EXHIBIT 4.4
STOCK ELECTION AGREEMENT
AGREEMENT, dated as of September 8, 1999, by and between RSJ Acquisition
Co., a Delaware corporation (the "Purchaser") and Frederick F. Sommer (the
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"Stockholder"). Capitalized terms used but not defined herein shall have the
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meanings set forth in the Agreement and Plan of Merger and Recapitalization,
dated as of June 24, 1999, by and between the Purchaser and Citation
Corporation, a Delaware corporation (the "Company"), as amended by Amendment No.
1 (the "Amendment") to the Agreement and Plan of Merger and Recapitalization, by
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and between such parties, dated as of September 3, 1999 (as so amended, and as
such agreement may be further amended from time to time, the "Merger
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Agreement").
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WHEREAS, the Purchaser and the Company have previously entered into the
Merger Agreement, pursuant to which Purchaser will be merged with and into the
Company (the "Merger");
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WHEREAS, in connection with the Purchaser's entering into the Amendment,
the Purchaser is requiring that the Stockholder enter into this Agreement with
regard to certain of the Stockholder's shares of Common Stock, par value $.01
per share, of the Company ("Common Stock"); and
WHEREAS, the Stockholder is willing to enter into this Agreement.
NOW, THEREFORE, in order to implement the foregoing and in consideration
of the mutual agreements contained herein, the parties hereby agree as follows:
Section 1. Covenants of the Stockholder. The Stockholder hereby covenants
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and agrees as follows:
a. Irrevocable Stock Election. The Stockholder hereby irrevocably
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agrees that he will make, or cause to be made, a Stock Election with respect to
31,250 of the shares of Common Stock owned by the Stockholder (such shares, the
"Stock Election Shares"); it being understood and agreed such Stock Election
will be made by the Stockholder in accordance with the applicable terms and
provisions of the Merger Agreement.
b. Stockholders Agreement and Registration Rights Agreement. At the
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Effective Time, the Stockholder shall execute and deliver a Stockholders
Agreement (the
"Stockholders Agreement") and a Registration Rights Agreement (the "Registration
Rights Agreement") containing the applicable terms and conditions set forth on
Exhibit A hereto; it being understood and agreed that the Stockholder shall be
legally bound to accept such terms and provisions only to the extent they relate
to the Stock Election Shares, and all other terms and provisions of such
agreements shall be established by mutual agreement among the various parties
thereto.
c. No Transfers. Prior to the Termination Date (as defined in
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Section 6), the Stockholder shall not, directly or indirectly (i) except
pursuant to the terms of the Merger Agreement or this Agreement, offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, tender, pledge, encumbrance, assignment or
other disposition of any of the Stockholder's Stock Election Shares or any
interest therein, or (ii) take any action that would make any representation or
warranty of the Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling the Stockholder from performing the
Stockholder's obligations under this Agreement.
d. Waiver of Appraisal Rights. The Stockholder hereby waives any
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rights of appraisal or right to dissent from the Merger that the Stockholder may
have with respect to the Stock Election Shares.
Section 2. Covenants of the Purchaser. The Purchaser hereby covenants and
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agrees that at the Effective Time, the Purchaser shall execute, and shall cause
the Company, Kelso Investment Associates VI, L.P., a Delaware limited
partnership, and KEP VI, LLC, a Delaware limited liability company, to execute,
the Stockholders Agreement and the Registration Rights Agreement.
Section 3. Representations and Warranties of the Stockholders. The
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Stockholder hereby represents and warrants to the Purchaser as follows:
a. Ownership of Stock Election Shares, etc. The Stockholder is the
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record and beneficial owner of the Stock Election Shares, free and clear of all
liens, security interests, encumbrances or adverse claims of any kind. The
Stockholder has (A) sole power of disposition, (B) sole voting power and (C)
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sole power to demand dissenter's or appraisal rights, in each case with respect
to all of the Stockholder's Stock Election Shares and with no restrictions on
such rights, subject to applicable federal securities laws and the terms of this
Agreement.
b. Legal Capacity, etc. The Stockholder has all requisite legal
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capacity, power and authority to enter into and perform all of the Stockholder's
obligations under
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this Agreement. The execution, delivery and performance of this Agreement by the
Stockholder will not violate any other agreement to which the Stockholder is a
party or by which the Stockholder is bound or violate any order, writ,
injunction, decree, judgment, statute, rule, regulation or governmental permit
or license applicable to the Stockholder or any of the Stockholder's properties
or assets. This Agreement has been duly and validly authorized, executed and
delivered by the Stockholder and constitutes a valid and binding agreement of
the Stockholder, enforceable against the Stockholder in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally or by general principles of equity.
c. Investment Intent. The Stockholder is retaining the Stock
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Election Shares solely for the Stockholder's own account for investment and not
with a view to, or for sale in connection with, any distribution thereof. The
Stockholder will not, directly or indirectly, offer, transfer, sell, pledge,
hypothecate or otherwise dispose of any of the Stock Election Shares (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of any of the
Stock Election Shares) or any interest therein or any rights relating thereto,
except in compliance with the Securities Act of 1933, as amended, and the rules
and regulations thereunder (the "Act"), the Certificate of Incorporation of the
Company (the "Charter") and the Stockholders Agreement.
d. Transfer Restrictions. The Stockholder acknowledges receipt of
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advice from the Purchaser that (i) none of the Stock Election Shares have yet
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been registered under the Act, (ii) all of the Stock Election Shares must be
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held indefinitely and the Stockholder must continue to bear the economic risk of
the investment in all such Stock Election Shares unless such Stock Election
Shares are subsequently registered under the Act or an exemption from such
registration is available, (iii) there may not be any public market for any of
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the Stock Election Shares in the foreseeable future, (iv) Rule 144 promulgated
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under the Act is not presently expected to be available with respect to sales of
any securities of the Company following the Merger and neither the Company nor
the Purchaser has made any covenant to make such Rule available and such Rule is
not anticipated to be available in the foreseeable future, (v) when and if any
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of the Stock Election Shares may be disposed of without registration in reliance
upon Rule 144, such disposition can be made only in limited amounts and in
accordance with the terms and conditions of such Rule, (vi) if the exemption
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afforded by Rule 144 is not available, public sale of any of the Stock Election
Shares without registration will require the availability of an exemption under
the Act, (vii) restrictive legends in the form set forth in the Stockholders
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Agreement shall be placed on the certificates representing all of the Stock
Election Shares and (viii) a notation shall be made in the appropriate records
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of the Company indicating that all of the Stock Election Shares are subject to
restrictions on transfer and, if the Company should in the future engage the
services of a stock transfer agent, appropriate stop-transfer
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instructions will be issued to such transfer agent with respect to the Stock
Election Shares, if applicable.
e. Ability to Bear Risk. The Stockholder's financial situation is
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such that the Stockholder can afford to bear the economic risk of holding all of
the Stock Election Shares for an indefinite period and the Stockholder can
afford to suffer the complete loss of the Stockholder's investment in all of the
Stock Election Shares.
f. Evaluation. The Stockholder has been granted the opportunity to
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ask questions of, and receive answers from, representatives of the Purchaser and
the Company concerning the terms and conditions of its retention of the Stock
Election Shares and to obtain any additional information that the Stockholder
deems necessary; the Stockholder's knowledge and experience in financial
business matters is such that the Stockholder is capable of evaluating the
merits and risk of the investment in the Stock Election Shares; and the
Stockholder has carefully reviewed the terms and provisions of the Charter and
the Stockholders Agreement and has evaluated the restrictions and obligations
contained therein.
g. Accredited Investors. The Stockholder is an "accredited investor"
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as such term is defined in Rule 501(a) promulgated under the Act (a copy of such
Rule is attached to this Agreement as Exhibit B).
h. Reliance. The Stockholder understands and acknowledges that the
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Purchaser is entering into the Amendment in reliance upon the Stockholder's
execution and delivery of this Agreement with the Purchaser.
Section 4. Further Assurances. From time to time, at the other party's
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request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
Section 5. Certain Events. The Stockholder agrees that this Agreement and
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the obligations hereunder shall attach to the Stock Election Shares and shall be
binding upon any person or entity to which legal or beneficial ownership (within
the meaning of Rule 13(d)-5 under the Securities and Exchange Act of 1934, as
amended) of such Stock Election Shares shall pass, whether by operation of law
or otherwise, including without limitation the Stockholder's heirs, guardians,
administrators or successors or as a result of any divorce.
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Section 6. Termination. The obligations of the Stockholder hereunder
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shall terminate upon the first to occur of (a) the Effective Time and (b) the
date the Merger Agreement is terminated in accordance with its terms (the
"Termination Date"); provided that the provisions of this Section 6 and Section
7 hereof and any claim for breach of any representation, warranty, covenant or
other agreement under this agreement shall survive the Effective Time and/or the
Termination Date, as applicable.
Section 7. Miscellaneous.
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a. Notices. All notices, requests, demands, waivers and other
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communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
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personally, (b) mailed, certified or registered mail with postage prepaid, (c)
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sent by next-day or overnight mail or delivery or (d) sent by fax, as follows
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(or to such other address as the party entitled to notice shall hereafter
designate in accordance with the terms hereof):
If to the Stockholder: [ ]
If to the Purchaser: RSJ Acquisition Co.
c/o Kelso & Company
320 Park Avenue - 24/th/ Floor
New York, NY 10022
Attn: James J. Connors, II, Esq.
and: Debevoise & Plimpton
875 Third Avenue
New York, NY 10022
Attn: Richard D. Bohm, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
b. Invalidity, etc. If any term or other provision of this Agreement
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is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner.
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c. Entire Agreement. This Agreement, including all exhibits and
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schedules hereto, and, in the case of ______, the Voting Agreement (as such term
is defined in the Merger Agreement), constitute the entire agreement and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof and
except as otherwise expressly provided herein.
d. Assignment. Neither this Agreement not any of the rights or
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obligations hereunder may be assigned by any party (whether by operation of law
or otherwise) without the prior written consent of the other parties hereto.
Subject to the preceding sentence, this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns, and no other person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or otherwise.
e. Specific Performance. The parties hereto agree that irreparable
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damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms. It is accordingly
agreed that the parties hereto shall be entitled to specific performance of the
terms hereof, this being in addition to any other remedy to which they are
entitled at law or in equity.
f. Governing Law. This Agreement and the rights and obligations of
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the parties hereunder and the persons subject hereto shall be governed by, and
construed and interpreted in accordance with, the laws of the State of Delaware,
without giving effect to the choice of law principles thereof.
g. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY AND
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UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
h. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
RSJ ACQUISITION CO.
By:_________________
Name:
Title:
FREDERICK F. SOMMER
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EXHIBIT A
Citation Registration Rights Agreement and Stockholders Agreement
Proposed Terms
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The following sets out the proposed terms of the Citation Registration
Rights Agreement and the Stockholders Agreement among the Kelso Investors
("Kelso"), on the one hand, and the parties to the 5 separate but substantially
identical Stock Election Agreements, on the other hand (collectively, the
"Existing Stockholders"). Drafts of such Registration Rights Agreement and
Stockholders Agreement are attached as Annexes I and II to this Exhibit A,
respectively.
Registration Rights
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Kelso. Kelso shall have the right, exercisable on five separate
occasions, to demand a public offering of its shares. All Existing Stockholders
shall have a pro-rata right to participate with Kelso in any secondary public
offering of the Company initiated by Kelso, including any such secondary
offering which is combined with a primary offering by the Company.
Piggy Backs. Existing Stockholders shall also have piggy-back
registration rights allowing them to participate, pro-rata, in any piggy-back
registration rights exercised by Kelso.
Cut-backs. All such registration rights shall be subject to conventional
cut-back provisions, with the cut-backs applied on a pro-rata basis among Kelso
and the Existing Stockholders, except to the extent the managing underwriter for
the proposed offering concludes that Stock Election Shares held by one or more
Existing Stockholders may not be included in the proposed offering without
having an adverse effect of such offering, in which case such cuts-backs shall
be applied to that extent to the particular Existing Stockholder in question.
Pre-emptive Rights
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Prior to an IPO, all Existing Stockholders will have pre-emptive rights
with respect to all newly issued shares of common stock of the Company, subject
to customary exceptions.
Drag and Tag Rights
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Drag. Upon any transfer by Kelso of any shares of the Company to any
third party, Kelso may require each Existing Stockholder to sell a pro-rata
portion of his Stock Election Shares.
Tag. Upon any transfer by Kelso of any shares to a third party, each
Existing Stockholder may require Kelso to cause the third party buyer to
purchase a pro-rata portion of his Stock Election Shares.
Terms. Any sale by any Existing Stockholder pursuant to these Drag and
Tag rights will be on the same terms and conditions as apply to Kelso in the
underlying sale, including, without limitation, as to price, representations and
warranties and indemnitees; provided that, in connection with any such proposed
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sale in which the Existing Stockholders would receive all cash for their Stock
Election Shares, Kelso may elect to receive all or a portion of its
consideration in such proposed sale in a form other than cash, so long as the
per share consideration received by Kelso on the one hand, and the Existing
Stockholders, on the other, is equivalent in value.
Right of First Refusal
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Prior to an IPO (as defined) of the Company, each Existing Stockholder
shall be permitted to transfer, encumber or otherwise dispose of any of its
Stock Election Shares so long as it provides the Company and Kelso with a right
of first refusal with respect to such Stock Election Shares. Such right of
first refusal will not apply to any transfers made for estate planning purposes.
Kelso Option
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During the one-year period following the closing of the Recapitalization,
Kelso will have the right to purchase additional shares of common stock of the
Company for a per share price equal to the lesser of (i) the fair market value
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thereof (as defined) and (ii) the deal price (i.e., $18.10). The Existing
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Stockholders' pre-emptive rights (see above) would apply to any such shares so
issued to Kelso.
Binding Nature of Obligations
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It is understood and agreed that the parties shall be legally bound to
accept the foregoing terms and provisions only to the extent that they relate to
the Stock Election Shares, and all other terms and provisions of the
Stockholders' Agreement and the
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Registration Rights Agreement shall be established by mutual agreement among the
various parties thereto.
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