CERTIFICATE OF DESIGNATION
FOR CLASS A CONVERTIBLE PREFERRED STOCK
OF GENEVA STEEL HOLDINGS CORP.
Geneva Steel Holdings Corp., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), hereby certifies
that:
The United States Bankruptcy Court for the District of Utah, Central
Division, Case No. 99-21130 GEC, has confirmed a plan of reorganization for
Geneva Steel Company (the "Plan") under Chapter 11 of the United Stated
Bankruptcy Code. This Certificate of Designation is provided for in the order
confirming the Plan and is being filed with the Secretary of State of the State
of Delaware in accordance with the Delaware General Corporation Law.
Accordingly, the Corporation hereby creates and provides for the issuance of a
series of preferred stock, designated Class A Convertible Preferred Stock, with
the following powers, designations, preferences and relative, participating,
optional or other special rights.
1. Designation. The series of preferred stock established by this
Certificate of Designation is designated "Class A Convertible Preferred Stock,"
and the number of shares of Class A Convertible Preferred Stock constituting
such series is Two Million, Three Hundred Fifteen Thousand (2,315,000) shares.
2. Definitions. As used in this Certificate of Designation, the following
terms have the meanings ascribed to them below:
"Board" means the Board of Directors of the Corporation.
"Business Day" means a day other than Saturday, Sunday or any other
day in which commercial banks in Salt Lake City, Utah are authorized by law to
close.
"Capital Stock" means any and all shares of capital stock of the
Corporation (however designated and whether voting or nonvoting).
"Capital Stock Rights" means any warrants, options and other rights
to purchase Capital Stock or any securities convertible into or exchangeable for
Capital Stock or any participations or other interests (other than security
interests) in Capital Stock.
"Cash Dividend" is defined in Section 3(a).
"Certificate" means this Certificate of Designation creating the
Class A Preferred Stock pursuant to Section 303(c) of the Delaware General
Corporations Law, as amended, supplemented or modified from time to time.
"Class A Preferred Stock" means the Class A Convertible Preferred
Stock, no par value per share, created by this Certificate.
"Common Stock" means the common stock, par value $0.01 per share, of
the Corporation.
"Conversion Election Notice" is defined in Section 7(b).
"Conversion Ratio" means, initially, a ratio of one share of Common
Stock for each share of Class A Preferred Stock being converted, and shall be
adjusted from time to time in accordance with the provisions of Sections 8 and 9
of this Certificate.
"DGCL" means the Delaware General Corporation Law.
"Dividend Payment Date" is defined in Section 3(b).
"Dividend Record Date" is defined in Section 3(b).
"Dividend Shares" is defined in Section 3(a).
"Effective Date of Conversion" is defined in Section 7(b).
"Fair Market Value" of the Common Stock means the average of the
daily closing prices of the Common Stock for the thirty consecutive Business
Days immediately preceding the Dividend Payment Date. The closing price for each
day shall be the last reported sales price, regular way, on the composite tape
or, in case no such reported sale takes place on such day, the average of the
reported closing bid and asked prices, in either case on the principal national
securities exchange on which the Common Stock is listed or admitted to trading
or, if not listed or admitted to trading on any national securities exchange,
the average of the closing bid and asked prices on the National Association of
Securities Dealers Automated Quotation System or, if the Common Stock is not
then so quoted, by any New York Stock Exchange member firm selected from time to
time by the Corporation for that purpose.
"Issuance Date" means the date on which shares of Class A Preferred
Stock are first being issued [CLOSING DATE UNDER RIGHTS OFFERING].
"Junior Stock" means the Common Stock and any other class or series
of Capital Stock of the Corporation now or hereafter authorized, issued or
outstanding which is the subject, under the terms of the Corporation's
certificate of incorporation (including any certificate of amendment or
certificate of designation designating any class of preferred stock), to the
following restrictions and limitations:
(i) no dividend or distribution can be declared or paid on the shares of such
other class or series unless all accrued dividends and other amounts then due
with respect to the Class A Preferred Stock shall have been paid in full; (ii)
in the event of any liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, the holders of shares of Class A Preferred
Stock shall be entitled to receive out of assets of the Corporation available
for distribution to stockholders, a sum equal to the Liquidation Preference plus
accrued and unpaid dividends on such shares through the date of final
distribution to the stockholders, whether or not declared, in each case before
any payment shall be made or any assets distributed to the holders of such other
class or series of Capital Stock of the Corporation.
"Liquidation Preference" means, with respect to each share of Class
A Preferred Stock, an amount equal to $10.80 per share of Class A Preferred
Stock.
"Mandatory Conversion Date" means __________, 2005 [FIFTH
ANNIVERSARY OF ISSUANCE DATE].
"New Revolver" means the revolving credit agreement, dated _____,
among Geneva Steel Company, as borrower, Citicorp USA, Inc., as agent bank, and
the other lenders named therein.
"New Term Loan" means the term loan agreement, dated ____, among
Geneva Steel Company, as borrower, Citicorp USA, Inc., as agent bank, and the
other lenders named therein.
"Preferred Dividend Rate" is defined in Section 3(a).
"Registrar" means the Corporation's registrar and transfer agent.
"Sale" means the merger or consolidation of the Corporation into or
with another Person or the merger or consolidation of any other Person into or
with the Corporation, or a statutory share exchange between the Corporation and
any other Person (in which merger, consolidation or statutory share exchange any
stockholders of the Corporation receive distributions of cash or securities or
other assets), or the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation to a third party.
"Securities Act" means the Securities Act of 1933, as amended.
3. Dividends.
(a) The holders of the shares of Class A Preferred Stock shall be
entitled to receive, before any dividends shall be declared and paid upon or set
aside for the Junior Stock, when and as declared by the Board out of funds
legally available for that purpose, dividends at the rate of twelve percent
(12%) per annum (the "Preferred Dividend Rate") per share of Class A Preferred
Stock and on dividends in arrears, calculated based on the Liquidation
Preference and any such arrearage, of which eight percent (8%) per annum shall
be payable in cash ("Cash Dividend") and four percent (4%) per annum shall be
payable by issuing fully paid and nonassessable shares of Common Stock (the
"Dividend Shares") based on the Fair Market Value for such Common Stock.
(b) Dividends shall cumulate and be payable annually in arrears on
______ [THE ANNIVERSARY OF THE ISSUANCE DATE] of each year, commencing on
________, 2001, except that if such date is not a Business Day, then such
dividend shall be payable on the next day that is a Business Day (any such
dividend payment date being hereinafter referred to as a "Dividend Payment
Date"). Such dividends shall, if declared, be paid to holders of record of the
Class A Preferred Stock on such date, not more than sixty (60) days prior to the
date such dividends are paid, as is fixed by the Board of Directors of the
Corporation (the "Dividend Record Date"). Dividends on shares of Class A
Preferred Stock shall be cumulative and shall accrue (whether or not declared),
from the immediately preceding Dividend Payment Date, except with respect to the
first dividend payment, which will accrue from the Issuance Date.
(c) Cash Dividends shall be payable when, as and if declared by the
Board of Directors out of funds legally available therefor and to the extent
they are permitted by the terms and conditions governing the New Term Loan and
the New Revolver.
(d) In the event Cash Dividends are not paid in full, they shall be
paid by issuing Dividend Shares, with the number of Dividend Shares to be issued
on the Dividend Payment Date in respect of each share of Class A Preferred Stock
to be calculated by multiplying the percent of the Cash Dividends not paid, by
(i) 1.85% (ii) multiplied by the sum of (A) the number of issued and outstanding
shares of Common Stock and (B) the number of issued and outstanding shares of
Class A Preferred Stock, in each case as of the Dividend Record Date, (iii)
multiplied by a fraction, (A) the numerator of which is the number of issued and
outstanding shares of Class A Preferred Stock and (B) the denominator of which
is (B) 2,315,000. In the event of any adjustments to the Conversion Ratio
pursuant to Section 8 of this Certificate of Designation, the foregoing
calculation shall be adjusted accordingly.
(e) For purposes of dividends payable in Dividend Shares, the
Corporation shall execute, issue and deliver on such Dividend Payment Date to
each holder of record on the Dividend Record Date, a stock certificate dated the
Dividend Payment Date representing the number of Dividend Shares determined in
accordance with this Section 3. The due issuance of such Dividend Shares shall
constitute full payment of the dividend, provided that in lieu of the issuance
of any fractional Dividend Shares, the Corporation shall make the adjustments
provided for in Section 9.
(f) Dividends that are not declared or paid in full, in cash or by
delivery of Common Stock on each Dividend Payment Date, shall bear dividends as
set forth in Section 3(a). Dividends in arrears may be declared and paid at any
time to holders of Class A Preferred Stock of record on such date, not more than
sixty (60) days prior to the date such dividends are paid, as is fixed by the
Board of Directors of the Corporation.
(g) All dividends declared upon the Class A Preferred Stock and any
other class of stock ranking on a parity as to dividends with the Class A
Preferred Stock shall be declared pro rata per share.
4. Rights Upon Liquidation, Dissolution or Winding-Up.
(a) In the event of a stock dividend, subdivision, reclassification,
distribution or similar event relating to the Class A Preferred Stock, the
Liquidation Preference of each share of Class A Preferred Stock shall be
adjusted proportionally to reflect any resulting increase or decrease in the
number of outstanding shares of Class A Preferred Stock.
(b) In the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holder of any share of
Class A Preferred Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to its stockholders, whether from
capital, surplus or earnings, before any payment shall be made to the holders of
any Junior Stock, an amount equal to the Liquidation Preference for each share
of Class A Preferred Stock held by such holder.
(c) Prior to the time of any liquidation, dissolution or winding-up
of the Corporation, to the extent permitted by applicable law, the Corporation
shall declare for payment all accrued and unpaid dividends with respect to the
Class A Preferred Stock. If upon any liquidation, dissolution or winding-up of
the Corporation the assets of the Corporation available for distribution to its
stockholders shall be insufficient to pay the holders of shares of Class A
Preferred Stock the full amounts to which they shall be entitled, the holders of
shares of Preferred Stock shall share ratably in any distribution of assets
according to the respective amounts which would be payable in respect of the
shares held by them upon such distribution if all amounts payable on or with
respect to said shares were paid in full. In the event that such distribution of
assets is made other than in cash or in any combination of cash and other
assets, both the distribution of cash and the distribution of other assets
(including securities) shall be made ratably among the holders of the shares of
Class A Preferred Stock, with the distribution of assets other than cash to be
based upon the fair market value of any such assets as determined by a
nationally recognized investment banking firm selected by the holders of a
majority in voting power of the Class A Preferred Stock then outstanding and
reasonably acceptable to the Corporation (or if such selection cannot be made,
by a nationally recognized investment banking firm selected by the American
Arbitration Association in accordance with its rules).
(d) In the event of any liquidation, dissolution or winding-up of
the Corporation, after payment shall have been made to the holders of shares of
Class A Preferred Stock of the full amount to which they shall be entitled as
aforesaid, the holders of any Junior Stock shall be entitled, to the exclusion
of the holders of shares of Class A Preferred Stock, to share, according to
their respective rights and preferences, in all remaining assets of the
Corporation available for distribution to its stockholders.
5. Voting.
(a) Holders of shares of Class A Preferred Stock shall be entitled
to vote, together with the holders of shares of Common Stock as a single class
(except as otherwise set forth in this Certificate or as otherwise required by
applicable law), on all matters as to which holders of Common Stock shall be
entitled to vote, and shall be entitled to notice of all stockholders' meetings
in the same manner and with the same effect as the holders of Common Stock. Each
share of Class A Preferred Stock shall entitle the holder thereof to such number
of votes per share as shall equal the number of full and fractional shares of
Common Stock into which each share of Class A Preferred Stock is then
convertible upon application of the Conversion Ratio then in effect.
(b) Without the affirmative consent or approval of the holders of
shares representing at least two-thirds of the voting power of the Class A
Preferred Stock then outstanding, acting separately as one class, given by
written consent or by vote at a meeting called for such purpose for which notice
shall have been given to the holders of the Class A Preferred Stock, the
Corporation shall not, directly or indirectly (through any subsidiary or
otherwise), in any manner alter or change the designations or the powers,
preferences or rights, or the qualifications, limitations or restrictions of the
Class A Preferred Stock.
6. Mandatory Conversion.
(a) Effective upon the Mandatory Conversion Date, each outstanding
share of Class A Preferred Stock shall be converted automatically into that
number of shares of Common Stock into which such share of Class A Preferred
Stock is convertible upon application of the Conversion Ratio then in effect.
(b) Not less than thirty (30) days prior to the Mandatory Conversion
Date, the Corporation or its transfer agent shall mail a notice of automatic
conversion to each holder of shares of Class A Preferred Stock. Effective upon
the Mandatory Conversion Date, the outstanding shares of Class A Preferred Stock
shall be converted automatically, without any further action by the holders of
such shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; provided that the
Corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such conversion unless the certificates evidencing
such shares of Class A Preferred Stock are either delivered to the Corporation
or its transfer agent as provided below, or the holder notifies the Corporation
or its transfer agent that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with the loss, theft or
destruction of such certificates. Upon the occurrence of such automatic
conversion of the Class A Preferred Stock, the holders of shares of Class A
Preferred Stock shall surrender the certificates representing such shares at the
office of the Corporation or its transfer agent. Thereupon, there shall be
issued and delivered to such holder a certificate or certificates for the number
of shares of Common Stock into which the shares of Class A Preferred Stock
surrendered were convertible on the Mandatory Conversion Date.
(c) From and after the Mandatory Conversion Date, shares of Class A
Preferred Stock shall no longer be deemed outstanding, and shall have the status
of authorized and unissued shares of preferred stock undesignated as to series
and may be redesignated and reissued as part of any series of preferred stock,
other than Class A Preferred Stock.
7. Optional Conversion.
(a) Any holder of the Class A Preferred Stock then outstanding shall
have the right at any time prior to the Mandatory Conversion Date, exercisable
in accordance with the provisions of Section 7(b), to elect to convert all or
any part the outstanding shares of Class A Preferred Stock of such holder at the
Conversion Ratio in effect on the date such conversion is deemed to be effective
into shares of Common Stock.
(b) In order to effect a conversion pursuant to Section 7(a), a
holder electing to convert shall surrender such holder's shares of Class A
Preferred Stock and give written notice to the Registrar on behalf of the
Corporation (the "Conversion Election Notice") of such holder's election to
convert the outstanding shares of Class A Preferred Stock into shares of Common
Stock, which election shall be effective as of the third (3rd) day following the
Registrar's receipt of the Conversion Election Notice (such date, the "Effective
Date of Conversion").
(c) Within three (3) Business Days after the Effective Date of
Conversion, the Corporation shall issue and deliver to each holder who has
tendered its shares of Class A Preferred Stock a certificate(s) for the full
number of shares of Common Stock issuable upon the conversion of such shares of
Class A Preferred Stock in accordance with the provisions of this Section 7.
8. Adjustment of Conversion Ratio.
(a) In the event the Corporation shall at any time after the
Issuance Date of the shares of Class A Preferred Stock:
(i) declare a dividend or make a distribution on any series of
its Junior Stock in shares of any series of its Junior Stock;
(ii) subdivide or reclassify shares of any series of its
outstanding Junior Stock into a greater number of shares;
(iii) combine shares of any series of its outstanding Junior
Stock into a smaller number of shares;
(iv) pay a dividend or make a distribution on any series of
its Common Stock in shares of any series of its Capital Stock (other than Common
Stock) of or in Capital Stock Rights; or
(v) issue by reclassification of any series of its Common
Stock shares of any series of its Capital Stock or any Capital Stock Rights,
then the Conversion Ratio in effect immediately prior to such event shall be
adjusted so that the holder of any shares of Class A Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number of shares of
Common Stock and other Capital Stock of the Corporation and Capital Stock Rights
which such holder would have owned or would have been entitled to receive after
the consummation of such event or the record date therefor, whichever is
earlier, had such Class A Preferred Stock been outstanding and converted
immediately prior to the consummation of such event or the record date therefor,
whichever is earlier. An adjustment made pursuant to this Section 8 shall become
effective immediately after the record date in case of a dividend or
distribution and shall become effective immediately after the effective date in
case of a subdivision, combination or reclassification. Such adjustment shall be
made successively whenever any event referred to above shall occur.
(b) Upon an adjustment of the Conversion Ratio pursuant to Section
8(a), the Corporation shall give prompt written notice thereof to each holder of
shares of Class A Preferred Stock, which notice shall state the Conversion Ratio
resulting from such adjustment and shall set forth in reasonable detail the
method of calculation of such Conversion Ratio and the facts upon which such
calculation was based.
(c) In case at any time:
(i) the Corporation shall determine to declare any dividend or
make any distribution on any series of its Common Stock;
(ii) the Corporation shall determine to offer for subscription
pro rata to the holder of any series of its Common Stock any shares of its
Capital Stock or Capital Stock Rights; or
(iii) there shall be an impending voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation.
then, in any one or more of said cases, the Corporation shall give written
notice of the action in question to each holder of shares of Class A Preferred
Stock, by first-class mail, postage prepaid, addressed to such holder at its
last address as shown on the stock transfer books of the Corporation. Such
notice shall describe the material terms and conditions of such action and shall
specify (A) in the case of a dividend, distribution or subscription right, the
date on which a record shall be taken for such dividend, distribution or
subscription right and the date as of which holders of Class A Preferred Stock
of record shall participate in such dividend, distribution or subscription
right, and (B) in the case of a dissolution, liquidation or winding-up of the
Corporation, the date on which such dissolution, liquidation or winding-up shall
take place and the date as of which the holders of Class A Preferred Stock shall
be entitled to exchange their Class A Preferred Stock for securities or other
property deliverable upon such dissolution, liquidation or winding-up. Such
written notice shall be given at least thirty (30) days prior to the action in
question and not less than twenty (20) days prior to the record date in respect
thereof.
9. Fractional Shares. No fractional shares of Common Stock shall be issued
upon payment of dividends in respect of or conversion of Class A Preferred
Stock. When any calculation calls for the distribution of a fractional share of
Common Stock, the actual number of shares distributed shall be rounded down to
the nearest whole number if the fraction is less than or equal to 0.50 and
rounded up to the nearest whole number if the fraction is greater than 0.50.
10. Reservation of Stock Issuable Upon Conversion. The Corporation shall
at all times reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the conversion of
the shares of the Class A Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of the Class A Preferred Stock. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of the Class A Preferred Stock,
the Corporation will take such corporate action as may, in the opinion of its
counsel, be necessary to increase its authorized but unissued shares of Common
Stock to such number of shares as shall be sufficient for such purpose.
11. Notices. Any notice required by the provisions of this Certificate
shall be in writing and shall be deemed effectively given: (i) upon personal
delivery to the party to be notified, (ii) when sent by confirmed facsimile if
sent during normal business hours of the recipient; if not, then on the next
Business Day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All notices shall be
addressed, and all deliveries shall be made to each holder of record at the last
address for such holder shown on the stock transfer books of the Corporation.
12. Payment of Taxes. The Corporation shall pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon conversion of
shares of Class A Preferred Stock, excluding any tax or other charge imposed in
connection with any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that in which the shares of Class A Preferred
Stock so converted were registered.
13. No Preemptive Rights. Holders of Class A Preferred Stock shall have no
preemptive rights, except as granted by the Corporation pursuant to written
agreements.
<PAGE>
IN WITNESS WHEREOF, Geneva Steel Holdings Corp. has caused this
certificate of designation to be signed by its President and Secretary on
______, 2000.
GENEVA STEEL HOLDINGS CORP.
By: _____________________________________
Joseph A. Cannon
President and Chief Executive Officer
By: _____________________________________
Ken C. Johnsen
Secretary
