment is subject to the satisfaction of each of the following conditions precedent: 3.1 WARRANTIES. Before and after giving effect to this Amendment, the representations and warranties in Article IV of the Credit Agreement shall be true and correct as though made on the date hereof, except for changes that are permitted by the terms of the Credit Agreement. 3.2 DEFAULTS. Before and after giving effect to this Amendment, no Event of Default and no Unmatured Event of Default shall have occurred and be continuing under the Credit Agreement. The execution by the Borrower of this Amendment shall be deemed a representation that the Borrower has complied with the foregoing condition. 3.3 DOCUMENTS. The following shall have been delivered to the Lender, each duly executed and dated, or certified, as of the date hereof, as the case may be: (a) RESOLUTIONS. Certified copies of resolutions of the Board of Directors of each of Cryenco, CSI and Cryenex authorizing or ratifying the execution, delivery and performance, respectively, of this Amendment and other documents provided for in this Amendment. (b) CONSENTS. Certified copies of all documents evidencing any necessary corporate action, consent or governmental or regulatory approval (if any) with respect to this Amendment. -5- (c) INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an Assistant Secretary of Cryenex certifying the names of the officer or officers of Cryenex authorized to sign this Amendment and other documents provided for in this Amendment, together with a sample of the true signature of each such officer. (d) CERTIFICATE OF INCORPORATION AND BY-LAWS. A certified copy of the Certificate or Articles of Incorporation and the By-laws of Cryenex, certified by the Secretary or an Assistant Secretary of Cryenex. (e) CERTIFICATE OF GOOD STANDING. A certificate of good standing as to Cryenex issued by the Secretary of State of the state in which Cryenex is organized, and each other state in which the failure of Cryenex to be in good standing would constitute an Adverse Event or have a material adverse effect on the Lender's rights in any Collateral or Third Party Collateral. (f) FINANCING STATEMENTS. UCC-1 financing statements executed by Cryenex and substantially in the form of financing statements executed and delivered to the Lender by CSI and Cryenco. Notwithstanding the opening paragraph of this Article III, the certificate of good standing may be delivered no later than ten days following the date hereof. ARTICLE IV - GENERAL 4.1 EXPENSES. The Borrower agrees to reimburse the Lender upon demand for all reasonable expenses (including reasonable attorneys' fees and legal expenses) incurred by the Lender in connection with the preparation of this Amendment and in enforcing the obligations of the Borrower hereunder, and to pay and save the Lender harmless from all liability for any stamp or other taxes which may be payable with respect to the execution or delivery of this Amendment, which obligations of the Borrower shall survive any termination of the Credit Agreement. 4.2 COUNTERPARTS. This Amendment may be executed in as many counterparts as may be deemed necessary or convenient, and by the different parties hereto on separate counterparts, each of which, when so executed, shall be deemed an original but all such counterparts shall constitute but one and the same instrument. 4.3 SEVERABILITY. Any provision of this Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provisions in any other jurisdiction. -6- 4.4 LAW. This Amendment shall be a contract made under the laws of the State of Minnesota, which laws shall govern all the rights and duties hereunder. 4.5 SUCCESSORS; ENFORCEABILITY. This Amendment shall be binding upon the Borrower and the Lender and their respective successors and assigns, and shall inure to the benefit of the Borrower and the Lender and the successors and assigns of the Lender. Except as hereby amended, the Credit Agreement shall remain in full force and effect and is hereby ratified and confirmed in all respects. [SIGNATURE PAGE IMMEDIATELY FOLLOWS] -7- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the date first written above. FBS BUSINESS FINANCE CORPORATION By /s/ William C. Phelps -------------------------------------- Its Vice President ----------------------------------- CRYENCO, INC. By /s/ James A. Raabe -------------------------------------- Its CFO ----------------------------------- CRYENCO SCIENCES, INC. By /s/ James A. Raabe -------------------------------------- Its CFO ----------------------------------- CRYENEX, INC. By /s/ James A. Raabe -------------------------------------- Its Secretary ----------------------------------- -8- EX-10.2 3 EXHIBIT 10.2 The CIT Group/Equity Investments, Inc. 650 CIT Drive Livingston, NJ 07039-5795 January 12, 1996 FBS Business Finance Corporation First Bank Place MPFP0804 601 Second Avenue South Minneapolis, Minnesota 55402-4302 Attention: Business Credit Division Re: Cryenco, Inc., Cryenco Sciences, Inc. and Cryenex, Inc. (collectively the "Borrower") Ladies/Gentlemen: We understand that you are providing revolving and term financing of up to $12,960,000 to the Borrower to be evidenced by a Credit and Security Agreement dated as of December 19, 1995, as amended by a First Amendment to Credit and Security Agreement dated as of January 12, 1996 (as so amended, the "CREDIT AGREEMENT"). This financing is intended to replace financing currently being provided by Chemical Bank, as agent ("Chemical"). As part of the financing, the Borrower plans to make a prepayment to us in the amount of $500,000.00 (the "Prepayment"). As you are aware, we are the holder of a Senior Subordinate Note due 1998 and dated September 3, 1991, issued by Cryenco, Inc. in the original amount of $2,200,000 (the "Subordinated Note"), which Subordinated Note is more fully described on Exhibit A attached to this letter. A true, correct and complete copy of the Subordinated Note and of all amendments, modifications and supplements thereto, if any, are attached to this letter as EXHIBIT B. The Subordinated Note was issued pursuant to a Securities Purchase Agreement dated as of August 30, 1991, among the Borrower's predecessors in interest, Cryenco Holdings, Inc., CEC Acquisition Corp., Cryogenic Energy Company and Gulf & Mississippi Corporation, and us (the "Purchase Agreement"). A true, correct and complete copy of the Purchase Agreement and of all amendments, modifications and supplements thereto, if any, are attached to this letter as EXHIBIT C. One of the conditions to the financing to be provided pursuant to the Credit Agreement, is that we subordinate the Subordinated Note to the payment of the liabilities and FBS Business Finance Corporation January 12, 1996 Page 2 obligations (including without limitation, interest, fees and expenses) evidenced by the Credit Agreement (the "Obligations"). Accordingly, to induce you to enter into the Credit Agreement and in consideration of our receipt of the Prepayment, we hereby confirm to you, acknowledge and agree as follows: 1. We consent to the substitution of the financing to be provided by the Credit Agreement for the financing currently being provided by Chemical. To the extent that the terms of such financing are inconsistent with the definition of "Permitted Renewal" contained in the Purchase Agreement, we acknowledge that we have waived compliance with such definition, including, without limitation, compliance with restrictions on the amount of such financing and the maturity thereof. Regardless of whether or not the Obligations actually constitute "Senior Indebtedness" as such term is defined and used in the Purchase Agreement, we acknowledge and agree that the Obligations shall constitute "Senior Indebtedness" under the Purchase Agreement. In furtherance of and not in limitation of the foregoing, the liabilities and obligations evidenced by the Subordinated Note and the Purchase Agreement shall be subordinated to the Obligations as though the Obligations had originally been defined in the Purchase Agreement as "Senior Indebtedness". 2. You have a perfected security interest in substantially all of the assets of the Borrower to secure the Obligations and we consent thereto. 3. We have received from you a copy of the executed Credit Agreement together with SUPPLEMENT A thereto. You have represented to us that the copies of the Credit Agreement and SUPPLEMENT A that you delivered to us are true, correct and complete copies of such documents. 4. To our knowledge, no Defaults or Events of Default under and as defined in the Purchase Agreement were outstanding as of August 31, 1995. We further confirm that prior to the date hereof we have received no notice of Payment Blockage Periods under Section 22.4 of the Purchase Agreement. 5. We have reviewed the Borrower's calculations of its "Consolidated Interest Coverage Ratio" and "Net Worth" as of August 31, 1995, as set forth in EXHIBIT D hereto. We hereby confirm that such calculations are consistent with the "Consolidated Interest Coverage Ratio" and "Net Worth" financial covenants contained in the Purchase Agreement. 6. We acknowledge and agree that the definitions of "Group I Default" and "Group II Default" are hereby amended to read as follows: FBS Business Finance Corporation January 12, 1996 Page 3 "Group I Default" shall mean a Senior Event of Default under Article VII of the Credit Agreement or under any equivalent successor provision that is not a Group II Default. "Group II Default" shall mean a Senior Event of Default under Section 7.1(a) of the Credit Agreement, under Section 7.1(g) of the Credit Agreement insofar as it pertains to a default under Section 5.1, Article VI thereunder (other than any such default under Sections 6.3, 6.4, 6.5, 6.6, 6.9, 6.14, 6.15 or 6.17), or Section 9 of Supplement A thereto or under any equivalent successor provision contained in any document evidencing a Permitted Renewal. In consideration of our agreements as set forth in this letter, you acknowledge and agree to the provisions of the Subordinated Note and the Purchase Agreement applicable to the Senior Indebtedness that relate to the subordination of the Subordinated Indebtedness to the Senior Indebtedness under the Purchase Agreement. In furtherance of and not in limitation of the foregoing, you agree not to increase the aggregate amount of loans or extensions of credit being provided pursuant to the Credit Agreement to an aggregate amount in excess of $12,960,000 (as reduced from time to time to reflect payments made in reduction of the Term Loan under the Credit Agreement), without our prior written consent. You further acknowledge and agree that the definition of "Senior Indebtedness" set forth in the Purchase Agreement, as such definition applies to the Obligations, limits the total amount of Senior Indebtedness under clause (ii) of the definition thereof for fees and expenses as follows: "in no event shall the total amount of Senior Indebtedness under this clause (ii) for fees and expenses incurred in connection with the collection or enforcement of Senior Indebtedness at any time exceed 5% of the aggregate principal amount then outstanding under the Credit Agreement. . ." The foregoing reference to the "Credit Agreement" shall mean the Credit Agreement as defined herein. Finally, you acknowledge and consent to the Prepayment, notwithstanding FBS Business Finance Corporation January 12, 1996 Page 4 anything contained in the Credit Agreement that would otherwise prohibit the Prepayment. Please indicate your acknowledgements and agreements as stated above by executing and returning to us an acknowledgement copy of this letter. Very truly yours, THE CIT GROUP/EQUITY INVESTMENTS, INC. By Paul Laud --------------------------------- Its President ----------------------- Acknowledged and agreed to this 12th day of January, 1996 FBS BUSINESS FINANCE CORPORATION By William C. Phelps ------------------------------------------- Its Vice President --------------------------------- ACKNOWLEDGEMENT The undersigned, Cryenco Sciences, Inc. and Cryenco, Inc. hereby agree to the terms and provisions of the foregoing agreement between the CIT Group/Equity Investments, Inc. and FBS Business Finance Corporation, including such terms whereby certain provisions of the Purchase Agreement are amended. Dated: 1/12/96 ------------------ CRYENCO SCIENCES, INC. By James A. Raabe --------------------------------- Its Chief Financial Officer ----------------------------- CRYENCO, INC. By James A. Raabe --------------------------------- Its Chief Financial Officer ----------------------------- EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED FEBRUARY 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS AUG-31-1996 DEC-01-1995 FEB-29-1996 645 0 4,207 0 3,921 14,366 5,749 2,648 23,277 5,238 0 0 1 70 11,324 23,277 8,983 8,983 7,193 7,193 1,155 0 204 378 139 239 0 93 0 146 .02 .02
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