Exhibit 4.18
FORM OF WARRANTS
222
EXHIBIT F
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FORM OF
WARRANT
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THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND MAY NOT BE OFFERED OR SOLD, UNLESS THEY HAVE BEEN REGISTERED UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE AND THEN ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON
TRANSFER SET FORTH IN THE BRIDGE FINANCING AGREEMENT DATED AS OF DECEMBER 1,
1999, AS AMENDED, A COPY OF THE BRIDGE FINANCING AGREEMENT MAY BE OBTAINED FROM
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE.
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CITATION CORPORATION
Warrant for the Purchase of Shares of Common Stock
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No. ____ [__] Shares
FOR VALUE RECEIVED, CITATION CORPORATION (the "Company"), a Delaware
corporation, hereby certifies that _________________________________________
(the "Purchaser"), (together with any permitted subsequent holder of warrants
subject hereto, the "Holder") is entitled, subject to the provisions of this
Warrant, to purchase from the Company, at any time or from time to time during
the Exercise Period (as hereinafter defined) an aggregate of Eight Hundred
Thousand Four Hundred Fifty Two (800,452) fully paid and nonassessable Warrant
Shares (as hereinafter defined), at an aggregate purchase price equal to the
Exercise Price (as hereinafter defined). The number of Warrant Shares to be
received upon the exercise of this Warrant is subject to adjustment from time to
time as hereinafter set forth.
29. Definitions Terms defined in the Bridge Financing Agreement dated as of
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December 1, 1999 among the Company, Citation Funding, Inc., First Union
Investors, Inc. and The Chase Manhattan Bank, unless otherwise defined
herein are used herein as therein defined. The following additional terms,
as used herein, have the following respective meanings:
"Additional Shares" means any shares of Common Stock other than Common
Stock issued upon the exercise of any Warrant.
"Appraiser" has the meaning set forth in Section 7(d)(iii).
"Common Stock" means the authorized Capital Stock, par value $.01 per
share of the Company, and any stock into which such Capital Stock may thereafter
be converted or changed.
"Convertible Securities" means rights to subscribe for, or any rights
or options to purchase, shares of Common Stock, or any stock or other securities
convertible into or exchangeable for shares of Common Stock.
"Current Market Price" means for shares of Common Stock the current
market price of such Common Stock as determined in accordance with subsection
7(d).
"Exercise Period" means the period from and including the date the
Warrants are released in accordance with the terms of the Warrant Escrow
Agreement, dated as of December 1, 1999, among the Company,
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the Purchaser and Snoga, Inc., the escrow agent, to and including 5:00 p.m. (New
York City time) on the seventh (7/th/) anniversary of the date thereof (or if
such day is not a Business Day, the next succeeding Business Day).
"Exercise Price" means, with respect to any Warrant Share, an amount
equal to $0.01 per share for such Warrant Share.
"Fully Diluted Common Stock" means, at any time, the then outstanding
Common Stock plus (without duplication) all shares of Common Stock issuable,
whether at such time or upon the passage of time or the occurrence of future
events, upon the exercise, conversion or exchange of all then-outstanding
rights, warrants, options, convertible securities or exchangeable securities or
indebtedness, or other rights exercisable for or convertible or exchangeable
into, directly or indirectly, Common Stock, and securities convertible or
exchangeable into Common Stock, whether at the time of issuance or upon the
passage of time or the occurrence of some future event.
"Kelso Holder" means any Affiliate or designee of Kelso
"Non-Kelso Holder" means any Holder that is not a Kelso Holder.
"Warrant Shares" means the shares of Common Stock of the Company
deliverable upon exercise of this Warrant, as adjusted from time to time.
30. Exercise of Warrant. This Warrant may be exercised in whole or in part, at
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any time or from time to time, during the Exercise Period, by presentation
and surrender hereof to the Company at its principal office at the address
set forth on the signature page hereof (or at such other address as the
Company may hereafter notify the Holders in writing), or at the office of
Escrow Agent with the Purchase Form annexed hereto duly executed and
accompanied by proper payment of that portion of the Exercise Price
represented by the number of Warrant Shares specified in such form being
exercised. Such payment may be made, at the option of the Holders, either
(a) by cash, certified or bank cashier's check or wire transfer in an
amount equal to the product of (i) the Exercise Price times (ii) the number
of Warrant Shares as to which this Warrant is being exercised or (b) by
receiving from the Company the number of Warrant Shares equal to (i) the
number of Warrant Shares as to which this Warrant is being exercised minus
(ii) the number of Warrant Shares having a value, based on the Current
Market Price on the trading day immediately prior to the date of such
exercise, equal to the product of (x) the Exercise Price times (y) the
number of Warrant Shares as to which this Warrant is being exercised. If
this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant, execute and deliver a new Warrant evidencing the
rights of the Company thereof to purchase the balance of the Warrant Shares
purchasable hereunder. Upon receipt by the Company or Escrow Agent of this
Warrant and such Purchase Form, together with the applicable portion of the
Exercise Price, at such office, in proper form for exercise, the Holder
shall be deemed to be the holder of record of the Warrant Shares,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such Warrant Shares shall not then
be actually delivered to the Holder. The Company shall pay any and all
documentary stamp or similar issue taxes payable in respect of the issue of
the Warrant Shares. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance or delivery of certificates representing Warrants or Warrant
Shares in a name other than that of the Holder at the time of surrender for
exercise, and, until the payment of such tax, shall not be required to
issue such Warrant Shares.
31. Due Authorization; Reservation of Shares. (a) The Company represents and
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warrants that this Warrant has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company and
entitles the Holder hereof or its assignees to purchase Warrant Shares upon
payment to the Company of the Exercise Price applicable to such shares.
The Company hereby agrees that at all times there shall be reserved for
issuance and delivery, upon exercise of this Warrant, all shares of its
Common Stock or other shares of capital stock of the Company from time to
time issuable or deliverable upon exercise of this Warrant. All such
shares shall be duly authorized (and, if newly-issued, when issued upon
such exercise), shall be validly issued, fully paid and nonassessable, free
and clear of all liens, security interests, charges and other encumbrances
or restrictions on sale and free and clear of all preemptive rights
(including without limitation, any encumbrances or rights in favor of the
Company).
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Any Common Stock held by the Company and subject to this Warrant shall be
marked with a legend stating that such shares are subject to this Warrant.
(c) The Company represents and warrants that the execution and
delivery by it of this Warrant does not require any action by or in respect of,
or filing with, any governmental body, agency or official and does not
contravene or constitute a default under or violation of (i) any provision of
applicable law or regulation, (ii) the certificate of incorporation or (iii)
bylaws of the Company, or any material agreement, judgment, injunction, order,
decree or other instrument binding upon the Company.
32. Fractional Shares. No fractional shares or scrip representing fractional
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shares shall be issued upon the exercise of this Warrant. With respect to
any fraction of a share called for upon any exercise hereof, the Company
shall pay to the Holder an amount in cash equal to such fraction multiplied
by the Current Market Price of such fractional share.
33. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is
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exchangeable, without expense, at the option of the Holder, upon
presentation and surrender hereof to the Company for other Warrants of
different denominations, entitling the Holder or Holders thereof to
purchase in the aggregate the same number of Warrant Shares. Subject to
Section 10 hereof, the Holder of this Warrant shall be entitled to assign
its interest in this Warrant in whole or in part to any person or persons.
Upon surrender of this Warrant to the Company by the Holder, with the
Assignment Form annexed hereto duly executed and funds sufficient to pay
any transfer tax, the Company shall, without charge, execute and deliver a
new Warrant or Warrants in the name set forth in such assignment form and,
if the Holder's entire interest is not being assigned, in the name of the
Holder, and this Warrant shall promptly be cancelled. In the event of any
assignment in part, the Exercise Price shall be apportioned between the
Warrant to be issued to the Holder with respect to that portion not
transferred and the Warrant to be issued to the transferee based on their
respective interests. This Warrant may be divided or combined with other
Warrants that carry the same rights upon presentation hereof at the office
of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued and signed by the
Holder hereof. The term "Warrant" as used herein includes any Warrants
into which this Warrant may be divided or for which it may be exchanged.
Upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and in
the case of mutilation, upon surrender and cancellation of this Warrant the
Company shall execute and deliver a new Warrant of like tenor and date.
34. Rights of the Holder. The Holder shall not, by virtue hereof, be entitled
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to any rights of a stockholder in the Company, either at law or equity, and
the rights of the Holder are limited to those expressed in this Warrant.
35. Anti-dilution Provisions and Other Adjustments; Purchase Right. The number
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of Warrant Shares which may be purchased upon the exercise hereof shall be
subject to change or adjustment as follows:
(a) Stock Dividends, Splits, Combinations, Reclassifications, etc. If
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the Company at any time (i) shall declare a dividend or make a distribution on
its Common Stock payable in shares of its capital stock (whether shares of
Common Stock or of capital stock of any other class), (ii) shall subdivide
shares of its Common Stock into a greater number of shares, (iii) shall combine
or have combined its outstanding Common Stock into a smaller number of shares or
(iv) shall issue by reclassification of its Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), other securities of the Company the
Holder shall be entitled to purchase pursuant to this Warrant the aggregate
number and kind of shares of capital stock and other securities which, if such
Holder's Warrant had been exercised immediately prior to such event, such Holder
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, distribution, subdivision, combination or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) Additional Issuances. If the Company at any time shall issue any
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Additional Shares at a price less than the Current Market Price per share of
Common Stock or any Convertible Securities (excluding any such issuance for
which the number of Warrant Shares purchasable hereunder shall have been
adjusted pursuant to subsection (a) of this Section 7 and excluding (i) any
issuance of Warrants pursuant to the Escrow Agreement
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and (ii) any options granted to employees of the Company or any subsidiary of
the Company), which are exercisable or convertible for Additional Shares at an
exercise or conversion price less than the Current Market Price per share of
Common Stock, the number of Warrant Shares purchasable hereunder after such
issuance shall be determined by multiplying the number of Warrant Shares
purchasable hereunder immediately prior to such issuance by a fraction, (i) the
denominator of which shall be the number of shares of Fully Diluted Common Stock
immediately prior to such issuance plus the number of shares that the aggregate
consideration for the total number of such Additional Shares (including the
issue price of any such Convertible Securities) would purchase at the Current
Market Price per share of Common Stock and (ii) the numerator of which shall be
the number of shares of Fully Diluted Common Stock immediately after such
issuance. No further adjustment to the number of Warrant Shares purchasable
hereunder shall be made upon the actual issue of Common Stock upon exercise of
such Convertible Securities. Shares of Common Stock owned by or held for the
account of the Company or any Subsidiary on such date shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall
become effective immediately after such issuance. Such adjustment shall be made
successively whenever any such event shall occur.
If the Company at any time shall issue two or more securities as a
unit and one or more of such securities shall be Additional Shares or
Convertible Securities subject to this subsection (b), the consideration
allocated to each such security shall be determined in good faith by the board
of directors of the Company; provided that if the aggregate issue price of all
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such units exceeds $10,000,000, then such allocation shall be determined by an
independent nationally recognized investment banking firm experienced in valuing
securities.
(c) Distribution of Evidences of Indebtedness or Assets. If the
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Company at any time shall fix a record date for the making of a distribution to
all holders of its Common Stock (including any such distribution to be made in
connection with a consolidation or merger in which the Company is to be the
continuing corporation) of evidences of its indebtedness or assets (excluding
dividends or distributions of the Company paid in capital stock for which the
number of Warrant Shares purchasable hereunder shall have been adjusted pursuant
to subsection (a) of this Section 7 or regular cash dividends or distributions
payable out of earnings or surplus and made in the ordinary course of business)
the number of Warrant Shares purchasable hereunder after such record date shall
be determined by multiplying the number of Warrant Shares purchasable hereunder
immediately prior to such record date by a fraction, of which the denominator
shall be the Current Market Price per share of Common Stock on such record date,
less the fair market value (as determined in the reasonable judgment of the
Board of Directors of the Company and described in a statement delivered to the
Holder) of the portion of the assets or evidences of indebtedness so to be
distributed to a holder of one share of Common Stock, and the numerator shall be
the Current Market Price per share of Common Stock. Such adjustment shall
become effective immediately after such record date. Such adjustment shall be
made whenever such a record date is fixed; and in the event that such
distribution is not so made, the number of Warrant Shares purchasable hereunder
shall again be adjusted to be the number that was in effect immediately prior to
such record date.
(d) Determination of Market Price. (A) For the purpose of any
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computation under subsection (b) or (c) of this Section 7, the Current Market
Price per share of Common Stock on any record date shall be the average of the
current market value, determined as set forth below, of Common Stock for the 20
Business Days prior to the date in question.
(i) If the Common Stock is listed on a national securities exchange
or admitted to unlisted trading privileges on such an exchange, the current
market value shall be the last reported sale price of the Common Stock on such
exchange on such Business Day or if no such sale is made on such day, the mean
of the closing bid and asked prices for such day on such exchange; or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges, the current market value shall be the mean of the last bid
and asked prices reported on such Business Day (A) by the National Association
of Securities Dealers, Inc. Automatic Quotation System or (B) if reports are
unavailable under clause (A) above by the National Quotation Bureau
Incorporated; or
(iii) If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported, the current
market value shall be such value as agreed upon by the Company and the Majority
Holders or, if the Company and the Majority Holders cannot otherwise agree, (i)
the current market value shall be determined by the most recent appraisal of the
Company, which was made by Houlihan,
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Lokey, Howard & Zukin pursuant to the Stockholder's Agreement of the Company, or
(ii) if such appraisal is dated more than 3 months prior to the date the Current
Market Price is being determined by an independent nationally recognized
investment banking firm experienced in valuing businesses (an "Appraiser")
jointly chosen by the Majority Holders and the Company or, if the Majority
Holders and the Company cannot agree on the selection of an Appraiser within 10
Business Days, then each of the Company and the Majority Holders shall choose an
Appraiser within 10 Business Days of the end of such first 10-day period, and
the current market value shall be the value agreed upon by such Appraisers or,
if the two Appraisers cannot so agree, the value of a third Appraiser, which
third Appraiser shall be chosen by the two Appraisers. If there is only one
Appraiser, all expenses of the Appraiser shall be paid by the Company. If there
are two Appraisers, the Majority Holders and the Company shall pay all expenses
of the Appraiser chosen by it.
(B) For the purposes of any computation under Sections 2 or 4, the
Current Market Price shall be determined by (i) the most recent appraisal of the
Company, which was made by Houlihan, Lokey, Howard & Zukin pursuant to the
Stockholder's Agreement of the Company, or (ii) if such appraisal is dated more
than 3 months prior to the date the Current Market Price is being determined by
an independent nationally recognized investment banking firm experienced in
valuing businesses (an "Appraiser") jointly chosen by the Majority Holders and
the Company or, if the Majority Holders and the Company cannot agree on the
selection of an Appraiser within 10 Business Days, then each of the Company and
the Majority Holders shall choose an Appraiser within 10 Business Days of the
end of such first 10-day period, and the current market value shall be the value
agreed upon by such Appraisers or, if the two Appraisers cannot so agree, the
value of a third Appraiser, which third Appraiser shall be chosen by the two
Appraisers. If there is only one Appraiser, all expenses of the Appraiser shall
be paid by the Company. If there are two Appraisers, the Majority Holders and
the Company shall pay all expenses of the Appraiser chosen by it.
(e) Stock Other Than Common Stock. In the event that at any time, as
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a result of an adjustment made pursuant to subsection (a) of this Section 7, the
Holder shall become entitled to receive any shares of the capital stock of the
Company other than Common Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in this Section 7, and the
provisions of this Warrant with respect to the Common Stock shall apply on like
terms to any such other shares.
(f) Notice of Certain Actions. In the event that at any time:
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the Company shall authorize the issuance of Convertible
Securities to all holders of its Common Stock; or
the Company shall authorize the distribution to all holders of
its Common Stock of evidences of its indebtedness or assets (other than
dividends paid in or distributions of the Company, capital stock for which the
number of Warrant Shares purchasable hereunder shall have been adjusted pursuant
to subsection (a) of this Section 7 or regular cash dividends or distributions
payable out of earnings or surplus and made in the ordinary course of business);
or
the Company shall authorize any capital reorganization or
reclassification of the Common Stock (other than a subdivision or combination of
the outstanding Common Stock and other than a change in par value of the Common
Stock) or of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required (other than a
consolidation or merger in which the Company is the continuing corporation and
that does not result in any reclassification or change of the Common Stock
outstanding), or of the conveyance or transfer of the properties and assets of
the Company substantially as an entirety; or
there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; or
the Company shall propose to take any other action that would
require an adjustment of the number of Warrant Shares purchasable hereunder
pursuant to this Section 7;
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then the Company shall or shall cause to be mailed by certified mail to the
Holder, at least 30 days (or 20 days in any case specified in clause (A) or (B)
above) prior to the applicable record or effective date hereinafter specified, a
notice describing such issuance, distribution, reorganization, reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation, winding-
up or other action and stating (x) the date as of which the holders of Common
Stock of record entitled to receive any such Convertible Securities or
distributions are to be determined or (y) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding-up is expected to become effective and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding-up.
(g) Common Stock Defined. Whenever reference is made in this Section
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7 to the issue of shares of Common Stock, the term "Common Stock" shall include
any equity securities of any class of the Company hereinafter authorized which
shall not be limited to a fixed or determinable amount in respect of the right
of the holders thereof to participate in dividends or distributions of assets
upon the voluntary or involuntary liquidation, dissolution or winding up of the
Company. However, subject to the provisions of Section 9 hereof, shares
issuable upon exercise of this Warrant shall include only Common Stock existing
as of the date hereof or shares of any class or classes resulting from any
reclassification or reclassifications thereof or as a result of any corporate
reorganization as provided for in Section 9 hereof.
36. Tag-Along and Drag-Along Rights
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(a) Tag-Along Rights
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(A) In the event that at any time Kelso proposes to sell shares
of Common Stock owned by it to any Person (a "Proposed Purchaser"), other than
any sale, assignment, transfer or other disposal (i) pursuant to a registration
statement or Rule 144 or (ii) to a Kelso Holder, and the shares proposed to be
sold, together with all shares of Common Stock previously sold by Kelso, would
represent more than 25% of the aggregate number of shares of Common Stock owned
by Kelso immediately after the Closing, then Kelso will promptly provide each
Non-Kelso Holder written notice (a "Sale Notice") of such proposed sale (a
"Proposed Sale") and the material terms of the Proposed Sale as of the date of
such Sale Notice (the "Material Terms"). If within 30 days of the receipt of the
Sale Notice, Kelso receives a written request (a "Sale Request") to include
Warrant Shares or Warrants, as the case may be, held by one or more Non-Kelso
Holder in the Proposed Sale, the Warrant Shares or Warrants, as the case may be,
so held by such Non-Kelso Holder shall be so included as provided therein;
provided, however, that any Sale Request shall be irrevocable unless (x) there
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shall be a material adverse change in the Material Terms or (y) otherwise
mutually agreed to in writing by such Non-Kelso Holder and Kelso.
(B) The number of Warrant Shares or Warrants, as the case may
be, that each Non-Kelso Holder will be permitted to include in a Proposed Sale
pursuant to a Sale Request will be the product of (i) the number of Warrant
Shares or Warrants, as the case may be, then held by such Non-Kelso Holder and
(ii) a fraction, the numerator of which shall be the number of Warrant Shares or
Warrants, as the case may be, which Kelso and the Kelso Holders propose to sell
in the Proposed Sale and the denominator of which shall be the number of shares
of Common Stock then held by Kelso and the Kelso Holders.
(C) Warrant Shares or Warrants, as the case may be, subject to a
Sale Request will be included in a Proposed Sale pursuant hereto and to any
agreement with the Proposed Purchaser relating thereto, on the same terms and
subject to the same conditions applicable to the shares of Common Stock which
Kelso and the Kelso Holders propose to sell in the Proposed Sale. Such terms and
conditions shall include, without limitation, (i) the sale consideration (which
shall be reduced by the fees and expenses incurred by Kelso and the Company in
connection with the Proposed Sale), (ii) the provision of information,
representations, warranties, covenants and requisite indemnifications; provided,
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however, that any representations and warranties relating specifically to any
Holder shall only be made by that Holder and any indemnification provided by the
Holder shall be based on the number of Warrant Shares or Warrants, as the case
may be, being sold by each Holder in the Proposed Sale, either on a several, not
joint, basis or solely with recourse to an escrow established for the benefit of
the Proposed Purchaser; provided further, however, that in connection with any
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Proposed Sale in which the Non-Kelso Holders receive all cash for the Warrant
Shares or Warrants, as the case may be, to be sold by them in such sale, Kelso
or any Kelso Holder may elect to receive a form of
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consideration consisting, in whole or in part, of non-cash consideration so long
as the per share value of the consideration to be received by Kelso or any Kelso
Holder is the same or less than that to be received by the Non-Kelso Holders (as
reasonably determined by the Board in good faith).
(D) Upon delivering a Sale Request, each Non-Kelso Holder (other
than DLJ, FUI or Chase) will, if requested by Kelso (or any Kelso Holder),
execute and deliver a custody agreement and power of attorney in form and
substance satisfactory to Kelso (or any such Kelso Holder) (a "Custody Agreement
and Power of Attorney") with respect to the Warrant Shares or Warrants, as the
case may be which are to be included in the Proposed Sale pursuant to this
Section 8(a). The Custody Agreement and Power of Attorney will provide, among
other things, that the Non-Kelso Holders executing such Custody Agreement and
Power of Attorney will deliver to and deposit in custody with the custodian and
attorney-in-fact named therein a certificate or certificates representing such
Warrant Shares or Warrants, as the case may be (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly executed stock powers
in blank), and irrevocably appoint said custodian and attorney-in-fact as such
Non-Kelso Holder's agent and attorney-in-fact with full power and authority to
act under a custody agreement and power of attorney on behalf of such Non-Kelso
Holders with respect to the matters specified therein.
(E) Each Non-Kelso Holder agrees that he or she will execute
such other agreements as Kelso (or any Kelso Holder) may reasonably request in
connection with the consummation of a Proposed Sale and Sale Request and the
transactions contemplated thereby, including, without limitation, any purchase
agreement, proxies, written consents in lieu of meetings or waiver of appraisal
rights.
(b) Drag Along Rights
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(A) In the event that any time Kelso proposes to sell shares of
Common Stock owned by it to any Proposed Purchaser other than any sale,
assignment, transfer or other disposal (i) pursuant to a registration statement
or Rule 144, or (ii) to a Kelso Holder, and the shares proposed to be sold,
together with all shares of Common Stock previously sold by Kelso would
represent all of the Common Stock owned by Kelso immediately after the Closing,
then Kelso may provide each Non-Kelso Holder written notice (a "Drag-Along
Notice") of such Proposed Sale and the Material Terms thereof not less than 25
business days prior to the proposed closing date of the Proposed Sale and each
of the Non-Kelso Holder hereby agrees to sell to such Proposed Purchaser that
number of Warrant Shares or Warrants, as the case may, owned by such Non-Kelso
Holder.
(B) Warrant Shares or Warrants, as the case may be, subject to a
Drag-Along Notice will be included in the Proposed Sale pursuant hereto and to
any agreement with the Proposed Purchaser relating thereto, on the same terms
and subject to the same conditions applicable to the sale of shares of Common
Stock which Kelso and the Kelso Holders propose to sell in the Proposed Sale.
Such terms and conditions shall include, without limitation, (i) the sale
consideration (which shall be reduced by the fees and expenses incurred by Kelso
and the Company in connection with the Proposed Sale); (ii) the provision of
information, representations, warranties, covenants and requisite
indemnifications, provided, however, that any representations and warranties
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relating specifically to any Holder shall only be made by that Holder and any
indemnification provided by the Holders shall be on a several, not joint, basis
(or by recourse to an escrow provided for the benefit of the Proposed Purchaser)
based on the number of Warrant Shares or Warrants, as the case may be, being
sold by each Holder in the Proposed Sale; provided, further, however, that the
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form of consideration to be received by Kelso or any Kelso Holder in connection
with the Proposed Sale may be different from that received by the Non-Kelso
Holders so long as the value of the consideration to be received by Kelso or any
Kelso Holder is the same or less than that to be received by the Non-Kelso
Holders (as reasonably determined by the Board of Directors of the Company in
good faith). No Non-Kelso Holders shall exercise any dissenter's or like rights
with respect to, or otherwise object in any way to, the consummation of any such
Proposed Sale pursuant to this Section 8(b).
(C) Each Non-Kelso Holder (other than DLJ, FUI or Chase) will,
if requested by Kelso (or any Kelso Holder), execute and deliver a Custody
Agreement and Power of Attorney in form and substance satisfactory to Kelso (or
any such Kelso Holder) with respect to the Warrant Shares or Warrants, as the
case may be, which are to be included in the Proposed Sale pursuant to this
Section 8(b). The Custody Agreement and Power Attorney will provide, among other
things, that the Non-Kelso Holders executing such Custody Agreement and Power of
Attorney will deliver to and deposit in custody with the custodian and
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attorney-in-fact named therein a certificate or certificates representing such
Warrant Shares or Warrants, as the case may be, (duly endorsed in blank by the
registered owner or owners thereof or accompanied by duly endorsed stock powers
in blank) and irrevocably appoint said custodian and attorney-in-fact as such
Non-Kelso Holder's agent and attorney-in-fact with full power and attorney to
act under a custody agreement and power of attorney on behalf of such Non-Kelso
Holder with respect to the matters specified therein.
(D) Each Non-Kelso Holder agrees that he or she will execute such
other agreements as Kelso (or any Kelso Holder) may reasonably request in
connection with the consummation of a Proposed Sale and Drag-Along Notice and
the transactions contemplated thereby, including, without limitation, any
purchase agreement, proxies, written consents in lieu of meetings or waiver of
appraisal rights.
37. Officers' Certificate. Whenever the number of Warrant Shares purchasable
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hereunder shall be adjusted as required by the provisions of Section 7, the
Company shall forthwith file in the custody of its Secretary or an
Assistant Secretary at its principal office an officers' certificate
showing the adjusted number of Warrant Shares purchasable hereunder
determined as herein provided, setting forth in reasonable detail the facts
requiring such adjustment and the manner of computing such adjustment.
Each such officers' certificate shall be signed by the chairman, president
or chief financial officer of the Company and by the secretary or any
assistant secretary of the Company. Each such officers' certificate shall
be made available at all reasonable times for inspection by the Holder or
any holder of a Warrant executed and delivered pursuant to Section 4 hereof
and the Company shall, forthwith after each such adjustment, mail a copy,
by certified mail, of such certificate to the Holder or any such holder.
38. Reclassification, Reorganization, Consolidation or Merger. In case of any
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Reorganization Transaction (as hereinafter defined), the Company shall, as
a condition precedent to such transaction, cause effective provisions in
the documentation relating to the Reorganization Transaction and otherwise,
to be made so that the Holder shall have the right thereafter, by
exercising this Warrant, to purchase the kind and amount of shares of stock
and other securities and property receivable upon such Reorganization
Transaction by a holder of the number of shares of Common Stock that would
have been received upon exercise of this Warrant immediately prior to such
Reorganization Transaction. Any such provision shall include provision for
adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions of this
Section 9 shall similarly apply to successive Reorganization Transactions.
For purposes of this Section 9, "Reorganization Transaction" shall mean any
reclassification, capital reorganization or other change of outstanding
shares of Common Stock of the Company (other than a subdivision or
combination of the outstanding Common Stock and other than a change in the
par value of the Common Stock) or any consolidation or merger of the
Company with or into another corporation (other than a merger with a
subsidiary in which merger the Company is the continuing corporation and
that does not result in any reclassification, capital reorganization or
other change of outstanding shares of Common Stock of the class issuable
upon exercise of this Warrant) or any sale, lease, transfer or conveyance
to another corporation of all or substantially all of the assets of the
Company. Notwithstanding the foregoing, if a transaction that might
otherwise be deemed a Reorganization Transaction for the purposes of
Section 7, it shall not be deemed a Reorganization Event for such purposes.
39. Transfer Restrictions. The Holder by its acceptance hereof, represents and
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warrants that it is acquiring the Warrants and any Warrant Shares for its
own account and not with an intent to sell or distribute the Warrants or
any Warrant Shares except in compliance with applicable United States
federal and state securities law in a manner which would not result in the
issuance of the Warrants hereby being treated as a public offering.
Neither this Warrant nor any of the Warrant Shares, nor any interest in
either, may be sold, assigned, pledged, hypothecated, encumbered or in any
other manner transferred or disposed of, in whole or in part, except in
compliance with applicable United States federal and state securities laws
and the applicable terms and conditions of the Securities Purchase
Agreement.
40. Listing on Securities Exchanges; Registration Rights. If any shares of
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Common Stock required to be reserved for purposes of exercise of this
Warrant require registration with or approval of any governmental authority
under any federal or state law (other than the Securities Act) before such
shares
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may be issued upon exercise, the Company will, at its expense and as
expeditiously as possible, use its best efforts to cause such shares to be
duly registered or approved prior to such issuance, as the case may be. The
shares of Common Stock (and other securities) issuable upon exercise of
this Warrant (or upon conversion of any shares of Common Stock issued upon
such exercise) shall constitute Registrable Securities (as such term is
defined in the Registration Rights Agreement). Each holder of this Warrant
shall be entitled to all of the benefits afforded to a holder of any such
Registrable Securities under the Registration Rights Agreement and such
holder, by its acceptance of this Warrant, agrees to be bound by and to
comply with the terms and conditions of the Registration Rights Agreement
applicable to such holder as a holder of such Registrable Securities. At
any such time as Common Stock is listed on any national securities
exchange, the Company will, at its expense, obtain promptly and maintain
the approval for listing on each such exchange, upon official notice of
issuance, the shares of Common Stock issuable upon exercise of the then
outstanding Warrants and maintain the listing of such shares after their
issuance; and the Company will also list on such national securities
exchange, will register under the Exchange Act and will maintain such
listing of, any other securities that at any time are issuable upon
exercise of the Warrants, if and at the time that any securities of the
same class shall be listed on such national securities exchange by the
Company.
41. Availability of Information. (a) The Company shall comply with the
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reporting requirements of Sections 13 and 15(d) of the Exchange Act to the
extent, if at all, it is required to do so under the Exchange Act. The
Company shall also cooperate with each Holder of any Warrants and holder of
any Warrant Shares in supplying such information as may be necessary for
such holder to complete and file any information reporting forms currently
or hereafter required by the Securities and Exchange Commission as a
condition to the availability of an exemption from the Securities Act for
the sale of any Warrants or Warrant Shares. The provisions of this Section
12 shall survive termination of this Warrant, whether upon exercise of this
Warrant in full or otherwise.
(b) If at any time the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company will promptly furnish at
its expense, upon request, for the benefit of Holders from time to time of
Warrants and holders from time to time of Warrant Shares, to Holders of
Warrants, holders of Warrant Shares and prospective purchasers of Warrants and
Warrant Shares information satisfying the requirements of subsection (d)(4)(i)
of Rule 144A under the Securities Act.
42. Governing Law. This Warrant and the rights and obligations of the parties
-------------
hereunder shall be construed in accordance with and governed by the laws of
the State of New York without regard to principles of conflicts of laws.
Each party hereto hereby submits to the jurisdiction of the United States
District Court for the Southern District of New York, of any New York state
court sitting in New York City and of any court located in its own
corporate domicile for purposes of all legal proceedings arising out of or
relating to this Warrant. Each party hereto irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum. Each party hereto hereby
irrevocably waives any and all right to trial by jury in any legal
proceeding arising out of or relating to this Warrant. The Company agrees
(i) that service of process in any such proceeding may be effected by
mailing a copy thereof by registered or certified mail (of any
substantially similar form of mail), postage prepaid, to the Company at 2
Office Park Circle, Suite 204, Birmingham, Alabama 35223, (ii) agrees that
nothing herein shall affect service of process in any other manner
permitted by law or shall limit the right to sue in any other jurisdiction
and (iii) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any such proceeding any special, exemplary,
punitive or consequential damages.
231
IN WITNESS WHEREOF, the Company has duly caused this Warrant to be
executed by and attested by their duly authorized officers and to be dated as of
December 1, 1999.
CITATION CORPORATION
By______________________________ By:____________________________
Attest: Name:
Title: Title:
Address: 2 Office Park Circle
Suite 204
Birmingham, AL 35223
Attention: Stanley B. Atkins
Telecopy: (205) 871-5772
232
PURCHASE FORM
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Dated ____________, ____
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ______ shares of Common Stock and hereby
makes payment of ________ in payment of the exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name____________________________________________________________
(please typewrite or print in block letters)
Address__________________________________________________________
Signature___________________________________________________
____________________
ASSIGNMENT FORM
---------- ----
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers unto
Name____________________________________________________________
(please typewrite or print in block letters)
Address__________________________________________________________
its right to purchase _____________ shares of Common Stock represented by this
Warrant and does hereby irrevocably constitute and appoint ___________ Attorney,
to transfer the same on the books of Company, with full power of substitution in
the premises.
Date________________, _____
Signature____________________
233