EXHIBIT 10.23
AGREEMENT
This Agreement is entered into this 31st day of October, 1995, among Lone
Star Steel Company ("LSS"), Lone Star Technologies, Inc. ("LST"), Merced
Partners Limited Partnership ("Merced"), TCW Special Credits Fund, TCW Special
Credits Fund II, TCW Special Credits Fund IIb, Weyerhaeuser Company Master
Pension Trust, and Inland Steel Industries Pension Trust (the "TCW Holders") and
Cargill Financial Services Corporation ("Cargill").
WHEREAS, LST, Merced, the TCW Holders and Cargill each have indicated their
interest in participating in additional financing of the acquisition and, as
necessary, the installation of equipment and facilities for LSS, in addition to
the $23,000,000 previously committed for the First Capital Project by those
parties other than Cargill, by acquiring additional convertible preferred stock
of LSS (the "First Capital Project Addition"); and
WHEREAS, the parties hereto now desire to enter into the further agreements
herein with respect to those matters.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree for themselves and their successors
and assigns as follows:
1. LST, Merced, the TCW Holders, and Cargill agree that the preferred
stock that is to be issued to them as provided hereunder, each time any of them
makes an advance of funds to LSS for the First Capital Project Addition, will in
all material respects be issued as provided in paragraph 1(b) of and otherwise
have the same terms or substantially the same terms as set forth in the attached
schedule of preferred stock terms. The advances for which such preferred stock
is to be issued will not exceed in aggregate $5,000,000. This agreement and the
issuance of such preferred stock is subject to the receipt of the requisite
approval necessary therefor under the Stockholders and Registration Rights
Agreement dated May 16, 1991 (the "1991 Stockholders Agreement") among the
parties hereto and the other shareholders of LSS, and the parties hereto agree
to cooperate with one another in seeking such approval and in connection with
any other corporate action by LSS, not yet completed, necessary to authorize, as
soon as possible, such preferred stock and to enable the issuance of shares of
such stock.
2. Each of the parties hereto agree to cooperate with one another and
exercise their best efforts to amend the 1991 Stockholders Agreement so that
such agreement will provide that Merced, the TCW Holders and Cargill will be
entitled to the benefit of the provisions of Appendix l of the 1991 Stockholders
Agreement with respect to the registration of the shares of common stock of LSS
issued to them upon their conversion of any of the preferred stock issued to
them as a result of this Agreement along with the common stock with respect to
which such registration rights are to be provided under
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paragraph 3 of an earlier agreement of November 2, 1994 between the parties
hereto other than Cargill, and the provisions of this paragraph 2 shall be
deemed an amendment of paragraph 3 of that earlier agreement so as to include
therein the parties hereto and the registration of the additional common stock
that is issued upon conversion of any of the preferred stock issued as a result
of this Agreement (and the terms "New Shares" and "New Agreement" as defined in
that earlier agreement shall be deemed, as used therein and herein, to include
the common stock that is intended to be provided registration rights under this
Agreement in addition to the common stock to be provided such rights under that
earlier agreement), and if the parties hereto are unable to effect such
amendment of the 1991 Stockholders Agreement they will enter into a New
Agreement as regards the registration of the New Shares.
3. Without limiting paragraph 2, LST, Merced, the TCW Holders and Cargill
understand that it is not expected that the preferred stock of LSS that would be
issued to them pursuant hereto, or the common stock that could be acquired upon
conversion of that preferred stock will upon issuance or at any foreseeable time
be registered under the Securities Act of 1933, as amended (the "1933 Act"), and
LST, Merced, each of the TCW Holders and Cargill each represents and warrants to
each other party to this Agreement that such preferred stock and any common
stock that is acquired upon conversion of such preferred stock by it will be
acquired for investment purposes and not with a view to the sale or distribution
of any thereof, except in compliance with federal and state securities laws.
4. LST, Merced, each of the TCW Holders and Cargill. agree among
themselves that in the event any of them should advance funds towards the First
Capital Project Addition for which preferred stock is to be issued as provided
in paragraph 1 above, LST, Merced, the TCW Holders and Cargill shall immediately
make such adjusting payments between one another as are necessary, so that
immediately after any such advances and any adjusting payments are made, (a) LST
will have advanced (including taking into account any adjusting payments) 83.62%
of the funds advanced by LST, Merced, the TCW Holders and Cargill in total to
LSS for the First Capital Project Addition, (b) Merced will have advanced
(including taking into account any adjusting payments) 0.90% of those funds, (c)
the TCW Holders will have advanced (including taking into account any adjusting
payments) 12.72% of those funds, and (d) Cargill will have advanced (including
taking into account any adjusting payments) 2.76% of those funds. The preferred
stock that is to be issued to LST, Merced, the TCW Holders and Cargill pursuant
hereto when any advance is made to LSS for the First Capital Project Addition
will always be issued in the ratio such that 83.62% of the total shares to be
issued at any such time will be issued to LST, 0.90% of the total shares to be
issued at any such time will be issued to Merced, 12.72% of the total shares to
be issued at any such time will be issued to the TCW Holders, and 2.76% of the
total shares to be issued at any such time will be issued to Cargill.
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5. The references in this Agreement to shares of preferred stock or
common stock will be deemed to refer to both whole shares and to fractional
shares as applicable.
6. This Agreement constitutes the entire agreement and understanding of
the parties hereto in respect of the subject matter contained herein, and there
are no restrictions, promises, representations, warranties, covenants, or
undertakings with respect to the subject matter hereof, other than those
expressly set forth or referred to herein.
7. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware applicable to agreements made to be performed
entirely in such State, except for paragraph 2, which shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made to be performed entirely in such State.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LONE STAR STEEL COMPANY
By: /s/ Xxxx X. Xxxxxx
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Its: Chairman
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LONE STAR TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxx
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Chairman and Chief Executive Officer
TCW Special CREDITS FUND
By: /s/ Xxxxxxx Xxxxx, Xxxxxxx Xxxxx
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Its: Authorized Signatories of TCW Asset
Management Company, Managing General
Partner of TCW Special Credits as
General Partner of TCW Special Credits
Fund
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TCW SPECIAL CREDITS FUND II
By: /s/ Xxxxxxx Xxxxx, Xxxxxxx Xxxxx
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Its: Authorized Signatories of TCW Asset
Management Company, Managing General
Partner of TCW Special Credits as
General Partner of TCW Special Credits
Fund II.
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TCW SPECIAL CREDITS FUND IIb
By: /s/ Xxxxxxx Xxxxx, Xxxxxxx Xxxxx
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Its: Authorized Signatories of TCW Asset
Management Company, Managing General
Partner of TCW Special Credits as
General Partner of TCW Special Credits
Fund IIb
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WEYERHAEUSER COMPANY MASTER
PENSION TRUST
By: /s/ Xxxxxxx Xxxxx, Xxxxxxx Xxxxx
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Its: Authorized Signatories of TCW Asset
Management Company, Managing General
Partner of TCW Special Credits as
Investment Manager of Weyerhaeuser
Company Master Pension Trust.
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INLAND STEEL INDUSTRIES PENSION TRUST
By: /s/ Xxxxxxx Xxxxx, Xxxxxxx Xxxxx
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Its: Authorized Signatories of TCW Asset
Management Company, Managing General
Partner of TCW Special Credits as
Investment Manager of Inland Steel
Industries Pension Trust.
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MERCED PARTNERS LIMITED PARTNERSHIP
By: EBF & Associates, L.P., General Partner
By: Global Capital Management, Inc.,
General Partner
By: /s/ Xxxxxxx Xxxx
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CARGILL FINANCIAL SERVICES
CORPORATION
By: /s/ Xxx Xxxxxxxx
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SCHEDULE OF PREFERRED STOCK TERMS
RESTATED CERTIFICATE OF THE POWERS, DESIGNATIONS, PREFERENCES, AND RELATIVE,
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS THEREOF, WHICH HAVE NOT BEEN SET FORTH IN THE
CERTIFICATE OF INCORPORATION OR IN ANY AMENDMENT THERETO, OF THE
PREFERRED STOCK, SERIES A
(PAR VALUE $1.00 PER SHARE)
LONE STAR STEEL COMPANY
----------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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The Undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted on _____________ , 1995, by the Board of Directors of Lone Star Steel
Company (the "Board of Directors"), a Delaware corporation (hereinafter called
the "Corporation") pursuant to authority conferred upon the Board of Directors
by the provisions of the Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), of the Corporation to become effective upon the
next business day following the date this Restated Certificate of Designations
becomes effective:
RESOLVED, that pursuant to the authority vested in the Board of Directors
by Article Fourth of the Certificate of Incorporation the series of preferred
stock of the Corporation designated Preferred Stock, Series A (the "preferred
stock") be, and hereby is, amended, including, but not limited to, in the number
of shares that comprise the series which is increased out of the authorized but
unissued shares of the preferred stock of the Corporation by 75 shares to 450
shares, per value $1.00 per share, and the preferences and relative and other
rights,. and the qualifications, limitations or restrictions of the preferred
stock shall be (in addition to those set forth in the Certificate of
Incorporation), as amended and restated in this Restated Certificate of
Designations in their entirety, as follows:
1. AMOUNT OF ISSUANCE.
(a) To the extent the common stockholders of the Corporation
identified in this paragraph 1(a) below, who have expressed their
willingness to assist in the financing of the acquisition and as
necessary the installation of certain equipment and
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production facilities for the Corporation (the "First Capital
Project"), advance funds towards that project, those common
stockholders, to wit Lone Star Technologies, Inc. ("LST"), and
TCW Special Credits Fund, TCW Special Credits Fund II, TCW
Special Credits Fund IIb, Weyerhaeuser Company Master Pension
Trust, and Inland Steel Industries Pension Trust (The 'TCW
Holders"), except as stated in paragraph (b), will receive, each
time that funds are advanced to the Corporation for the First
Capital Project, and the Corporation will issue, each such time,
in total to LST and the TCW Holders on the date each advance is
made, that number of shares (and/or fractions of shares) of
preferred stock as equal the number derived, when the total
advance is divided by One Hundred Thousand and No/100 Dollars
($100,000.00), such that, for each One Hundred Thousand and
No/100 Dollars ($100,000.00) advanced, one (1) whole share will
be issued. Of the total shares of the preferred stock to be
issued each time shares are to be issued as provided above,
90.84% of the total shares to be issued will be issued to LST,
9.16% of the total shares to be issued will be issued to the TCW
Holders. Merced Partners Limited Partnership ("Merced") is also
participating in the aforesaid financing contemplated under this
paragraph 1(a) to the extent of 1.087% of the funds advanced, but
acquires the shares of preferred stock it is entitled to from LST
upon the basis of that percentage participation. The total shares
issuable to the TCW Holders, each time shares are to be issued to
them, shall be issued individually among them as the TCW Holders
shall direct. Funds were advanced towards the First Capital
Project and shares of the preferred stock were issued in return
therefor, prior to this Restated Certificate of Designations
becoming effective, and all of that is acknowledged and
confirmed.
(b) After a total of $23,000,000.00 has been advanced to the
Corporation under paragraph 1(a) above for the First Capital
Project, including amounts advanced prior to this restatement and
amounts advanced on and hereafter, as additional advances are
made to the Corporation for the First Capital Project in excess
of $23,000,000.00, the preferred stock, each time an advance is
made, shall be issued to LST, the TCW Holders, Merced and Cargill
Financial Services Corporation ("Cargill") in the following
respective percentages: 83.62% to LST; 12.72% to the TCW Holders;
0.90% to Merced; and 2.76% to Cargill. In all other respects the
shares will be
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issued upon advances toward the First Capital Project under this
paragraph 1(b) in the same manner as provided in paragraph 1(a).
(c) The "Dollar Value" of the shares of preferred stock shall be One
Hundred Thousand and No/100 Dollars ($100,000.00) per share, and
as proportionately adjusted downward shall be the "Dollar Value"
of fractional shares. Each share of preferred Stock shall have a
par value of One and No/100 Dollar ($1.00) per whole share, and
the entire series of preferred stock shall consist of four
hundred fifty (450) authorized shares. Fractional shares may be
issued.
(d) The foregoing provisions of this paragraph 1 will inure to the
benefit of the respective successors to LST, each of the TCW
Holders, Merced and Cargill so that such successors upon advances
of funds being made for the First Capital Project will be
entitled to receive the preferred stock which the party they
succeeded otherwise would have been entitled to receive under the
foregoing provisions. Unless the context indicates otherwise,
herein the references to "preferred stock refer to this
Preferred Stock, Series A. and not to any other preferred stock.
2. ISSUANCE DATE. The preferred stock will be issued in the number of
shares (or fractions of shares) to LST, the TCW Holders and as stated to Merced
and Cargill, as provided in paragraphs 1(a) and 1(b) above, as and when each
advance is made by any of them to fund the First Capital Project. while the
shares of the preferred stock will be issued by the Corporation when the
advances are made, certificates for the shares of such preferred stock will be
delivered to the shareholders entitled thereto for the preceding calendar
quarter based upon the advances to fund the First Capital Project made during
that quarter each January 1, April 1, July 1, and October 1 after September 30,
1994. In addition, shares of the preferred stock may be issued in payment of
dividends as provided under paragraph 3 below, and the shares of preferred stock
to be issued as dividends will be issued, in each case, when the dividend that
the stock is to pay, is, pursuant to action of the Board of Directors, to be
paid, and the share certificates for such stock will be furnished at the same
time by the Corporation to the holders entitled thereto.
3. DIVIDENDS.
(a) The holders of preferred stock will be entitled to a cumulative
dividend at the rate of six percent (6%) per annum on the Dollar
Value of the shares of preferred stock issued and
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outstanding accruing from The date of issuance. No dividends of
any kind or other distributions are permitted to be paid or made
on Corporation's common stock at any time while any preferred
stock is outstanding.
(b) As to any share of preferred stock, commencing on the January 1,
April 1, July 1, or October 1 first to occur after such stock is
issued, and for each succeeding quarterly period ending
immediately prior to each succeeding January 1, April 1, July 1,
and October 1, the holder of such stock shall be entitled to
receive, when and as declared as hereinafter provided, out of
funds legally available for that purpose, cash dividends of one
and one-half percent (1.5%) of the Dollar Value of each share or
fractional share held (prorated for the first such dividend
period at the rate of one and one-half percent (1.5%) per quarter
accruing from the actual issue date to the end of that dividend
period), and no more. All dividends shall be payable in arrears,
when and as declared by the Board of Directors. Each such
dividend shall be paid to the holders of record of the preferred
stock as their names appear on the share register of the
Corporation on the date set as the record date for such dividend.
Dividends on account of arrears for any past dividend periods may
be declared and paid at any time without reference to any
dividend payment date, to holders of record on a date, not
exceeding thirty (30) calendar days preceding the payment date
thereof, as may be fixed by the Board of Directors.
(c) To the extent, on any dividend payment date, the holders of the
preferred stock shall not have received the full dividends for
all periods ended up to that date provided for in the other
provisions of this paragraph 3, then such dividends shall
cumulate, whether or not declared and irrespective of whether
such dividends could have been paid for such periods under
applicable law. It is understood that no dividends may be paid in
respect of the preferred stock prior to January 1, 1995 (although
dividends will accrue on the preferred stock outstanding prior to
that date).
(d) If at any time the Corporation pays less than the total amount of
dividends then accrued and payable with respect to the preferred
stock, such payment shall be distributed ratably among the
holders of the preferred stock. Any payment made by the
Corporation on the unpaid cumulative dividends, if less
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than the total amount of such dividends, shall be applied first
to those dividends that have been accrued for the longest time.
(e) The Corporation may at any time to the extent it so elects,
declare that dividends on the preferred stock which have accrued
will be payable in shares of preferred stock of a Dollar Value
equal to the dividends to be paid with such stock. Any holder of
preferred stock on which a cash dividend has been declared and
before it is paid may elect to similarly have the Corporation pay
any such dividend to the holder, to the extent the holder elects,
in preferred stock of the Dollar Value equal to the dividend the
holder has elected to be so paid.
4. REDEMPTION.
(a) The Corporation may, provided the Board of Directors has adopted
a resolution approving such action, redeem the preferred stock,
in whole or in part, in cash, at any time by paying the holder or
holders of the shares to be redeemed (i) the Dollar Value of such
stock and (ii) all accrued and unpaid dividends through the date
of redemption on the shares to be redeemed (including a pro rated
dividend based on the number of days elapsed from the last day of
the most recent completed quarterly dividend period through the
redemption date). Each holder of stock redeemed shall be entitled
to payment of that part of the total amount described above for
all the redeemed stock as is attributable to his redeemed stock.
If the Board of Directors has authorized a redemption which, when
authorized, was of less than all of the outstanding shares of the
preferred stock, and because of subsequent conversions of the
preferred stock since then, amounts to more than the actual
outstanding shares on the Redemption Date or, if applicable, the
Final Redemption Date, the Board of Directors' authorization
shall be deemed amended to the number of such outstanding shares
on the Redemption Date or, if applicable, the Final Redemption
Date which shall be the number authorized for redemption. Any
redemption of the preferred stock outstanding shall be
accomplished by redeeming from each holder of record all or a
fraction of each holder's shares, the numerator of which is the
total number of shares to be redeemed as authorized by the Board
of Directors or as deemed amended as provided above, and the
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denominator of which is the total number of shares of preferred
stock outstanding on the Redemption Date or, if applicable, the
Final Redemption Date.
(b) On January 3, 2002, the Corporation shall be obligated to redeem
the preferred stock outstanding as a mandatory redemption in
whole for cash. The redemption price shall be equal to the Dollar
Value of the shares redeemed together with any accrued but unpaid
dividends on such shares to and including the date of redemption,
as specified in clauses (i) and (ii) of paragraph 4(a). If less
than all of the outstanding shares of the preferred stock can be
redeemed under applicable law, such shares shall be redeemed pro
rata or by lot as determined by the Board of Directors in its
sole discretion to the maximum extent permitted by applicable
law, and the remaining shares shall be redeemed as and when they
can be redeemed under law.
(c) Notice of every proposed redemption of the preferred stock shall
be sent by or on behalf of the Corporation, by first class mail,
postage prepaid, to the holders of record of the shares to be
redeemed at their respective addresses as they shall appear on
the records of the Corporation, not less than thirty (30) days
nor more than sixty (60) days prior to the date fixed for
redemption (the "Redemption Date") (i) notifying such holders of
the election of the Corporation to redeem such shares and of the
Redemption Date and (ii) stating the place or places at which the
shares called for redemption shall, upon presentation and
surrender of the certificates evidencing such shares, be
redeemed, and the redemption price therefor, and (iii) stating
the name and address of any redemption agent selected by the
Corporation if other than the Corporation, and the name and
address of the Corporation's transfer agent for the preferred
stock. The Corporation may act as the transfer agent for the
preferred stock.
(d) The Corporation may act as the redemption agent to redeem the
preferred stock or appoint as its agent for such purpose a bank
or trust company in good standing, organized under the laws of
the United States of America or any jurisdiction thereof, and
having capital, surplus and undivided profits aggregating at
least Twenty Million and No.100 Dollars ($20,000,000.00), and may
appoint any one or more additional such agents which shall in
each case be a bank or trust company in good
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standing organized under the laws of the United States of America
or of any jurisdiction thereof, having an office or offices in
the City of Dallas, Texas, or such other place as shall have been
designated by the Corporation, and having capital, surplus, and
undivided profits aggregating at least Twenty Million and No/100
Dollars ($20,000,000.00). The Corporation or such bank or trust
company is hereinafter referred to as the "Redemption Agent."
Following such appointment and prior to any redemption, the
Corporation shall deliver to the Redemption Agent irrevocable
written instructions authorizing the Redemption Agent, on behalf
and at the expense of the Corporation, to cause such notice of
redemption to be duly mailed as herein provided as soon as
practicable after receipt of such irrevocable instructions and in
accordance with the above provisions. All funds necessary for the
redemption shall be deposited with the Redemption Agent in trust
at least one (1) business day prior to the Redemption Date, for
the pro rata benefit of the holders of the shares so called for
redemption, so as to be and continue to be available therefor.
Neither failure to mail any such notice to one (1) or more such
holders nor any defect in any notice shall affect the sufficiency
of the proceedings for redemption as to other holders.
(e) If notice of redemption shall have been given as hereinbefore
provided, and the Corporation shall not default in the payment of
the redemption price, then each holder of shares called for
redemption shall be entitled to all preferences and relative and
other rights accorded by this resolution until and including the
day immediately prior to the Redemption Date. If the Corporation
shall default in making payment or delivery as aforesaid on the
Redemption Date, then each holder of the shares called for
redemption shall be entitled to all preferences and relative and
other rights accorded by this resolution until and including the
day immediately prior to the date (the "Final Redemption Date")
when the Corporation makes payment as aforesaid to the holders of
the preferred stock. From and after the Redemption Date or, if
the Corporation shall default in making payment or delivery as
aforesaid, the Final Redemption Date, the shares called for
redemption shall no longer be deemed to be outstanding, and all
rights of the holders of such shares shall cease and terminate,
except the right of the holders of such shares, upon surrender of
certificates therefor, to receive amounts to be
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paid hereunder. The deposit of monies in trust with the
Redemption Agent shall be irrevocable except that the Corporation
shall be entitled to receive from the Redemption Agent the
interest or other earnings, if any, earned on any monies so
deposited in trust, and the holders of any shares redeemed shall
have no claim to such interest or other earnings, and any balance
of monies so deposited by the Corporation and unclaimed by the
holders of the preferred stock entitled thereto at the expiration
of two (2) years from the Redemption Date (or the Final
Redemption Date, as applicable) shall be repaid, together with
any interest or other earnings thereon, to the Corporation, and
after any such repayment, the holders of the shares entitled to
the funds so repaid to the Corporation shall look only to the
Corporation for such payment, without interest.
5. VOTING RIGHTS. The preferred stock issued and outstanding will possess
voting rights only to the extent required by law and as provided herein. If and
to the extent the preferred stock may be entitled to vote on any matter, each
whole share of the preferred stock voting shall be counted as one (1) vote and
the fractional shares voting will be counted as fractional votes, in each case
the fractional vote will be the same as the fraction of a share that is voting,
except that in any case when the preferred stock is voting on any matter with
the common stock, each share or fractional share of the preferred stock voting
will be counted as having the same vote as the shares of common stock into which
that preferred stock could be converted at the time of voting.
6. LIQUIDATION PREFERENCE AND MERGER.
(a) In the event of the voluntary or involuntary liquidation,
dissolution, or other winding up of the affairs of the
Corporation, prior to any payment or distribution to the holders
of the Corporation's common stock or with respect to any other
stock which is not to receive assets of the Corporation before
receipt by the holders of the preferred stock of the full amount
they are to receive as provided in this subparagraph the holders
of the preferred stock shall be entitled to receive for the
preferred stock an amount equal to (with each holder entitled to
that part of such amount as is attributable to his shares) (i)
the Dollar Value of the preferred stock outstanding and (ii) all
accrued and unpaid dividends through the date of liquidation,
dissolution or other winding up of the affairs of the Corporation
(including a pro rated dividend based on the number of days
elapsed from the last day of the most recent completed quarterly
dividend period through the date of
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liquidation, dissolution or winding up of the affairs of the
Corporation).
(b) The amount payable pursuant to paragraph 6(a) shall be paid in
cash to the extent available to the Corporation and to the extent
not so in property taken at its fair value as determined by the
Board of Directors. If such payment shall have been made in full
to the holders of the preferred stock, the remaining assets and
funds of the Corporation shall be distributed among the holders
of common or other stock remaining outstanding of the Corporation
according to their respective shares and priorities.
(c) In the event of the liquidation, dissolution, or winding up of
the affairs of the Corporation as described in paragraph 6(a),
the holders of the preferred stock will share in the assets,
funds, and property of the Corporation on a parity with or junior
to, as the case may be, any other stock of the Corporation which
is to share on a parity with or prior to the preferred stock
under such circumstances in accordance with the provisions of the
Certificate of Incorporation or Certificate of Designation
related to that other stock.
(d) The Corporation will not, without first obtaining the affirmative
vote or written consent of the holders of not less than 92% of
the shares of preferred stock outstanding at the time,
consolidate or merge with another corporation or corporations
(other than any mergers or consolidations of the Corporation with
any of its subsidiaries, whether owned directly or indirectly by
the Corporation, which mergers and consolidations this paragraph
6(d) will not apply to) or sell, lease, transfer or otherwise
dispose of, in one transaction or a series of related
transactions, all or substantially all of its assets without
first paying the holders of the preferred stock outstanding the
same amount through the date of the merger, consolidation, sale,
lease, transfer, or other disposition as is provided in clauses
(i) and (ii) of paragraph 6(a) through the date of liquidation,
dissolution, or winding up and in accordance with paragraph 6(b).
7. CONVERSION.
(a) Each whole share of preferred stock will be convertible at any
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time after issuance by the holder into 10 shares of common stock
of the Corporation, or as such number is adjusted pursuant to the
following provisions, such number as stated above and as it may
be adjusted to be ratably reduced downward for fractional shares
outstanding of the preferred stock The number of shares of common
stock into which the preferred stock is convertible is based on a
conversion price of $10,000 per share of common stock. Such price
shall be ratably adjusted to reflect any change in the number of
shares of common stock into which the preferred stock is
convertible pursuant to the provisions of paragraph 7(b). In
addition, if after the date hereof the Corporation shall, at any
time while the preferred stock remains outstanding, otherwise
than as a result of any of the events as described in paragraph
7(b) issue any (i) shares of common stock, or (ii) securities
that are convertible into or exchangeable for common stock, or
(iii) options, warrants or other rights to acquire common stock,
in any case described under clause (i), (ii), or (iii), at a
price of less than $10,000 per share of common stock or, after
such price has been adjusted from $10,000 per share pursuant to
the foregoing provisions or the following provisions of this
paragraph 7(a), at a price less than the amount to which such
$10,000 may previously have been appropriately adjusted pursuant
to the foregoing provisions or the following provisions of this
paragraph 7(a), then each whole share of preferred stock will be
convertible at any time thereafter by the holder into the number
of shares of common stock of the Corporation based upon a new
conversion price equal to the lowest issuance, conversion,
exchange, or exercise price, as the case may be, for the common
stock pursuant to clause (i), (ii), or (iii) above, adjusting
such price appropriately for any events described in paragraph
7(b). Fractional shares of preferred stock may be converted on a
ratable basis at such new adjusted conversion price. Each holder
may convert his preferred stock in whole or in such part
(including fractional shares) as he chooses when he converts the
stock.
(b) If at any time after September 30, 1994 and prior to the
conversion of the preferred stock the Corporation shall have
effected a common stock split or the outstanding common stock of
the Corporation shall have been subdivided or combined into a
greater or lesser number of shares or shares of its common stock
shall have been distributed as a dividend on any class of its
stock, and after giving effect to any prior
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adjustments under paragraph 7(a) and This paragraph 7(b), the
number of shares of common stock into which each share of
preferred stock can be converted shall be increased or decreased
to reflect proportionately the increase or decrease in the number
of shares of common stock outstanding.
(c) Upon the occurrence of any event which requires any of the
adjustments provided for above, then and in each such case the
Corporation shall give notice thereof to the holders of the
preferred stock, which notice shall state the increase or
decrease, if any, in the number of shares of common stock into
which the preferred stock shall be convertible, setting forth in
reasonable detail the method of calculation and the facts upon
which such calculation is based.
(d) In case after September 30,1994, at any time:
(i) the Corporation shall offer for subscription pro rata
to the holders of the common stock any additional shares of stock
of any class or other rights;
(ii) there shall be any capital reorganization of the
Corporation, or reclassification of the common stock or
consolidation or merger of the Corporation with or into (other
than with a wholly owned subsidiary), or sale of all or
substantially all of its assets to, another corporation or
entity; or
(iii) there shall be a voluntary or involuntary
dissolution, liquidation, or winding-up of the Corporation;
then, in each such case, the Corporation shall give to the
holders of the preferred stock (a) notice of the date on which
the books of the Corporation shall close or a record shall be
taken for determining the holders of common stock entitled to
receive any such subscription rights or for determining the
holders of common stock entitled to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up and (b) in the case of
any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, notice of the date
(or, if not then known, a reasonable approximation thereof by the
Corporation) when the same shall take place. Such notice shall
also specify the date on which the holders of
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common stock shall be entitled to receive such subscription
rights or to exchange their common stock for stock or other
securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation, or winding-up, as the case may be. Such notice shall
be given at least twenty (20) days prior to the record date or
the date on which the Corporation's books are closed in respect
thereof. Failure to give any such notice or any defect therein
shall not affect the validity of the proceedings referred to in
clause (i), (ii), and (iii) above.
(e) Any accrued and unpaid dividends on the preferred stock being
converted (with the current quarterly dividend for the quarter
during which the conversion occurs being paid in an amount
prorated to the date of conversion) shall either be paid within
five (5) days of the conversion to the converting preferred stock
holder in cash or in an additional number of whole and/or
fractional shares of common stock equal to the number of common
shares that would have been issued had the total amount of those
dividends which were not paid in cash represented an equivalent
Dollar Value of additional preferred stock converted along with
the preferred stock that was actually converted by the holder.
(f) The certificate for the shares of the preferred stock being
converted will be surrendered to the Corporation, and if less
than all shares of the preferred stock represented by a
certificate are converted, a certificate for the number of shares
not converted, which shall have a Dollar Value commensurate with
that number of shares, shall be returned to the holder.
8. 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 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 preferred stock and to effect the exercise of all
rights, warrants, and options to purchase common stock, and 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 stock,
and such other convertible stock or securities and rights, warrants, and
options, 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.
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9. NOTICES. Any notice required by the provisions hereof to be given to
any holders of shares of the preferred stock shall be deemed given upon the
earlier of actual receipt or seventy-two (72) hours after the same has been
deposited in the United States mail, by certified or registered mail, return
receipt requested, postage prepaid, and addressed to the holder of record at his
address appearing on the books of the Corporation.
10. ISSUANCE TAX. The issuance of certificates for common stock upon the
conversion of preferred stock shall be made without charge to the converting
holder of the preferred stock for any issuance tax in respect thereof, provided
that the Corporation shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the holder of the preferred stock converted
therefor.
11. EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law,
the shares of preferred stock shall not have any preferences or relative,
participating, optional or other special rights, other than those specifically
set forth herein and in the Corporation's Certificate of Incorporation. The
shares of preferred stock shall have no preemptive or subscription rights.
12. AMENDMENT ETC. In addition to any other rights provided by law, so
long as any preferred stock is outstanding, the Corporation, without first
obtaining the affirmative vote or written consent of the holders of not less
than ninety two percent (92%) of the shares of preferred stock outstanding at
the time, will not:
(a) amend or repeal any provision of, or add any provision to, the
Certificate of Incorporation, the Restated Certificate of
Designations related to the preferred stock, or By-Laws if such
action would materially adversely change the preferences, rights,
privileges or powers of, or the restrictions provided for the
benefit of, the preferred stock, or increase or decrease the
number of shares of preferred stock authorized hereby; or
(b) authorize or increase the authorized number of shares of any
series or class of stock, which would be entitled to receive
dividends or Other distributions at any time in preference to the
preferred stock before any of the dividends under paragraph 3
hereof for that period and all past quarterly dividend periods
prior to such time have been paid on the preferred stock, or
would be entitled to receive assets upon the liquidation,
dissolution, or winding up of the affairs of the Corporation in
preference to the preferred stock before any of the assets the
preferred stock is to receive under those circumstances have been
received, except that a merger or consolidation of the
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Corporation into another corporation or corporations pursuant to
which the holders of the preferred stock are to receive stock of
the surviving corporation or corporations with substantially the
same preferences, rights, privileges, powers, and restrictions
for the benefit of such holders as the preferred stock of The
Corporation will not be deemed an event that falls within this
subparagraph or subparagraph (a) immediately above.
13. HEADINGS OF SUBDIVISIONS. The headings of the various paragraphs
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
14. SEVERABILITY OF PROVISIONS. If any right, preference, or limitation
of the preferred stock set forth herein is invalid, unlawful or incapable of
being enforced by reason of any rule of law or public policy, all other rights,
preferences, and limitations set forth herein which can be given effect without
the invalid, unlawful or unenforceable right, preference or limitation shall,
nevertheless, remain in full force and effect, and no right, preference or
limitation herein set forth shall be deemed dependent upon any other such right,
preference or limitation unless so expressed herein.
15. STATUS OF REACQUIRED SHARES. Shares of preferred stock which have been
issued and reacquired by the Corporation in any manner or converted shall be
canceled, and will no longer have the status of authorized shares of preferred
stock or be capable of being issued.
16. SINGULAR. PLURAL, ETC. Herein, unless the context is to the contrary,
references to the singular shall include the plural, to the masculine shall
include the feminine and the neuter, and to shares of stock shall include
fractional shares, and VICE VERSA, and, unless the context is otherwise,
references to the holder of stock shall mean the record holder and references to
the voting or the consent of the holders of such stock shall mean the record
holders of the stock as of the record date set by the Board of Directors for
such vote or consent.
IN WITNESS WHEREOF, Lone Star Steel Company has caused this Certificate to
be duly executed this ____ day of ____________ ,1995.
LONE STAR STEEL COMPANY
By:
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ATTEST:
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