EXHIBIT 99.1
CALL OPTION AGREEMENT
THIS CALL OPTION AGREEMENT (this "Agreement") is made and entered into as of
November 6, 1998, by and between Xxxxxxxx Company, Inc., an Alabama corporation
("Xxxxxxxx"), and T. Xxxxxx Xxxxxxx, an individual ("Xxxxxxx").
R E C I T A L S:
WHEREAS, Xxxxxxx currently is the record owner of 5,005,800 shares of common
stock of Citation Corporation, a Delaware corporation; and
WHEREAS, Xxxxxxxx desires to acquire from Xxxxxxx the right and option to
purchase certain of the shares of common stock of the Company held by Xxxxxxx,
and Xxxxxxx desires to grant to Xxxxxxxx such option in consideration of the
Option Price (defined below).
NOW, THEREFORE, in consideration of the foregoing recitals and of the mutual
covenants, agreements, undertakings, representations and warranties contained
herein, the parties hereto agree as follows:
1. Definitions. For purposes of this Agreement,
-----------
(a) "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning set
forth in Rule 13d-3(a) promulgated by the Securities and Exchange Commission.
(b) "CLOSING" shall have the meaning set forth in Section 6(d) hereof.
(c) "COMPANY" means Citation Corporation, a Delaware corporation.
(d) "XXXXXXXX" means Xxxxxxxx Company, Inc., an Alabama corporation, or an
affiliate to which Xxxxxxxx may assign its rights hereunder.
(e) "EXERCISE PRICE" shall have the meaning set forth in Section 6(a).
(f) "XXXX-XXXXX-XXXXXX" shall have the meaning set forth in Section 10(a).
(g) "INFORMATION" shall have the meaning set forth in Section 10(c).
(h) "LIENS" shall mean any mortgage, lien, pledge, adverse claim, interest,
encumbrance, option, warrant, call, preemptive right, restriction or other
agreement or right of a similar nature.
(i) "NOTICE" shall have the meaning set forth in Section 9(d).
(j) "OFFER" shall have the meaning set forth in Section 9(d).
(k) "OPTION" shall have the meaning set forth in Section 2 hereof.
(l) "OPTION PRICE" shall have the meaning set forth in Section 3.
(m) "OPTION TERM" shall mean the period beginning on the date hereof, and
ending on March 6, 1999.
(n) "REMAINING SHARES" shall have the meaning set forth in Section 9(d).
(o) "SHARES" shall mean 4,000,000 shares of the common stock of the Company,
currently owned by Xxxxxxx.
(p) "TRANSFER" shall mean to sell, exchange, give, assign, pledge, devise,
bequeath, or otherwise transfer, grant any interest in or encumber in any way.
2. Grant of Option. In consideration of the payment of the Option Price
---------------
by Xxxxxxxx, Xxxxxxx does hereby give and grant to Xxxxxxxx the exclusive right,
privilege and option (but not the duty) to purchase all, but not less than all,
of the Shares during the Option Term (the "Option").
3. Option Price. Xxxxxxxx agrees to pay to Xxxxxxx, in cash or
------------
immediately available funds simultaneously with the execution of this Agreement,
the sum of One Hundred Thousand and No/100 Dollars ($100,000.00) as
consideration for the Option (the "Option Price"). The Option Price shall be
non-refundable, but shall be applied toward the Exercise Price in the event
Xxxxxxxx exercises the Option.
4. Exercise of Option. Xxxxxxxx may (but is not required to) exercise
------------------
its Option by giving written notice of its exercise of the Option to Xxxxxxx, in
accordance with the provisions of Section 10 hereof, at any time during the
Option Term.
5. Failure to Exercise Option. If the Option is not exercised prior to
--------------------------
the expiration of the Option Term, the Option shall become null and void and of
no further force and effect.
6. Contract of Sale and Purchase. Upon exercise of the Option by
-----------------------------
Xxxxxxxx, this Agreement shall become a contract of sale and purchase whereby
Xxxxxxx agrees to sell, transfer and convey to Xxxxxxxx and Xxxxxxxx agrees to
purchase from Xxxxxxx the Shares, for the following purchase price and on the
following terms and conditions:
(a) Purchase Price. The total purchase price to be paid by Xxxxxxxx to
--------------
Xxxxxxx for the Shares if the Option shall have been exercised (the "Exercise
Price") shall be an amount equal to Eighty Million and No/100 Dollars
($80,000,000.00), representing a price per share of $20.00.
2
(b) Payment of Purchase Price. The Exercise Price (less the amount of the
-------------------------
Option Price) shall be paid by Xxxxxxxx to Xxxxxxx in cash or other immediately
available funds at the Closing.
(c) Title. At the Closing, Xxxxxxx shall deliver to Xxxxxxxx good and
-----
marketable title to the Shares, free and clear of any Liens or other
restrictions, except for applicable restrictions on transfer under federal and
state securities laws.
(d) Closing. The closing shall take place at a mutually agreeable time and
-------
location in Birmingham, Alabama (the "Closing"), provided that the Closing shall
take place on or prior to the later of (i) thirty (30) days following the
exercise of the Option and (ii) five (5) business days following the
satisfaction, termination or waiver of all conditions to such Closing, including
but not limited to, the termination or expiration of the waiting periods under
Xxxx-Xxxxx-Xxxxxx. At Closing, Xxxxxxx shall deliver to Xxxxxxxx one or more
stock certificates representing the Shares, together with duly executed stock
powers, and take such other actions and deliver such other documents as are
necessary to transfer title to the Shares to Xxxxxxxx.
7. General Restrictions on Transfer of Common Stock. During the Option
------------------------------------------------
Term, Xxxxxxx agrees that he will not Transfer all or any portion of the Shares
except in accordance with the terms of this Agreement. Any Transfer or
attempted Transfer of any Shares by Xxxxxxx which is not in accordance with the
terms of this Agreement shall be null and void, ab initio, shall not be
reflected on the Company's books, and may be enjoined by a court of competent
jurisdiction by Xxxxxxxx. Xxxxxxx agrees that if he breaches the restrictions
on Transfers in this Agreement, he shall indemnify and hold Xxxxxxxx harmless
from and against any claims, losses, damages, expenses, costs, demands, suits,
actions or other liabilities (including without limitation attorneys' fees and
court costs) caused by, resulting from, or arising out of or in any way
connected with the breach of this Agreement.
8. Representations, Warranties and Agreements.
------------------------------------------
(a) By Xxxxxxx. Xxxxxxx hereby represents and warrants to Xxxxxxxx as
----------
follows:
(i) Xxxxxxx is the record and beneficial owner of all of the
Shares;
(ii) Xxxxxxx has full power, right and authority to make and enter
into this Agreement and to sell, assign, transfer and deliver
the Shares to Xxxxxxxx;
(iii) Xxxxxxx has good and valid title to the Shares, free and clear
of all Liens;
(iv) upon the consummation of the transactions provided for in this
Agreement in accordance with the terms hereof, Xxxxxxxx shall
acquire good and marketable title to the Shares, free and clear
of all Liens;
(v) this Agreement constitutes the valid and binding obligation of
Xxxxxxx;
3
(vi) Except as provided in this Agreement, Xxxxxxx is not required
by any provision of federal, state, or local law to take any
further action or to seek any governmental approval of any
nature prior to the sale by him of the Shares;
(vii) There are no outstanding or existing provisions of the
Company's Certificate of Incorporation or Bylaws that would
prevent, limit, or condition the sale and transfer of the
Shares to Xxxxxxxx or the exercise by Xxxxxxxx of its rights as
a stockholder of the Company;
(viii) Assuming the representations and warranties of Xxxxxxxx are
true and correct and will be true and correct as of the
Closing, there are no provisions of any contract, indenture, or
other instrument to which Xxxxxxx is a party or to which the
Shares are subject which would prevent limit, or condition the
sale and transfer of the Shares to Xxxxxxxx; and
(ix) The representation and warranties of Xxxxxxx in this Agreement
are true, complete, and correct, and no such representation or
warranty contains any untrue statement of material fact or
omits to state any material fact necessary to make the
statements made not misleading.
(b) By Xxxxxxxx. Xxxxxxxx hereby represents and warrants to Xxxxxxx as
-----------
follows:
(i) Xxxxxxxx is a corporation duly organized, validly existing and
in good standing under the laws of the State of Alabama;
(ii) Xxxxxxxx has all requisite power and authority to execute and
deliver this Agreement and to perform the provisions hereof;
(iii) this Agreement has been approved by all requisite action on its
part, and constitutes the valid and binding obligation of
Xxxxxxxx;
(iv) upon exercise of the Option, Xxxxxxxx will acquire the Shares
for its own account for investment purposes only and not with a
view toward, or for resale in connection with, any distribution
or Transfer to any other person or entity;
(v) Xxxxxxxx acknowledges its understanding that (i) the Shares
have not been registered under the Securities Act of 1933, as
amended, or any state securities laws, and must therefore be
held indefinitely unless subsequently registered under such
laws or unless, in the opinion of counsel satisfactory to the
Company, a transfer may be effected without registration
thereunder; (ii) the Company may, upon transfer of the Shares
to Xxxxxxxx, instruct its transfer agent to place a restrictive
legend on the
4
certificates evidencing the Shares; (iii) the Shares are not
subject to any registration rights or similar rights or
obligations, and the Company is not required to effect any
registration statement relating to all or any part of the
Shares; and (iv) the certificates evidencing the Shares
currently bear a restrictive legend and, accordingly, the
Company may rely upon the representations and warranties of
Xxxxxxxx set forth herein in authorizing the transfer of the
Shares from Xxxxxxx to Xxxxxxxx.
(vi) Xxxxxxxx will not have, as a result of the execution of this
Agreement, and will not acquire, through the exercise of the
Option or otherwise as of the Closing, beneficial ownership of
30% or more of the outstanding shares of common stock of the
Company, if any such acquisition would constitute an event of
default under the Company's existing bank credit facility; and
(vii) The representations and warranties of Xxxxxxxx in this
Agreement are true, complete and correct, and no such
representation or warranty contains any untrue statement of
material fact or omits to state any material fact necessary to
make the statements not misleading.
9. Additional Covenants and Conditions.
-----------------------------------
(a) Xxxx-Xxxxx-Xxxxxx. As promptly as practicable, but no later than
-----------------
fifteen (15) days following the exercise of the Option, Xxxxxxxx and Xxxxxxx
shall complete any filing that may be required pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended ("Xxxx-Xxxxx-Xxxxxx") (each an
"HSR Filing"), or shall mutually agree that no such filing is required.
Xxxxxxxx and Xxxxxxx shall diligently take, or fully cooperate in the taking of,
all necessary and proper steps, and provide any additional information
reasonably requested in order to comply with, the requirements of Xxxx-Xxxxx-
Xxxxxx. The parties hereto shall use their reasonable best efforts to resolve
objections, if any, that may be asserted under Xxxx-Xxxxx-Xxxxxx in connection
with the transactions provided for in this Agreement.
(b) Publicity. Xxxxxxx and Xxxxxxxx shall make a joint press release
---------
announcing the execution of this Agreement and the transactions contemplated
hereby that shall be reviewed by and be acceptable to the Company. No other
publicity release or announcement concerning the transactions contemplated
hereby shall be issued by either party without the advance written consent of
the other party and the Company, except any such release or announcement as may
be required by applicable law.
(c) Reasonable Access; Confidentiality.
----------------------------------
(i) From the date hereof until Closing, Xxxxxxx shall use his best
efforts to cause the Company and its subsidiaries to give
Xxxxxxxx and its representatives, upon reasonable notice to the
Company, full and complete access to the assets, properties,
books, records, agreements and employees and advisors of the
Company and its subsidiaries (the "Information") and
5
shall use his best efforts to cause the Company and its
subsidiaries to permit Xxxxxxxx to make such inspections as it
may reasonably require and to furnish Xxxxxxxx during such period
with all such information relating to the Company and its
subsidiaries as Xxxxxxxx may from time to time reasonably
request. Xxxxxxxx'x access to and use of any such Information
shall be subject to a confidentiality agreement satisfactory to,
and other restrictions imposed by, the Company.
(ii) Xxxxxxxx agrees to use the Information solely for the purpose of
evaluating its proposed investment in the Company. Should
Xxxxxxxx choose not to exercise the Option, Xxxxxxxx agrees not
to use the Information in any manner, and to return all copies of
written Information to the Company or Xxxxxxx upon Xxxxxxx'x
request.
(iii) Xxxxxxxx further agrees to keep all such Information
confidential, provided Xxxxxxxx may disclose the Information to
its directors, officers, employees, accountants, attorneys and
other advisers who need to know such Information for the purpose
of evaluating its proposed investment in the Company (it being
understood that all such persons will be advised of the
obligation to keep such Information confidential). The foregoing
restrictions shall not apply to any Information (a) which is or
was generally available to the public from sources other than
Xxxxxxxx or its representatives, (b) is or becomes available to
Xxxxxxxx from a third party which is not known by Xxxxxxxx to be
subject to a confidentiality agreement with Xxxxxxx or the
Company, (c) is already in the possession of Xxxxxxxx or
developed by Xxxxxxxx without reference to any Information, or
(d) which Xxxxxxxx becomes obligated to disclose by any law,
regulation or judicial process.
(d) Right of First Refusal. Xxxxxxx hereby agrees to grant to Xxxxxxxx a
----------------------
right of first refusal with respect to the Remaining Shares (defined below) on
the terms set forth in this Section 9(d); provided, however, that the grant of
such right to Xxxxxxxx, as set forth in this Section 9(d), is subject to the
receipt by Xxxxxxx of a consent or acknowledgement from the Company's lenders
that the granting of such right would not constitute an event of default under
the Company's existing bank credit facility. Xxxxxxx further agrees to use his
best efforts to obtain such consent or acknowledgement as soon as possible
following the date hereof, it being understood that the granting of such consent
or acknowledgment will be subject to the discretion of the Company's lender.
(i) If, at any time after the date hereof, Xxxxxxx receives a bona
fide offer from a third party (the "Offer") for the purchase of
all or any portion of the shares of common stock of the Company
owned by Xxxxxxx other than the Shares (the "Remaining Shares")
and Xxxxxxx desires to sell the same, Xxxxxxxx shall have the
right and option to purchase such Remaining Shares at the same
price and upon the same terms and conditions as are contained in
the Offer. If Xxxxxxx wishes to
6
sell pursuant to the Offer, Xxxxxxx shall give written notice to
Xxxxxxxx of his desire to sell (the "Notice"). The Notice shall
specify the Remaining Shares which Xxxxxxx owns and proposes to
sell, the name and address of the proposed buyer, and the price
and other terms of the sale contained in the proposed buyer's
offer.
(ii) If Xxxxxxxx desires to buy the Remaining Shares subject to the
Offer, Xxxxxxxx shall notify Xxxxxxx in writing within ten (10)
days after the receipt of Notice. If Xxxxxxxx exercises its
option pursuant to Section 9(d), the transaction shall be
consummated at a "closing" which shall take place at a mutually
agreeable time and place within thirty (30) days after such
exercise.
(iii) If Xxxxxxxx shall fail or refuse to exercise its option to
purchase such Remaining Shares pursuant to Section 9(d) within
the ten (10) day period allowed therefor, Xxxxxxx shall
thereafter be free to dispose of the Remaining Shares upon the
terms and conditions set forth in the Notice for a period of
thirty (30) days following the expiration of all of the rights of
Xxxxxxxx. If such disposition is not effected by Xxxxxxx within
thirty (30) days, the Remaining Shares shall remain subject to
all terms and provisions of this Section 9(d).
(e) Additional Conditions to Closing. In addition to the other conditions
--------------------------------
set forth herein, the Closing of the transactions contemplated hereby shall be
subject to the following conditions: (i) the representations and warranties of
the parties hereto shall be true and correct in all material respects on and as
of the date hereof and as of the Closing with the same effect as though such
representations and warranties had been made or given as of the Closing; (ii)
the parties shall have performed and complied with all agreements and conditions
required by this Agreement to be performed and complied with by them prior to or
at the Closing in all material respects; and (iii) no court of competent
jurisdiction or governmental agency shall have rendered a judgment or issued an
order prohibiting or preventing the transactions provided for herein, it being
understood that the mere filing of a claim or lawsuit by a third party shall not
affect the obligations of the parties hereunder.
10. Notices. All notices or other communications provided for herein
-------
shall be validly given, made or served if in writing and delivered personally or
sent by certified or registered mail, return receipt requested, postage prepaid
or transmitted by facsimile transmission, as set forth below:
(a) if to Xxxxxxxx, addressed to:
Xxxxxxxx Company, Inc.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxx X. Xxxxxxxx, Xx.
Facsimile: (000)000-0000
7
With a copy to:
Xxxxxxx X. Xxxx
Xxxxxxxx Company, Inc.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
(b) if to Xxxxxxx, addressed to:
T. Xxxxxx Xxxxxxx
Citation Corporation
0 Xxxxxx Xxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxxx and Xxxxxxx
000 00xx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
Facsimile: (000) 000-0000
11. Miscellaneous.
-------------
(a) Governing Law. This Agreement shall be interpreted, construed and
-------------
enforced according to the laws of the State of Delaware.
(b) Captions. The captions or headings in this Agreement are made for
--------
convenience and general reference only and shall not be construed to describe,
define or limit the scope or intent of the provisions of this Agreement.
(c) Binding Effect. This Agreement shall be binding upon the parties
--------------
hereto, their heirs, legal representatives, successors, assigns, and legatees;
provided, however, that Xxxxxxxx agrees not to transfer or assign its rights
under this Agreement, except to an affiliated entity, without the prior written
consent of Xxxxxxx.
(d) Entire Agreement. This Agreement contains the entire agreement of the
----------------
parties, and may not be revoked, modified or amended in any manner without the
prior written consent of the parties hereto.
(e) Further Acts. Each party hereby agrees to perform any acts and to
------------
execute and deliver any documents which may be reasonably necessary to carry out
the provisions of this Agreement.
8
(f) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall for all purposes be deemed to be an original,
but each of which, when so executed, shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement or caused
this Agreement to be executed on their behalf as of the date and year first
above written.
XXXXXXXX COMPANY, INC.
an Alabama corporation
By /s/ Xxx X. Xxxxxxxx, Xx.
_____________________________
XXX X. XXXXXXXX, XX.
Its President
/s/ T. Xxxxxx Xxxxxxx
________________________________
T. XXXXXX XXXXXXX, an individual
9
