<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the quarterly period ended June 30, 1996
or
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
For the transition period from _______________ to _______________
Commission File No. 0-24492
CITATION CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 63-0828225
(STATE OF INCORPORATION) (IRS EMPLOYER I.D. NO.)
2 OFFICE PARK CIRCLE, SUITE 204
BIRMINGHAM, ALABAMA 35223
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(205) 871-5731
(REGISTRANT'S TELEPHONE NUMBER)
_______________
Indicate by check mark whether the registrant has (1) 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 the registrant's
class of common stock, as of the latest practicable date.
Class Outstanding at August 12, 1996
- ---------------------------- ------------------------------
Common Stock, $.01 Par Value 17,715,540
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I: FINANCIAL INFORMATION
ITEM 1: Financial Statements................................. 1
Interim Condensed Consolidated Balance Sheets..... 2
Interim Condensed Consolidated Statements
of Income......................................... 3
Interim Condensed Consolidated Statements
of Cash Flows..................................... 4
Notes to Interim Condensed Consolidated
Financial Statements.............................. 5
ITEM 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. 11
PART II: OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K..................... 14
SIGNATURES..................................................... 15
EXHIBITS:
Credit Agreement Dated July 1, 1996
Financial Data Schedule
</TABLE>
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM I: FINANCIAL STATEMENTS
The financial statements listed below are included on the
following pages of this Report on Form 10-Q (Unaudited):
Interim Condensed Consolidated Balance Sheets at
October 1, 1995 and June 30, 1996.
Interim Condensed Consolidated Statements of Income for
the three months and nine months ended July 2, 1995 and
June 30, 1996.
Interim Condensed Consolidated Statements of Cash Flows
for the nine months ended July 2, 1995 and June 30,
1996.
Notes to Interim Condensed Consolidated Financial Statements.
__________________________________
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1
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CITATION CORPORATION
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands of dollars, except share data)
<TABLE>
<CAPTION>
October 1, 1995 June 30, 1996
--------------- -------------
<S> <C> <C>
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 9,812 $ 1,600
Accounts receivable, net 52,994 81,937
Inventories 23,903 42,105
Deferred income taxes, prepaid
expenses and other assets 7,882 10,017
-------- --------
Total current assets 94,591 135,659
Property, plant and equipment, net 143,425 201,389
Other assets 33,855 43,141
-------- --------
$271,871 $380,189
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 6,553 $ 2,170
Accounts payable 24,605 37,154
Accrued expenses 24,857 32,184
-------- --------
Total current liabilities 56,015 71,508
Long-term debt, net of current portion 71,254 146,274
Deferred income taxes and other deferred
liabilities 12,126 14,484
-------- --------
Total liabilities 139,395 232,266
-------- --------
Stockholders' equity:
Preferred stock, $0.01 par value; 5,000,000
shares authorized, none issued and outstanding -- --
Common stock, $0.01 par value; 30,000,000 shares
authorized, 17,715,540 issued and outstanding
in 1996, and 17,675,540 in 1995 177 177
Additional paid-in capital 106,986 107,105
Retained earnings 25,313 40,641
-------- --------
Total stockholders' equity 132,476 147,923
-------- --------
$271,871 $380,189
-------- --------
-------- --------
</TABLE>
See notes to interim condensed consolidated financial statements.
2
<PAGE>
CITATION CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars, except share and per share data)
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
July 2, 1995 June 30, 1996 July 2, 1995 June 30, 1996
------------ ------------- ------------ -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales $ 82,130 $ 143,420 $ 215,585 $ 356,136
Costs of sales 64,728 117,167 170,080 291,678
----------- ----------- ----------- -----------
Gross profit 17,402 26,253 45,505 64,458
Selling, general and
administrative expenses 8,828 12,326 23,334 34,059
----------- ----------- ----------- -----------
Operating income 8,574 13,927 22,171 30,399
Other (income) expenses:
Interest expense, net 1,087 2,559 2,170 5,210
Other, net (55) (141) (266) (358)
----------- ----------- ----------- -----------
1,032 2,418 1,904 4,852
----------- ----------- ----------- -----------
Income before provision for
income taxes 7,542 11,509 20,267 25,547
Provision for income taxes 2,902 4,604 7,991 10,219
----------- ----------- ----------- -----------
Net income $ 4,640 $ 6,905 $ 12,276 $ 15,328
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share $ 0.35 $ 0.39 $ 0.93 $ 0.87
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average shares
outstanding 13,297,826 17,699,331 13,260,942 17,686,639
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See notes to interim condensed consolidated financial statements.
3
<PAGE>
CITATION CORPORATION
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<TABLE>
<CAPTION>
For the Nine Months Ended
July 2, 1995 June 30, 1996
------------ -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: (unaudited)
Net income $ 12,276 $ 15,328
-------- --------
Adjustments to reconcile net income
to net cash flows provided
by operating activities:
Provision for losses on receivables 276 208
Depreciation and amortization 7,113 14,394
Other, net (29) (14)
Changes in operating assets and
liabilities, net:
Accounts receivable (2,565) (10,467)
Inventories (620) (5,765)
Prepaid expenses and other assets (4,486) (1,785)
Accounts payable (2,537) 1,697
Accrued expenses and other liabilities 1,004 4,617
-------- --------
Total adjustments (1,844) 2,885
-------- --------
Net cash provided by operating activities 10,432 18,213
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment
expenditures - net (22,819) (22,662)
Other nonoperating assets, net (191) (2,699)
Net assets from acquisitions (19,700) (36,450)
-------- --------
Net cash used by investing activities (42,710) (61,811)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of capital stock 72 --
Change in long-term debt, and note payable 34,691 35,267
Change in paid in capital -- 119
Distributions to original S corporation
stockholders (3,466) --
-------- --------
Net cash provided by financing activities 31,297 35,386
-------- --------
Net decrease in cash and cash equivalents (981) (8,212)
Cash and cash equivalents, beginning of period 981 9,812
-------- --------
Cash and cash equivalents, end of period $ 0 $ 1,600
-------- --------
-------- --------
</TABLE>
See notes to interim condensed consolidated financial statements.
4
<PAGE>
CITATION CORPORATION
NOTES TO INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars, except share and per share data)
1. The interim condensed consolidated balance sheet of Citation
Corporation (the "Company") at October 1, 1995 and the interim
condensed consolidated financial statements for the nine
months ended July 2, 1995, have been derived from audited
financial statements, but do not include all disclosures
required by generally accepted accounting principles. The
interim condensed consolidated financial statements at June
30, 1996 and for the three and nine months ended June 30,
1996 and for the three months ended July 2, 1995 are
unaudited; however, in the opinion of management, all
adjustments, consisting only of normal recurring accruals
necessary for a fair presentation, have been included. These
financial statements should be read in conjunction with the
1995 annual report on Form 10-K.
2. During September 1995, the Company completed a secondary
public offering of 4,250,000 common shares at $17.375 per
share. After the secondary offering, the Company had
17,675,540 common shares outstanding.
3. A summary of inventories is as follows:
<TABLE>
<CAPTION>
October 1, 1995 June 30, 1996
--------------- -------------
<S> <C> <C>
Raw materials $ 6,600 $ 8,769
Supplies and containers 5,398 9,923
Castings 11,905 23,413
---------- --------
$ 23,903 $ 42,105
---------- --------
---------- --------
</TABLE>
4. Balances of major classes of property, plant and equipment and
accumulated depreciation are as follows:
<TABLE>
<CAPTION>
October 1, 1995 June 30, 1996
--------------- -------------
<S> <C> <C>
Land and improvements $ 5,921 $ 8,374
Buildings 28,945 39,253
Plant and equipment 125,277 177,806
Office equipment 5,813 8,145
Transportation equipment 6,297 8,816
Construction in progress 22,343 21,316
---------- --------
194,596 263,710
Less accumulated depreciation (51,171) (62,321)
---------- --------
$ 143,425 $201,389
---------- --------
---------- --------
</TABLE>
5
<PAGE>
5. The Company's other assets consist of the following:
<TABLE>
<CAPTION>
October 1, 1995 June 30, 1996
--------------- -------------
<S> <C> <C>
Goodwill, net $ 29,495 $ 40,017
Consulting, noncompetition
agreements and other, net 4,360 3,124
---------- ---------
$ 33,855 $ 43,141
---------- ---------
---------- ---------
</TABLE>
6. Long term debt consists of the following:
<TABLE>
<CAPTION>
October 1, 1995 June 30, 1996
--------------- -------------
<S> <C> <C>
Note payable $ 62,638 $ 136,724
Other financing arrangements 15,169 11,720
---------- ---------
77,807 148,444
Less current portion of long-term debt 6,553 2,170
---------- ---------
$ 71,254 $ 146,274
---------- ---------
---------- ---------
</TABLE>
7. The following unaudited pro forma summary for the nine months
ended July 2, 1995 combines the results of operations of the
Company with Oberdorfer Industries Corporation ("Oberdorfer"),
Iroquois Foundry Corporation ("Iroquois"), Berlin Foundry
Corporation ("Berlin"), Pennsylvania Steel Foundry & Machine
Company ("Penn. Steel"), Castwell Products, Inc. ("Castwell"),
Texas Steel Company ("Texas Steel"), Hi-Tech Corporation ("Hi-
Tech"), Southern Aluminum Castings Company ("Southern
Aluminum") and Bohn Aluminum Corporation ("Bohn") as if the
acquisitions had occurred at the beginning of the 1995 fiscal
year. For the nine months ended June 30, 1996, the pro forma
summary combines the results of operations of the Company with
Texas Steel, Hi-Tech, Southern Aluminum and Bohn as if the
acquisitions had occurred at the beginning of the 1996 fiscal
year. Certain adjustments, including additional depreciation
expense, interest expense on the acquisition debt,
amortization of intangible assets and income tax effects have
been made to reflect the impact of the purchase transactions.
Additionally, a reduction in interest expense has been
recorded for the nine months ended July 2, 1995 resulting from
the application of the net proceeds of the Company's secondary
public offering of 4,250,000 shares of common stock. These
pro forma results have been prepared for comparative purposes
only and do not purport to be indicative of what would have
occurred had the acquisitions been made at the beginning of
the 1995 or 1996 fiscal year.
6
<PAGE>
Pro forma interim condensed consolidated statements of income
are as follows:
<TABLE>
<CAPTION>
Nine Months Ended
July 2, 1995 June 30, 1996
------------ -------------
<S> <C> <C>
Sales $394,597 $400,955
Operating income $ 37,494 $ 32,854
Income before provision for
income taxes $ 30,751 $ 25,829
Pro forma net income $ 18,626 $ 15,497
Pro forma earnings per common share $ 1.06 $ 0.88
</TABLE>
Pro forma earnings per common share for the nine months ended
July 2, 1995 is calculated by dividing pro forma net income by
the weighted average shares outstanding at July 2, 1995 plus
the 61,540 shares and 80,000 shares issued in conjunction with
the purchase of Berlin and Penn. Steel, respectively and the
4,250,000 shares issued in conjunction with the Company's
secondary public offering of common stock. Pro forma earnings
per common share for the nine months ended June 30, 1996 is
calculated by dividing pro forma net income by the weighted
average shares outstanding as of June 30, 1996.
8. Effective January 5, 1996, the Company completed the purchase
of the net assets of Texas Steel Company of Fort Worth, Texas
for $13 million and the assumption of approximately $2.2
million in debt. Texas Steel produces high quality steel
castings for the construction machinery, energy, mining,
railroad and other industrial markets. Texas Steel has
approximately 440 employees and sales for the twelve months
ending December 31, 1995 were approximately $38 million. The
estimated fair value of assets acquired and liabilities
assumed are as follows:
<TABLE>
<S> <C>
Accounts receivable $ 3,833
Inventories 4,795
Other current assets 211
Property, plant and equipment 9,938
Other non-operating assets 521
Accounts payable and accrued expenses (4,103)
Long-term debt (2,195)
-------
Purchase price $13,000
-------
-------
</TABLE>
On February 4, 1996, the Company completed the purchase of the
net assets of Hi-Tech Corporation of Albion, Indiana for $3.2
million plus the assumption of approximately $2.6 million of
debt. Hi-Tech machines medium volume products for the
automotive, industrial, heavy truck and heavy off road
equipment markets. Hi-Tech has approximately
7
<PAGE>
90 employees and had sales for the twelve months ended December 31,
1995, of approximately $7 million. The estimated fair values of assets
acquired and liabilities assumed are as follows:
<TABLE>
<S> <C>
Accounts receivable $ 801
Inventories 367
Other current assets 8
Property, plant and equipment 4,622
Other non-operating assets 437
Accounts payable and accrued expenses (410)
Long-term debt (2,625)
-------
Purchase Price $ 3,200
-------
-------
</TABLE>
Effective March 1, 1996, the Company completed the purchase of
the stock of Southern Aluminum Castings Company of Bay
Minette, Alabama for $12 million plus the assumption of
approximately $28.5 million of debt. Southern Aluminum
consists of three foundries producing high volume aluminum
sand castings, a processing plant, a pattern shop and a
machine shop. Primary products are intake manifolds, oil
cooler housings, oil filter adapters and throttle body
adapters. Substantially all of Southern Aluminum's sales are
to Ford Motor Company. Net sales for the twelve months ended
December 31, 1995 were approximately $42 million. The
estimated fair values of assets acquired and liabilities
assumed are as follows:
<TABLE>
<S> <C>
Accounts receivable, net $ 9,911
Inventories 5,975
Other current assets 19
Property, plant and equipment, net 26,980
Other non-operating assets 5,046
Accounts payable and accrued expenses (7,393)
Long-term debt (28,538)
-------
Purchase Price $12,000
-------
-------
</TABLE>
Effective April 1, 1996, the Company completed the acquisition
of the net assets of Bohn Aluminum Corporation ("Bohn") of
Butler, Indiana for $8.25 million plus the assumption of
approximately $2.0 million of debt. Bohn is a producer of
aluminum permanent mold castings to the medium truck, diesel
engine and construction equipment markets. In addition, Bohn
operates its own smelter which remelts aluminum scrap for
reuse. Bohn had net sales of approximately $32 million for
the twelve months ended September 30, 1995 and has
approximately 275 employees. The estimated fair values of
assets acquired
8
<PAGE>
and liabilities assumed are as follows:
<TABLE>
<S> <C>
Accounts receivable $ 4,139
Inventories 1,300
Other current assets 112
Property, plant and equipment 5,948
Other non-operating assets 2,777
Accounts payable and accrued expenses (4,014)
Long-term debt (2,012)
-------
Purchase Price $ 8,250
-------
-------
</TABLE>
On May 16, 1996, the Company and Interstate Forging
Industries, Inc. ("Interstate Forging") of Milwaukee,
Wisconsin and Navasota, Texas, entered into a definitive
Merger Agreement whereby a subsidiary of the Company would be
merged into Interstate Forging, and Interstate Forging would
become a wholly owned subsidiary of the Company (the
"Merger"). Interstate Forging produces custom closed die
forgings of carbon, alloy and stainless steel for construction
equipment, aircraft, off-road equipment, material handling,
outboard motors, and truck and trailer industries. Interstate
Forging has approximately 500 employees and had sales for the
twelve months ended December 31, 1995 of approximately $85
million.
The Company has filed a Registration Statement on Form S-4
(the "S-4") with the S.E.C. to register certain contingent
payment rights which Citation is to pay to the shareholders
and certain option holders of Interstate Forging as a portion
of the purchase price for the Merger. At such time as the S-4
is declared effective, Interstate Forging will hold a meeting
of its shareholders to vote on the Merger. If Interstate Forging
shareholder approval and all required regulatory approvals are
received and certain other conditions fulfilled, it is anticipated
that the Merger would be effective in the fall of 1996.
9. Recently Issued Accounting Standards - The Financial
Accounting Standards Board (FASB) has issued SFAS No. 107,
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS.
Management believes that this statement will not have a significant
effect on the Company's consolidated financial statements.
Also in October 1995, the FASB issued SFAS No. 123.
ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company is not
required to adopt this statement until fiscal year
9
<PAGE>
1997. The Company anticipates continuing to account for its
stock based compensation plans in accordance with APB Opinion No. 25.
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, as permitted by this
statement. When this statement becomes applicable, the
Company intends to provide the appropriate pro forma net
income and net income per share disclosures required by this
statement.
10
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of
certain significant factors that have affected the Company's
financial condition and earnings during the periods included in the
accompanying interim condensed consolidated financial statements.
QUARTER ENDED JUNE 30, 1996 COMPARED TO THE QUARTER ENDED JULY 2, 1995
SALES. Sales increased 74.6%, or $61.3 million, to $143.4 million
for the three months ended June 30, 1996 from $82.1 million in the
comparable prior year period. The increase was attributable to
fiscal year 1995 and 1996 acquisitions. Sales added at Berlin,
Penn. Steel, Castwell, Texas Steel, Southern Aluminum and Bohn
Aluminum foundries and Hi-Tech machine shop (collectively the
"Acquisitions") in the fiscal 1996 third quarter were approximately
$61.5 million. Sales from the Company's existing foundry
operations in the 1996 third quarter were approximately the same as
the prior year comparable period.
GROSS PROFIT. Gross profit increased 50.9%, or $8.9 million, to
$26.3 million in the 1996 third quarter from $17.4 million in the
comparable 1995 period. Gross margin decreased to 18.3% in the
1996 third quarter from 21.2% in the 1995 third quarter. This
decrease was due to the integration of the Acquisitions, the impact
of the Texas Foundries expansion and increased competition for the
Company's products as a result of a slower economy as compared to
the same period in the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses ("SG&A") increased 39.6%, or $3.5 million,
to $12.3 million in the 1996 third quarter from $8.8 million in the
1995 third quarter. The net increase of $3.5 million consists of a
$4.6 million increase attributable to the Acquisitions and a $1.1
million decrease from the existing Company operations for the three
months ended June 30, 1996 from the comparable 1995 period. As a
percentage of net sales, SG&A expenses decreased to 8.6% in the
1996 third quarter from 10.8% in the 1995 third quarter.
OPERATING INCOME. Operating income increased 62.4%, or $5.4
million, to $13.9 million for the 1996 third quarter from $8.6
million for the comparable 1995 quarter. Operating margin decreased
to 9.7% in the 1996 third quarter from 10.4% in the 1995 third
quarter.
INTEREST EXPENSE. Interest expense increased to $2.6 million in
the 1996 third quarter from $1.1 million in the 1995 third quarter.
This increase is primarily attributable to higher average
outstanding debt balances as a result of completing four
acquisitions during the 1996 second and third quarters. The
purchase price plus assumed debt of the acquisitions totaled
approximately $72 million. Capitalized interest for the third
fiscal quarters of 1996 and 1995 was approximately -0- and $234
thousand, respectively.
11
<PAGE>
NET INCOME. As a result of the foregoing factors, net income
increased $2.3 million, or 48.9% in the third quarter of 1996 to
$6.9 million from $4.6 million in the 1995 comparable quarter.
NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE NINE MONTHS ENDED
JULY 2, 1995
SALES. Sales increased 65.2%, or $140.6 million, to $356.1 million
for the nine months ended June 30, 1996 from $215.6 million in the
comparable prior year period. The increase was attributable to
fiscal year 1995 and 1996 acquisitions. Sales at Oberdorfer,
Iroquois, Berlin, Penn. Steel, Castwell, Texas Steel, Southern
Aluminum and Bohn Aluminum foundries and Hi-Tech machine shop
(collectively the "Acquisitions") in the first nine months of
fiscal 1996 were approximately $148.6 million. Sales from the
Acquisitions were partially offset by lower sales at the Company's
existing foundry operations. For the nine months ended June 30,
1996, sales from existing units were down approximately 3.7%, or
$8.0 million, as compared to the same period last year. Management
attributes this decrease to the delay of the Texas Foundries
expansion and a slower economy as compared to the comparable prior
year period. The Texas Foundries expansion was originally targeted
to be complete prior to the 1996 fiscal first quarter. However,
because of delayed shipments of critical new equipment the project
was not fully completed until the second quarter of 1996. The
Texas Foundries expansion project is currently operating at
approximately 75% of its optimal capacity.
GROSS PROFIT. Gross profit increased 42%, or $19.0 million, to
$64.5 million for the nine months ended June 30, 1996 from $45.6
million in the comparable 1995 period. Gross margin decreased to
18.1% during the first nine months from 21.1% in the comparable
1995 period. This decrease was due to the integration of the
Acquisitions, the impact of the Texas Foundries expansion and
increased competition for the Company's products as a result of a
slower economy as compared to the same period in the prior year.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses ("SG&A") increased 46%, or $10.7 million,
to $34.1 million for the nine months ended June 30, 1996 from $23.4
million in the first nine months of 1995. The net increase of
$10.7 million consists of a $13.0 million increase attributable to
the Acquisitions and a $2.3 million decrease from the existing
Company operations for the nine months ended June 30, 1996 from the
comparable 1995 period. As a percentage of net sales, SG&A
expenses decreased to 9.6% for the nine months ended June 30, 1996
from 10.8% in the 1995 comparable period.
OPERATING INCOME. Operating income increased 37.1%, or $8.2
million, to $30.4 million for the nine months ended June 30, 1996
from $22.2 million in the comparable 1995 period. Operating margin
decreased to 8.5% during the first nine months of 1996 from 10.3%
in the 1995 comparable period.
INTEREST EXPENSE. Interest expense increased to $5.2 million for
the nine months ended June 30, 1996 from $2.2 million in the nine
months ended July 2, 1995. This increase is primarily attributable
to higher average outstanding debt balances as a result of
completing four acquisitions
12
<PAGE>
during the 1996 second and third quarters. The purchase price plus
assumed debt of these acquisitions totaled approximately $72 million.
Additionally, the Company placed the remainder of the Texas Foundries
expansion in service during the second quarter of 1996, which reduced
capitalized interest and increased interest expense for the period.
Capitalized interest for the nine months ended June 30, 1996 and
July 2, 1995 was approximately $453 thousand and $659 thousand,
respectively.
NET INCOME. As a result of the foregoing factors, net income
increased $3.0 million, or 24.9% to $15.3 million in the first nine
months of 1996 from $12.3 million in the comparable prior year
period.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Company had a bank line of credit from its
current lending institution to provide credit facilities in an
aggregate amount of up to $175 million, bearing interest rates
equal to LIBOR plus 1.0% to LIBOR plus 2.5% depending on the
Company's leverage ratios from time to time. The Company was able
to borrow at LIBOR plus 1.5% based on its leverage ratio at June
30, 1996. At June 30, 1996, $136.7 million was outstanding and
$38.3 million was available to borrow under this facility.
The Company had working capital of $38.6 million at October 1, 1995
and $64.2 million at June 30, 1996. The Company's primary sources
of working capital are cash flows from operating activities, equity
offerings and borrowings under the above mentioned line of credit.
Primary uses of working capital are the funding of operations,
capital expenditures and acquisitions.
Effective July 1, 1996, the Company's credit facility was
increased from $175 million to $230 million. Additionally, NBD
Bank replaced SouthTrust Bank as the lead bank, and several new
agent banks were added to the lending group. Under the amended
facility, the Company can borrow at interest rates from LIBOR plus
1.0% to LIBOR plus 2.0% depending on the Company's leverage ratios
from time to time.
Also, subsequent to June 30, 1996, the Company entered into
interest rate swap agreements with NBD Bank establishing fixed
interest rates for approximately $80 million of the total
outstanding debt. The agreements have fixed interest rates ranging
from 6.85% to 7.09% plus 1.0% to 2.5% depending on the Company's
leverage ratios on the effective date of the agreement. Each of
the swap agreements are for a period of five years and mature in
the years 2001 and 2002. The Company is exposed to credit risk in
the event of non-performance by the counterparty to the interest
rate swap agreement (NBD). The Company mitigates credit risk by
dealing only with financially sound U.S. banks. Accordingly, the
Company does not anticipate loss for non-performance.
ACQUISITIONS
Note 8 of the interim condensed consolidated financial statements
included elsewhere in this filing describes recently announced
acquisitions.
13
<PAGE>
PART II: OTHER INFORMATION
<TABLE>
<S> <C> <C>
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10.2(r) - Credit Agreement dated July 1, 1996
among the Company and its subsidiaries,
SouthTrust Bank of Alabama, National
Association and NBD Bank
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
There were no Reports on Form 8-K during the quarter
ended June 30, 1996.
</TABLE>
_____________________________________________________
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14
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DATE: CITATION CORPORATION
August 12, 1996 /s/ T. MORRIS HACKNEY
-------------------------------------
T. MORRIS HACKNEY
Chairman and Chief Executive Officer
August 12, 1996 /s/ R. CONNER WARREN
--------------------------------------
R. CONNER WARREN
Executive Vice President of Finance and
Administration and Treasurer
(Principal Financial Officer)
August 12, 1996 /s/ THOMAS W. BURLESON
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THOMAS W. BURLESON
Vice President-Controller and
Assistant Secretary
(Principal Accounting Officer)
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EXHIBIT 10.2(r)
CITATION CORPORATION
CITATION AUTOMOTIVE SALES CORP.
MANSFIELD FOUNDRY CORPORATION
IROQUOIS FOUNDRY CORPORATION
OBERDORFER INDUSTRIES CORP.
BERLIN FOUNDRY CORPORATION
PENNSYLVANIA STEEL FOUNDRY & MACHINE COMPANY
CASTWELL PRODUCTS, INC.
TSC ACQUISITION CORPORATION
HTC ACQUISITION CORPORATION
SOUTHERN ALUMINUM CASTINGS COMPANY
BAC ACQUISITION CORPORATION
TSC TEXAS CORPORATION
TEXAS FOUNDRIES, LTD.
and
MABRY FOUNDRY COMPANY, LTD.
_______________________________________________
CREDIT AGREEMENT
dated as of July 1, 1996
__________________________________________
The Banks Party Thereto,
SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION,
as Collateral Agent
and
NBD BANK,
as Administrative and Syndication Agent
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TABLE OF CONTENTS
Article Page
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INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . 1
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Certain Definitions . . . . . . . . . . . . . . . . 2
1.2 Other Definitions; Rules of
Construction. . . . . . . . . . . . . . . . . . . . 17
II. THE COMMITMENTS, THE SWING LINE FACILITY
AND THE ADVANCES. . . . . . . . . . . . . . . . . . . . . . 18
2.1 Commitment of the Banks and Swing
Line Facility . . . . . . . . . . . . . . . . . . . 18
(a) Revolving Credit Advances. . . . . . . . . . . 18
(b) Limitation on Amount of
Revolving Credit Advanc. . . . . . . . . . . . 18
(c) Swing Line Loans . . . . . . . . . . . . . . . 18
2.2 Termination and Reduction of
Commitments . . . . . . . . . . . . . . . . . . . . 19
2.3 Fees. . . . . . . . . . . . . . . . . . . . . . . . 20
2.4 Disbursement of Advances. . . . . . . . . . . . . . 21
2.5 Conditions for First Disbursement . . . . . . . . . 24
(a) Charter and Partnership
Documents. . . . . . . . . . . . . . . . . . . 24
(b) By-Laws, Partnership Agreements
and Corporate Authorizations . . . . . . . . . 25
(c) Incumbency Certificates. . . . . . . . . . . . 25
(d) Notes. . . . . . . . . . . . . . . . . . . . . 25
(e) Security Documents . . . . . . . . . . . . . . 25
(i) Recording, Filing, Etc . . . . . . . . . 25
(ii) Title Insurance and
Surveys. . . . . . . . . . . . . . . . . 25
(iii) Casualty and Other
Insurance. . . . . . . . . . . . . . . . 26
(iv) Environmental Certificate. . . . . . . . 26
(f) Legal Opinions . . . . . . . . . . . . . . . . 26
(g) Consents, Approvals, Etc. . . . . . . . . . . 26
(h) Fees . . . . . . . . . . . . . . . . . . . . . 26
(i) Payment of Amounts Owing Under
Original Credit
Agreement. . . . . . . . . . . . . . . . . . . 26
(j) Other. . . . . . . . . . . . . . . . . . . . . 27
2.6 Further Conditions for Disbursement . . . . . . . . 27
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Article Page
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2.7 Subsequent Elections as to Loans. . . . . . . . . . 27
2.8 Limitation of Requests and Elections. . . . . . . . 28
2.9 Minimum Amounts; Etc. . . . . . . . . . . . . . . . 28
2.10 Additional Required Documents for New
Participating Subsidiaries. . . . . . . . . . . . . 28
III. PAYMENTS AND PREPAYMENTS OF ADVANCES. . . . . . . . . . . . 30
3.1 Principal Payments and Prepayments. . . . . . . . . 30
3.2 Interest Payments . . . . . . . . . . . . . . . . . 30
3.3 Letter of Credit Reimbursement
Payments. . . . . . . . . . . . . . . . . . . . . . 30
3.4 Payment Method. . . . . . . . . . . . . . . . . . . 32
3.5 No Setoff or Deduction. . . . . . . . . . . . . . . 33
3.6 Payment on Non-Business Day; Payment
Computations. . . . . . . . . . . . . . . . . . . . 33
3.7 Additional Costs. . . . . . . . . . . . . . . . . . 34
3.8 Illegality and Impossibility. . . . . . . . . . . . 35
3.9 Indemnification . . . . . . . . . . . . . . . . . . 35
IV. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . 36
4.1 Original. . . . . . . . . . . . . . . . . . . . . . 36
4.2 Survival. . . . . . . . . . . . . . . . . . . . . . 40
V. BORROWERS' COVENANTS. . . . . . . . . . . . . . . . . . . . 40
5.1 Affirmative Covenants . . . . . . . . . . . . . . . 40
5.2 Negative Covenants. . . . . . . . . . . . . . . . . 47
5.3 Financial Covenants . . . . . . . . . . . . . . . . 51
5.4 Interpretation and Consolidation. . . . . . . . . . 52
VI. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.1 Events of Default . . . . . . . . . . . . . . . . . 52
6.2 Remedies. . . . . . . . . . . . . . . . . . . . . . 54
6.3 Distribution of Proceeds of
Collateral. . . . . . . . . . . . . . . . . . . . . 56
6.4 Letter of Credit Liabilities. . . . . . . . . . . . 56
VII. THE AGENTS AND THE BANKS. . . . . . . . . . . . . . . . . . 57
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Article Page
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7.1 Appointment and Authorization . . . . . . . . . . . 57
7.2 Agents and Affiliates . . . . . . . . . . . . . . . 57
7.3 Scope of Agents' Duties . . . . . . . . . . . . . . 57
7.4 Reliance by Agents. . . . . . . . . . . . . . . . . 58
7.5 Default . . . . . . . . . . . . . . . . . . . . . . 58
7.6 Liability of Agents . . . . . . . . . . . . . . . . 58
7.7 Nonreliance on Agents and Other
Banks . . . . . . . . . . . . . . . . . . . . . . . 58
7.8 Indemnification . . . . . . . . . . . . . . . . . . 59
7.9 Successor Agents. . . . . . . . . . . . . . . . . . 59
7.10 Sharing of Payments . . . . . . . . . . . . . . . . 60
7.11 Withholding Tax Exemption . . . . . . . . . . . . . 61
VIII. COLLATERAL SECURITY . . . . . . . . . . . . . . . . . . . . 61
8.1 Composition of the Collateral . . . . . . . . . . . 61
8.2 Rights in Property Held by the Banks. . . . . . . . 61
8.3 Rights in Property Held Either by
Borrowers or by
the Banks . . . . . . . . . . . . . . . . . . . . . 62
8.4 Priority of Liens . . . . . . . . . . . . . . . . . 62
8.5 Perfection. . . . . . . . . . . . . . . . . . . . . 62
8.6 Lien Waivers. . . . . . . . . . . . . . . . . . . . 64
8.7 Chattel Paper or Instruments. . . . . . . . . . . . 64
IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 64
9.1 Amendments, Etc. . . . . . . . . . . . . . . . . . 64
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . 65
9.3 No Waiver By Conduct; Remedies
Cumulative. . . . . . . . . . . . . . . . . . . . . 65
9.4 Reliance on and Survival of Various
Provisions. . . . . . . . . . . . . . . . . . . . . 66
9.5 Expenses; Indemnification. . . . . . . . . . . . . 66
9.6 Successors and Assigns. . . . . . . . . . . . . . . 69
9.7 Counterparts. . . . . . . . . . . . . . . . . . . . 72
9.8 Governing Law . . . . . . . . . . . . . . . . . . . 72
9.9 Table of Contents and Headings. . . . . . . . . . . 73
9.10 Construction of Certain Provisions. . . . . . . . . 73
9.11 Integration and Severability. . . . . . . . . . . . 73
9.12 Independence of Covenants . . . . . . . . . . . . . 73
9.13 Interest Rate Limitation. . . . . . . . . . . . . . 73
9.14 Joint and Several Obligations;
Subrogation and Contribution Rights;
Savings Clause. . . . . . . . . . . . . . . . . . . 73
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9.15 Waivers, Etc. . . . . . . . . . . . . . . . . . . . 76
9.16 Citation To Act For All Borrowers . . . . . . . . . 76
9.17 Further Assurances. . . . . . . . . . . . . . . . . 77
9.18 Waiver and Release by Borrowers . . . . . . . . . . 77
9.19 No Partnership or Joint Venture . . . . . . . . . . 78
9.20 Termination . . . . . . . . . . . . . . . . . . . . 78
9.21 SouthTrust Letters of Credit. . . . . . . . . . . . .78
9.22 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . 79
EXHIBITS
Exhibit A . . . . Environmental Certificate
Exhibit B-1 . . . Revolving Credit Note
Exhibit B-2 . . . Swing Line Note
Exhibit C-1 . . . Request for Borrowing
Exhibit C-2 . . . Request for Swing Line Loan
Exhibit D . . . . Request for Continuation or Conversion
Exhibit E . . . . Legal Opinion
Exhibit F . . . . Compliance Certificate
Exhibit G . . . . Participating Subsidiary
Assumption Agreement
Exhibit H . . . . Assignment of Note and Collateral
Exhibit I . . . . Assignment and Acceptance
Exhibit J . . . . Bank Assumption Agreement
SCHEDULES
Schedule 1.1(a) . Security Documents
Schedule 1.1(b) . Existing Liens
Schedule 4.1(a) . Qualification to do Business,
Places of Business and Locations
of Collateral
Schedule 4.1(b) . Tradenames
Schedule 4.1(d) . Mergers, Acquisitions and Certain
Changes
Schedule 4.1(i) . Claims, Litigation
Schedule 4.1(n) . Compliance with Laws Disclosures
Schedule 4.1(u) . ERISA Disclosures
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Schedule 4.1(v) . Citation and Consolidated Entities
Organization
Schedule 5.2(h) . Certain Existing Indebtedness
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THIS CREDIT AGREEMENT, dated as of July 1, 1996 (this "Agreement"), is
by and among CITATION CORPORATION, a Delaware corporation ("Citation" or the
"Company"), CITATION AUTOMOTIVE SALES CORP., a Michigan corporation,
MANSFIELD FOUNDRY CORPORATION, an Ohio corporation formerly named MFC
Acquisition Corporation, IROQUOIS FOUNDRY CORPORATION, a Wisconsin
corporation formerly named Iroquois Acquisition Corporation, OBERDORFER
INDUSTRIES CORP., a New York corporation formerly named OBI Acquisition
Corp., BERLIN FOUNDRY CORPORATION, a Wisconsin corporation, PENNSYLVANIA
STEEL FOUNDRY & MACHINE COMPANY, a Pennsylvania corporation, CASTWELL
PRODUCTS, INC., an Illinois corporation, TSC ACQUISITION CORPORATION, a Texas
corporation, HTC ACQUISITION CORPORATION, an Indiana corporation, SOUTHERN
ALUMINUM CASTINGS COMPANY, an Alabama corporation, BAC ACQUISITION
CORPORATION ("BAC"), an Indiana corporation, TSC TEXAS CORPORATION ("TSC
Texas"), a Delaware corporation, TEXAS FOUNDRIES, LTD. ("Texas Foundries"), a
Texas limited partnership, and MABRY FOUNDRY COMPANY, LTD. ("Mabry Foundry"),
a Texas limited partnership (collectively the "Initial Participating
Subsidiaries" and individually an "Initial Participating Subsidiary"; and,
together with Citation and all other Subsidiaries (as hereinafter defined) of
Citation that hereafter become Participating Subsidiaries, collectively the
"Borrowers" and individually a "Borrower"), the banks and other lenders party
hereto from time to time (collectively the "Banks" and individually a
"Bank"), SOUTHTRUST BANK OF ALABAMA, NATIONAL ASSOCIATION, a national banking
association, as collateral agent (in such capacity, the "Collateral Agent")
for the Banks, and NBD BANK, a Michigan banking corporation, as
administrative and syndication agent (in such capacity, the "Administrative
Agent", and together with the Collateral Agent, collectively the "Agents" and
individually an "Agent") for the Banks.
INTRODUCTION
I. Citation, the Initial Participating Subsidiaries (other than BAC, TSC
Texas, Texas Foundries and Mabry Foundry) and SouthTrust Bank of Alabama,
National Association (the "Original Lender") are parties to the Fourth
Amended and Restated Loan Agreement, dated as of August 1, 1995, as amended
by the First Amendment to Fourth Amended and Restated Loan Agreement, dated
as of April 1, 1996 (the "Original Credit Agreement"), pursuant to which the
Original Lender provided to the Borrowers (as defined in the Original Credit
Agreement) a revolving credit facility, including letters of credit, for
working capital and general corporate purposes, including acquisitions. The
Original Lender had transferred indirect participation interests in the
rights and obligations of the Original Lender under the Original Credit
Agreement to certain of the Banks (such Banks, in that capacity, hereinafter
are referred to collectively as the "Original Bank Participants" and
individually as an "Original Bank Participant").
A. Citation, the Initial Participating Subsidiaries, the
Banks and the Agents now desire to amend and restate the Original Credit
Agreement in order to, among other things, provide for direct participation by
the Banks, establish NBD Bank as the Administrative Agent and
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SouthTrust Bank of Alabama, National Association as Collateral Agent, and
increase the amount of the revolving credit facility provided to the
Borrowers to $230,000,000, with the possibility of increasing to $300,000,000.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the parties hereto hereby amend and restate the
Original Credit Agreement, and further agree, as follows:
ARTICLE I.
DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used herein the following terms shall have the
following respective meanings:
"ACCOUNTS", "CHATTEL PAPER", "CONTRACTS", "DOCUMENTS", "EASEMENT",
"FIXTURES", "GENERAL INTANGIBLES", "GOODS", "INSTRUMENTS", "INVENTORY" and
other terms not specifically defined in the Agreement shall have the same
respective meanings as are given to those terms in the Uniform Commercial
Code as currently adopted and in effect in the State of Michigan.
"ACCOUNT DEBTOR" means any Person for which any Borrower holds any right
to payment arising from a bona fide outright sale or lease of Goods or for
services rendered by such Borrower to that Person.
"ACQUISITION CAPITAL EXPENDITURES" means Capital Expenditures incurred
in connection with the acquisition of one or more businesses from any Person,
whether pursuant to a purchase of capital stock from any Person, a purchase
of all or substantially all of the assets of any Person or any division
thereof, a merger, a consolidation, or any other means.
"ADVANCE" means any Loan and any Letter of Credit Advance.
"AFFILIATE" means, with respect to any person, any other person (A)
which directly or indirectly, through one or more intermediaries, controls,
or is controlled by, or is under common control with, such person, or (B)
five percent (5%) or more of the equity interest of which is held
beneficially or of record by such person. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person, whether through the
ownership of voting securities, by contract or otherwise.
"ASSIGNMENT OF NOTE AND COLLATERAL" means the Assignment of Note and
Collateral, dated as of even date herewith, by and among the Original Lender,
the Agents, Citation and the Initial Participating Subsidiaries (other than
BAC, TSC Texas, Texas Foundries and Mabry Foundry), in substantially the form
annexed hereto as EXHIBIT H.
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"BANK OBLIGATIONS" means the obligations of the Borrowers to the Banks
described in paragraph (A) of the definition of Obligations.
"BASE RATE" means the per annum rate equal to the greater of (a) the
Prime Rate in effect from time to time, and (b) the sum of one percent (1%)
per annum plus the Federal Funds Rate in effect from time to time; which Base
Rate shall change simultaneously with any change in such Prime Rate or
Federal Funds Rate, as the case may be.
"BENEFIT PLAN" means any employee welfare benefit plan as defined in
Section 3(1) of ERISA or any employee pension benefit plan as defined in
Section 2(2) of ERISA.
"BORROWING" means the aggregation of Advances, including each Letter of
Credit issuance, of the Banks to be made to the Borrowers, or continuations
and conversions of any Loans, made pursuant to Article II on a single date
and, in the case of any Loans, for a single Interest Period, which Borrowings
may be classified for purposes of this Agreement by reference to the type of
Loans or the type of Advance comprising the related Borrowing, e.g., a
"Eurodollar Rate Borrowing" is a Borrowing comprised of Eurodollar Rate Loans
and a "Letter of Credit Borrowing" is an Advance comprised of the issuance of
a single Letter of Credit.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which the Administrative Agent is not open to the public for carrying on
substantially all of its banking functions in Detroit, Michigan.
"CAPITAL EXPENDITURE" means any payment by any of the Borrowers or any
of the other Consolidated Entities for the purpose of acquiring or
constructing any real property, plant and equipment or other Fixed Assets, or
acquiring any existing business or part thereof, including any such payment
made under a title retention agreement or capital lease obligation and any
such payment made for goodwill of a business or for any noncompetition
covenant in connection with the acquisition of a business, and any other
expenditure or liability that is properly charged to a capital account or
otherwise capitalized on Citation's Consolidated balance sheet in accordance
with Generally Accepted Accounting Principles.
"CAPITAL LEASE" of any person means any lease which, in accordance with
generally accepted accounting principles, is or should be capitalized on the
books of such person.
"CASH FLOW" means, as to any Person, the aggregate of: (A) net income
after taxes (or the net deficit, as applicable) PLUS (B) amounts that have
been deducted for (i) amortization of intangible assets, (ii) depreciation
and depletion, and (iii) deferred taxes and expenses; all as shown by the
income statement of such Person, calculated in accordance with Generally
Accepted Accounting Principles.
"CASH FLOW COVERAGE" means the quotient which is obtained by dividing
(i) EBITDA for the four (4) calendar quarters preceding the applicable date
by (ii) the sum of Interest Expense,
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income taxes, Maintenance Capital Expenditures, the current portion of
Long-Term Liabilities, dividends paid to stockholders (other than dividends
paid by a Consolidated Entity to Citation) and the aggregate amount paid by
Citation for the redemption, retirement or purchase of any of its capital
stock for the same period.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations thereunder.
"COLLATERAL" means the property and rights, and any proceeds, in
whatever form, thereof, described in Article VIII of this Agreement and in
the Security Documents.
"COMMITMENT" means, with respect to each Bank, the commitment of each
such Bank to make Loans and to participate in Letter of Credit Advances made
through the Administrative Agent pursuant to Section 2.1, in amounts not
exceeding in aggregate principal amount outstanding at any time the
respective commitment amounts for each such Bank set forth next to the name
of each such Bank on the signature pages hereof or otherwise pursuant to
Section 9.6, as such amounts may be reduced from time to time pursuant to
Section 2.2.
"COMMITMENT FEE RATE" means the per annum rate (expressed as a
percentage) in accordance with the following:
-----------------------------------------------------------------
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Ratio of Funded Debt to four times Commitment Fee
EBITDA for preceding three (3) months Rate (%)
-----------------------------------------------------------------
Less than or equal to 2.75 to 1.00 .25
-----------------------------------------------------------------
Greater than 2.75 to 1.00 .35
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Each change in the Commitment Fee Rate shall be effective on the first day of
the second calendar month following the three (3) month period for which such
ratio has been determined.
"COMPLIANCE CERTIFICATE" means a certificate in the form annexed hereto
as EXHIBIT F which is delivered by Citation, on behalf of itself and the
other Borrowers, and accepted by the Administrative Agent pursuant to Section
5.l(c)(4) of this Agreement.
"CONSOLIDATED" refers to the consolidation of the accounts of a Person
and its Consolidated Entities on a balance sheet and statement of income and
retained earnings in accordance with Generally Accepted Accounting Principles.
"CONSOLIDATED ENTITY" means any Person the financial statements of which
are appropriately consolidated with the financial statements of Citation
under Generally Accepted Accounting Principles; and "CONSOLIDATED ENTITIES"
means all of them, collectively.
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"CONSOLIDATED NET INCOME" means, for any period, the net income of
Citation and the Consolidated Entities (on a Consolidated basis and excluding
intercompany items) for such period, determined in accordance with Generally
Accepted Accounting Principles.
"CONTINGENT LIABILITIES" of any person means, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor, surety, accommodation party, partner or in any
other capacity, or in respect of which obligations such person assures a
creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including, without limitation, all
reimbursement obligations of such person in respect of any letters of credit,
surety bonds or similar obligations (including, without limitation, bankers
acceptances) and all obligations of such person to advance funds to, or to
purchase assets, property or services from, any other person in order to
maintain the financial condition of such other person.
"CURRENT ASSETS" and "CURRENT LIABILITIES" mean, at any time, all assets
or liabilities, respectively, that, in accordance with Generally Accepted
Accounting Principles, should be classified as current assets or current
liabilities, respectively, on a balance sheet of a Person.
"CURRENT OPERATING DIVISIONS" means Citation's Alabama Ductile division
presently located in Brewton, Alabama, Southern Ductile division presently
located in Bessemer, Centreville and Selma, Alabama, Foundry Service division
presently located in Biscoe, North Carolina, and Citation Foam division
presently located in Columbiana, Alabama.
"DEFAULT" means any event or condition which might become an Event of
Default with notice or lapse of time or both.
"DOLLARS" and "$" each mean the lawful money of the United States of
America.
"EBIT" for any period means Consolidated Net Income after taxes (or the
net deficit, if expenses and charges exceed revenues and proper income items)
for such period, plus amounts that have been deducted for (i) Interest
Expense, (ii) income taxes, (iii) extraordinary items, (iv) the cumulative
effects of changes in accounting principles and (v) minority interest
expense, in determining Consolidated Net Income for such period, and minus
amounts that have been added for (vi) extraordinary items and (vii) the
cumulative effects of changes in accounting principles, in determining
Consolidated Net Income for such period.
"EBITDA" for any period means Consolidated Net Income after taxes (or
the net deficit, if expenses and charges exceed revenues and proper income
items) for such period, plus amounts that have been deducted for (i)
depreciation, (ii) amortization, (iii) Interest Expense, (iv) income taxes,
(v) extraordinary items, (vi) the cumulative effects of changes in accounting
principles and (vii) minority interest expense, in determining Consolidated
Net Income for such period, and minus amounts that have been added for (viii)
extraordinary items and (ix) the cumulative effects of changes in accounting
principles, in determining Consolidated Net Income for such period.
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"EFFECTIVE DATE" means the effective date specified in the final
paragraph of this Agreement.
"ENVIRONMENTAL CERTIFICATE" means an appropriately completed
environmental certificate in the form annexed hereto as EXHIBIT A, executed
and delivered by the Borrowers to the Administrative Agent.
"ENVIRONMENTAL LAWS" shall have the meaning ascribed thereto in the
Environmental Certificate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and in effect from time to time, and the regulations promulgated by
the Department of Labor or the Pension Benefit Guaranty Corporation
thereunder.
"ERISA AFFILIATE" means any trade or business, whether or not
incorporated, that with any Borrower is a member of a group that would be
treated as a single employer for purposes of Section 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended.
"EURODOLLAR BUSINESS DAY" means, with respect to any Eurodollar Rate
Loan, a day which is both a Business Day and a day on which dealings in
Dollar deposits are carried out in the London interbank market.
"EURODOLLAR INTEREST PERIOD" means, with respect to any Eurodollar Rate
Loan, the period commencing on the day such Eurodollar Rate Loan is made or
converted to a Eurodollar Rate Loan and ending on the day which is one, two,
three or six months thereafter, as the Borrowers may elect under Section 2.4
or 2.7, and each subsequent period commencing on the last day of the
immediately preceding Eurodollar Interest Period and ending on the day which
is one, two, three or six months thereafter, as the Borrowers may elect under
Section 2.4 or 2.7, PROVIDED, HOWEVER, that (a) any Eurodollar Interest
Period which commences on the last Eurodollar Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in
the appropriate subsequent calendar month) shall end on the last Eurodollar
Business Day of the appropriate subsequent calendar month, (b) each
Eurodollar Interest Period which would otherwise end on a day which is not a
Eurodollar Business Day shall end on the next succeeding Eurodollar Business
Day or, if such next succeeding Eurodollar Business Day falls in the next
succeeding calendar month, on the next preceding Eurodollar Business Day, and
(c) no Eurodollar Interest Period which would end after the Termination Date
shall be permitted.
"EURODOLLAR RATE" means, with respect to any Eurodollar Rate Loan and
the related Eurodollar Interest Period, the per annum rate that is equal to
the sum of:
(a) the Margin, plus
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(b) the rate per annum obtained by dividing (i) the per annum
rate of interest at which deposits in Dollars for such Eurodollar Interest
Period and in an aggregate amount comparable to the amount of such Eurodollar
Rate Loan to be made by the Administrative Agent in its capacity as a Bank
hereunder are offered to the Administrative Agent by other prime banks in the
London interbank market at approximately 11:00 a.m. London time on the second
Eurodollar Business Day prior to the first day of such Eurodollar Interest
Period by (ii) an amount equal to one minus the stated maximum rate
(expressed as a decimal) of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or other reserves)
that are specified on the first day of such Eurodollar Interest Period by the
Board of Governors of the Federal Reserve System (or any successor agency
thereto) for determining the maximum reserve requirement with respect to
eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of such System;
all as conclusively determined by the Administrative Agent, such sum to be
rounded up, if necessary, to the nearest whole multiple of one one-hundredth
of one percent (1/100 of 1%).
"EURODOLLAR RATE LOAN" means any Loan which bears interest at the
Eurodollar Rate.
"EVENT OF DEFAULT" means any of the events or conditions described in
Section 6.1.
"FEDERAL FUNDS RATE" means, for any day, the per annum rate that is
equal to the average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published by the Federal Reserve Bank of New York for such day,
or, if such rate is not so published for any day, the average of the
quotations for such rates received by the Administrative Agent from three
federal funds brokers of recognized standing selected by the Administrative
Agent in its discretion; all as conclusively determined by the Administrative
Agent, such sum to be rounded up, if necessary, to the nearest whole multiple
of one one-hundredth of one percent (1/100 of 1%), which Federal Funds Rate
shall change simultaneously with any change in such published or quoted rates.
"FINANCIAL STATEMENTS" means the Consolidated balance sheets of Citation
and the Consolidated Entities as of March 31, 1996, and Consolidated
statements of income and retained earnings and Cash Flows of Citation and the
Consolidated Entities for the years or months ended on such dates all as
furnished to the Banks, and shall also mean any such balance sheets and
statements as may hereafter be furnished by any Borrower to the Banks.
"FIXED ASSETS" means long-term assets used in the operation of the
business of Citation or any Consolidated Entity, as determined in accordance
with Generally Accepted Accounting Principles.
"FIXED CHARGE COVERAGE" means the quotient which is obtained by dividing
(a) the sum of (i) EBIT for the four (4) calendar quarters preceding the
applicable date plus (ii) to the extent
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<PAGE>
deducted in determining such EBIT, Rent Expense, by (b) Interest Expense for
the four (4) calendar quarters preceding the applicable date plus (ii) such
Rent Expense.
"FLOATING RATE" means the per annum rate equal to the sum of (a) the
Margin plus (b) the Base Rate.
"FLOATING RATE LOAN" means any Loan which bears interest at the Floating
Rate.
"FUNDED DEBT" means the Bank Obligations and all other interest bearing
Indebtedness of Citation and the Consolidated Entities, whether now existing
or hereafter incurred, provided that Indebtedness arising under guarantees
shall be included only to the extent that it relates to Indebtedness of
Persons that are not Consolidated Entities.
"FUNDED DEBT TO CAPITALIZATION" means the quotient, expressed as a
percentage, which is obtained by dividing (i) Funded Debt by (ii) the sum of
Funded Debt and Stockholders' Equity of Citation.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" and "GAAP" each mean
generally accepted principles of accounting in effect from time to time in
the United States applied in a manner consistent with those used in preparing
such financial statements as have theretofore been furnished to the Banks by
or on behalf of the Borrowers or any one or more of them.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state and
any political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, which has or asserts jurisdiction over any Bank,
either Agent, any Borrower, or over the property of any of them.
"HAZARDOUS MATERIALS" shall have the meaning ascribed thereto in the
Environmental Certificate.
"HEDGING CONTRACT" means, with respect to any Borrower, all liabilities
of such Borrower under interest rate swap, cap or collar agreements, currency
exchange agreements and all similar agreements designed to protect such
person against fluctuations in interest rates or currency exchange rates
entered into with any Bank.
"INDEBTEDNESS" of any person means, as of any date, (a) all obligations
of such person for borrowed money and all obligations of such person
evidenced by any promissory note, debenture or other similar instrument, (b)
all obligations of such person as lessee under any Capital Lease, (c) all
obligations which are secured by any Lien existing on any asset or property
of such person whether or not the obligation secured thereby shall have been
assumed by such person (to the extent of such Lien if such obligation is not
assumed), (d) all obligations of such person for the unpaid purchase price
for goods, property or services acquired by such person, (e) all obligations
of such person to purchase goods, property or services where payment therefor
is required regardless of whether
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<PAGE>
delivery of such goods or property or the performance of such services is
ever made or tendered (generally referred to as "take or pay contracts"), (f)
all liabilities of such person in respect of Unfunded Benefit Liabilities
under any Plan of such person or of any ERISA Affiliate, (g) all obligations
of such person in respect of any Hedging Contract (valued in an amount equal
to the highest termination payment, if any, that would be payable by such
person upon termination for any reason on the date of determination), and (h)
all obligations of others similar in character to those described in clauses
(a) through (g) of this definition for which such person is contingently
liable, as guarantor, surety, accommodation party, partner or in any other
capacity, or in respect of which obligations such person assures a creditor
against loss or agrees to take any action to prevent any such loss (other
than endorsements of negotiable instruments for collection in the ordinary
course of business), including without limitation all reimbursement
obligations of such person in respect of letters of credit, surety bonds or
similar obligations and all obligations of such person to advance funds to,
or to purchase assets, property or services from, any other person in order
to maintain the financial condition of such other person.
"INTEREST EXPENSE" means interest payable by Citation and the
Consolidated Entities on Indebtedness (including the component of amounts
payable under capitalized leases attributable to interest) during the period
in question.
"INTEREST PAYMENT DATE" means (a) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period with respect to such Eurodollar
Rate Loan and, in the case of any Interest Period exceeding three months,
those days that occur during such Interest Period at intervals of three
months after the first day of such Interest Period, and (b) in all other
cases, the last Business Day of each March, June, September and December
occurring after the date hereof, commencing with the first such Business Day
occurring after the date of this Agreement.
"INTEREST PERIOD" means any Eurodollar Interest Period or Swing Line
Interest Period.
"LAW" and "LAWS" each means all ordinances, statutes, rules,
regulations, orders, injunctions, judgments, writs or decrees of any
government or political subdivision or agency thereof, or any court or
similar entity established by any thereof.
"LETTER OF CREDIT" means a standby letter of credit, having a stated
expiry date or a date upon which the draft must be reimbursed not later than
twelve months after the date of issuance and not later than the fifth
Business Day before the Termination Date, issued by the Administrative Agent
on behalf of the Banks for the account of the Borrowers under an application
and related documentation acceptable to the Administrative Agent requiring,
among other things, immediate reimbursement by the Borrowers jointly and
severally to the Administrative Agent in respect of all drafts or other
demand for payment honored thereunder and all expenses paid or incurred by
the Administrative Agent relative thereto.
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<PAGE>
"LETTER OF CREDIT ADVANCE" means any issuance of a Letter of Credit
under Section 2.4 made pursuant to Section 2.1 in which each Bank acquires a
pro rata risk participation pursuant to Section 2.4(d).
"LETTER OF CREDIT BORROWINGS" means, as of any date, the maximum
aggregate amount that the Administrative Agent could be required to pay under
any drafts that conceivably could be drawn under all Letters of Credit
outstanding on such date, but does not include drafts that have been drawn
and paid.
"LETTER OF CREDIT DOCUMENTS" shall have the meaning ascribed thereto in
Section 3.3(b).
"LETTER OF CREDIT FEE RATE" means the rate (expressed as a percentage)
in accordance with the following:
-----------------------------------------------------------------
-----------------------------------------------------------------
Ratio of Funded Debt to four times Letter of Credit
EBITDA for preceding three (3) months Fee Rate (%)
-----------------------------------------------------------------
Less than or equal to 2.75 to 1.00 1.00
-----------------------------------------------------------------
Greater than 2.75 to 1.00 1.25
-----------------------------------------------------------------
-----------------------------------------------------------------
Each change in the Letter of Credit Fee Rate shall be effective on the first
day of the second calendar month following the three (3) month period for
which such ratio has been determined.
"LETTER OF CREDIT OBLIGATIONS" means (a) the Letter of Credit Borrowings
and (b) the reimbursement obligations and other obligations of Borrowers
under this Agreement with respect to drawings made on Letters of Credit
(including any obligations owing under the application or agreement relating
to any such Letter of Credit), including all principal, interest, fees and
other charges relating thereto.
"LIABILITIES" means all Indebtedness and all other items that, in
accordance with Generally Accepted Accounting Principles, should be
classified as liabilities on a balance sheet of a Person.
"LIEN" means any pledge, assignment, hypothecation, mortgage, security
interest, deposit arrangement, option, conditional sale or title retaining
contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any lease, subordination of any claim or
right, or any other type of lien, charge, encumbrance, preferential
arrangement or other claim or right.
"LOAN" means any Revolving Credit Loan or any Swing Line Loan, as the
context may require.
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<PAGE>
"LOAN DOCUMENTS" means, collectively, this Agreement, the
Notes, the Security Documents, the Assignment of Note and Collateral, the
Hedging Contracts and all other agreements, instruments and other documents now
or hereafter executed pursuant, or otherwise relating, thereto.
"LONG-TERM LIABILITIES" means Liabilities less the portion thereof that
constitutes Current Liabilities.
"MAINTENANCE CAPITAL EXPENDITURES" means Capital Expenditures other than
(a) Acquisition Capital Expenditures and (b) Capital Expenditures made in
connection with expanding facilities or increasing operating capacity.
"MARGIN" means the margin (expressed as a percentage) to be used to
determine the Floating Rate or the Eurodollar Rate, as the case may be, in
accordance with the following:
<TABLE>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Ratio of Funded Debt to four times Floating Rate Margin (%) Eurodollar Rate Margin (%)
EBITDA for preceding three (3)
months
- -----------------------------------------------------------------------------------------------
Less than or equal to 1.00 to 1.00 0 1.00
- -----------------------------------------------------------------------------------------------
Greater than 1.00 to 1.00 but less than
or equal to 2.00 to 1.00 0 1.25
- -----------------------------------------------------------------------------------------------
Greater than 2.00 to 1.00 but less than
or equal to 2.75 to 1.00 .25 1.50
- -----------------------------------------------------------------------------------------------
Greater than 2.75 to 1.00 0.75 2.00
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
</TABLE>
Each change in the Margin shall be effective on the first day of the second
calendar month following the three (3) month period for which such ratio has
been determined; PROVIDED that a change in the Margin shall not affect the
Eurodollar Rate with respect to any Eurodollar Rate Loans the Eurodollar
Interest Period for which commenced prior to the first day of such second
calendar month.
"MARGIN CERTIFICATE" means the certificate, pursuant to Section
5.1(c)(6), provided to the Banks by Citation, on behalf of itself and the
other Borrowers, on a monthly basis with respect to the ratio used to
calculate the applicable Margin.
"MORTGAGE" means each mortgage or deed of trust identified on SCHEDULE
1.1(A) annexed hereto, and each other mortgage or deed of trust now or
hereafter entered into by any Borrower for the benefit of the Agents and the
Banks pursuant to this Agreement, as any of the foregoing may be amended or
modified from time to time.
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<PAGE>
"NOTES" means the Revolving Credit Notes and the Swing Line Note; and
"NOTE" means any Revolving Credit Note or the Swing Line Note, as the context
may require.
"OBLIGATIONS" means the obligations, whether joint or several, of
Borrowers:
(A) To pay the principal of and interest on the Notes in accordance
with the terms thereof and to satisfy, pay and perform the Letter of Credit
Obligations and all other liabilities to the Agents and the Banks under this
Agreement and the other Loan Documents, including, without limitation, the
Hedging Contracts, whether now existing or hereafter incurred, matured or
unmatured, direct or contingent, joint or several, including any extensions,
modifications, and renewals thereof and substitutions therefor;
(B) To repay to the Agents and the Banks all amounts advanced by any
Agent or any Bank under this Agreement, under any of the Security Documents
or under any of the other Loan Documents on behalf of the Borrowers, or any
one or more of them, including, but without limitation, advances for
principal or interest payments to prior secured parties, mortgagees, or
lienors, or for taxes, levies, insurance rent, repairs to or maintenance or
storage of any of the Collateral; and
(C) To reimburse the Agents, on demand, for all of each Agent's
expenses and costs, including the reasonable fees and expenses of its
counsel, in connection with the preparation, administration, amendment,
modification, or enforcement of this Agreement and the documents required or
contemplated hereunder, including, without limitation, any proceeding brought
or threatened to enforce payment of any of the obligations referred to in the
foregoing paragraphs (A) and (B).
"OVERDUE RATE" means (a) in respect of principal of Floating Rate Loans,
a rate per annum that is equal to the sum of three percent (3%) per annum
plus the Floating Rate, (b) in respect of principal of Eurodollar Rate Loans
and Swing Line Loans, a rate per annum that is equal to the sum of three
percent (3%) per annum plus the per annum rate in effect thereon until the
end of the then current Interest Period for such Loan and, thereafter, a rate
per annum that is equal to the sum of three percent (3%) per annum plus the
Floating Rate, and (c) in respect of other amounts payable by the Borrowers
hereunder (other than interest), a per annum rate that is equal to the sum of
three percent (3%) per annum plus the Floating Rate.
"PARTICIPATING SUBSIDIARY" means (a) each of the Initial Participating
Subsidiaries and (b) any other Subsidiary that hereafter executes and
delivers to the Administrative Agent a Participating Subsidiary Assumption
Agreement, the appropriate Security Documents and all other documents
necessary to assume joint and several liability as to the Obligations arising
with respect to the Advances or any agreement or instrument executed by such
Subsidiary in connection therewith (in the maximum amount provided for in
such Assumption Agreement) and to include all of its assets in the Collateral.
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<PAGE>
"PARTICIPATING SUBSIDIARY ASSUMPTION AGREEMENT" means each Assumption
Agreement duly authorized and executed by each Subsidiary that is to become a
Participating Subsidiary after the Effective Date and substantially in the
form annexed hereto as EXHIBIT G, as each such Assumption Agreement may be
thereafter supplemented or amended, and "PARTICIPATING SUBSIDIARY ASSUMPTION
AGREEMENTS" means all of them, collectively.
"PENSION PLAN" means any employee pension benefit plan, as defined in
Section 3(2) of ERISA that is subject to Section 302 of ERISA.
"PERMITTED LIENS" means:
(A) Liens for taxes, assessments, or similar charges, incurred in the
ordinary course of business that are not yet due and payable;
(B) Pledges or deposits made in the ordinary course of business to
secure payment of workmen's compensation, or to participate in any fund in
connection with workmen's compensation, unemployment insurance, old-age
pensions or other social security programs;
(C) Liens of mechanics, materialmen, warehousemen, carriers, or other
like liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary course of
business to secure performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, not in excess of ten percent
(10%) of the aggregate amount due thereunder, or to secure statutory
obligations, or surety, appeal, indemnity, performance or other similar bonds
required in the ordinary course of business;
(E) Encumbrances consisting of zoning restrictions, easement or other
restrictions on the use of real property, none of which materially impairs
the use of such property by a Borrower or any Consolidated Entity in the
operation of its business, and none of which is violated in any material
respect by existing or proposed structures or land use;
(F) Liens in favor of the Collateral Agent for the benefit of the
Banks;
(G) Existing liens set forth or described on SCHEDULE 1.1(B), attached
hereto and incorporated herein;
(H) Purchase money security interests granted to secure not more than
the purchase price of assets, the purchase of which does not violate any Loan
Document, and provided that any such security interest does not encumber any
asset other than the related asset purchased; and
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<PAGE>
(I) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long as
levy and execution thereon have been stayed and continue to be stayed and
they do not, in the aggregate, materially detract from the value of the
property of a Borrower or any Consolidated Entity or materially impair the
use thereof in the operation of its business:
(1) Claims or liens for taxes, assessments or charges due and
payable and subject to interest or penalty;
(2) Claims, liens and encumbrances upon, and defects of title to,
real or personal property, including any attachment of
personal or real property or other legal process prior to
adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal.
"PERSON" or "PERSON" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a joint stock company, a
limited liability company, an unincorporated organization, a joint venture, a
trade or business (whether or not incorporated), a government (foreign or
domestic) and any agency or political subdivision thereof, or any other
entity.
"PLEDGE AGREEMENTS" means each stock pledge agreement identified on
SCHEDULE 1.1(A) annexed hereto, and each other pledge agreement now or
hereafter entered into by any Borrower for the benefit of the Agents and the
Banks pursuant to this Agreement, as any of the foregoing may be amended or
modified from time to time.
"PLEDGED STOCK" means all shares of stock of all Subsidiaries now or
hereafter owned, directly or indirectly, in whole or in part, by Citation.
"PRIME RATE" means the per annum rate announced by the Administrative
Agent from time to time as its "prime rate" (it being acknowledged that such
announced rate may not necessarily be the lowest rate charged by the
Administrative Agent to any of its customers); which Prime Rate shall change
simultaneously with any change in such announced rate.
"RECORDS" means correspondence, memoranda, tapes, discs, microfilm,
microfiche, papers, books and other documents, or transcribed information of
any type, whether expressed in ordinary or machine language, and all filing
cabinets, computer hardware, and other containers in which any of the
foregoing is stored, maintained or updated.
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<PAGE>
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System as now or from time to time hereafter in effect, and
shall include any successor or other regulation or official interpretation of
said Board of Governors relating to reserve requirements applicable to member
banks of the Federal Reserve System.
"REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System as now or from time to time hereafter in effect and
shall include any successor or other regulation or official interpretation of
said Board of Governors relating to the extension of credit by banks for the
purpose of purchasing or carrying margin stocks applicable to member banks of
the Federal Reserve System.
"RENT EXPENSE" means, for any period, the maximum aggregate amount of
all rents and other payments (exclusive of property taxes, property and
liability insurance premiums and maintenance costs) paid or required to be
paid by Citation and the Consolidated Entities under any Capital Leases and
other leases of real or personal property in respect of which Citation or any
Consolidated Entity is obligated as a lessee or user.
"REQUIRED BANKS" means Banks holding not less than (i) sixty-six and
two-thirds of one percent (66 and 2/3 of 1%) of the aggregate principal
amount of the Advances then outstanding or (ii) sixty-six and two-thirds of
one percent (66 and 2/3 of 1%) of the Commitments if no Advances are then
outstanding.
"REQUIREMENT OF LAW" for any person or entity means the certificate of
incorporation and by-laws or other organization or governing documents of
such person or entity and any law, treaty, rule or regulation, or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such person or entity or any of its
property or to which such person or entity or any of its property is subject.
"REVOLVING CREDIT ADVANCE" means any Revolving Credit Loan and any
Letter of Credit Advance.
"REVOLVING CREDIT LOAN" means any borrowing under Section 2.4 evidenced
by the Notes and made by a Bank pursuant to Section 2.1. Any such Loan or
portion thereof may also be denominated as a Floating Rate Loan or a
Eurodollar Rate Loan and such Loans are referred to herein as "types" of
Loans.
"REVOLVING CREDIT NOTE" means any promissory note of the Borrowers
evidencing the Revolving Credit Loans, in substantially the form annexed
hereto as EXHIBIT B-1, as amended or modified from time to time and together
with any promissory note or notes issued in exchange or replacement therefor.
"SECURITY AGREEMENT" means each security agreement identified on
SCHEDULE 1.1(a) annexed hereto, and each other security agreement now or
hereafter entered into by any Borrower
-15-
<PAGE>
for the benefit of the Agents and the Banks pursuant to this Agreement, as
any of the foregoing may be amended or modified from time to time.
"SECURITY DOCUMENTS" means, collectively, the Mortgages, the Security
Agreements and the Pledge Agreements, as assigned, if applicable, by the
Original Lender to the Collateral Agent pursuant to the Assignment of Note
and Collateral, the Environmental Certificate, and all other and related
agreements and documents, including financing statements and similar
documents, delivered pursuant to this Agreement or the Original Credit
Agreement or otherwise entered into by any person to secure the Advances.
"STOCKHOLDERS' EQUITY" means, at any time, the sum of the following
accounts (less treasury stock carried at cost) set forth in a balance sheet
of a Borrower (or, if the Borrower in question is Citation, a Consolidated
balance sheet of Citation and the Consolidated Entities), prepared in
accordance with Generally Accepted Accounting Principles consistently applied:
(A) The par or stated value of all outstanding capital stock;
(B) Capital surplus; and
(C) Retained earnings.
"SUBORDINATED INDEBTEDNESS" of any person means, as of any date, that
Indebtedness of such person for borrowed money which is expressly subordinate
and junior in right and priority of payment to the Advances and other
Indebtedness of such person to the Banks in manner and by agreement
satisfactory in form and substance to the Required Banks.
"SUBSIDIARY" of any person means any other person (whether now existing
or hereafter organized or acquired) in which (other than directors qualifying
shares required by law) more than 50% of the securities or other ownership
interests of each class having ordinary voting power or analogous right
(other than securities or other ownership interests which have such power or
right only by reason of the happening of a contingency), at the time as of
which any determination is being made, are owned, beneficially and of record,
by such person or by one or more of the other Subsidiaries of such person or
by any combination thereof.
"SWING LINE BANK" means the Administrative Agent.
"SWING LINE FACILITY" shall have the meaning specified in Section 2.1(c).
"SWING LINE INTEREST PERIOD" means, with respect to any Swing Line Loan,
the period commencing on the day such Swing Line Loan is made and ending on
the date agreed upon between Citation and the Swing Line Bank at the time
such Swing Line Loan is made, provided no Swing Line Interest Period which
would end after the Termination Date shall be permitted.
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<PAGE>
"SWING LINE LOAN" means any borrowing under Section 2.4 evidenced by the
Swing Line Note and made by the Swing Line Bank pursuant to Section 2.1(c).
"SWING LINE NOTE" means any promissory note of the Borrowers evidencing
the Swing Line Loans, in substantially the form annexed hereto as EXHIBIT
B-2, as amended or modified from time to time and together with any
promissory note or notes issued in exchange or replacement therefor.
"SWING LINE RATE" means the Base Rate.
"TANGIBLE NET WORTH" means, at any time, Stockholders' Equity less all
amounts included therein attributable to assets which are deemed intangible
assets in accordance with Generally Accepted Accounting Principles.
"TERMINATION DATE" means the earlier to occur of (a) July 31, 1998 and
(b) the date on which the Commitments shall be terminated pursuant to Section
2.2 or 6.2.
"UCC-1" means each financing statement to be filed pursuant to the
Uniform Commercial Code, as enacted in any state in which any of the
Collateral is located, in order to perfect the Collateral Agent's lien on the
Collateral.
1.2 OTHER DEFINITIONS; RULES OF CONSTRUCTION. As used herein, the
terms "ADMINISTRATIVE AGENT", "AGENT", "AGENTS", "BAC", "BANK", "BANKS",
"BORROWER", "BORROWERS", "CITATION", "COLLATERAL AGENT", "COMPANY", "INITIAL
PARTICIPATING SUBSIDIARIES", "INITIAL PARTICIPATING SUBSIDIARY", "MABRY
FOUNDRY", "ORIGINAL CREDIT AGREEMENT", "ORIGINAL LENDER", "ORIGINAL BANK
PARTICIPANT", "ORIGINAL BANK PARTICIPANTS", "TEXAS FOUNDRIES", "THIS
AGREEMENT" and "TSC TEXAS" shall have the respective meanings ascribed
thereto in the introductory paragraphs of this Agreement. Such terms,
together with the other terms defined in Section 1.1 shall include both the
singular and the plural forms thereof and shall be construed accordingly.
All computations required hereunder and all financial terms used herein shall
be made or construed in accordance with Generally Accepted Accounting
Principles unless such principles are inconsistent with the express
requirements of this Agreement; PROVIDED that, if the Company notifies the
Administrative Agent that the Borrowers wish to amend any covenant in Article
V to eliminate the effect of any change in Generally Accepted Accounting
Principles in the operation of such covenant (or if the Administrative Agent
notifies the Company that the Required Banks wish to amend Article V for such
purpose), then the Borrowers' compliance with such covenant shall be
determined on the basis of Generally Accepted Accounting Principles in effect
immediately before the relevant change in Generally Accepted Accounting
Principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Borrowers and the
Required Banks. Use of the terms "HEREIN", "HEREOF" and "HEREUNDER" shall be
deemed references to this Agreement in its entirety and not to the Section or
clause in which such term appears. References to "SECTIONS" and
"SUBSECTIONS" shall be to Sections and subsections, respectively, of this
Agreement unless otherwise specifically provided.
-17-
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ARTICLE II.
THE COMMITMENTS, THE SWING LINE FACILITY AND THE ADVANCES
2.1 COMMITMENT OF THE BANKS AND SWING LINE FACILITY.
(a) REVOLVING CREDIT ADVANCES. Each Bank agrees, for itself
only, subject to the terms and conditions of this Agreement, to make
Revolving Credit Loans to the Borrowers pursuant to Section 2.4 and Section
3.3 and to participate in Letter of Credit Advances to the Borrowers pursuant
to Section 2.4, from time to time from and including the Effective Date to
but excluding the Termination Date, not to exceed in aggregate principal
amount at any time outstanding the amount determined pursuant to Section
2.1(b).
(b) LIMITATION ON AMOUNT OF REVOLVING CREDIT ADVANCES.
Notwithstanding anything in this Agreement to the contrary, the aggregate
principal amount of the Revolving Credit Advances made by any Bank at any
time outstanding shall not exceed the amount of its respective Commitment as
of the date any such Advance is made, PROVIDED, HOWEVER, that the aggregate
principal amount of Letter of Credit Advances outstanding at any time shall
not exceed $20,000,000.
(c) SWING LINE LOANS. (i) The Borrowers may request the Swing
Line Bank to make, and the Swing Line Bank may, in its sole discretion
provided that the requirements of Section 2.6 are complied with by the
Borrowers at the time of such request, make, Swing Line Loans to the
Borrowers from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an aggregate principal amount
not to exceed at any date the lesser of (A) $15,000,000 (the "Swing Line
Facility") and (B) the aggregate unused portions of the Commitments of the
Banks as of such date. Each Bank's Commitment shall be deemed utilized by an
amount equal to such Bank's pro rata share (based on such Bank's Commitment)
of each Swing Line Loan for purposes of determining the amount of Revolving
Credit Advances required to be made by such Bank, but no Bank's Commitment,
other than the Swing Line Bank, shall be deemed utilized for purposes of
determining commitment fees under Section 2.3(a). Swing Line Loans shall bear
interest at the Swing Line Rate. Within the limits of the Swing Line
Facility, so long as the Swing Line Bank, in its sole discretion, elects to
make Swing Line Loans, the Borrowers may borrow and reborrow under this
Section 2.1(c)(i).
(ii) The Swing Line Bank may at any time in its sole and
absolute discretion require that any Swing Line Loan be refunded by a
Floating Rate Borrowing from the Banks, and upon written notice thereof by
the Swing Line Bank to the Administrative Agent, the Banks and Citation, the
Borrowers shall be deemed to have requested a Floating Rate Borrowing in an
amount equal to the amount of such Swing Line Loan, and such Floating Rate
Borrowing shall be made to refund such Swing Line Loan. Each Bank shall be
absolutely and unconditionally obligated (except as set forth in Section
2.1(c)(i)) to fund its pro rata share (based
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on such Bank's Commitment) of such Floating Rate Borrowing or, if applicable,
purchase a participating interest in the Swing Line Loans pursuant to Section
2.1(c)(iii) and such obligation shall not be affected by any circumstance,
including, without limitation, (A) any set-off, counterclaim, recoupment,
defense or other right which such Bank or any Borrower or any of their
respective Subsidiaries may have against the Swing Line Bank, any Borrower or
any of their respective Subsidiaries or anyone else for any reason
whatsoever; (B) the occurrence or continuance of a Default or an Event of
Default, subject to Section 2.1(c)(iii); (C) any adverse change in the
condition (financial or otherwise) of any Borrower or any of its
Subsidiaries; (D) any breach of this Agreement by any Borrower or any of its
Subsidiaries or any other Bank; or (E) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing (including
without limitation any Borrower's failure to satisfy any conditions contained
in Article II or any other provision of this Agreement).
(iii) If, for any reason (including without limitation as a
result of the occurrence of an Event of Default with respect to any Borrower
pursuant to Section 6.1(e), (f) or (g)), Floating Rate Loans may not be made
by the Banks as described in Section 2.1(c)(ii), then (A) each Borrower
agrees that each Swing Line Loan not paid pursuant to Section 2.1(c)(ii)
shall bear interest, payable on demand by the Swing Line Bank, at the Overdue
Rate, and (B) effective on the date each such Floating Rate Loan would
otherwise have been made, each Bank severally agrees that it shall
unconditionally and irrevocably, without regard to the occurrence of any
Default or Event of Default, in lieu of deemed disbursement of loans, to the
extent of such Bank's Commitment, purchase a participating interest in the
Swing Line Loans by paying its participation percentage thereof. Each Bank
will immediately transfer to the Swing Line Bank, in same day funds, the
amount of its participation. Each Bank shall share on a pro rata basis
(calculated by reference to its Commitment) in any interest which accrues
thereon and in all repayments thereof. If and to the extent that any Bank
shall not have so made the amount of such participating interest available to
the Swing Line Bank, such Bank and the Borrowers severally agree to pay to
the Swing Line Bank forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Swing Line Bank until
the date such amount is paid to the Swing Line Bank, at (x) in the case of
the Borrowers, the interest rate specified above and (y) in the case of such
Bank, the Federal Funds Rate.
2.2 TERMINATION AND REDUCTION OF COMMITMENTS. (a) The Borrowers shall
have the right to terminate or reduce the Commitments at any time and from
time to time at their option, PROVIDED that (i) the Borrowers shall give
notice of such termination or reduction to the Administrative Agent (with
sufficient executed copies for each Bank) specifying the amount and effective
date thereof, (ii) each partial reduction of the Commitments shall be in a
minimum amount of $5,000,000 and in an integral multiple of $500,000 and
shall reduce the Commitments of all of the Banks proportionately in
accordance with the respective Commitment amounts for each such Bank prior to
such reduction, (iii) no such termination or reduction shall be permitted
with respect to any portion of the Commitments as to which a request for an
Advance pursuant to Section 2.4 is then pending and (iv) the Commitments may
not be terminated if any Advances are then outstanding and may not be reduced
below the principal amount of Advances then outstanding.
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The Commitments or any portion thereof terminated or reduced pursuant to this
Section 2.2 may not be reinstated.
(b) For purposes of this Agreement, a Letter of Credit Advance
(i) shall be deemed outstanding in an amount equal to the sum of the maximum
amount available to be drawn under the related Letter of Credit on or after
the date of determination and on or before the stated expiry date thereof
plus the amount of any draws under such Letter of Credit that have not been
reimbursed as provided in Section 3.3 and (ii) shall be deemed outstanding at
all times on and before such stated expiry date or such earlier date on which
all amounts available to be drawn under such Letter of Credit have been fully
drawn, and thereafter until all related reimbursement obligations have been
paid pursuant to Section 3.3. As provided in Section 3.3, upon each payment
made by the Administrative Agent in respect of any draft or other demand for
payment under any Letter of Credit, the amount of any Letter of Credit
Advance outstanding immediately prior to such payment shall be automatically
reduced by the amount of each Loan deemed advanced in respect of the related
reimbursement obligation of the Borrowers.
2.3 FEES. (a) The Borrowers agree to pay to each Bank a commitment
fee on the daily average unused amount of such Bank's respective Commitment,
during each calendar quarter or portion thereof for the period from the
Effective Date to but excluding the Termination Date, at a rate equal to the
Commitment Fee Rate applicable during each such quarter. Accrued commitment
fees shall be payable quarterly in arrears on the last Business Day of each
March, June, September and December, commencing on the first such Business
Day occurring after the Effective Date, and on the Termination Date.
(b) The Borrowers agree to pay, to (i) each Bank that was not an
Original Bank Participant and (ii) each Bank that was an Original Bank
Participant and whose Commitment amount hereunder exceeds its previous
participation interest, a closing fee in the amount with respect to each such
Bank as set forth in that certain letter dated July 1, 1996 from NBD Bank to
Citation. Such closing fees shall be payable on or prior to the Effective
Date.
(c) On or before the date of issuance, extension or renewal of
any Letter of Credit during any calendar quarter, the Borrowers agree (i) to
pay to the Banks a fee computed at the rate equal to the Letter of Credit Fee
Rate applicable during such quarter of the maximum amount available to be
drawn from time to time under such Letter of Credit for the period from and
including the date of issuance, extension or renewal, as the case may be, of
such Letter of Credit to and including the stated expiry date of such Letter
of Credit, and (ii) to pay an additional fee to the Administrative Agent for
its own account computed at the rate of one-eighth of one percent (1/8 of 1%)
per annum of such maximum amount for such period. Such fees are
nonrefundable and the Borrowers shall not be entitled to any rebate of any
portion thereof if such Letter of Credit does not remain outstanding through
its stated expiry date or for any other reason. The Borrowers further agree
to pay to the Administrative Agent, on demand, such other customary
administrative fees, charges and expenses of the Administrative Agent in
respect of the issuance, negotiation, acceptance, amendment, transfer and
payment of such Letter of Credit or
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otherwise payable pursuant to the application and related documentation under
which such Letter of Credit is issued.
(d) The Borrowers agree to pay to the Administrative Agent an
arrangement fee and an agency fee for its arrangement services and its
services as Administrative Agent with respect to this Agreement in such
amounts, and on such schedule, as provided in that certain letter dated July
1, 1996 from NBD Bank to Citation, and as the Borrowers and the
Administrative Agent otherwise may from time to time agree.
2.4 DISBURSEMENT OF ADVANCES. (a) Except with respect to Swing Line
Loans, the Borrowers shall give the Administrative Agent notice of their
request for each Borrowing in substantially the form annexed hereto as
EXHIBIT C-1 not later than 11:00 a.m. Detroit time (i) three Eurodollar
Business Days prior to the date such Borrowing is requested to be made if
such Borrowing is to be made as a Eurodollar Rate Borrowing, (ii) five
Business Days prior to the date any Letter of Credit Borrowing is requested
to be made, and (iii) one Business Day prior to the date such Borrowing is
requested to be made in all other cases, which notice shall specify whether a
Eurodollar Rate Borrowing, Floating Rate Borrowing or Letter of Credit
Borrowing is requested and, in the case of each requested Eurodollar Rate
Borrowing, the Interest Period to be initially applicable thereto and, in the
case of each Letter of Credit Borrowing, such information as may be necessary
for the issuance thereof by the Administrative Agent. With respect to Swing
Line Loans, the Borrowers shall give the Swing Line Bank notice of their
request for each Swing Line Loan in substantially the form of EXHIBIT C-2 not
later than 1:00 p.m. Detroit time on the same Business Day such Swing Line
Loan is requested to be made. The Administrative Agent, not later than the
Business Day next succeeding the day such notice is given, shall provide
notice of each such requested Borrowing (not including Swing Line Loans) to
each Bank. Subject to the terms and conditions of this Agreement, the
proceeds of each such requested Swing Line Loan or Borrowing comprised of
Revolving Credit Loans shall be made available to the Borrowers by depositing
the proceeds thereof, in immediately available funds, in an account
maintained and designated by the Borrowers at the principal office of the
Administrative Agent. Subject to the terms and conditions of this Agreement,
the Administrative Agent shall, on the date any Letter of Credit Advance is
requested to be made, issue the related Letter of Credit on behalf of the
Banks for the account of the Borrowers. Notwithstanding anything herein to
the contrary, the Administrative Agent may decline to issue any requested
Letter of Credit on the basis that the beneficiary, the purpose of issuance
or the terms or the conditions of drawing are unacceptable to it in its
discretion.
(b) Each Bank, on the date any Borrowing comprised of Loans is
requested to be made, shall make its pro rata share of such Borrowing
available in immediately available funds for disbursement to the Borrowers
pursuant to the terms and conditions of this Agreement at the principal
office of the Administrative Agent. Unless the Administrative Agent shall
have received notice from any Bank prior to the date such Borrowing is
requested to be made under this Section 2.4 that such Bank will not make
available to the Administrative Agent such Bank's pro rata portion of such
Borrowing, the Administrative Agent may assume that such
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Bank has made such portion available to the Administrative Agent on the date
such Borrowing is requested to be made in accordance with this Section 2.4.
If and to the extent such Bank shall not have so made such pro rata portion
available to the Administrative Agent, the Administrative Agent may (but
shall not be obligated to) make such amount available to the Borrowers, and
such Bank and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such amount together with interest thereon, for
each day from the date such amount is made available to the Borrowers by the
Administrative Agent until the date such amount is repaid to the
Administrative Agent, at the Federal Funds Rate. If such Bank shall pay such
amount to the Administrative Agent together with interest, such amount so
paid shall constitute a Loan by such Bank as a part of such Borrowing for
purposes of this Agreement. The failure of any Bank to make its pro rata
portion of any such Borrowing available to the Administrative Agent shall not
relieve any other Bank of its obligation to make available its pro rata
portion of such Borrowing on the date such Borrowing is requested to be made,
but no Bank shall be responsible for failure of any other Bank to make such
pro rata portion available to the Administrative Agent on the date of any
such Borrowing.
(c) All Revolving Credit Loans made under this Section 2.4 shall
be evidenced by the Revolving Credit Notes, all Swing Line Loans under this
Section 2.4 shall be evidenced by the Swing Line Note, and all such Loans
shall be due and payable and bear interest as provided in Article III. Each
Bank is hereby authorized by the Borrowers to record on the schedule attached
to its Note(s), or in its books and records, the date, amount and type of
each Loan and the duration of the related Interest Period (if applicable),
the amount of each payment or prepayment of principal thereon, and the other
information provided for on such schedule, which schedule or books and
records, as the case may be, shall constitute prima facie evidence of the
information so recorded, PROVIDED, HOWEVER, that failure of any Bank to
record, or any error in recording, any such information shall not relieve the
Borrowers of their obligation to repay the outstanding principal amount of
the Loans, all accrued interest thereon and other amounts payable with
respect thereto in accordance with the terms of the Notes and this Agreement.
Subject to the terms and conditions of this Agreement, the Borrowers may
borrow Revolving Credit Loans under this Section 2.4 and under Section 3.3,
prepay Revolving Credit Loans pursuant to Section 3.1 and reborrow Revolving
Credit Loans under this Section 2.4 and under Section 3.3.
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized that
the Administrative Agent has the sole obligation under this Agreement to
issue Letters of Credit on behalf of the Banks, and the Commitment of each
Bank with respect to Letter of Credit Advances is expressly conditioned upon
the Administrative Agent's performance of such obligations. Upon such
issuance by the Administrative Agent, each Bank shall automatically acquire a
pro rata risk participation interest in such Letter of Credit Advance based
on the amount of its respective Commitment. If the Administrative Agent
shall honor a draft or other demand for payment presented or made under any
Letter of Credit, the Administrative Agent shall provide notice thereof to
each Bank on the date such draft or demand is honored unless the Company
shall have satisfied its reimbursement obligation under Section 3.3 by
payment to the Administrative Agent on such date. Each Bank,
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on such date, shall make its pro rata share of the amount paid by the
Administrative Agent available in immediately available funds at the
principal office of the Administrative Agent for the account of the
Administrative Agent. If and to the extent such Bank shall not have made
such pro rata portion available to the Administrative Agent, such Bank and
the Borrowers severally agree to pay to the Administrative Agent forthwith on
demand such amount together with interest thereon, for each day from the date
such amount was paid by the Administrative Agent until such amount is so made
available to the Administrative Agent at a per annum rate equal to the
Federal Funds Rate. If such Bank shall pay such amount to the Administrative
Agent together with such interest, such amount so paid shall constitute a
Loan by such Bank as part of the Borrowing disbursed in respect of the
reimbursement obligation of the Borrowers under Section 3.3 for purposes of
this Agreement. The failure of any Bank to make its pro rata portion of any
such amount paid by the Administrative Agent available to the Administrative
Agent shall not relieve any other Bank of its obligation to make available
its pro rata portion of such amount, but no Bank shall be responsible for
failure of any other Bank to make such pro rata portion available to the
Administrative Agent.
(e) The initial Borrowing under this Agreement shall, subject to
the terms and conditions of this Agreement, be a Borrowing of Revolving
Credit Loans in an aggregate principal amount not less than the Assigned Debt
(as defined in the Assignment of Note and Collateral) and shall be made
immediately upon the satisfaction of all conditions set forth in Sections 2.5
and 2.6. Notwithstanding anything in this Agreement or any of the other Loan
Documents to the contrary, the Borrowers, the Banks and the Agents hereby
agree that such initial Borrowing shall be funded as follows:
(i) the Original Lender, in its capacity
as a Bank under this Agreement, shall
automatically be deemed to have already
funded to the Administrative Agent (and the
Administrative Agent likewise shall automatically
be deemed to have already disbursed to the
Borrowers) an amount of such initial Borrowing
equal to the excess of (A) the entire Assigned
Debt over (B) the aggregate amount of the Assigned
Debt transferred by the Lender to the Original
Bank Participants in participation interests;
(ii) each Original Bank Participant, in
its capacity as a Bank under this
Agreement, shall automatically be deemed
to have already funded to the
Administrative Agent (and the
Administrative Agent likewise shall
automatically be deemed to have already
disbursed to the Borrowers) an amount of
such initial Borrowing equal to the
portion of the Assigned Debt transferred
by the Original Lender to such Original
Bank Participant in a participation
interest;
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<PAGE>
(iii) each Bank that is neither the
Original Lender nor an Original Bank
Participant shall fund to the
Administrative Agent an amount of such
initial Borrowing equal to such Bank's
pro rata share thereof based on such
Bank's respective Commitment amount under
this Agreement;
(iv) if the amount deemed funded by any
Bank under clause (i) or (ii) above is
less than such Bank's pro rata share of
such initial Borrowing (based on such
Bank's respective Commitment amount under
this Agreement), then such Bank shall
fund, by the actual transfer to the
Administrative Agent of immediately
available funds, the amount equal to such
shortfall;
(v) if the amount deemed funded by any
Bank under clause (i) or (ii) above
exceeds such Bank's pro rata share of
such initial Borrowing (based on such
Bank's respective Commitment amount under
this Agreement), then the Administrative
Agent shall remit to such Bank a portion
of the amounts funded under clauses (iii)
and (iv) above equal to such excess; and
(vi) any portion of the amounts funded
by the Banks under clauses (iii) and (iv)
above remaining after the Administrative
Agent has remitted all amounts required
to be remitted to the Banks under clause
(v) above shall be made available to the
Borrowers in accordance with Section
2.4(a);
such that thereupon (A) each Bank shall have funded a portion of such initial
Borrowing in a net amount equal to its pro rata share thereof (based on such
Bank's respective Commitment amount), and (B) all Advances (as defined in the
Original Credit Agreement) of loans, including, without limitation, all LIBOR
Rate Loans (as defined in the Original Credit Agreement) shall be deemed
restated and replaced by such initial Borrowing.
2.5 CONDITIONS FOR FIRST DISBURSEMENT. The obligation of the Banks to
make the first Advances hereunder is subject to receipt by each Bank and the
Agents of the following documents and completion of the following matters, in
form and substance satisfactory to each Bank and the Agents:
(a) CHARTER AND PARTNERSHIP DOCUMENTS. Certificates of recent
date of the appropriate authority or official of Citation's and each Initial
Participating Subsidiary's
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respective state of incorporation or organization (listing all charter
documents or the certificate of limited partnership, as applicable, of
Citation and each Initial Participating Subsidiary, respectively, on file in
that office if such listing is available) and certifying as to the good
standing and corporate or partnership existence of Citation and each Initial
Participating Subsidiary, respectively, together with copies of such charter
documents or certificate of limited partnership, as the case may be, of
Citation and each Initial Participating Subsidiary, certified as of a recent
date by such authority or official and certified as true and correct as of
the Effective Date by a duly authorized officer of Citation, such Initial
Participating Subsidiary or the general partner of such Initial Participating
Subsidiary, as applicable;
(b) BY-LAWS, PARTNERSHIP AGREEMENTS AND CORPORATE AUTHORIZATIONS.
Copies of the by-laws or partnership agreement, as applicable, of Citation
and each Initial Participating Subsidiary, together with all authorizing
resolutions and evidence of other corporate action taken by Citation, such
Initial Participating Subsidiary or the general partner of such Initial
Participating Subsidiary, as the case may be, to authorize the execution,
delivery and performance by Citation and each Initial Participating
Subsidiary of the Loan Documents to which it is a party and the consummation
by Citation and each such Initial Participating Subsidiary, respectively, of
the transactions contemplated hereby, certified as true and correct as of the
Effective Date by a duly authorized officer of Citation, such Initial
Participating Subsidiary or the general partner of such Initial Participating
Subsidiary, as applicable;
(c) INCUMBENCY CERTIFICATES. Certificates of incumbency of
Citation, of each corporate Initial Participating Subsidiary and of the
general partner of each partnership Initial Participating Subsidiary
containing, and attesting to the genuineness of, the signatures of those
officers authorized to act on behalf of Citation, each such Initial
Participating Subsidiary and each such general partner in connection with the
Loan Documents to which Citation or such Initial Participating Subsidiary, as
the case may be, is a party and the consummation by Citation and such Initial
Participating Subsidiary of the transactions contemplated hereby, certified
as true and correct as of the Effective Date by a duly authorized officer of
Citation, such Initial Participating Subsidiary or the general partner of
such Initial Participating Subsidiary, as applicable;
(d) NOTES. The Revolving Credit Notes duly executed on behalf of
Citation and each Initial Participating Subsidiary for each Bank, and the
Swing Line Note so executed for the Swing Line Bank;
(e) SECURITY DOCUMENTS. The Security Documents, including,
without limitation, the Assignment of Note and Collateral and such amendments
to the Security Documents required or reasonably desired by the
Administrative Agent in order to satisfy the requirements of Article VIII of
this Agreement and otherwise to provide to the Collateral Agent for the
benefit of the Banks and the Agents all of the security intended to be
provided thereby, duly executed on behalf of Citation and each Initial
Participating Subsidiary, as applicable, together with:
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<PAGE>
(i) RECORDING, FILING, ETC. Evidence of the recordation,
filing and other action (including payment of any applicable taxes or fees)
in such jurisdictions as the Administrative Agent may deem necessary or
appropriate with respect to the Security Documents, including the filing of
financing statements, financing statement assignments, financing statement
amendments and similar documents which the Administrative Agent may deem
necessary or appropriate to create, preserve or perfect the liens, security
interests and other rights intended to be granted to the Banks and the Agents
thereunder, together with Uniform Commercial Code record searches in such
offices as the Administrative Agent may request;
(ii) TITLE INSURANCE AND SURVEYS. Evidence of policies of
mortgage title insurance insuring the interest of the mortgagee under the
Mortgages, and surveys of the property subject to the Mortgages, satisfactory
to the Administrative Agent;
(iii) CASUALTY AND OTHER INSURANCE. Evidence that the
casualty and other insurance required pursuant to the Loan Documents is in
full force and effect; and
(iv) ENVIRONMENTAL CERTIFICATE. An Environmental
Certificate dated as of the Effective Date.
(f) LEGAL OPINIONS. The favorable written opinion of Ritchie &
Rediker, L.L.C., counsel for Citation the and Initial Participating
Subsidiaries in substantially the form annexed hereto as EXHIBIT E;
(g) CONSENTS, APPROVALS, ETC. Copies of all governmental and
nongovernmental consents, approvals, authorizations, declarations,
registrations or filings, if any, required on the part Citation or any
Initial Participating Subsidiary in connection with the execution, delivery
and performance of the Loan Documents or the transactions contemplated hereby
or as a condition to the legality, validity or enforceability of any of the
Loan Documents, certified as true and correct and in full force and effect as
of the Effective Date by a duly authorized officer of Citation, or, if none
is required, a certificate of such officer to that effect;
(h) FEES. Payment of the closing fees described in Section
2.3(b) and all fees due to the Agent in accordance with Section 2.3(d);
(i) PAYMENT OF AMOUNTS OWING UNDER ORIGINAL CREDIT AGREEMENT.
The Borrowers (as defined in the Original Credit Agreement) shall have paid
to the Original Lender all interest, fees and other amounts (other than
principal of Advances (as defined in the Original Credit Agreement) and
amounts provided for under Section 2.13(A) of the Original Credit Agreement
in connection with the payment of LIBOR Rate Loans (as defined in the
Original Credit Agreement)), it being understood that the restating and
replacement of the Advances (as defined in the Original Credit Agreement)
pursuant to Section 2.4(e) of this Agreement shall result in a breaking of
such LIBOR Rate Loan contracts, but no amounts shall be due under Section
2.13(A) of the Original Credit Agreement in connection therewith; and
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<PAGE>
(j) OTHER. Such other documents, and completion of such other
matters, as the Administrative Agent may reasonably request.
2.6 FURTHER CONDITIONS FOR DISBURSEMENT. The obligation of the Banks
to make the Advances (including the first Advances), or any continuation or
conversion under Section 2.7, is further subject to the satisfaction of the
following conditions precedent:
(a) The representations and warranties contained in Article IV
hereof and in the Security Documents shall be true and correct on and as of
the date such Advances are made (both before and after such Advances are
made) as if such representations and warranties were made on and as of such
date;
(b) No Default or Event of Default shall exist or shall have
occurred and be continuing on the date such Advances are made (whether before
or after such Advance is made);
(c) No material adverse change shall have occurred in the
financial condition of any Borrower since the Effective Date;
(d) All of the Loan Documents shall have remained, and then be,
in full force and effect; and
(e) In the case of any Letter of Credit Advance, the Borrowers
shall have delivered to the Administrative Agent an application for the
related Letter of Credit and other related documentation requested by and
acceptable to the Administrative Agent appropriately completed and duly
executed on behalf of the Borrowers.
The Borrowers shall be deemed to have made a representation and warranty to
the Banks at the time of the making of, and the continuation or conversion
of, each Advance to the effects set forth in clauses (a), (b), (c) and (d) of
this Section 2.6.
2.7 SUBSEQUENT ELECTIONS AS TO LOANS. The Borrowers may elect (a) to
continue a Eurodollar Rate Borrowing, or a portion thereof, as a Eurodollar
Rate Borrowing or (b) to convert a Eurodollar Rate Borrowing, or a portion
thereof, to a Floating Rate Borrowing or (c) to convert a Floating Rate
Borrowing, or a portion thereof, to a Eurodollar Rate Borrowing in each case
by giving notice thereof to the Administrative Agent in substantially the
form annexed hereto as EXHIBIT D not later than 11:00 a.m. Detroit time three
Eurodollar Business Days prior to the date any such continuation of or
conversion to a Eurodollar Rate Borrowing is to be effective and not later
than 11:00 a.m. Detroit time one Business Day prior to the date such
continuation or conversion is to be effective in all other cases, PROVIDED
that an outstanding Eurodollar Rate Borrowing may only be converted on the
last day of the then current Interest Period with respect to such Borrowing,
and PROVIDED, FURTHER, if a continuation of a Borrowing as, or a conversion
of a Borrowing to, a Eurodollar Rate Borrowing is requested, such notice
shall
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<PAGE>
also specify the Interest Period to be applicable thereto upon such
continuation or conversion. The Administrative Agent, not later than the
Business Day next succeeding the day such notice is given, shall provide
notice of such election to the Banks. If the Borrowers shall not timely
deliver such a notice with respect to any outstanding Eurodollar Rate
Borrowing, the Borrowers shall be deemed to have elected to convert such
Eurodollar Rate Borrowing to a Floating Rate Borrowing on the last day of the
then current Interest Period with respect to such Borrowing.
2.8 LIMITATION OF REQUESTS AND ELECTIONS. Notwithstanding any other
provision of this Agreement to the contrary, if, upon receiving a request for
a Eurodollar Rate Borrowing pursuant to Section 2.4, or a request for a
continuation of a Eurodollar Rate Borrowing, or a request for a conversion of
a Floating Rate Borrowing to a Eurodollar Rate Borrowing pursuant to Section
2.7, (a) deposits in Dollars for periods comparable to the Interest Period
elected by the Borrowers are not available to one or more of the Banks in the
London interbank market, or (b) the Eurodollar Rate will not adequately and
fairly reflect the cost to any Bank of making, funding or maintaining its
related Eurodollar Rate Loan, or (c) by reason of national or international
financial, political or economic conditions or by reason of any applicable
law, treaty or other international agreement, rule or regulation (whether
domestic or foreign) now or hereafter in effect, or the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank with any
guideline, request or directive of such authority (whether or not having the
force of law), including without limitation exchange controls, it is
impracticable, unlawful or impossible for, or shall limit or impair the
ability of, any Bank to make or fund its relevant Loan or to continue such
Loan as a Loan of the then existing type or to convert a Loan to such a Loan,
then the Borrowers shall not be entitled, so long as such circumstances
continue, to request a Eurodollar Rate Borrowing pursuant to Section 2.4 or a
continuation of or conversion to a Eurodollar Rate Borrowing type pursuant to
Section 2.7. In the event that such circumstances no longer exist, the Banks
shall again consider requests for Eurodollar Rate Borrowings pursuant to
Section 2.4, and requests for continuations of and conversions to Eurodollar
Rate Borrowings pursuant to Section 2.7.
2.9 MINIMUM AMOUNTS; ETC. Except for (a) Borrowings which exhaust the
entire remaining amount of the Commitments, and (b) payments required
pursuant to Section 3.8, each Eurodollar Rate Borrowing and each continuation
thereof or conversion thereto pursuant to Section 2.7 shall be in a minimum
amount of $2,500,000 and in an integral multiple of $100,000, and each
Floating Rate Borrowing and each continuation thereof or conversion thereto
pursuant to Section 2.7 and each prepayment thereof shall be in a minimum
amount of $500,000 and in an integral multiple of $100,000.
2.10 ADDITIONAL REQUIRED DOCUMENTS FOR NEW PARTICIPATING SUBSIDIARIES.
On or before the date on which a Subsidiary becomes a Participating
Subsidiary, the Administrative Agent shall have received, with copies for
each of the Banks, the following:
(a) a certificate of such Subsidiary's, or such Subsidiary's
general partner's, corporate secretary, in form satisfactory to the
Administrative Agent and each of the
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Banks and certifying as to the incumbency and signatures of the officers of
such Subsidiary or general partner, as the case may be, together with the
following documents attached thereto:
(1) A copy of resolutions of such Subsidiary's, or
such Subsidiary's general partner's, board of
directors authorizing the execution, delivery and
performance of this Agreement, the Notes and
other Loan Documents, and each other document to
be delivered by such Subsidiary pursuant hereto;
(2) A copy, certified as of the most recent date
practicable by the appropriate authority or
official of the jurisdiction in which such
Subsidiary's articles or certificate of
incorporation or certificate of limited
partnership or similar document is filed or the
secretary of state of the state where such
Subsidiary is incorporated or with which such
Subsidiary's certificate of limited partnership
or similar document has been filed, as
appropriate, of such Subsidiary's articles or
certificate of incorporation or certificate of
limited partnership or similar document; and
(3) A copy of such Subsidiary's bylaws or partnership
agreement or similar document;
(b) certificates, as of the most recent dates practicable of the
aforesaid secretaries of state, the secretary of state of each state in which
such Subsidiary is qualified as a foreign corporation and the department of
revenue or taxation of each of the foregoing states, as to the good standing
of such Subsidiary;
(c) a written opinion of legal counsel for such Subsidiary and
addressed to the Agents and the Banks, in form satisfactory to the Agents and
the Banks;
(d) fully executed copies of all Loan Documents that this
Agreement requires to be executed or delivered (or both) by such Subsidiary
(including a duly executed Participating Subsidiary Assumption Agreement, in
the case of any Subsidiary that becomes a Participating Subsidiary after the
Effective Date), and fully executed Security Documents, which Security
Documents shall include a security agreement, in form acceptable to the
Administrative Agent and the Banks, covering all of such Subsidiary's
personal property, if requested by the Administrative Agent or any Bank, a
mortgage, in form acceptable to the Agents and the Banks, covering all of
such Subsidiary's real property, and an Environmental Certificate; and
(e) such additional supporting documents as the Administrative
Agent or any Bank or their respective counsel may reasonably request.
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ARTICLE III.
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 PRINCIPAL PAYMENTS AND PREPAYMENTS.
(a) Unless earlier payment is required under this Agreement, the
Borrowers shall pay to the Banks on the Termination Date the entire
outstanding principal amount of the Loans.
(b) The Borrowers may at any time and from time to time prepay
all or a portion of the Loans, without premium or penalty, PROVIDED that (i)
the Borrowers may not prepay any portion of any Loan as to which an election
for a continuation of or a conversion to a Eurodollar Rate Loan is pending
pursuant to Section 2.4, and (ii) unless earlier payment is required under
this Agreement, any Eurodollar Rate Loan may only be prepaid on the last day
of the then current Interest Period with respect to such Loan.
3.2 INTEREST PAYMENTS. The Borrowers shall pay interest to the Banks
on the unpaid principal amount of each Loan, for the period commencing on the
date such Loan is made until such Loan is paid in full, on each Interest
Payment Date and at maturity (whether at stated maturity, by acceleration or
otherwise), and thereafter on demand, at the following rates per annum:
(a) With respect to Revolving Credit Loans:
(i) During such periods that such Loan is a Floating Rate
Loan, the Floating Rate; and
(ii) During such periods that such Loan is a Eurodollar Rate
Loan, the Eurodollar Rate applicable to such Loan for each related Eurodollar
Interest Period.
(b) With respect to Swing Line Loans, the Swing Line Rate.
Notwithstanding the foregoing paragraphs (a) and (b), the Borrowers shall pay
interest on demand by the Administrative Agent at the Overdue Rate on the
outstanding principal amount of any Loan and any other amount payable by the
Borrowers hereunder (other than interest) at any time on or after an Event of
Default if required in writing by the Required Banks.
3.3 LETTER OF CREDIT REIMBURSEMENT PAYMENTS. (a)(i) The Borrowers
agree to pay to the Banks, on the day on which the Administrative Agent shall
honor a draft or other demand for payment presented or made under any Letter
of Credit, an amount equal to the amount paid by the Administrative Agent in
respect of such draft or other demand under such Letter of
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Credit and all expenses paid or incurred by the Administrative Agent relative
thereto. Unless the Borrowers shall have made such payment to the Banks on
such day, upon each such payment by the Administrative Agent, the
Administrative Agent shall be deemed to have disbursed to the Borrowers, and
the Borrowers shall be deemed to have elected to satisfy their reimbursement
obligation by, a Borrowing of Revolving Credit Loans bearing interest at the
Floating Rate for the account of the Banks in an amount equal to the amount
so paid by the Administrative Agent in respect of such draft or other demand
under such Letter of Credit. Such Loans shall be disbursed notwithstanding
any failure to satisfy any conditions for disbursement of any Advance set
forth in Article II hereof and, to the extent of the Loans so disbursed, the
reimbursement obligation of the Borrowers under this Section 3.3 shall be
deemed satisfied; PROVIDED, HOWEVER, that nothing in this Section 3.3 shall
be deemed to constitute a waiver of any Default or Event of Default caused by
the failure to the conditions for disbursement or otherwise.
(ii) If, for any reason (including without limitation as a
result of the occurrence of an Event of Default with respect to any Borrower
pursuant to Section 6.1(e), (f) or (g)), Floating Rate Loans may not be made
by the Banks as described in Section 3.3(a)(i), then (A) the Borrowers agree
that each reimbursement amount not paid pursuant to the first sentence of
Section 3.3(a)(i) shall bear interest, payable on demand by the
Administrative Agent, at the interest rate then applicable to Floating Rate
Loans, and (B) effective on the date each such Floating Rate Loan would
otherwise have been made, each Bank severally agrees that it shall
unconditionally and irrevocably, without regard to the occurrence of any
Default or Event of Default, in lieu of deemed disbursement of Loans, to the
extent of such Bank's Commitment, purchase a participating interest in each
reimbursement amount. Each Bank will immediately transfer to the
Administrative Agent, in same day funds, the amount of its participation.
Each Bank shall share on a pro rata basis (calculated by reference to its
Commitment) in any interest which accrues thereon and in all repayments
thereof. If and to the extent that any Bank shall not have so made the
amount of such participating interest available to the Administrative Agent,
such Bank and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Administrative Agent until the date
such amount is paid to the Administrative Agent, at (x) in the case of the
Borrowers, the interest rate then applicable to Floating Rate Loans and (y)
in the case of such Bank, the Federal Funds Rate.
(b) The reimbursement obligation of the Borrowers under this
Section 3.3 shall be absolute, unconditional and irrevocable and shall remain
in full force and effect until all obligations of the Borrowers to the Banks
hereunder shall have been satisfied, and such obligations of the Borrowers
shall not be affected, modified or impaired upon the happening of any event,
including without limitation, any of the following, whether or not with
notice to, or the consent of, any Borrower:
(i) Any lack of validity or enforceability of any Letter of
Credit or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of
Credit Documents");
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(ii) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest in
collateral or security, with respect to any of the Letter of Credit Documents;
(iii) The existence of any claim, setoff, defense or other
right which the Borrowers may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), either Agent or any
Bank or any other person or entity, whether in connection with any of the
Letter of Credit Documents, the transactions contemplated herein or therein
or any unrelated transactions;
(iv) Any draft or other statement or document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(v) Payment by the Administrative Agent to the beneficiary
under any Letter of Credit against presentation of documents which do not
comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to such Letter of
Credit;
(vi) Any failure, omission, delay or lack on the part of the
either Agent or any Bank or any party to any of the Letter of Credit
Documents to enforce, assert or exercise any right, power or remedy conferred
upon either Agent, any Bank or any such party under this Agreement or any of
the Letter of Credit Documents, or any other acts or omissions on the part of
either Agent, any Bank or any such party;
(vii) Any other event or circumstance that would, in the
absence of this clause, result in the release or discharge by operation of
law or otherwise of any Borrower from the performance or observance of any
obligation, covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which any of the Borrowers have or may have
against the beneficiary of any Letter of Credit shall be available hereunder
to the Borrowers against the Agent or any Bank. Nothing in this Section 3.3
shall limit the liability, if any, of the Banks to the Borrowers pursuant to
Section 9.5.
3.4 PAYMENT METHOD. (a) All payments to be made by the Borrowers
hereunder will be made to the Administrative Agent for the account of the
Banks in Dollars and in immediately available funds not later than 1:00 p.m.
at the principal office of the Administrative Agent specified in Section 9.2.
Payments received after 1:00 p.m. at the place for payment shall be deemed to
be payments made prior to 1:00 p.m. at the place for payment on the next
succeeding Business Day; PROVIDED that payments with respect to Swing Line
Loans shall be made to the Administrative Agent for the account of the Swing
Line Bank. The Borrowers hereby
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authorize the Administrative Agent to charge their accounts with the
Administrative Agent in order to cause timely payment of amounts due
hereunder to be made (subject to sufficient funds being available in such
account for that purpose).
(b) At the time of making each such payment, the Borrowers shall,
subject to the other terms and conditions of this Agreement, specify to the
Administrative Agent that Borrowing or other obligation of the Borrowers
hereunder to which such payment is to be applied. In the event that the
Borrowers fail to so specify the relevant obligation or if an Event of
Default shall have occurred and be continuing, the Administrative Agent may
apply such payments as it may determine in its sole discretion.
(c) On the day such payments are deemed received, the
Administrative Agent shall remit to the Banks their pro rata shares of such
payments in immediately available funds to the Banks at their respective
address in the United States specified for notices pursuant to Section 9.2.
In the case of payments of principal and interest on any Borrowing, such pro
rata shares shall be determined with respect to each such Bank by the ratio
which the outstanding principal balance of its Loan included in such
Borrowing bears to the outstanding principal balance of the Loans of all of
the Banks included in such Borrowing, and in the case of fees paid pursuant
to Section 2.3 and other amounts payable hereunder (other than the closing
fees payable pursuant to Section 2.3(b), the Letter of Credit fees for the
Administrative Agent pursuant to Section 2.3(c), the Administrative Agent's
fees payable pursuant to Section 2.3(d) and amounts payable to any Bank under
Section 3.7), such pro rata shares shall be determined with respect to each
such Bank by the ratio which the Commitment of such Bank bears to the
Commitments of all the Banks.
3.5 NO SETOFF OR DEDUCTION. All payments of principal of and interest
on the Loans and other amounts payable by the Borrowers hereunder shall be
made by the Borrowers without setoff or counterclaim, and, subject to the
next succeeding sentence, free and clear of, and without deduction or
withholding for, or on account of, any present or future taxes, levies,
imposts, duties, fees, assessments, or other charges of whatever nature,
imposed by any governmental authority, or by any department, agency or other
political subdivision or taxing authority. If any such taxes, levies,
imposts, duties, fees, assessments or other charges are imposed, the
Borrowers will pay such additional amounts as may be necessary so that
payment of principal of and interest on the Loans and other amounts payable
hereunder, after withholding or deduction for or on account thereof, will not
be less than any amount provided to be paid hereunder and, in any such case,
the Borrowers will furnish to the Banks certified copies of all tax receipts
evidencing the payment of such amounts within 45 days after the date any such
payment is due pursuant to applicable law.
3.6 PAYMENT ON NON-BUSINESS DAY; PAYMENT COMPUTATIONS. Except as
otherwise provided in this Agreement to the contrary, whenever any
installment of principal of, or interest on, any Loan or any other amount due
hereunder becomes due and payable on a day which is not a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and,
in the case of any installment of principal, interest shall be payable
thereon at the rate per annum
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determined in accordance with this Agreement during such extension.
Computations of interest and other amounts due under this Agreement shall be
made on the basis of a year of 360 days (or 365 or 366 days, as the case may
be, when determining the Floating Rate) for the actual number of days
elapsed, including the first day but excluding the last day of the relevant
period.
3.7 ADDITIONAL COSTS. (a) In the event that any applicable law,
treaty or other international agreement, rule or regulation (whether domestic
or foreign) now or hereafter in effect and whether or not presently
applicable to any Bank or either Agent, or any interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by any Bank or either
Agent with any guideline, request or directive of any such authority (whether
or not having the force of law), shall (i) affect the basis of taxation of
payments to any Bank or either Agent of any amounts payable by the Borrowers
under this Agreement (other than taxes imposed on the overall net income of
any Bank or either Agent by the jurisdiction, or by any political subdivision
or taxing authority of any such jurisdiction, in which any Bank or either
Agent, as the case may be, has its principal office), or (ii) shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by
any Bank or either Agent, or (iii) shall impose any other condition with
respect to this Agreement, or any of the Commitments, the Notes or the Loans
or any Letter of Credit, and the result of any of the foregoing is to
increase the cost to any Bank or either Agent, as the case may be, of making,
funding or maintaining any Eurodollar Rate Loan or any Letter of Credit or to
reduce the amount of any sum receivable by any Bank or either Agent, as the
case may be, thereon, then the Borrowers shall pay to such Bank or such
Agent, as the case may be, from time to time, upon request by such Bank (with
a copy of such request to be provided to the Administrative Agent) or such
Agent, additional amounts sufficient to compensate such Bank or such Agent,
as the case may be, for such increased cost or reduced sum receivable to the
extent, in the case of any Eurodollar Rate Loan, such Bank or such Agent is
not compensated therefor in the computation of the interest rate applicable
to such Eurodollar Rate Loan. A statement as to the amount of such increased
cost or reduced sum receivable, prepared in good faith and in reasonable
detail by such Bank or such Agent, as the case may be, and submitted by such
Bank or such Agent, as the case may be, to the Borrowers, shall be conclusive
and binding for all purposes absent manifest error in computation.
(b) In the event that any applicable law, treaty or other
international agreement, rule or regulation (whether domestic or foreign) now
or hereafter in effect and whether or not presently applicable to any Bank or
either Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Bank or either Agent with any guideline,
request or directive of any such authority (whether or not having the force
of law), including any risk-based capital guidelines, affects or would affect
the amount of capital required or expected to be maintained by such Bank or
such Agent (or any corporation controlling such Bank or such Agent) and such
Bank or such Agent, as the case may be, determines that the amount of such
capital is increased by or based upon the existence of such Bank's or such
Agent's obligations hereunder and such increase has the effect of reducing
the rate of return on such Bank's or such Agent's (or such controlling
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corporation's) capital as a consequence of such obligations hereunder to a
level below that which such Bank or such Agent (or such controlling
corporation) could have achieved but for such circumstances (taking into
consideration its policies with respect to capital adequacy), then the
Borrowers shall pay to such Bank or such Agent, as the case may be, from time
to time, upon request by such Bank (with a copy of such request to be
provided to the Administrative Agent) or such Agent, additional amounts
sufficient to compensate such Bank or such Agent (or such controlling
corporation) for any increase in the amount of capital and reduced rate of
return which such Bank or such Agent reasonably determines to be allocable to
the existence of such Bank's or such Agent's obligations hereunder. A
statement as to the amount of such compensation, prepared in good faith and
in reasonable detail by such Bank or such Agent, as the case may be, and
submitted by such Bank or such Agent to the Company, shall be conclusive and
binding for all purposes absent manifest error in computation.
3.8 ILLEGALITY AND IMPOSSIBILITY. In the event that any applicable
law, treaty or other international agreement, rule or regulation (whether
domestic or foreign) now or hereafter in effect and whether or not presently
applicable to any Bank, or any interpretation or administration thereof by
any governmental authority charged with the interpretation or administration
thereof, or compliance by any Bank with any guideline, request or directive
of such authority (whether or not having the force of law), including without
limitation exchange controls, shall make it unlawful or impossible for any
Bank to maintain any Loan under this Agreement, the Borrowers shall upon
receipt of notice thereof from such Bank repay in full the then outstanding
principal amount of each Loan so affected, together with all accrued interest
thereon to the date of payment and all amounts owing to such Bank under
Section 3.9, (a) on the last day of the then current Interest Period
applicable to such Loan if such Bank may lawfully continue to maintain such
Loan to such day, or (b) immediately if such Bank may not continue to
maintain such Loan to such day.
3.9 INDEMNIFICATION. If the Borrowers make any payment of principal
with respect to any Eurodollar Rate Loan on any other date than the last day
of an Interest Period applicable thereto (whether pursuant to Section 3.8,
Section 6.2 or otherwise), or if the Borrowers fail to borrow any Eurodollar
Rate Loan after notice has been given to the Banks in accordance with Section
2.4, or if the Borrowers fail to make any payment of principal or interest in
respect of a Eurodollar Rate Loan when due, the Borrowers shall reimburse
each Bank on demand for any resulting loss or expense incurred by each such
Bank, including without limitation any loss incurred in obtaining,
liquidating or employing deposits from third parties, whether or not such
Bank shall have funded or committed to fund such Loan. A statement as to the
amount of such loss or expense, prepared in good faith and in reasonable
detail by such Bank and submitted by such Bank to the Borrowers, shall be
conclusive and binding for all purposes absent manifest error in computation.
Calculation of all amounts payable to such Bank under this Section 3.9 shall
be made as though such Bank shall have actually funded or committed to fund
the relevant Eurodollar Rate Loan through the purchase of an underlying
deposit in an amount equal to the amount of such Loan in the relevant market
and having a maturity comparable to the related Interest Period and through
the transfer of such deposit to a domestic office of such Bank in the United
States;
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PROVIDED, HOWEVER, that each Bank may fund any Eurodollar Rate Loan in any
manner it sees fit and the foregoing assumption shall be utilized only for
the purpose of calculation of amounts payable under this Section 3.9.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 ORIGINAL. To induce the Agents and the Banks to enter into this
Agreement, each Borrower, jointly and severally, represents and warrants to
the Agents and the Banks, as of the date hereof and, except as otherwise
expressly provided, as of all times (including, without limitation, as of the
date each Advance is requested and made) until the Termination Date and
thereafter until all Obligations under the Loan Documents are satisfied, as
follows:
(a) Citation is a corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware; each
Consolidated Entity is a corporation or limited partnership, as the case may
be, duly organized, validly existing and in good standing under the Laws of
its state of organization, Citation and each Consolidated Entity has the
lawful power to own its properties and to engage in the business it conducts,
and is duly qualified and in good standing as a foreign corporation in the
jurisdictions wherein the nature of the business transacted by it or property
owned by it makes such qualification necessary; the states in which Citation
and each Consolidated Entity are qualified to do business are set forth in
SCHEDULE 4.1(a) annexed hereto; the addresses of all places of business and
headquarters of Citation and each Consolidated Entity are as set forth in
SCHEDULE 4.1(a) annexed hereto and the addresses of all places where the
Collateral is located and a brief description of the nature of the Collateral
at each such location are set forth in SCHEDULE 4.1(a) annexed hereto;
(b) Except as set forth in SCHEDULE 4.1(b) annexed hereto,
neither Citation nor any Consolidated Entity has used any corporate or
fictitious name other than the name for Citation or such Consolidated Entity,
as the case may be, as is used in this Agreement, which is the same as the
name shown, respectively, on Citation's and such Consolidated Entity's
certificate or articles of incorporation or certificate of limited
partnership, as applicable, through the date of filing of the last amendment
thereto;
(c) None of the Borrowers is directly or indirectly controlled
by, or acting on behalf of, any Person which is an "Investment Company,"
within the meaning of the Investment Company Act of 1940, as amended;
(d) Neither Citation nor any Consolidated Entity has been the
surviving corporation in a merger, acquired any business, or changed its
principal executive office within five (5) years and one (1) month prior to
the date hereof, except as set forth in SCHEDULE 4.1(d) annexed hereto;
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(e) Neither Citation nor any Consolidated Entity is in default
with respect to any of its existing Indebtedness, and the making and
performance of this Agreement, the Notes, and the other Loan Documents will
not (immediately, or with the passage of time, the giving of notice, or both):
(1) Violate the charter or by-law provisions or the
certificate of limited partnership or partnership
agreement or any similar document of any
Borrower, or violate any Law or result in a
default under any contract, agreement or
instrument to which any Borrower or any
Consolidated Entity is a party or by which any
Borrower or any Consolidated Entity or its
property is bound; or
(2) Result in the creation or imposition of any
security interest in, or lien or encumbrance
upon, any of the assets of any Borrower or any
Consolidated Entity except in favor of the
Collateral Agent for the benefit of the Banks and
the Agents;
(f) Each Borrower has the power and authority to enter into and
perform this Agreement, the Notes, and the other Loan Documents, and to incur
the obligations herein and therein provided for, and has taken all corporate
or partnership, as the case may be, action necessary to authorize the
execution, delivery, and performance of this Agreement, the Notes, and the
other Loan Documents;
(g) This Agreement, the Notes and the other Loan Documents are,
or when delivered will be, valid, binding, and enforceable in accordance with
their respective terms;
(h) The Security Documents, together with any UCC-1's and all
other documents filed in connection therewith, create as security for the
Obligations, a valid and enforceable perfected first-priority security
interest in and lien on all of each Borrower's rights, title and interest in
the Collateral, in favor of the Collateral Agent for the benefit of the Banks
and the Agents, superior and prior to the rights of all third Persons and
subject to no other Liens.
(i) Except as disclosed in SCHEDULE 4.1(i) annexed hereto, there
is no pending order, notice, claim, litigation, proceeding or investigation
against or affecting Citation or any Consolidated Entity whether or not
covered by insurance, that would involve the payment of $500,000 or more if
adversely determined;
(j) Citation and each Consolidated Entity has good and marketable
title to all of its assets, including the Collateral, free of any security
interest, encumbrance or lien, or claim of any third person except for
Permitted Liens;
(k) The Financial Statements, including any schedules and notes
pertaining thereto, have been prepared in accordance with Generally Accepted
Accounting
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Principles consistently applied, and fully and fairly present the financial
condition of Citation and the Consolidated Entities at the dates thereof and
the results of operations for the periods covered thereby, except that the
interim Financial Statements may not include all footnotes required for
conformity with Generally Accepted Accounting Principles, and there have been
no material adverse changes in the Consolidated financial condition or
business of Citation and the Consolidated Entities from the dates of the
Financial Statements to the date hereof;
(l) As of the date of the Financial Statements, Citation and the
Consolidated Entities had no material Indebtedness of any nature, including,
but without limitation, liabilities for taxes and any interest or penalties
relating thereto, except to the extent reflected (in a footnote or otherwise)
and reserved against in the Financial Statements or as disclosed in or
permitted by this Agreement; none of the Borrowers knows or has any
reasonable ground to know of any basis for the assertion against it or any
Consolidated Entity of any material Indebtedness of any nature not fully
reflected and reserved against in the Financial Statements;
(m) Except as otherwise permitted herein, each of Citation and
the Consolidated Entities has filed all federal, state and local tax returns
and other reports that it is required by Law to file prior to the date hereof
and which are material to the conduct of its businesses, has paid or caused
to be paid all taxes, assessments and other governmental charges that are due
and payable prior to the date hereof, and has made adequate provision for the
payment of such taxes, assessments or other charges accruing but not yet
payable; none of the Borrowers has any knowledge of any deficiency or
additional assessment in a materially important amount in connection with any
taxes, assessments or charges not provided for on its books;
(n) Except as otherwise disclosed in SCHEDULE 4.1(n) annexed
hereto, or except to the extent that the failure to comply would not
materially interfere with the conduct of the business of Citation or any
Consolidated Entity, Citation and each Consolidated Entity has complied with
all applicable Laws with respect to:
(1) Any restrictions, specifications, or other
requirements pertaining to products that Citation
or any Consolidated Entity manufactures or sells
or to the services that Citation or any
Consolidated Entity performs;
(2) The conduct of its businesses; and
(3) The use, maintenance and operation of the real
and personal properties owned or leased by it in
the conduct of its businesses;
(o) No representation by any Borrower contained herein or in any
certificate or other document furnished by any Borrower pursuant hereto
contains any untrue statement of material fact or omits to state a material
fact necessary to make such representation or warranty not misleading in
light of the circumstances under which it was made;
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(p) Each consent, approval or authorization of, or filing,
registration or qualification with, any Person that is required to be
obtained or effected by Citation or any Consolidated Entity in connection
with the execution and delivery of this Agreement, the Notes, and the other
Loan Documents or the undertaking or performance of any obligation hereunder
or thereunder has been duly obtained or effected;
(q) All existing Indebtedness of each Borrower which, with
respect to any particular item, is in excess of $150,000:
(1) For money borrowed; or
(2) Under any security agreement, mortgage, or
agreement covering the lease by any Borrower as
lessee of real or personal property,
is described in the most recent Financial Statements furnished by Borrowers
to the Banks;
(r) To the best of each Borrower's knowledge, all parties
(including each Borrower and each Consolidated Entity) to any material lease,
contract or commitment of any kind to which any Borrower or any other
Consolidated Entity is a party have complied with the provisions of such
lease, contract or commitment; no party is in default under any material
lease, contract, or other commitment thereof and no event has occurred which,
but for the giving of notice or the passage of time, or both, would
constitute a default;
(s) Neither Citation nor any Consolidated Entity has made any
agreement or taken any action which may cause any Person to become entitled
to a commission or finder's fee as a result of the making of the Advances
hereunder;
(t) Citation's Consolidated federal tax returns for all years of
operation prior to its fiscal year ended October 2, 1995 have been filed with
the Internal Revenue Service and have not been challenged; PROVIDED, HOWEVER,
that said tax return for the fiscal year ended September 30, 1993 is under
audit, but there has not to date been any adverse determination made with
respect thereto;
(u) Except as set forth on SCHEDULE 4.1(u) annexed hereto, (1)
each Benefit Plan that any Borrower or any ERISA Affiliate maintains or
contributes to, or has maintained or contributed to, that is a Pension Plan
satisfies the minimum funding standards of Section 302 of ERISA; (2) there
have been no Reportable Events (as defined in Section 4043 of ERISA) or
Prohibited Transactions (as defined in Section 408 of ERISA) with respect to
any such Benefit Plan; (3) the Internal Revenue Service has not issued a
minimum funding waiver with respect to any such Benefit Plan that is a
Pension Plan; (4) none of such Benefit Plans is a multiemployer plan as
defined in Section 3(37) of ERISA; (5) each such Benefit Plan to which 4980B
of the Internal Revenue Code of 1986, as amended, applies has been operated
in compliance therewith; and (6) no such Benefit Plan provides benefits to
employees beyond
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retirement or other termination of employment other than benefits required by
Section 4980B of the Internal Revenue Code of 1986, as amended;
(v) SCHEDULE 4.1(v) annexed hereto correctly sets forth the
corporate or partnership, as the case may be, name, the jurisdiction of
incorporation or partnership formation, as the case may be, and the ownership
(corporate stock or partnership interest, as the case may be) of Citation and
each Consolidated Entity. All outstanding shares of capital stock or
partnership interests of each class or type of each of Citation and the
Consolidated Entities have been validly issued and are fully paid and
nonassessable and, in the case of each such Consolidated Entity, are owned,
beneficially and of record, by Citation or another Consolidated Entity free
and clear of any Liens. Each Participating Subsidiary is a Consolidated
Entity;
(w) Each Borrower owns or has the rights to use, pursuant to
written licenses, all patents, trademarks and copyrights used or employed in
its business and products; and
(x) No Borrower's Inventory is subject to any license agreement
relating to patents, trademarks or copyrights which could, directly or
indirectly, preclude or render impracticable the realization by Agent for the
benefit of the Banks of the value of such Inventory.
4.2 SURVIVAL. All of the representations and warranties set forth in
Section 4.1 shall survive until all Obligations are satisfied in full and
there remain no outstanding Commitments.
ARTICLE V.
BORROWERS' COVENANTS
Each Borrower does hereby, jointly and severally, covenant and agree
with the Agents and the Banks that, so long as any of the Obligations remains
unsatisfied or any Commitments remain outstanding, and thereafter until this
Agreement is terminated in writing, it will comply and it will cause the
other Borrowers and the Consolidated Entities to comply, at all times with
the following covenants:
5.1 AFFIRMATIVE COVENANTS.
(a) Each Borrower will take and will cause each other
Consolidated Entity to take all necessary steps to preserve their respective
corporate or limited partnership, as the case may be, existence and
franchises and comply with all present and future Laws, applicable to it in
the operation of its businesses, and all material agreements to which it is
subject.
(b) Each Borrower will use the proceeds of the Advances only for
the purposes set forth below in this Section 5.1(b), and will furnish to each
Bank such evidence as it
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may reasonably require with respect to such use. The proceeds of the
Advances shall be used by the Borrowers for general working capital and, to
the extent permitted by this Agreement, to fund Acquisition Capital
Expenditures; provided, however, no Eurodollar Rate Loans shall be used by
the Borrowers to fund any Acquisition Capital Expenditures until the Banks
shall have received the Margin Certificate which takes into account such
Acquisition Capital Expenditures and any appropriate adjustments to the
applicable Margin shall have taken effect.
(c) Citation will furnish to each Bank:
(1) Within thirty (30) days after the close of each
calendar month:
(i) A Consolidated and consolidating income
statement of Citation and the Consolidated
Entities for such period; and
(ii) A Consolidated and consolidating balance
sheet of Citation and the Consolidated
Entities as of the end of such period all in
reasonable detail, subject to year-end audit
adjustments, and certified by Citation's
president or principal financial officer to
have been prepared in accordance with
Generally Accepted Accounting Principles,
consistently applied, by Citation, except
for any inconsistencies explained in such
certificate to the satisfaction of the
Required Banks;
(2) Within sixty (60) days after the close of each
quarterly accounting period in each fiscal year:
(i) A Consolidated statement of Stockholders'
Equity and a Consolidated statement of Cash
Flows of Citation and the Consolidated
Entities for such quarterly period;
(ii) Consolidated and consolidating income
statements of Citation and the Consolidated
Entities for such quarterly period; and
(iii) Consolidated and consolidating
balance sheets of Citation and the
Consolidated Entities as of the
end of such quarterly period all
in reasonable detail, subject to
year-end audit adjustments and
certified by Citation's president
or principal financial officer to
have been prepared in accordance
with Generally Accepted Accounting
Principles, consistently applied,
by Citation and the Consolidated
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Entities, except for any
inconsistencies explained in such
certificate to the satisfaction of
the Required Banks;
(3) Within ninety (90) days after the close of each
fiscal year:
(i) A Consolidated statement of Stockholders'
Equity and a Consolidated statement of Cash
Flows of Citation and the Consolidated
Entities for such fiscal year;
(ii) Consolidated and consolidating income
statements of Citation and the Consolidated
Entities for such fiscal year; and
(iii) Consolidated and consolidating
balance sheets of Citation and the
Consolidated Entities as of the
end of such fiscal year;
all in reasonable detail, including all
supporting schedules and comments; the
Consolidated statements and balance sheets
to be audited by an independent certified
public accountant selected by Citation and
acceptable to the Required Banks, and
certified by such accountants to have been
prepared in accordance with Generally
Accepted Accounting Principles, consistently
applied, by Citation and the Consolidated
Entities except for any inconsistencies
explained in such certificate to the
satisfaction of the Required Banks; in
addition, Citation will obtain from such
independent certified public accountants and
deliver to the Banks, within ninety (90)
days after the close of each fiscal year,
their written statement that in making the
examination necessary to their certification
they have obtained no knowledge of any Event
of Default by Citation or any other
Borrower, or disclosing all Events of
Default of which they have obtained
knowledge; PROVIDED, HOWEVER, that in making
their examination such accountants shall not
be required to go beyond the bounds of
generally accepted auditing procedures for
the purpose of certifying financial
statements; Lender shall have the right from
time to time to discuss Citation's and each
Consolidated Entity's affairs directly with
Citation's independent certified public
accountant after notice to Citation and
opportunity of Citation to be present at any
such discussions.
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(4) Contemporaneously with each quarterly and year-end
financial report required by the foregoing paragraphs,
a Compliance Certificate, wherein in addition to the
financial information reported in such Compliance
Certificate, the president or principal financial
officer of Citation shall certify that he has
individually reviewed the provisions of this Agreement
and that a review of the activities of Citation and the
Consolidated Entities during such year or quarterly
period, as the case may be, has been made by or under
the supervision of the signer of such certificate with
a view to determine whether each Borrower has kept,
observed, performed and fulfilled all its obligations
under this Agreement, and that, to the best of his
knowledge, each Borrower has observed and performed
each and every undertaking contained in this Agreement
and is not at the time in default in the observance or
performance of any of the terms and conditions hereof,
or specifying all such Defaults and Events of Default
of which he may have knowledge;
(5) Promptly after sending or making available or filing of
the same, copies of all reports, proxy statements and
financial statements that any Borrower sends or makes
available to its stockholders or other holders of
equity interests and all registration statements and
reports that any Borrower files with the Securities and
Exchange Commission or any successor Person;
(6) Not later than twenty-one (21) days after the end of
each calendar month, a certificate (the "Margin
Certificate") executed by the chief financial officer,
treasurer or chief executive officer of Citation
setting forth (a) the ratio of Funded Debt to four
times EBITDA for the period of three (3) consecutive
calendar months ending at the end of said calendar
month and (b) the computations used in calculating said
ratio; and
(7) Upon any Bank's request from time to time, copies of
any or all agreements, contracts, or commitments of the
type referred to in Section 4.1(r) hereof.
(d) Citation and each Consolidated Entity will maintain its
Inventory, Equipment, real estate and other properties in good condition and
repair (normal wear and tear excepted), and will pay and discharge, or cause
to be paid and discharged when due, the cost of repairs to or maintenance of
the same, and will pay or cause to be paid all rental or mortgage payments
due on such real estate. Borrowers hereby agree that, in the event they or
any Consolidated Entity fail to pay or cause to be paid any such payments,
either Agent may do so and on demand be reimbursed therefor by Borrowers. In
addition, Borrowers jointly and severally agree to reimburse the Agents for
any reasonable expenses incurred by either of them to protect and preserve
the Collateral pursuant to Section 8.5(c).
(e) Citation and each Consolidated Entity will maintain, or cause
to be maintained, public liability insurance, and fire and extended coverage
insurance on all tangible
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assets owned by it, naming the Collateral Agent as mortgagee and loss payee
in all policies insuring the Collateral, all in such form and amounts as are
consistent with industry practices and with such insurers as may be
satisfactory to the Administrative Agent. Such policies shall contain a
provision whereby they cannot be canceled except after thirty (30) days'
written notice to the Administrative Agent. Each Borrower will furnish to the
Administrative Agent such evidence of insurance as the Administrative Agent
may require. Borrowers jointly and severally hereby agree that, in the event
they or any Consolidated Entity fail to pay or cause to be paid the premium
on any such insurance, either Agent may do so and be reimbursed by Borrowers
therefor. Each Borrower hereby assigns to the Collateral Agent for the
benefit of the Banks any returned or unearned premiums that may be due such
Borrower upon cancellation of any such policies for any reason whatsoever and
directs the insurers to pay the Collateral Agent any amounts so due. The
Collateral Agent is hereby appointed each Borrower's attorney-in-fact
(without requiring the Collateral Agent to act as such) to endorse any check
which may be payable to such Borrower to collect such returned or unearned
premiums or the proceeds of such insurance, and any amount so collected may
be applied by the Collateral Agent toward satisfaction of any of the
Obligations.
(f) Citation and each Consolidated Entity will pay or cause to be
paid when due all taxes, assessments and charges or levies imposed upon it or
on any of its property or which it is required to withhold and pay over,
except where contested in good faith by appropriate proceedings with adequate
reserves therefor having been set aside on their books; PROVIDED, HOWEVER,
that Citation and each Consolidated Entity shall pay or cause to be paid all
such taxes, assessments, charges or levies forthwith whenever foreclosure on
any lien that attached (or security therefor) appears imminent.
(g) Citation and each Consolidated Entity will, when requested to
do so, make available for inspection by each Agent's and Bank's duly
authorized representatives any of its books and Records, and will furnish to
each Agent and Bank any information regarding its business affairs and
financial condition within a reasonable time after written request therefor.
Each Borrower will, and will cause each Consolidated Entity to, keep proper
books of record and account in which full, true and correct entries in all
material respects shall be substantially in conformity with GAAP and all
requirements of Law shall be satisfied in all dealings and transactions in
relation to its business and activities. Each Borrower will, and will cause
each Consolidated Entity to, permit each Agent's and Bank's officers and
designated representatives to visit and inspect, during normal business
hours, any of the properties of such Borrower or such Consolidated Entity and
to examine the books of account of such Borrower or such Consolidated Entity
and discuss the affairs, finances, accounts of such Borrower or such
Consolidated Entity with, and be advised as to the same by, its and their
officers, all at such reasonable times and intervals and to such reasonable
extent as either Agent or Bank may from time to time request. In connection
with the foregoing, each of the Agents and the Banks agrees to utilize such
documents, materials and information solely and exclusively in connection
with this Agreement and the other Loan Documents and the transactions
contemplated therein to exercise its best efforts to keep all such documents,
materials and information delivered or made available by Borrowers
confidential from anyone other than Persons employed or retained by such
Agent or Bank, as the case may be,
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who are expected to be engaged in evaluating, approving, structuring, and
forcing or administering this Agreement; PROVIDED, HOWEVER, that nothing
herein shall prevent such Agent or Bank from disclosing such information;
(1) to any actual or potential assignee or
participant of any Advance or Note; provided
that such assignee or participant shall be
subject to this Section;
(2) upon order of any court or administrative
agency after it, to the extent practical,
gives notice to Citation pursuant to which
Citation may seek a protective order against
such disclosure;
(3) upon request or demand of any regulatory
agency or authority having jurisdiction over
such Agent or such Bank, as the case may be;
(4) which has been publicly disclosed;
(5) in connection with any litigation;
(6) to the extent reasonably required in
connection with the exercise of any remedy
hereunder; or
(7) to such Agent's or such Bank's legal counsel
and independent auditors in connection with
such Agent's or such Bank's business.
(h) Citation and each Consolidated Entity will collect their
respective Accounts and sell their respective Inventory only in the ordinary
course of business.
(i) Citation and each Consolidated Entity will keep accurate and
complete Records of their respective Accounts, Inventory and Equipment,
consistent with sound business practices.
(j) Citation and each Consolidated Entity will give immediate
notice to the Banks of:
(1) Any litigation or proceeding in which it is
a party if an adverse decision therein would
require it to pay over more than $500,000 or
deliver assets the value of which exceeds
such sum (whether or not the claim is
considered to be covered by insurance); and
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(2) The institution of any other suit or
proceeding involving it that might
materially and adversely affect its
operations, financial condition, property or
business prospects.
(k) Within ten (10) days of the Administrative Agent's or any
Bank's request therefor, each Borrower will furnish to the Administrative
Agent or such Bank, as the case may be, copies of federal income tax returns
filed by such Borrower.
(l) Citation and each Consolidated Entity will pay when due (or
within applicable grace periods) all Indebtedness due third Persons, except
when the amount thereof is being contested in good faith by appropriate
proceedings and with adequate reserves there for being set aside on the books
of Citation and each Consolidated Entity. If default is made by Citation or
any Consolidated Entity in the payment of any principal (or installment
thereof) of, or interest on, any such Indebtedness, the Administrative Agent
shall have the right, in its discretion, to pay such interest or principal
for the account of Citation or such Consolidated Entity and be reimbursed by
Borrowers therefor.
(m) Citation and each Consolidated Entity will notify the Banks
immediately if it becomes aware of the occurrence of any Event of Default or
of any fact, condition or event that only with the giving of notice or
passage of time or both, could become an Event of Default, or if they become
aware of any material adverse change in the business prospects, financial
condition (including, without limitation, proceedings in bankruptcy,
insolvency, reorganization, or the appointment of a receiver or trustee), or
results of operations of Citation or any Consolidated Entity, or of the
failure of Citation or any Consolidated Entity to observe any of its
undertakings hereunder or under any of the Loan Documents.
(n) Citation and each Consolidated Entity will notify the
Administrative Agent thirty (30) days in advance of any change in the
location of any of its places of business or of the establishment of any new
place of business, or the discontinuance of any existing place of business.
(o) Citation and each Consolidated Entity will notify the
Administrative Agent thirty (30) days in advance of any change in the
location or use of any of the Collateral and within thirty (30) days after
any change in condition, aside from normal wear and tear, of any of the
Collateral.
(p) Each Borrower and each ERISA Affiliate will:
(1) Fund each of its Pension Plans, if any, in
accordance with no less than the minimum
funding standards set forth in Section 302
of ERISA;
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(2) Furnish to the Banks, promptly after filing
the same, copies of all reports or
statements filed with the United States
Department of Labor, the Pension Benefit
Guaranty Corporation, or the Internal
Revenue Service with respect to any Benefit
Plans;
(3) Promptly advise the Banks of the occurrence
of any Reportable Event or Prohibited
Transaction; each as defined in ERISA, with
respect to any Benefit Plan; and
(4) Promptly advise the Banks of the issuance of
a funding waiver by the Internal Revenue
Service with respect to any Pension Plan.
(q) If a private placement of the debt or equity of Citation or
any of the Consolidated Entities is entered into during the term of this
Agreement and any such private placement includes a Funded Debt to
Capitalization or similar covenant with respect to Citation, Citation and the
other Borrowers shall grant to the Banks the same covenant with greater
restrictions of 2.5%. For example, if the private placement includes a
covenant that Funded Debt to Capitalization shall not be more than 65%, the
percentage applicable to the Banks shall be 62.5%.
5.2 NEGATIVE COVENANTS.
(a) Neither Citation nor any Consolidated Entity will change its
name, enter into any merger, consolidation, reorganization or
recapitalization, enter into any joint venture or similar arrangement,
reclassify its capital stock, or liquidate or dissolve; provided that this
Section 5.2(a) shall not prohibit any merger of a Consolidated Entity
completed as part of a transaction permitted under Section 5.2(r).
(b) Neither Citation nor any Consolidated Entity will sell,
transfer, lease or otherwise dispose of all or (except in the ordinary course
of business) any material part of its assets.
(c) Neither Citation nor any Consolidated Entity will sell, or
enter into any agreement to sell, any of its Accounts.
(d) Neither Citation nor any Consolidated Entity will sell,
lease, transfer, assign, or otherwise dispose of any of the Collateral except
in the ordinary course of business and as permitted under this Agreement.
(e) Neither Citation nor any Consolidated Entity will sell, or
otherwise dispose of, or for any reason cease operating, any of its
divisions, franchises, or lines of business.
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(f) Neither Citation nor any Consolidated Entity will mortgage,
pledge, or grant or permit to exist a security interest in or lien upon any
of its assets of any kind, now owned or hereafter acquired, except for
Permitted Liens.
(g) Neither Citation nor any Consolidated Entity will incur any
Contingent Liabilities, except for (i) the endorsement of commercial paper
for deposit or collection in the ordinary course of business, (ii) deferred
purchase price obligations, including without limitation pursuant to earn-out
provisions, incurred as part of Acquisition Capital Expenditures permitted
under Section 5.2(r), and (iii) the guarantee by Citation of obligations of
Participating Subsidiaries permitted under this Agreement.
(h) Neither Citation nor any Consolidated Entity will incur,
create, assume, or permit to exist any Indebtedness except:
(1) The Advances;
(2) Indebtedness to Persons other than the Banks
which is existing on the date of this
Agreement (all such interest-bearing
Indebtedness in excess of $10,000 being
listed on SCHEDULE 5.2(H) annexed hereto);
(3) Trade indebtedness incurred in the ordinary
course of business;
(4) Contingent Liabilities permitted by Section
5.2(g);
(5) Indebtedness not to exceed $1,000,000 which
is unsecured or secured by Permitted Liens;
(6) Lease obligations permitted by Section
5.2(m);
(7) Hedging Contracts; and
(8) Purchase money Indebtedness of any person
acquired by Citation, provided that such
purchase money Indebtedness was existing at
the time of such acquisition and not created
in contemplation thereof and such purchase
money Indebtedness was incurred to acquire
fixed assets.
(i) Neither Citation nor any Consolidated Entity will make any
assignment or transfer of Accounts, Chattel Paper or Equipment, or, other
than in the ordinary course of business, of Inventory.
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(j) Neither Citation nor any Consolidated Entity will (i) form or
acquire any Subsidiary that would be used to acquire the assets of or to
substantially succeed to the operations of any of the Current Operating
Divisions or (ii) except as permitted under Section 5.2(r) or 5.2(k), make
any investment in or loan to any Person, without the prior written consent of
the Required Banks in their sole discretion; PROVIDED, HOWEVER, that such
consent shall not be unreasonably withheld with respect to any such action
described in clause (i) of this Section 5.2(j) taken in connection with any
restructuring of any Subsidiaries or divisions of Citation or any
Consolidated Entity for tax or other legal reasons provided that such formed
or acquired Subsidiary satisfies the requirements for, and becomes, a
Participating Subsidiary in accordance with the terms of this Agreement.
(k) Neither Citation nor any Consolidated Entity will make any
loan or advance to any officer, shareholder, director or employee of Citation
or any Consolidated Entity except for business travel and similar temporary
advances in the ordinary course of business.
(l) Citation will not declare or pay any dividends, or make any
other payments or distributions on account of its capital stock, which exceed
in the aggregate for all such dividends, payments and distributions in any
fiscal year an amount equal to 10% of Citation's net income, determined in
accordance with Generally Accepted Accounting Principles, for the immediately
preceding fiscal year; PROVIDED, HOWEVER, that no dividends or other such
payments shall be made by Citation at any time that the ratio of Funded Debt
to four times EBITDA for the immediately preceding three (3) months, as
determined as of the end of the latest fiscal quarter of Citation for which a
Compliance Certificate has been delivered pursuant to Section 5.1(c)(4), is
equal to or greater than 2.0 to 1.0.
(m) Neither Citation nor any Consolidated Entity will pay, in an
aggregate amount in any fiscal year (commencing with the current fiscal
year), lease obligations in excess of $1,000,000. As used in this paragraph,
the term "lease" means a lease that is NOT reflected on a Consolidated
balance sheet of Citation and the Consolidated Entities and should not be so
reflected under Generally Accepted Accounting Principles.
(n) Neither Citation nor any Consolidated Entity will purchase or
otherwise invest in or hold securities, non-operating real estate or other
non-operating assets, except:
(1) Direct obligations of the United States of
America;
(2) The present investment as of the Effective
Date in any such assets; and
(3) Operating assets that hereafter become nonoperating assets.
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(o) Neither Citation nor any Consolidated Entity will redeem,
purchase or retire any of its capital stock or partnership or other ownership
interests or grant or issue any warrant, right or option pertaining thereto
or other security convertible into any of the foregoing, or permit any
redemption or retirement of the outstanding capital stock or partnership or
other ownership interests of Citation or of any Consolidated Entity. No
Consolidated Entity will issue any capital stock or partnership or other
ownership interests or grant or issue any warrant, right or option pertaining
thereto or other security convertible into any of the foregoing.
(p) Neither Citation nor any Consolidated Entity will prepay,
directly or indirectly, any Subordinated Indebtedness, Indebtedness for
borrowed money, or Indebtedness secured by any of its assets (except, in each
case, the Obligations), or enter into or modify any agreement as a result of
which the terms of payment of any of the foregoing Indebtedness are waived or
modified.
(q) Neither Citation nor any Consolidated Entity will enter into
any sale-leaseback transaction.
(r) Neither Citation nor any Consolidated Entity will acquire any
stock in, or acquire all or substantially all of the assets of, any Person,
or otherwise incur any Acquisition Capital Expenditures which for any
transaction or series of related transactions exceed $10,000,000 without
furnishing to the Administrative Agent and the Banks, at least 10 days prior
thereto, the following, in form and substance satisfactory to the
Administrative Agent: (i) historical financial information on the entity or
assets to be acquired, (ii) pro forma financial statements after giving
effect to the acquisition, and showing that no Event of Default or Default
would exist after giving effect to such acquisition or be caused thereby, and
(iii) information showing that the purchase price paid for such acquisition
is based on a historical multiple of cash flow that is consistent with
Citation's other acquisitions.
(s) Neither Citation nor any Consolidated Entity will furnish to
either Agent or any Bank any certificate or other document that will contain
any untrue statement of material fact or that will omit to state a material
fact necessary to make it not misleading in light of the circumstances under
which it was furnished.
(t) Neither Citation nor any Consolidated Entity will directly or
indirectly apply any part of the proceeds of the Advances to the purchasing
or carrying of any "margin stock" within the meaning of Regulation U or any
regulations, interpretations or rulings thereunder.
(u) Neither Citation nor any Consolidated Entity will enter into
any transaction or series of transactions where any Affiliate, officer,
director or shareholder of Citation or a Consolidated Entity, or any family
member or Affiliate of the foregoing, is a counter-party to such transaction
except for such transactions as are entered into on terms that would
otherwise be available with unaffiliated Persons on an "arms-length" basis.
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(v) Neither Citation nor any Consolidated Entity will enter into
any agreement whereby title to any of Citation's or the Consolidated Entity's
inventory passes to any transferee prior to delivery by Citation or the
Consolidated Entity
(w) Citation and the Consolidated Entities will not incur during
any Fiscal Year on an aggregate basis Capital Expenditures (exclusive of
Acquisition Capital Expenditures) exceeding 200% of the annual depreciation
expense of Citation and the Consolidated Entities for such fiscal year;
PROVIDED that for any Consolidated Entity that was acquired by Citation or
another Consolidated Entity during such fiscal year, for purposes of this
covenant the acquired Consolidated Entity's depreciation expense for such
fiscal year shall be deemed to have been equal to its depreciation expense
for its last complete fiscal year prior to such acquisition.
(x) Neither Citation nor any Consolidated Entity will enter into
any private placement of any of its debt or equity with any Persons other
than all the Banks unless the covenants contained in the agreements for any
such private placement are less restrictive on Citation and the Consolidated
Entities than those contained in this Agreement.
5.3 FINANCIAL COVENANTS. Citation will maintain at all times:
(a) Consolidated Tangible Net Worth in the following minimum
amounts:
At 3/31/96 $60,000,000
Last day of Minimum required Consolidated Tangible
each fiscal Net Worth for previous quarter-end plus
quarter thereafter the greater of (i) $3,500,000 or (ii) 50%
of Consolidated Net Income for such
previous quarter
For purposes of the above calculations, a loss shall count
as $0.
(b) A ratio of Funded Debt to four times EBITDA for the period of
the prior three (3) consecutive months of not more than:
1/1/96 through 12/31/96 3.50 to 1.0
1/1/97 and thereafter 3.25 to 1.0
(c) Fixed Charge Coverage of not less than 2.0 to 1.0.
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(d) Cash Flow Coverage of not less than 1.10 to 1.0.
5.4 INTERPRETATION AND CONSOLIDATION. Except as otherwise expressly
provided in this Article V, each Borrower shall also cause and require each
of the Consolidated Entities to observe and perform the covenants and
agreements of this Article V that are to be observed and performed by such
Borrower, regardless of whether any such covenant expressly refers to the
Consolidated Entities. All financial covenants set forth in Section 5.3 shall
be computed only on a Consolidated basis for Citation and the Consolidated
Entities. In addition, all calculations required to be made in connection
with any numerical or dollar limitations set forth in this Article V shall be
made only on a combined or Consolidated basis for Citation and the
Consolidated Entities, in accordance with Generally Accepted Accounting
Principles, but after elimination of intercompany items.
ARTICLE VI.
DEFAULT
6.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default hereunder:
(a) Any Borrower shall fail to pay when due any installment of
principal under the Loans, any reimbursement obligation in respect of
drawings on the Letters of Credit, or any interest or fee payable under this
Agreement, any Security Document or any other Loan Document.
(b) (1) Any Borrower shall fail to observe or perform any of its
covenants contained in Sections 5.1(a), 5.2(a) or 5.3; or
(2) Any Borrower or any Consolidated Entity shall fail to
observe or perform any other obligation to be observed or performed by it
hereunder, or under the Notes or under any of the other Loan Documents, and
such failure shall continue for five (5) days after the earlier of: (i)
notice (either written or verbal) of such failure from the Administrative
Agent to Citation; or (ii) the Banks are notified or should have been
notified of such failure pursuant to the provisions of Section 5.1(m).
(c) Any Borrower or any Consolidated Entity shall (1) fail to pay
when due any Indebtedness (other than Indebtedness under this Agreement) to
either Agent or any Bank; (2) fail to pay any Indebtedness due any third
Persons and such failure shall continue beyond any applicable grace period;
or (3) default under any agreement binding such Borrower or such Consolidated
Entity with respect to any Indebtedness owing to either Agent or any Bank
(other than Indebtedness hereunder) or any third Persons if the effect of
such default is to permit the holder of such Indebtedness to accelerate the
maturity date thereof.
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(d) Any financial statement, representation, warrant or
certificate made or furnished by any Borrower or any Consolidated Entity to
either Agent or any Bank in connection with this Agreement, or as inducement
to either Agent or any Bank to enter into this Agreement, or in any separate
statement or document to be delivered hereunder to either Agent or the
Banks: (1) shall be materially false, incorrect, or incomplete when made; or
(2) shall become materially false or incorrect and remain so for ten (10)
days after the earlier of: (1) notice (either written or verbal) from the
Administrative Agent to Citation; or (2) the Banks are notified or should
have been notified pursuant to the provisions of Section 5.1(m).
(e) Any Borrower or any Consolidated Entity shall admit its
inability to pay its debts as they mature, or shall make an assignment for
the benefit of itself or any of its creditors.
(f) Proceedings in bankruptcy, or for reorganization of any
Borrower or any Consolidated Entity or for the readjustment of any of their
respective debts, under the Bankruptcy Code, or any part thereof, or under
any other Law, whether state or federal, for the relief of debtors, now or
hereafter existing, shall be commenced by any Borrower or any Consolidated
Entity or shall be commenced against any Borrower or any Consolidated Entity
and shall not be discharged within thirty (30) days of its commencement.
(g) A receiver, trustee or conservator shall be appointed for any
Borrower or any Consolidated Entity or for any substantial part of their
respective assets, or any proceedings shall be instituted for the dissolution
or the full or partial liquidation of any Borrower or any Consolidated Entity
and such receiver, trustee or conservator shall not be discharged within
thirty (30) days of his appointment, or such proceedings shall not be
discharged within thirty (30) days of its commencement, or any Borrower or
any Consolidated Entity shall discontinue business or materially change the
nature of its business.
(h) Any Borrower or any Consolidated Entity shall suffer final
judgments for payment of money aggregating in excess of $ 500,000 and shall
not discharge the same within a period of thirty (30) days unless, pending
further proceedings, execution has been effectively stayed.
(i) A creditor of any Borrower or any Consolidated Entity shall
obtain possession of any of the Collateral by any means, including, without
limitation, levy, distraint, replevin or self-help.
(j) The validity or enforceability of this Agreement, any Note,
or any of the other Loan Documents shall be contested by any Borrower or any
Consolidated Entity or any of them shall deny that it has any or further
liability or obligation hereunder or thereunder.
(k) Any Pension Plan shall fail to meet the minimum funding
standards of Section 302 of ERISA as now in effect or hereafter amended.
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(l) A criminal investigation is commenced with respect to any
Borrower or any Consolidated Entity.
(m) Any property of any Borrower or any Consolidated Entity is
seized by a governmental authority, or a forfeiture proceeding is
commenced.against any Borrower or any Consolidated Entity or any property of
any Borrower, or any Consolidated Entity.
(n) Any default or event of default shall occur under any of the
Security Documents or other Loan Documents.
6.2 REMEDIES.
(a) Upon the occurrence and during the continuance of any Event
of Default, the Administrative Agent may and, upon being directed to do so by
the Required Banks, shall by notice to Citation (i) terminate the Commitments
or (ii) declare the outstanding principal of, and accrued interest on, the
Notes, all unpaid reimbursement obligations in respect of drawings under
Letters of Credit and all other amounts owing under this Agreement to be
immediately due and payable, or (iii) demand immediate delivery of cash
collateral, and the Borrowers agree to deliver such cash collateral upon
demand, in an amount equal to the maximum amount that may be available to be
drawn at any time prior to the stated expiry of all outstanding Letters of
Credit, or any one or more of the foregoing, whereupon the Commitments shall
terminate forthwith and all such amounts, including such cash collateral,
shall become immediately due and payable, PROVIDED that in the case of any
event or condition described in Section 6.1(e), (f) or (g) with respect to
any Borrower, the Commitments shall automatically terminate forthwith and all
such amounts, including such cash collateral, shall automatically become
immediately due and payable without notice; in all cases without demand,
presentment, protest, diligence, notice of dishonor or other formality, all
of which are hereby expressly waived. Such cash collateral delivered in
respect of outstanding Letters of Credit shall be deposited in a special cash
collateral account to be held by the Administrative Agent as collateral
security for the payment and performance of the Borrowers' obligations under
this Agreement and the other Loan Documents to the Banks and the Agents.
(b) Each Agent may and, upon being directed to do so by the
Required Banks, shall, in addition to the remedies provided in Section
6.2(a), exercise and enforce any and all other rights and remedies available
to it, whether arising under this Agreement, the Notes or any Security
Document or under applicable law, in any manner deemed appropriate by such
Agent, including suit in equity, action at law, or other appropriate
proceedings, whether for the specific performance (to the extent permitted by
law) of any covenant or agreement contained in this Agreement or in the Notes
or any Security Document or in aid of the exercise of any power granted in
this Agreement, the Notes or any Security Document. Without limiting the
generality of the foregoing, either Agent may immediately, without demand of
performance and without other notice (except as specifically required by this
Agreement or the other Loan Documents, or as required by Law and which cannot
be waived) or demand whatsoever to Borrowers, all of
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which are hereby expressly waived, and without advertisement, sell at public
or private sale or otherwise realize upon, the whole or, from time to time,
any part of the Collateral, or any interest which any Borrower may have
therein. The Agents shall apply the proceeds of sale or other disposition of
the Collateral toward the satisfaction of the Obligations in accordance with
Section 6.3. Notice of any sale or other disposition shall be given to
Citation on behalf of the Borrowers at least five (5) days before the time of
any intended public sale or of the time after which any intended private sale
or other disposition of the Collateral is to be made, which each Borrower
hereby agrees shall be reasonable notice of such sale or other disposition.
Borrowers shall be jointly and severally liable for any deficiency. Each
Borrower agrees to assemble, or to cause to be assembled, at its own expense,
the Collateral at such place or places as the Agents shall designate. At any
such sale or other disposition, either Agent or any Bank may, to the extent
permissible under applicable Law, purchase the whole or any part of the
Collateral, free from any right of redemption on the part of any Borrower,
which right is hereby waived and released. Without limiting the generality of
any of the rights and remedies conferred upon the Agents and the Banks under
this paragraph, either Agent may, to the full extent permitted by applicable
Law:
(1) Enter upon any Borrower's premises, exclude therefrom
any Borrower or any Affiliate thereof, and take immediate possession of the
Collateral, either personally or by means of a receiver appointed by a court
of competent jurisdiction, using all necessary force to do so;
(2) At such Agent's option, use, operate, manage and control
the Collateral in any lawful manner;
(3) Collect and receive all rents, income, revenue,
earnings, issues and profits therefrom; and
(4) Maintain, repair, renovate, alter or remove the
Collateral as such Agent may determine in its discretion.
(c) Upon the occurrence and during the continuance of any Event
of Default, each Bank may at any time and from time to time, without notice
to any Borrower (any requirement for such notice being expressly waived by
each Borrower) set off and apply against any and all of the obligations of
the Borrowers now or hereafter existing under this Agreement, whether owing
to such Bank or any other Bank or either Agent, any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the
account of any Borrower and any property of any Borrower from time to time in
possession of such Bank, irrespective of whether or not such Bank shall have
made any demand hereunder and although such obligations may be contingent and
unmatured. The rights of such Bank under this Section 6.2(c) are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which such Bank may have.
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6.3 DISTRIBUTION OF PROCEEDS OF COLLATERAL. All proceeds received by
either Agent pursuant to the Security Documents for application to the
Obligations or any payments on any of the liabilities secured by the Security
Documents received by either Agent or any Bank upon and during the
continuance of any Event of Default shall be allocated and distributed as
follows:
(a) First, to the payment of all costs, expenses and fees,
including without limitation all attorneys' fees, of each Agent in connection
with the enforcement of the Security Documents and otherwise administering
this Agreement;
(b) Second, to the payment of all costs, expenses and fees,
including without limitation, commitment fees and attorneys' fees, owing to
the Banks pursuant to the Obligations on a pro rata basis in accordance with
the Obligations consisting of fees, costs and expenses owing to the Banks
under the Obligations, for application to payment of such liabilities;
(c) Third, to the Banks on a pro rata basis in accordance with
the Obligations consisting of interest and termination payments under Hedging
Contracts owing to the Banks under the Obligations, for application to
payment of such liabilities;
(d) Fourth, to the Banks and the Administrative Agent on a pro
rata basis in accordance with the Obligations consisting of principal and
reimbursement obligations pursuant to Letters of Credit (including without
limitation any cash collateral for any outstanding Letters of Credit) owing
to the Banks and the Administrative Agent under the Obligations, for
application to payment of such liabilities;
(e) Fifth, to the payment of any and all other amounts owing to
the Banks and the Agents on a pro rata basis in accordance with the total
amount of such Indebtedness owing to each of the Banks and the Agents, for
application to payment of such liabilities; and
(f) Sixth, to the Borrowers or such other person as may be
legally entitled thereto.
6.4 LETTER OF CREDIT LIABILITIES. For the purposes of payments and
distributions under Section 6.3, the full amount of Bank Obligations on
account of any Letter of Credit then outstanding but not drawn upon shall be
deemed to be then due and owing. Amounts distributable to the Banks on
account of such Bank Obligations under such Letter of Credit shall be
deposited in a separate interest bearing collateral account in the name of
and under the control of the Administrative Agent and held by the
Administrative Agent first as security for such Letter of Credit Obligations
and then as security for all other Bank Obligations and the amount so
deposited shall be applied to the Letter of Credit Obligations at such times
and to the extent that such Letter of Credit Obligations become absolute
liabilities and if and to the extent that the Letter of Credit Obligations
fail to become absolute Bank Obligations because of the expiration or
termination of the underlying letters of credit without being drawn upon then
such amounts shall be applied to the remaining Bank Obligations in the order
provided in Section 6.3. Each Borrower hereby
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grants to the Administrative Agent, for the benefit of the Banks, a lien and
security interest in all such funds deposited in such separate interest
bearing collateral account, as security for all the Bank Obligations as set
forth above.
ARTICLE VII.
THE AGENTS AND THE BANKS
7.1 APPOINTMENT AND AUTHORIZATION. Each Bank hereby irrevocably
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers under this Agreement, the Notes and the other Loan
Documents as are delegated to such Agent by the terms hereof or thereof,
together with all such powers as are reasonably incidental thereto. The
provisions of this Article VII are solely for the benefit of the Agents and
the Banks, and no Borrower shall have any rights as a third party beneficiary
of any of the provisions hereof. In performing its functions and duties
under this Agreement, each Agent shall act solely as agent of the Banks and
does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for any Borrower.
7.2 AGENTS AND AFFILIATES. Each of NBD Bank and Southtrust Bank of
Alabama, National Association in its capacity as a Bank hereunder shall have
the same rights and powers hereunder as any other Bank and may exercise or
refrain from exercising the same as though it were not an Agent. NBD Bank
and SouthTrust Bank of Alabama, National Association and their respective
affiliates may (without having to account therefor to any Bank) accept
deposits from, lend money to, and generally engage in any kind of banking,
trust, financial advisory or other business with any Borrower or any of their
respective Subsidiaries as if it were not acting as an Agent hereunder, and
may accept fees and other consideration therefor without having to account
for the same to the Banks.
7.3 SCOPE OF AGENTS' DUTIES. Neither Agent shall have any duties or
responsibilities except those expressly set forth herein and in the other
Loan Documents, and neither Agent shall, by reason of this Agreement, have a
fiduciary relationship with any Bank, and no implied functions, covenants,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or shall otherwise be imposed upon or exist against either Agent.
As to any matters not expressly provided for by this Agreement (including,
without limitation, collection and enforcement action under the Notes and the
Security Documents), neither Agent shall be required to exercise any
discretion or take any action, but the Agents shall either take such action
or omit to take any action pursuant to the reasonable written instructions of
the Required Banks and may request instructions from the Required Banks.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, pursuant to the written instructions of the Required Banks (or
all of the Banks, as the case may be, in accordance with the requirements of
this Agreement), which instructions and any action or omission pursuant
thereto shall be binding upon all of the Banks; PROVIDED, HOWEVER, that
neither Agent shall be required to act or omit to act if, in the sole
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judgment of such Agent, such action or omission may expose such Agent to
personal liability or is contrary to this Agreement, the Notes or the
Security Documents or applicable law.
7.4 RELIANCE BY AGENTS. Each Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it
to be genuine and correct and to have been sent or given by or on behalf of
a proper person. Each Agent may treat the payee of any Note as the holder
thereof unless and until such Agent receives written notice of the assignment
thereof pursuant to the terms of this Agreement signed by such payee and the
Administrative Agent receives the written agreement of the assignee that such
assignee is bound hereby to the same extent as if it had been an original
party hereto. Each Agent may employ agents (including without limitation
collateral agents) and may consult with legal counsel (who may be counsel for
the Borrowers), independent public accountants and other experts selected by
it and shall not be liable to the Banks, except as to money or property
received by it or its authorized agents, for the negligence or misconduct of
any such agent selected by it with reasonable care or for any action taken or
omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or experts.
7.5 DEFAULT. Neither Agent shall be deemed to have knowledge of the
occurrence of any Default or Event of Default, unless such Agent has received
written notice from a Bank or Citation specifying such Default or Event of
Default and stating that such notice is a "Notice of Default". In the event
that either Agent receives such a notice, such Agent shall give written
notice thereto to the other Agent and the Banks.
7.6 LIABILITY OF AGENTS. Neither the Agents nor any of their
respective directors, officers, agents or employees shall be liable to the
Banks for any action taken or not taken by it or them in connection herewith
with the consent or at the request of the Required Banks or in the absence of
its or their own gross negligence or willful misconduct. Neither the Agents
nor any of their respective directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into or verify (a) any
recital, statement, warranty or representation contained in this Agreement,
any Note or any other Loan Document, or in any certificate, report, financial
statement or other document furnished in connection with this Agreement, (b)
the performance or observance of any of the covenants or agreements of any
Borrower, (c) the satisfaction of any condition specified in Article II
hereof, or (d) the validity, effectiveness, legal enforceability, value or
genuineness of this Agreement, the Notes or any other Loan Documents or any
collateral subject thereto or any other instrument or document furnished in
connection herewith.
7.7 NONRELIANCE ON AGENTS AND OTHER BANKS. Each Bank acknowledges and
agrees that it has, independently and without reliance on either Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrowers and decision to
enter into this Agreement and that it will, independently and without
reliance upon either Agent or any other Bank, and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own analysis and decision in taking or
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not taking action under this Agreement. Neither Agent shall be required to
keep itself informed as to the performance or observance by the Borrowers of
this Agreement, the Notes or the other Loan Documents or any other documents
referred to or provided for herein or to inspect the properties or books of
any Borrower and, except for notices, reports and other documents and
information expressly required to be furnished to the Banks by such Agent
hereunder, neither Agent shall have any duty or responsibility to provide any
Bank with any information concerning the affairs, financial condition or
business of any Borrower or any of their respective Subsidiaries which may
come into the possession of such Agent or any of its affiliates.
7.8 INDEMNIFICATION. The Banks agree to indemnify each Agent (to the
extent not reimbursed by the Borrowers, but without limiting any obligation
of the Borrowers to make such reimbursement), ratably according to the
respective principal amounts of the Advances then outstanding made by each of
them (or if no Advances are at the time outstanding, ratably according to the
respective amounts of their Commitments), from and against any and all
claims, damages, losses, liabilities, costs or expenses of any kind or nature
whatsoever (including, without limitation, fees and disbursements of counsel)
which may be imposed on, incurred by, or asserted against such Agent in any
way relating to or arising out of this Agreement or the transactions
contemplated hereby or any action taken or omitted by such Agent under this
Agreement or any of the other Loan Documents, PROVIDED, HOWEVER, that no
Bank shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from such Agent's gross negligence
or willful misconduct. Without limitation of the foregoing, each Bank agrees
to reimburse each Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including without limitation fees and expenses of
counsel) incurred by such Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement and the
other Loan Documents, to the extent that such Agent is not reimbursed for
such expenses by the Borrowers, but without limiting the obligation of any
Borrower to make such reimbursement. Each Bank agrees to reimburse each
Agent promptly upon demand for its ratable share of any amounts owing to such
Agent by the Banks pursuant to this Section. If the indemnity furnished to
any Agent under this Section shall, in the judgment of such Agent, be
insufficient or become impaired, such Agent may call for additional indemnity
from the Banks and cease, or not commence, to take any action until such
additional indemnity is furnished.
7.9 SUCCESSOR AGENTS. Either Agent may resign as such at any time
upon 30 days' prior written notice to Citation and the Banks. In the event
of any such resignation, the Required Banks shall, by an instrument in
writing delivered to Citation and the Administrative Agent, appoint a
successor, which shall be a commercial bank organized under the laws of the
United States or any State thereof and having a combined capital and surplus
of at least $500,000,000. If a successor is not so appointed or does not
accept such appointment before an Agent's resignation becomes effective, the
retiring Agent may appoint a temporary successor to act until such
appointment by the Required Banks is made and accepted or if no such
temporary successor is appointed as provided above by the retiring Agent, the
Required Banks shall thereafter
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perform all the duties of such Agent hereunder until such appointment by the
Required Banks is made and accepted. Any successor to either Agent shall
execute and deliver to Citation and the Banks an instrument accepting such
appointment and thereupon such successor Agent, without further act, deed,
conveyance or transfer shall become vested with all of the properties,
rights, interests, powers, authorities and obligations of its predecessor
hereunder with like effect as if originally named as an Agent hereunder.
Upon request of such successor Agent, the Borrowers and the retiring Agent
shall execute and deliver such instruments of conveyance, assignment and
further assurance and do such other things as may reasonably be required for
more fully and certainly vesting and confirming in such successor Agent all
such properties, rights, interests, powers, authorities and obligations. The
provisions of this Article VII shall thereafter remain effective for such
retiring Agent with respect to any actions taken or omitted to be taken by
such Agent while acting as an Agent hereunder.
7.10 SHARING OF PAYMENTS. The Banks agree among themselves that, in
the event that any Bank shall obtain payment in respect of any Advance or any
other Obligation through the exercise of a right of set-off, banker's lien,
counterclaim or otherwise in excess of its ratable share of payments received
by all of the Banks on account of the Advances and other Obligations (or if
no Advances are outstanding, ratably according to the respective amounts of
the Commitments), such Bank shall promptly purchase from the other Banks
participation in such Advances and other Obligations in such amounts, and
make such other adjustments from time to time, as shall be equitable to the
end that all of the Banks share such payment in accordance with such ratable
shares. The Banks further agree among themselves that if payment to a Bank
obtained by such Bank through the exercise of a right of set-off, banker's
lien, counterclaim or otherwise as aforesaid shall be rescinded or must
otherwise be restored, each Bank which shall have shared the benefit of such
payment shall, by repurchase of participation theretofore sold, return its
share of that benefit to each Bank whose payment shall have been rescinded or
otherwise restored. Each of the Borrowers agrees that any Bank so purchasing
such a participation may, to the fullest extent permitted by law, exercise
all rights of payment, including set-off, banker's lien or counterclaim, with
respect to such participation as fully as if such Bank were a holder of such
Advance or other obligation in the amount of such participation. The Banks
further agree among themselves that, in the event that amounts received by
the Banks and the Agents hereunder are insufficient to pay all such
obligations or insufficient to pay all such obligations when due, the fees
and other amounts owing to the Agents in such capacity shall be paid
therefrom before payment of obligations owing to the Banks under this
Agreement. Except as otherwise expressly provided in this Agreement, if any
Bank or either Agent (the "Payer") shall fail to remit to any Bank or either
Agent (the "Payee") an amount payable by the Payer to the Payee pursuant to
this Agreement on the date when such amount is due, such payments shall be
made together with interest thereon for each date from the date such amount
is due until the date such amount is paid to the Payee at a rate per annum
equal to the rate at which borrowings are available to the Payee in its
overnight federal funds market. It is further understood and agreed among
the Banks and the Agents that if NBD Bank or SouthTrust Bank of Alabama,
National Association shall engage in any other transactions permitted under
this Agreement with any of the Borrowers and shall have the benefit of any
collateral or security therefor which does not expressly secure the
obligations arising under this
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Agreement except by virtue of a so-called dragnet clause or comparable
provision, NBD Bank or SouthTrust Bank of Alabama, National Association, as
the case may be, shall be entitled to apply any proceeds of such collateral
or security first in respect of the obligations arising in connection with
such other transaction before application to the obligations arising under
this Agreement.
7.11 WITHHOLDING TAX EXEMPTION. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the account of
any Bank, each Bank that is not incorporated under the laws of the United
States of America, or a state thereof, agrees that it will deliver to each of
Citation and the Administrative Agent two duly completed copies of United
States Internal Revenue Service Form 1001 or 4224, certifying in either case
that such Bank is entitled to receive payments under this Agreement and the
Notes without deduction or withholding of any United States federal income
taxes. Each Bank which so delivers a Form 1001 or 4224 further undertakes to
deliver to each of Citation and the Administrative Agent two additional
copies of such form (or a successor form) on or before the date that such
form expires (currently, three successive calendar years for Form 1001 and
one calendar year for Form 4224) or becomes obsolete or after the occurrence
of any event requiring a change in the most recent forms so delivered by it,
and such amendments thereto or extensions or renewals thereof as may be
reasonably requested by Citation or the Administrative Agent, in each case
certifying that such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any
change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent such Bank from duly completing and
delivering any such form with respect to it and such Bank advises Citation
and the Administrative Agent that it is not capable of receiving payments
without any deduction or withholding of United States federal income tax.
ARTICLE VIII.
COLLATERAL SECURITY
8.1 COMPOSITION OF THE COLLATERAL. The property in which a security
interest is granted pursuant to the provisions of Sections 8.2 and 8.3 hereof
or pursuant to the provisions of any Security Document is herein collectively
called the "Collateral." The Collateral, together with all of each Borrower's
other property of any kind held by either Agent or any Bank, shall stand as
one general, continuing collateral security for all Obligations and may be
retained by such Agent and such Bank until all Obligations have been
satisfied in full and the Commitments have been terminated.
8.2 RIGHTS IN PROPERTY HELD BY THE BANKS. As security for the prompt
satisfaction of all Obligations, each Borrower hereby assigns, transfers and
conveys to each Bank for the benefit of the Agents and the Banks all of such
Borrower's right, title and interest in and to, and grants such Bank a lien
on and a security interest in, all amounts that may be owing from time to
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time by such Bank to such Borrower in any capacity, including, without
limitation, any balance or share belonging to such Borrower, of any deposit
or other account with such Bank, which lien and security interest shall be
independent of any right of setoff which such Bank may have.
8.3 RIGHTS IN PROPERTY HELD EITHER BY BORROWERS OR BY THE BANKS. As
further security for the prompt satisfaction of all Obligations, in addition
to any other or further security provided under any of the Security
Documents, including, without limitation, the real property collateral
provided under the Mortgages, each Borrower hereby assigns to the Collateral
Agent for the benefit of the Agents and the Banks all of such Borrower's
right, title and interest in and to, and grants the Collateral Agent for the
benefit of the Agents and the Banks a lien upon and security interest in, all
of the following, wherever located, whether now owned or hereafter acquired,
together with all replacements therefor and proceeds (including, but without
limitation, insurance proceeds) thereof (all of which shall constitute
original Collateral under this Agreement):
(a) Accounts;
(b) Chattel Paper;
(c) Contracts;
(d) Contract Rights;
(e) Documents;
(f) Equipment;
(g) Fixtures;
(h) General Intangibles;
(i) Instruments;
(j) Inventory;
(k) Rights as seller of Goods and rights to returned,
repossessed or reclaimed Goods; and
(l) All Records pertaining to any of the Collateral.
8.4 PRIORITY OF LIENS. The foregoing liens shall be first and prior
liens except for Permitted Liens.
8.5 PERFECTION.
(a) Each Borrower will:
(1) Execute such financing statements (including
amendments thereto and assignments and
continuation statements thereof) in form
satisfactory to the Administrative Agent as
the Administrative Agent may from time to
time specify;
(2) Pay, or reimburse either Agent for paying,
all costs and taxes of filing or recording
the same in such public offices as the
Administrative Agent may designate;
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(3) Deliver such of the Collateral, which in the
sole judgment of the Administrative Agent is
best perfected by possession, to the
Collateral Agent or its designated agent or
bailee; and
(4) Take such other steps as the Administrative
Agent may from time to time direct,
including the noting of the Collateral
Agent's lien on the Collateral and on any
certificates of title therefor all to
perfect the Collateral Agent's security
interest in the Collateral.
(b) Each Borrower will further:
(1) Execute and deliver such Pledge Agreements
and such stock powers relating to the
Pledged Stock, in form satisfactory to the
Administrative Agent as the Administrative
Agent may from time to time specify;
(2) Pay, or reimburse either Agent for paying,
all costs for the transfer of the Pledged
Stock;
(3) Deliver the Pledged Stock to the Collateral
Agent or its designated agent or bailee; and
(4) Take such other steps as the Administrative
Agent may from time to time direct, all to
perfect the Collateral Agent's security
interest in such Collateral.
(c) In addition to the foregoing, and not in limitation thereof:
(1) A carbon, photographic, or other
reproduction of this Agreement shall be
sufficient as a financing statement and may
be filed in any appropriate office in lieu
thereof; and,
(2) To the extent lawful, each Borrower hereby
appoints each Agent as its attorney-in-fact
(without requiring either Agent to act as
such) to execute any financing statement or
financing statement assignment or amendment
in the name of such Borrower, and to perform
all other acts that the Administrative Agent
deems appropriate to perfect and continue
the security interest in, and to protect and
preserve, the Collateral. Such appointment
is coupled with an interest and is
irrevocable until this Agreement is
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terminated in accordance with the provisions
of Section 9.20 hereof.
8.6 LIEN WAIVERS. If requested by the Required Banks, each Borrower
will cause each mortgagee of all real estate owned by such Borrower and each
landlord of all premises leased by such Borrower, and any warehouseman or
other bailee on whose premises any of the Collateral may be located, to
execute and deliver to the Collateral Agent instruments, in form and
substance satisfactory to the Administrative Agent, by which such mortgagee,
landlord, warehouseman, or bailee waives his or its rights, if any, in and to
all Goods composing a part of the Collateral.
8.7 CHATTEL PAPER OR INSTRUMENTS. Each Borrower will deliver
immediately to the Collateral Agent any Chattel Paper or Instruments arising
out of the Collateral usually, but not exclusively, as proceeds. Further, the
parties hereby agree that such Chattel Paper or Instruments constitute
original Collateral rather than proceeds; but if proceeds, then the
Collateral Agent's security interest created by this Agreement in the Chattel
Paper or Instruments shall not be claimed merely as proceeds.
ARTICLE IX.
MISCELLANEOUS
9.1 AMENDMENTS, ETC. (a) No amendment, modification, termination or
waiver of any provision of this Agreement nor any consent to any departure
therefrom shall be effective unless the same shall be in writing and signed
by Citation and the Required Banks and, to the extent any rights or duties of
either Agent may be affected thereby, such Agent, PROVIDED, HOWEVER, that no
such amendment, modification, termination, waiver or consent shall, without
the consent of the Administrative Agent and all of the Banks, (i) authorize
or permit the extension of time for, or any reduction of the amount of, any
payment of the principal of, or interest on, the Notes or any Letter of
Credit reimbursement obligation, or any fees or other amount payable
hereunder, (ii) authorize or permit any reduction of the rate of interest on
the Notes or the rate of any fee hereunder, (iii) amend, extend or terminate
the respective Commitment of any Bank set forth on the signature pages hereof
or modify the provisions of this Section regarding the taking of any action
under this Section or the provisions of Section 7.10 or the definition of
Required Banks or any provision of this Agreement requiring the consent of
all of the Banks, (iv) provide for the discharge of any Borrower or the
release of any Collateral, or (v) modify any other provision of this
Agreement which by its terms requires the consent of all of the Banks.
(b) Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, no Bank that
is in default of any of its obligations, covenants or agreements under this
Agreement shall be entitled
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to vote (whether to consent or to withhold its consent) with respect to any
amendment, modification, termination or waiver of any provision of this
Agreement or any departure therefrom or any direction from the Banks to
either Agent, and, for purposes of determining the Required Banks at any time
when any Bank is in default under this Agreement, the Commitment and Advances
of such defaulting Bank shall be disregarded.
9.2 NOTICES. (a) Except as otherwise provided in Section 9.2(c)
hereof, all notices and other communications hereunder shall be in writing
and shall be delivered or sent to Citation and the other Borrowers c/o
Citation at 2 Office Park Circle, Suite 204, Birmingham, Alabama 35223,
Attention: T. Morris Hackney, Chairman, Facsimile No. (205) 870-8211,
Facsimile Confirmation No. (205) 871-5731, with a copy to Ritchie & Rediker,
312 North 23rd Street, Birmingham, Alabama 35203, Attention: Thomas A.
Ritchie, Esq., Facsimile No. (205) 324-7832, Facsimile Confirmation No. (205)
251-1288, and to the Agents and the Banks at the respective addresses for
notices set forth on the signatures pages hereof, or to such other address as
may be designated by Citation, either Agent or any Bank by notice to the
other parties hereto. All notices and other communications shall be deemed
to have been given at the time of actual delivery thereof to such address,
or, unless sooner delivered, (i) if sent by certified or registered mail,
postage prepaid, to such address, on the third day after the date of mailing,
(ii) if sent by telex, upon receipt of the appropriate answer back, or (iii)
if sent by facsimile transmission, upon confirmation of receipt by telephone
at the number specified for confirmation, PROVIDED, HOWEVER, that notices to
the Administrative Agent or the Collateral Agent, as the case may be, shall
not be effective until received.
(b) Notices by the Borrowers to the Administrative Agent with
respect to terminations or reductions of the Commitments pursuant to Section
2.2, requests for Borrowings pursuant to Section 2.4, requests for
continuations or conversions of Borrowings pursuant to Section 2.7 and
notices of prepayment pursuant to Section 3.1 shall be irrevocable and
binding on the Borrowers.
(c) Any notice to be given by the Borrowers to the Administrative
Agent pursuant to Sections 2.4, 2.7 or 3.1 and any notice to be given by the
Administrative Agent or any Bank hereunder, may be given by telephone, and
all such notices given by the Borrowers must be immediately confirmed in
writing in the manner provided in Section 9.2(a). Any such notice given by
telephone shall be deemed effective upon receipt thereof by the party to whom
such notice is to be given. The Borrowers shall indemnify and hold harmless
the Banks and the Agents from any and all losses, damages, liabilities and
claims arising from their good faith reliance on any such telephone notice.
9.3 NO WAIVER BY CONDUCT; REMEDIES CUMULATIVE. No course of dealing
on the part of either Agent or any Bank, nor any delay or failure on the part
of either Agent or any Bank in exercising any right, power or privilege
hereunder shall operate as a waiver of such right, power or privilege or
otherwise prejudice such Agent's or such Bank's rights and remedies
hereunder; nor shall any single or partial exercise thereof preclude any
further exercise thereof or the exercise
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of any other right, power or privilege. No right or remedy conferred upon or
reserved to either Agent or any Bank under this Agreement, the Notes or any
other Loan Document is intended to be exclusive of any other right or remedy,
and every right and remedy shall be cumulative and in addition to every other
right or remedy granted thereunder or now or hereafter existing under any
applicable law. Every right and remedy granted by this Agreement, the Notes
or any other Loan Document or by applicable law to either Agent or any Bank
may be exercised from time to time and as often as may be deemed expedient by
such Agent or such Bank, as the case may be, and, unless contrary to the
express provisions of this Agreement, the Notes or any other Loan Document,
irrespective of the occurrence or continuance of any Default or Event of
Default.
9.4 RELIANCE ON AND SURVIVAL OF VARIOUS PROVISIONS. All terms,
covenants, agreements, representations and warranties of the Borrowers made
herein or in any other Loan Document or in any certificate, report, financial
statement or other document furnished by or on behalf of any Borrower in
connection with this Agreement shall be deemed to be material and to have
been relied upon by the Banks, notwithstanding any investigation heretofore
or hereafter made by any Bank or on such Bank's behalf, and those covenants
and agreements of the Borrowers set forth in Section 3.7, 3.9 and 9.5 hereof
shall survive the repayment in full of the Advances and the termination of
the Commitments.
9.5 EXPENSES; INDEMNIFICATION. (a) The Borrowers agree to pay, or
reimburse each Agent for the payment of, on demand, (i) the reasonable fees
and expenses of counsel to each Agent, including without limitation the fees
and expenses of Dickinson, Wright, Moon, Van Dusen & Freeman and Bradley,
Arant, Rose & White, in connection with the preparation, execution, delivery
and administration of this Agreement, the Notes and the other Loan Documents
and in connection with advising each Agent as to its rights and
responsibilities with respect thereto, and in connection with any amendments,
waivers or consents in connection therewith, and (ii) all stamp and other
taxes and fees payable or determined to be payable in connection with the
execution, delivery, filing or recording of this Agreement, Notes, the other
Loan Documents (or the verification of filing, recording, perfection or
priority thereof) or the consummation of the transactions contemplated
hereby, and any and all liabilities with respect to or resulting from any
delay in paying or omitting to pay such taxes or fees, and (iii) all
reasonable costs and expenses of the Agents and the Banks (including
reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise) in connection with any Default
or Event of Default or the enforcement of, or the exercise or preservation of
any rights under, this Agreement or the Notes or any other Loan Document or
in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement and (iv) all reasonable costs and
expenses of the Agents and the Banks (including reasonable fees and expenses
of counsel) in connection with any action or proceeding relating to a court
order, injunction or other process or decree restraining or seeking to
restrain the Administrative Agent from paying any amount under, or otherwise
relating in any way to, any Letter of Credit and any and all costs and
expenses which any of them may incur relative to any payment under any Letter
of Credit.
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(b) The Borrowers hereby indemnify and agree to hold harmless the
Banks and the Agents, and their respective officers, directors, employees and
agents, from and against any and all claims, damages, losses, liabilities,
costs or expenses of any kind or nature whatsoever which the Banks or the
Agents or any such person may incur or which may be claimed against any of
them by reason of or in connection with any Letter of Credit, and neither any
Bank nor either Agent or any of their respective officers, directors,
employees or agents shall be liable or responsible for: (i) the use which may
be made of any Letter of Credit or for any acts or omissions of any
beneficiary in connection therewith; (ii) the validity, sufficiency or
genuineness of documents or of any endorsement thereon, even if such
documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (iii) payment by the Administrative Agent
to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of any Letter of Credit,
including failure of any documents to bear any reference or adequate
reference to such Letter of Credit; (iv) any error, omission, interruption or
delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit; or (v) any other event
or circumstance whatsoever arising in connection with any Letter of Credit;
PROVIDED, HOWEVER, that the Borrowers shall not be required to indemnify the
Banks and the Agents and such other persons, and the Banks shall be liable to
the Borrowers to the extent, but only to the extent, of any direct, as
opposed to consequential or incidental, damages suffered by the Borrowers
which were caused by (A) the Administrative Agent's wrongful dishonor of any
Letter of Credit after the presentation to it by the beneficiary thereunder
of a draft or other demand for payment and other documentation strictly
complying with the terms and conditions of such Letter of Credit, or (B) the
payment by the Administrative Agent to the beneficiary under any Letter of
Credit against presentation of documents which do not comply with the terms
of the Letter of Credit to the extent, but only to the extent that (i) such
payment results from the Administrative Agent's failure to act in good faith
or to observe general banking usage in connection with the Letter of Credit
or failure to examine documents presented under the Letter of Credit with
care to determine whether they comply with the terms of the Letter of Credit
(it being understood that the Administrative Agent assumes no responsibility
for the genuineness, falsification or effect of any document which appears on
such examination to be regular on its face) or (ii) such payment constitutes
gross negligence or wilful misconduct of the Administrative Agent. It is
understood that in making any payment under a Letter of Credit the
Administrative Agent will rely on documents presented to it under such Letter
of Credit as to any and all matters set forth therein without further
investigation and regardless of any notice or information to the contrary,
and such reliance and payment against documents presented under a Letter of
Credit substantially complying with the terms thereof shall not be deemed
gross negligence or wilful misconduct of the Administrative Agent in
connection with such payment. It is further acknowledged and agreed that the
Borrowers may have rights against the beneficiary or others in connection
with any Letter of Credit with respect to which the Banks are alleged to be
liable and it shall be a precondition of the assertion of any liability of
the Banks under this Section that the Borrowers shall first have exhausted
all remedies in respect of the alleged loss against such beneficiary and any
other parties obligated or liable in connection with such Letter of Credit
and any related transactions.
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(c) In consideration of the execution and delivery of this
Agreement by each Bank and each Agent and the extension of the Commitments,
the Borrowers hereby indemnify, exonerate and hold each Agent, each Bank and
each of their respective officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES") free and harmless from and against
any and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of
whether any such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable attorneys' fees
and disbursements (collectively, the "INDEMNIFIED LIABILITIES"), incurred by
the Indemnified Parties or any of them as a result of, or arising out of, or
relating to:
(i) any transaction financed or to be financed in whole or
in part, directly or indirectly, with the proceeds of any Advance or any
transaction contemplated hereby or any acquisition by any Borrower;
(ii) the entering into and performance of this Agreement and
any other agreement or instrument executed in connection herewith by any of
the Indemnified Parties (including any action brought by or on behalf of the
Borrowers or any of them as the result of any determination by the Required
Banks not to fund any Advance);
(iii) any investigation, litigation or proceeding related to
any acquisition or proposed acquisition by the Borrowers or any of their
respective Subsidiaries of any portion of the stock or assets of any person,
whether or not the Agent or such Bank is party thereto;
(iv) any investigation, litigation or proceeding related to
any environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the release by the Borrowers or any of their
respective Subsidiaries of any Hazardous Material; or
(v) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releasing from, any
real property owned or operated by the Borrowers or any of their respective
Subsidiaries of any Hazardous Material (including any losses, liabilities,
damages, injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the control
of, any Borrower or any such Subsidiary, except for any such Indemnified
Liabilities arising for the account of a particular Indemnified Party by
reason of the activities of the Indemnified Party on the property of the
Borrowers conducted subsequent to a foreclosure on such property by the Banks
or by reason of the relevant Indemnified Party's gross negligence or willful
misconduct or breach of this Agreement, and if and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Borrowers
hereby agree to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law. The Borrowers shall be obligated to indemnify the Indemnified Parties
for all Indemnified Liabilities subject to and pursuant to the foregoing
provisions, regardless of whether the Borrowers or any
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of their respective Subsidiaries had knowledge of the facts and circumstances
giving rise to such Indemnified Liability.
9.6 SUCCESSORS AND ASSIGNS. (a) This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors and assigns, PROVIDED that the Borrowers may not, without the
prior consent of the Banks, assign their rights or obligations hereunder or
under the Notes or any other Loan Document and the Banks shall not be
obligated to make any Advance hereunder to any entity other than the
Borrowers.
(b) Any Bank may sell to any financial institution or
institutions, and such financial institution or institutions may further
sell, a participation interest (undivided or divided) in, the Advances and
such Bank's rights and benefits under this Agreement, the Notes and the other
Loan Documents, and to the extent of that participation interest such
participant or participants shall have the same rights and benefits against
the Borrowers under Section 3.7, 3.9 and 6.2(c) as it or they would have had
if such participant or participants were the Bank making the Advances to the
Borrowers hereunder, PROVIDED, HOWEVER, that (i) such Bank's obligations
under this Agreement shall remain unmodified and fully effective and
enforceable against such Bank, (ii) such Bank shall remain solely responsible
to the other parties hereto for the performance of such obligations, (iii)
such Bank shall remain the holder of its Note(s) for all purposes of this
Agreement, (iv) the Borrowers, the Agents and the other Banks shall continue
to deal solely and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement, and (v) such Bank shall not
grant to its participant any rights to consent or withhold consent to any
action taken by such Bank or either Agent under this Agreement other than
action requiring the consent of all of the Banks hereunder.
(c) Each Agent from time to time in its sole discretion may
appoint agents for the purpose of servicing and administering this Agreement
and the transactions contemplated hereby and enforcing or exercising any
rights or remedies of such Agent provided under this Agreement, the Notes,
any other Loan Documents or otherwise. In furtherance of such agency, each
Agent may from time to time direct that the Borrowers provide notices,
reports and other documents contemplated by this Agreement (or duplicates
thereof) to such agent. The Borrowers hereby consent to the appointment of
such agent and agree to provide all such notices, reports and other documents
and to otherwise deal with such agent acting on behalf of either Agent in the
same manner as would be required if dealing with such Agent itself.
(d) Each Bank may, with the prior consent of Citation (which
shall not be unreasonably withheld) and the Administrative Agent, assign to
one or more banks or other entities all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Advances owing to it and the Note or Notes
held by it); PROVIDED, HOWEVER, that (i) each such assignment shall be of a
uniform, and not a varying, percentage of all rights and obligations, (ii)
except in the case of an assignment of all of a Bank's rights and obligations
under this Agreement, (A) the amount of the Commitment of the assigning Bank
being assigned pursuant to each such assignment (determined as of the date of
the
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Assignment and Acceptance with respect to such assignment) shall in no event
be less than $5,000,000, and in integral multiples of $1,000,000 thereafter,
or such lesser amount as Citation and the Administrative Agent may consent to
and (B) after giving effect to each such assignment, the amount of the
Commitment of the assigning Bank shall in no event be less than $10,000,000,
(iii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance in the form annexed hereto as EXHIBIT I (an
"ASSIGNMENT AND ACCEPTANCE"), together with any Note or Notes subject to such
assignment and a processing and recordation fee of $3,000, and (iv) any Bank
may without the consent of Citation or the Administrative Agent, and without
paying any fee, assign to any Affiliate of such Bank that is a bank or
financial institution all of its rights and obligations under this Agreement.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, have the rights and obligations of a Bank hereunder and (y)
the Bank assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all
of the remaining portion of an assigning Bank's rights and obligations under
this Agreement, such Bank shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance, the
Bank assignor thereunder and the assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Bank makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of the Borrowers or the performance or observance by the Borrowers
of any of their obligations under this Agreement or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Section 4.1(k) and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon either Agent, such assigning
Bank or any other Bank and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement; (v) such assignee
appoints and authorizes each Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement and the other
Loan Documents as are delegated to such Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations that by the terms of this Agreement are required to be
performed by it as a Bank.
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(f) The Administrative Agent shall maintain at its address
designated on the signature pages hereof a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of the Banks and the Commitment of, and principal
amount of the Advances owing to, each Bank from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for
all purposes, absent manifest error, and the Borrowers, the Agents and the
Banks may treat each person whose name is recorded in the Register as a Bank
hereunder for all purposes of this Agreement. The Register shall be
available for inspection by Citation or any Bank at any reasonable time and
from time to time upon reasonable prior notice.
(g) Upon its receipt of an Assignment and Acceptance executed by
an assigning Bank and an assignee, together with any Note or Notes subject to
such assignment, the Administrative Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register and (iii) give
prompt notice thereof to Citation. Within five Business Days after its
receipt of such notice, the Borrowers, at their own expense, shall execute
and deliver to the Administrative Agent in exchange for the surrendered Note
or Notes a new Note to the order of such assignee in an amount equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance and, if
the assigning Bank has retained a Commitment hereunder, a new Note to the
order of the assigning Bank in an amount equal to the Commitment retained by
it hereunder. Such new Note or Notes shall be in an aggregate principal
amount equal to the aggregate principal amount of such surrendered Note or
Notes, shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of EXHIBIT I hereto.
(h) The Borrowers shall not be liable for any costs or expenses
of any Bank in effectuating any participation or assignment under this
Section 9.6 or any fee payable in connection therewith.
(i) The Banks may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 9.6, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers.
(j) Notwithstanding any other provision set forth in this
Agreement, any Bank may at any time create a security interest in, or assign,
all or any portion of its rights under this Agreement (including, without
limitation, the Loans owing to it and the Note or Notes held by it) in favor
of any Federal Reserve Bank in accordance with Regulation A of the Board of
Governors of the Federal Reserve System; PROVIDED that such creation of a
security interest or assignment shall not release such Bank from its
obligations under this Agreement.
(k) Additional lenders may also become Banks hereunder, with the
prior written consent of Citation and the Administrative Agent, by executing
a Bank Assumption Agreement substantially in the form annexed hereto as
EXHIBIT J, provided that (i) without the prior written consent of the
Required Banks, the aggregate Commitments of all Banks may not exceed
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$250,000,000, and (ii) in any event, the aggregate Commitments of all Banks
shall not exceed $300,000,000. Any Bank, subject to the prior written
approval of the Required Banks, the Administrative Agent and Citation and
subject to being paid in full all Obligations owing to such Bank, may be
terminated as a Bank hereunder and upon such termination Citation shall have
the option to select a bank to replace such terminated Bank and to assume the
rights and obligations of such terminated Bank hereunder, provided that such
replacement bank is acceptable to the Administrative Agent and executes a
Bank Assumption Agreement substantially in the form of EXHIBIT J. Upon any
Bank being added hereto or terminated, a new schedule will be distributed by
the Administrative Agent to all Banks and Citation showing the Commitment
amount of each Bank.
9.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
9.8 GOVERNING LAW. This Agreement is a contract made under, and shall
be governed by and construed in accordance with, the law of the State of
Michigan applicable to contracts made and to be performed entirely within
such State and without giving effect to choice of law principles of such
State. Each of the Borrowers, the Agents and the Banks further agrees that
any legal or equitable action or proceeding with respect to this Agreement,
the Notes or any other Loan Document or the transactions contemplated hereby
shall be brought in any court of the State of Michigan, or in any court of
the United States of America sitting in Michigan, and each of the Borrowers,
the Agents and the Banks hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person
and property, and, in the case of each Borrower, irrevocably appoints
Citation Automotive Sales Corp., whose address in Michigan is 27730 Franklin
Road, Southfield, Michigan 48034, as its agent for service of process and
irrevocably consents to the service of process in connection with any such
action or proceeding by personal delivery to such agent or to Citation, or by
the mailing thereof by registered or certified mail, postage prepaid to
Citation at its address for notices pursuant to Section 9.2. The Borrowers
shall at all times maintain such an agent in Michigan for such purpose and
shall notify the Banks and the Administrative Agent of such agent's address
in Michigan within ten days of any change of address. Nothing in this
paragraph shall affect the right of the Banks and the Agents to serve process
in any other manner permitted by law or limit the right of the Banks or the
Agents to bring any such action or proceeding against any Borrower or
property in the courts of any other jurisdiction. Each of the Borrowers and
the Banks hereby irrevocably waives any objection to the laying of venue of
any such action or proceeding in the above described courts.
9.9 TABLE OF CONTENTS AND HEADINGS. The table of contents and the
headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions
hereof.
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9.10 CONSTRUCTION OF CERTAIN PROVISIONS. If any provision of this
Agreement refers to any action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person, whether or not
expressly specified in such provision.
9.11 INTEGRATION AND SEVERABILITY. This Agreement, the Notes and the
other Loan Documents embody the entire agreement and understanding between
the Borrowers and the Agents and the Banks, and supersede all prior
agreements and understandings, relating to the subject matter hereof. In
case any one or more of the obligations of the Borrowers under this
Agreement, the Notes or any other Loan Document shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining obligations of the Borrowers shall not in any way be
affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality
or enforceability of the obligations of any Borrower under this Agreement,
the Notes or any other Loan Document in any other jurisdiction.
9.12 INDEPENDENCE OF COVENANTS. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not
permitted by any such covenant, the fact that it would be permitted by an
exception to, or would be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or an Event of Default
if such action is taken or such condition exists.
9.13 INTEREST RATE LIMITATION. Notwithstanding any provisions of this
Agreement, the Notes or any other Loan Document, in no event shall the amount
of interest paid or agreed to be paid by the Borrowers exceed an amount
computed at the highest rate of interest permissible under applicable law.
If, from any circumstances whatsoever, fulfillment of any provision of this
Agreement, the Notes or any other Loan Document at the time performance of
such provision shall be due, shall involve exceeding the interest rate
limitation validly prescribed by law which a court of competent jurisdiction
may deem applicable hereto, then, IPSO FACTO, the obligations to be fulfilled
shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the
payment of principal of the Advances outstanding hereunder (whether or not
then due and payable) and not to the payment of interest, or shall be
refunded to the Borrowers if such principal and all other obligations of the
Borrowers to the Banks have been paid in full.
9.14 JOINT AND SEVERAL OBLIGATIONS; SUBROGATION AND CONTRIBUTION
RIGHTS; SAVINGS CLAUSE. (a) Notwithstanding anything to the contrary set
forth herein or in any Note or in any other Loan Document, all the
obligations of the Borrowers hereunder and under the Notes and the other Loan
Documents are joint and several.
(b) If any Borrower makes a payment in respect of the Obligations
the proceeds of which were received by another Borrower (a "Nonpaying
Borrower"), such paying
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Borrower shall be subrogated to the rights of the payee against the Nonpaying
Borrower and shall have the rights of contribution with respect to such
payment set forth below against the other Borrowers (other than the Nonpaying
Borrower); PROVIDED that no Borrower shall enforce its rights to any payment
by way of subrogation or exercise its rights of contribution until the
Obligations have been paid in full. If any Borrower makes a payment in
respect of the Obligations the proceeds of which were received by a Nonpaying
Borrower (herein, such Nonpaying Borrower's "Guaranteed Obligations") that is
smaller in proportion to such Borrower's Payment Share (as hereinafter
defined) than the payments made by the other Borrowers in repayment of such
Guaranteed Obligations are in proportion to the amounts of their respective
Payment Shares, the Borrower making such proportionately smaller payment
shall, when permitted by the preceding sentence, pay to the other Borrowers
(other than the Nonpaying Borrower) an amount such that the net payments made
by the Borrowers (other than the Nonpaying Borrower) in respect of such
Guaranteed Obligations shall be shared among such Borrowers (other than the
Nonpaying Borrower) pro rata in proportion to their respective Payment
Shares. If any Borrower receives with respect to the Guaranteed Obligations
of any Nonpaying Borrower any payment by way of subrogation that is greater
in proportion to the amount of its Payment Share than the payments with
respect to such Guaranteed Obligations received by way of subrogation by the
other Borrowers (other than the Nonpaying Borrower) are in proportion to the
amounts of their respective Payment Shares, the Borrower receiving such
proportionately greater payment shall, when permitted by the second preceding
sentence, pay to such other Borrowers an amount such that the subrogation
payments received by all Borrowers (other than the Nonpaying Borrower) shall
be shared among such Borrowers pro rata in proportion to their respective
Payment Shares. Notwithstanding anything to the contrary contained in this
paragraph or in this Agreement, no liability or obligation of any Borrower
that shall accrue pursuant to this paragraph shall be paid nor shall it be
deemed owed pursuant to this paragraph until all of the Obligations shall be
paid in full.
For purposes hereof, the "Payment Share" of any Borrower with respect to
the Guaranteed Obligations of any Nonpaying Borrower shall be the product of
(a) the aggregate amount of such Guaranteed Obligations remaining unpaid on
the date such Guaranteed Obligations become due and payable in full, whether
by stated maturity, acceleration, or otherwise (the "Determination Date"),
times (b) a fraction, the numerator of which is such paying Borrower's net
worth on the Effective Date, and the denominator of which is the aggregate
net worth of all Borrowers (other than the Nonpaying Borrower) on such date.
(c) It is the intent of each Borrower and the Agents and the
Banks that each Borrower's maximum Bank Obligations shall be, but not in
excess of:
(i) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code on or within one year from the date on
which any of the Bank Obligations are incurred, the maximum amount that would
not otherwise cause the Bank Obligations (or any other obligations of such
Borrower to the Agents and the Banks) to be avoidable or unenforceable
against such Borrower under (A) Section 548 of the Bankruptcy Code
-74-
<PAGE>
or (B) any state fraudulent transfer or fraudulent conveyance act or statute
applied in such case or proceeding by virtue of Section 544 of the Bankruptcy
Code; or
(ii) in a case or proceeding commenced by or against such
Borrower under the Bankruptcy Code subsequent to one year from the date on
which any of the Bank Obligations are incurred, the maximum amount that would
not otherwise cause the Bank Obligations (or any other obligations of such
Borrower to the Agents and the Banks) to be avoidable or unenforceable
against such Borrower under any state fraudulent transfer or fraudulent
conveyance act or statute applied in any such case or proceeding by virtue of
Section 544 of the Bankruptcy Code;
(iii) in a case or proceeding commenced by or against such
Borrower under any law, statute or regulation other than the Bankruptcy Code
(including, without limitation, any other bankruptcy, reorganization,
arrangement, moratorium, readjustment of debt, dissolution, liquidation or
similar debtor relief laws), the maximum amount that would not otherwise
cause the Bank Obligations (or any other obligations of such Borrower to the
Agents and the Banks) to be avoidable or unenforceable against such Borrower
under such law, statute or regulation including, without limitation, any
state fraudulent transfer or fraudulent conveyance act or statute applied in
any such case or proceeding.
(d) The Borrowers acknowledge and agree that they have requested
that the Banks make credit available to the Borrowers with each Borrower
expecting to derive benefit, directly and indirectly, from the loans and
other credit extended by the Banks to the Borrowers.
(e) The joint and several obligations of the Borrowers described
in this Section 9.14 shall remain in full force and effect without regard to
and shall not be released, affected or impaired by: (i) any amendment,
assignment, transfer, modification of or addition or supplement to the
Obligations, this Agreement, any Note or any other Loan Document, except to
the extent any such amendment, assignment, transfer or modification
specifically relates to the matters set forth in Section 9.14; (ii) any
extension, indulgence, increase in the Obligations or other action or
inaction in respect of any of the Loan Documents or otherwise with respect to
the Obligations, or any acceptance of security for, or guaranties of, any of
the Obligations or Loan Documents, or any surrender, release, exchange,
impairment or alteration of any such security or guaranties including without
limitation the failing to perfect a security interest in any such security or
abstaining from taking advantage or of realizing upon any guaranties or upon
any security interest in any such security; (iii) any default by any Borrower
under, or any lack of due execution, invalidity or unenforceability of, or
any irregularity or other defect in, any of the Loan Documents; (iv) any
waiver by the Banks or any other person of any required performance or
otherwise of any condition precedent or waiver of any requirement imposed by
any of the Loan Documents, any guaranties or otherwise with respect to the
Obligations; (v) any exercise or non-exercise of any right, remedy, power or
privilege in respect of this Agreement or any of the other Loan Documents;
(vi) any sale, lease, transfer or other disposition of the assets of any
Borrower or any consolidation or merger of any Borrower with or into any
other person, corporation, or entity, or
-75-
<PAGE>
any transfer or other disposition by any Borrower or any other holder of any
shares of capital stock of any Borrower; (vii) any bankruptcy, insolvency,
reorganization or similar proceedings involving or affecting any Borrower;
(viii) the release or discharge of any Borrower from the performance or
observance of any agreement, covenant, term or condition under any of the
Obligations or contained in any of the Loan Documents by operation of law; or
(ix) any other cause whether similar or dissimilar to the foregoing which, in
the absence of this provision, would release, affect or impair the
obligations, covenants, agreements and duties of any Borrower hereunder,
including without limitation any act or omission by either Agent, any Bank or
any other any person which increases the scope of such Borrower's risk; and
in each case described in this paragraph whether or not any Borrower shall
have notice or knowledge of any of the foregoing, each of which is
specifically waived by each Borrower. Each Borrower warrants to the Banks
that it has adequate means to obtain from each other Borrower on a continuing
basis information concerning the financial condition and other matters with
respect to the Borrowers and that it is not relying on the Agents or the
Banks to provide such information either now or in the future.
9.15 WAIVERS, ETC. Each Borrower unconditionally waives: (a) notice of
any of the matters referred to in Section 9.14(e) above; (b) all notices
which may be required by statute, rule or law or otherwise to preserve any
rights of either Agent or the Banks, including, without limitation,
presentment to and demand of payment or performance from the other Borrowers
and protect for non-payment or dishonor; (c) any right to the exercise by
either Agent or the Banks of any right, remedy, power or privilege in
connection with any of the Loan Documents; (d) any requirement that either
Agent or the Banks, in the event of any default by any Borrower, first make
demand upon or seek to enforce remedies against, such Borrower or any other
Borrower before demanding payment under or seeking to enforce this Agreement
or any other Loan Document against any other Borrower; (f) any right to
notice of the disposition of any security which either Agent or any Bank may
hold from any Borrower or otherwise and any right to object to the commercial
reasonableness of the disposition of any such security; and (g) all errors
and omissions in connection with either Agent's or any Bank's administration
of any of the Obligations, any of the Loan Documents, or any other act or
omission of either Agent or any Bank which changes the scope of the
Borrowers' risk, except as a result of the gross negligence or willful
misconduct of an Agent or a Bank. The obligations of each Borrower hereunder
shall be complete and binding forthwith upon the execution of this Agreement
and subject to no condition whatsoever, precedent or otherwise, and notice of
acceptance hereof or action in reliance hereon shall not be required.
9.16 CITATION TO ACT FOR ALL BORROWERS. Each Participating Subsidiary,
separately and severally, hereby appoints and designates Citation as such
party's agent and attorney-in-fact to act on behalf of such party for all
purposes of the Loan Documents. Citation shall have authority to exercise on
behalf of each Participating Subsidiary all rights and powers that Citation
deems, in its sole discretion, necessary, incidental or convenient in
connection with the Loan Documents, including the authority to execute and
deliver certificates, documents, agreements and other instruments referred to
in or contemplated by the Loan Documents, request Advances hereunder, request
the issuance of Letters of Credit, receive all proceeds of Advances, give all
notices, approvals and consents required or requested from time to time by
either Agent or any Bank and
-76-
<PAGE>
take any other actions and steps that a Participating Subsidiary could take
for its own account in connection with the Loan Documents from time to time,
it being the intent of the Participating Subsidiaries to grant to Citation
plenary power to act on behalf of the Participating Subsidiaries in
connection with and pursuant to the Loan Documents. The appointment of
Citation as agent and attorney-in-fact for the Participating Subsidiaries
hereunder shall be coupled with an interest and be irrevocable so long as any
Loan Document shall remain in effect. The Agents and the Banks need not
obtain any Participating Subsidiary's consent or approval for any act taken
by Citation pursuant to any Loan Document, and all such acts shall bind and
obligate Citation and the Participating Subsidiaries, jointly and severally.
The Agents and the Banks may rely on any representation or request made or
action taken by Citation in connection with the Loan Documents as authorized
by the Participating Subsidiaries. Each Participating Subsidiary forever
waives and releases any claim (whether now or hereafter arising) against
either Agent or any Bank based on Citation's lack of authority to act on
behalf of any Participating Subsidiary in connection with the Loan Documents.
9.17 FURTHER ASSURANCES. From time to time, each Borrower will execute
and deliver to the Agents and the Banks such additional documents and will
provide such additional information as the Administrative Agent or the
Required Banks may reasonably require to carry out the terms of this
Agreement and be informed of the status and affairs of each of the Borrowers
and the Consolidated Entities. Each Borrower will take any and all actions as
reasonably requested by the Administrative Agent or the Required Banks to
ensure that the Agents and the Banks enjoy the full benefits of the security
intended to be granted hereunder and under the Security Documents and under
the other Loan Documents.
9.18 WAIVER AND RELEASE BY BORROWERS. To the maximum extent permitted
by applicable Law, each Borrower and each Consolidated Entity:
(a) Waives protest of all commercial paper at any time held by
any Bank on which any Borrower or any Consolidated Entity is any way liable;
(b) Except as the same may herein be specifically granted, waives
notice of acceleration and of intention to accelerate; and
(c) Waives notice and opportunity to be heard, after acceleration
in the manner provided in Section 6.2, before exercise by either Agent or any
Bank of the remedies of self-help, set-off, or of other summary procedures
permitted by any applicable Law or by any agreement with any Borrower or any
Consolidated Entity and except where required hereby or by any applicable Law
which requirement cannot be waived, notice of any other action taken by
either Agent or any Bank; and
(d) Releases each Agent and each Bank and their respective
officers, attorneys, agents and employees from all claims for loss or damage
caused by any act or omission on the part of any of them except willful
misconduct.
-77-
<PAGE>
9.19 NO PARTNERSHIP OR JOINT VENTURE. Notwithstanding anything to the
contrary herein contained or implied, none of the Agents and the Banks, by
this Agreement or by any action pursuant hereto or thereto, shall be deemed a
partner, joint venturer or participant in the venture of any Borrower, and
each Borrower hereby jointly and severally indemnifies and agrees to defend
each Agent and each Bank harmless (including the payment of attorneys' fees)
from any and all damages resulting from such allegation or construction of
the parties' relationship. The requirements herein, and the restrictions
imposed in this Agreement, are solely for the protection and benefit of the
Agents and the Banks and shall not be construed to create any obligation on
behalf of either Agent or any Bank to supervise, warn or disclose matters to
any Borrower.
9.20 TERMINATION. The terms and provisions of this Agreement shall
continue in effect until the Obligations shall have been fully paid and
performed, and the Banks shall have no further obligation whatsoever to make
any Advances or extend any other credit or accommodation. Following any
termination (if applicable), the terms and provisions of this Agreement
(excluding any obligation to lend or other commitment hereunder made by any
Bank), and all of the covenants and promises of Borrowers hereunder, shall be
automatically reinstated if at any time all or any part of any payment made
upon the Obligations is rescinded or must for any reason be returned to the
Person making such payment, whether due to insolvency, bankruptcy,
dissolution, appointment of a custodian or receiver, or any other reason
whatsoever, all as though such payment had not been made.
9.21 SOUTHTRUST LETTERS OF CREDIT. Notwithstanding anything in this
Agreement to the contrary, the letters of credit issued by the Original
Lender under the Original Credit Agreement that are outstanding as of the
Effective Date (collectively the "SouthTrust Letters of Credit" and
individually a "SouthTrust Letter of Credit"), shall for all purposes on and
after the Effective Date be deemed Letters of Credit under this Agreement in
which each Bank shall have acquired a pro rata risk participation pursuant to
Section 2.4(d), and constitute usage of the Commitments of the Banks, all as
if such SouthTrust Letters of Credit originally were issued under this
Agreement, PROVIDED that: (a) in each instance in this Agreement and the
other Loan Documents where there is a reference to the Administrative Agent
as issuer of the Letters of Credit, such reference shall, with respect to the
SouthTrust Letters of Credit, be deemed a reference to SouthTrust Bank of
Alabama, National Association, which shall hereby have all the benefits of
this Agreement with respect to the SouthTrust Letters of Credit as if it
issued such Letters of Credit as the Administrative Agent hereunder; (b) no
SouthTrust Letter of Credit shall be extended or renewed except pursuant to a
Letter of Credit issued by the Administrative Agent under this Agreement; and
(c) on the Effective Date, (i) the Borrowers shall pay (A) to the Original
Lender the fees, if any, accrued up to the Effective Date but unpaid under
the Original Credit Agreement with respect to the SouthTrust Letters of
Credit as of the Effective Date, which fees shall be shared by the Original
Lender with the Original Bank Participants in accordance with the
arrangements between them, and (B) to the Banks and SouthTrust Bank of
Alabama, National Association, as applicable, the fees provided under Section
2.3(c) with respect to each SouthTrust Letter of Credit for any portion, if
any, of the period commencing on the Effective Date to and including the
stated expiry date of such SouthTrust Letter of Credit for which the letter
of credit
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<PAGE>
fees under the Original Letter of Credit Agreement heretofore have not been
paid, and (ii) the Banks shall make such adjustments among themselves such
that all fees with respect to the SouthTrust Letters of Credit heretofore
paid under the Original Credit Agreement for the period on and after the
Effective Date are shared among the Banks in accordance with their respective
Commitments under this Agreement.
9.22 WAIVER OF JURY TRIAL. THE BANKS AND THE AGENTS AND THE BORROWERS,
AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE
TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY RELATED INSTRUMENT OR AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THEM. NEITHER ANY BANK,
EITHER AGENT, NOR ANY BORROWER SHALL SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR
OTHERWISE, ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. THESE
PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR
RELINQUISHED BY ANY PARTY HERETO EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY
SUCH PARTY.
[this space intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the day and year first above written, which
shall be the Effective Date of this Agreement.
CITATION CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
--------------------------------
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<PAGE>
CITATION AUTOMOTIVE SALES CORP.
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
MANSFIELD FOUNDRY CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
IROQUOIS FOUNDRY CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
OBERDORFER INDUSTRIES CORP.
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
BERLIN FOUNDRY CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
PENNSYLVANIA STEEL FOUNDRY
& MACHINE COMPANY
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
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<PAGE>
CASTWELL PRODUCTS, INC.
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
TSC ACQUISITION CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
HTC ACQUISITION CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
SOUTHERN ALUMINUM CASTINGS COMPANY
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
BAC ACQUISITION CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
TSC TEXAS CORPORATION
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
------------------------------
-81-
<PAGE>
TEXAS FOUNDRIES, LTD
By TSC Acquisition Corporation
Its General Partner
By /s/ T. Morris Hackney
---------------------------------
Its Chairman
--------------------------------
MABRY FOUNDRY COMPANY, LTD.
By TSC Acquisition Corporation
Its General Partner
By /s/ T. Morris Hackney
----------------------------------
Its Chairman
---------------------------------
-82-
<PAGE>
Address for Notices: NBD BANK, as a Bank
and as the Administrative Agent
611 Woodward Avenue By /s/ Richard C. Ellis
Detroit, Michigan 48226 --------------------------------
Its Vice President
Attention: National Banking Division
Facsimile No.: (313) 225-1671
Facsimile
Confirmation No.: (313) 225-2458
Commitment Amount: $36,000,000
Percentage of
Total Commitments: 15.6521739%
Address for Notices: SOUTHTRUST BANK OF ALABAMA,
NATIONAL ASSOCIATION, as a Bank
and as the Collateral Agent
P. O. Box 2554 (Zip 35290) By /s/ Stephen F. Vickery
420 North 20th Street --------------------------------
(Zip 35203) Its Vice President
Birmingham, Alabama
Attention: Metropolitan Loan Dept.
Facsimile No.: (205) 254-5911
Facsimile
Confirmation No.: (205) 254-5792
Commitment Amount: $37,000,000
Percentage of
Total Commitments: 16.0869565%
-83-
<PAGE>
Address for Notices: AMSOUTH BANK
Metro Commercial Banking, Upper Level By /s/ Harry Waugh, III
1900 Fifth Avenue North --------------------------------
Birmingham, Alabama 35203 Its Vice President
Attention: Harry Waugh
Facsimile No.: (205) 326-4793
Facsimile
Confirmation No.: (205) 320-7112
Commitment Amount: $35,000,000
Percentage of
Total Commitments: 15.2173913%
Address for Notices: BRANCH BANKING AND TRUST COMPANY
U.S. Banking Department By /s/ Thatcher Townsend
110 South Stratford Road --------------------------------
Winston-Salem, North Carolina 27103
Its Vice President
Attention: Thatcher Townsend
Facsimile No.: (910) 733-3254
Facsimile
Confirmation No.: (910) 733-3245
Commitment Amount: $32,000,000
Percentage of
Total Commitments: 13.9130434%
-84-
<PAGE>
Address for Notices: NATIONAL CITY BANK, KENTUCKY
National City Bank By /s/ C C Tate
5304 Chaversham Lane --------------------------------
Norcross, Georgia 30092 Its Vice President
Attention: Carrie Tate
Facsimile No.: (770) 441-1525
Facsimile
Confirmation No.: (770) 441-7838
Commitment Amount: $25,000,000
Percentage of
Total Commitments: 10.8695652%
Address for Notices: SUNTRUST BANK, ATLANTA
25 Park Place, 24th Floor By /s/ Jeffrey A. Howard
Mail Code 120 -----------------------------------
Atlanta, Georgia 30303 Its Corporate Banking Officer
-------------------------------
Attention: Jeffrey Howard and By /s/ F. McClellan Deaver, III
-----------------------------------
Facsimile No.: (404) 827-6270 Its: Group Vice President
----------------------------
Facsimile
Confirmation No.: (404) 827-6735
Commitment Amount: $20,000,000
Percentage of
Total Commitments: 8.6956521%
-85-
<PAGE>
Address for Notices: NATIONAL BANK OF CANADA
National Bank of Canada By /s/ William L. Benning
Atlanta Office --------------------------------
200 Galleria Parkway, Suite 800 William L. Benning
Atlanta, Georgia 30339 Its Vice President
Attention: Deanna O'Neil and By /s/ Vernon B. Woods
Atlanta Office -------------------------------
Facsimile No.: (770) 980-9531 Vernon B. Woods
Its Vice President
Facsimile
Confirmation No.: (770) 980-0588
Commitment Amount: $20,000,000
Percentage of
Total Commitments: 8.6956521%
Address for Notices: MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
721 Locust Street By /s/ Timothy W. Hassler
Tram 12-3 --------------------------------
St. Louis, Missouri 63101 Its AVP
----------------------------
Attention: Timothy W. Hassler
Assistance Vice President
Facsimile No.: (314) 425-2162
Facsimile
Confirmation No.: (314) 425-8046
Commitment Amount: $15,000,000
Percentage of
Total Commitments: 6.5217391%
-86-
<PAGE>
Address for Notices: DEPOSIT GUARANTY NATIONAL BANK
210 East Capitol, Suite 1180 By /s/ Gregory A. Moore
Post Office Box 1200 --------------------------------
Jackson, Mississippi 39215-1200 Gregory A. Moore
Its Vice President
Attention: Gregory A. Moore
Facsimile No.: (601) 354-8412
Facsimile
Confirmation No.: (601) 968-4730
Commitment Amount: $10,000,000
Percentage of
Total Commitments: 4.347926%
Total Commitment Amount of
all Banks: $230,000,000
-87-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INTERIM
CONDENSED CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF INCOME
FOUND ON PAGES 2 AND 3 OF THE COMPANY'S FORM 10-Q FOR THE NINE MONTHS ENDED
JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-START> OCT-02-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,600
<SECURITIES> 0
<RECEIVABLES> 83,588
<ALLOWANCES> (1,651)
<INVENTORY> 42,105
<CURRENT-ASSETS> 135,659
<PP&E> 263,710
<DEPRECIATION> (62,321)
<TOTAL-ASSETS> 380,189
<CURRENT-LIABILITIES> 71,508
<BONDS> 0
0
0
<COMMON> 177
<OTHER-SE> 147,746
<TOTAL-LIABILITY-AND-EQUITY> 380,189
<SALES> 356,136
<TOTAL-REVENUES> 356,136
<CGS> 291,678
<TOTAL-COSTS> 325,737
<OTHER-EXPENSES> (358)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,210
<INCOME-PRETAX> 25,547
<INCOME-TAX> 10,219
<INCOME-CONTINUING> 25,547
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,328
<EPS-PRIMARY> .87
<EPS-DILUTED> .87
</TABLE>
