<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 20, 1999
REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
SOUTHDOWN, INC.
(Exact name of corporation as specified in its charter)
<TABLE>
<S> <C>
LOUISIANA 72-0296500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 SMITH STREET, SUITE 2400
HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
SOUTHDOWN, INC. 1991 NONQUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(Full title of plan)
PATRICK S. BULLARD
SENIOR VICE PRESIDENT -- GENERAL COUNSEL AND SECRETARY
SOUTHDOWN, INC.
1200 SMITH STREET, SUITE 2400
HOUSTON, TEXAS 77002
(Name and address of agent for service)
(713) 650-6200
(Telephone number, including area code, of agent for service)
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TO BE REGISTERED REGISTERED OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.25 par 325,000
value(1).................. shares(2)(3) $63.41(4) $20,608,250(4) $5,730(4)
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</TABLE>
(1) Includes the Preferred Stock Purchase Rights issuable pursuant to the Rights
Agreement dated as of March 4, 1991, between the Registrant and American
Stock Transfer & Trust Company. As no separate consideration is payable with
respect to the Preferred Stock Purchase Rights, the registration fee with
respect to such securities is included in the registration fee for the
Common Stock.
(2) The 325,000 shares are in addition to the 400,000 shares previously
available under the Southdown, Inc. 1991 Nonqualified Stock Option Plan for
Non-Employee Directors which have been previously registered under the
Securities Act of 1933, as amended (the "Securities Act") pursuant to the
registration statements referred to in the final paragraph on this facing
page, 343,000 of which shares have not yet been issued (although options on
167,000 of such shares have been granted). A filing fee of $2,979.74 was
previously paid by registrant with respect to such 343,000 shares.
(3) Pursuant to Rule 416 under the Securities Act, includes any additional
shares issued pursuant to the antidilution provisions of the plan.
(4) The price of the Common Stock is estimated in accordance with Rule 457(c)
and (h) solely for the purpose of calculating the registration fee by
reference to the average of the high and low sale prices of the Common Stock
on the New York Stock Exchange on May 19, 1999 which was $63.41 per share.
THE DOCUMENTS SENT OR GIVEN TO NON-EMPLOYEE DIRECTORS IN CONNECTION WITH
THE SOUTHDOWN, INC. 1991 NONQUALIFIED STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS AS DESCRIBED IN PART I OF THIS REGISTRATION STATEMENT AND THE OTHER
DOCUMENTS WHICH TOGETHER THEREWITH CONSTITUTE THE PROSPECTUS MEETING THE
REQUIREMENTS OF SECTION 10(a) OF THE SECURITIES ACT CONSTITUTE, PURSUANT TO RULE
429 UNDER THE SECURITIES ACT, A COMBINED PROSPECTUS THAT ALSO RELATES TO AN
AGGREGATE OF 343,000 SHARES OF COMMON STOCK REGISTERED ON FORM S-8, REGISTRATION
NO. 33-45144, WHICH BECAME EFFECTIVE ON JANUARY 17, 1992, AND ON FORM S-8,
REGISTRATION NO. 333-26592, WHICH BECAME EFFECTIVE ON MAY 5, 1997.
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<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I will be sent
or given to non-employee directors as specified by Rule 428(b). In accordance
with the instructions to Part I of Form S-8, such documents are not being filed
and will not be filed with the Securities and Exchange Commission (the
"Commission"), either as part of this Registration Statement or as a prospectus
or prospectus supplement pursuant to Rule 424.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, or portions of documents, previously filed by
Southdown, Inc. (the "Company") with the Commission are hereby incorporated
herein by reference:
(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999, as amended by Form 10-Q/A dated May 14, 1999;
(c) The description of the Company's Common Stock, par value $1.25 per
share, set forth in the Company's Registration Statement on Form 8-C
relating to such Common Stock, and the description of the Company's
Preferred Stock Purchase Rights set forth in the Company's Registration
Statement on Form 8-A relating to such Preferred Stock Purchase Rights, as
each such Registration Statement is amended to date.
All reports and other documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold shall be deemed to be incorporated by reference herein and
to be a part hereof from the respective dates of filing of such reports and
other documents, other than the portions of such documents which by statute, by
designation in such documents or otherwise are not required to be filed by the
Commission or are not required to be incorporated herein by reference.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for all purposes to the extent that a statement contained in any other
subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Louisiana Business Corporation Law ("LBCL") generally gives a
corporation the power to indemnify any of its directors or officers against
certain expenses, judgments, fines and amounts paid in
2
<PAGE> 3
settlement in connection with certain actions, suits or proceedings, provided
generally that such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to the interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. In the case of an action by, or in the right of, the
corporation, the corporation may indemnify such person against expenses,
including attorneys' fees and amounts paid in settlement not exceeding, in the
judgment of the board of directors, the estimated expense of litigating the
action to conclusion, actually and reasonably incurred in connection with the
defense or settlement of such action, and no indemnification shall be made in
respect of any claim, issue, or matter as to which such person shall have been
adjudged by a court of competent jurisdiction, after exhaustion of all appeals
therefrom, to be liable for willful or intentional misconduct in the performance
of his duty to the corporation, unless, and only to the extent that the court
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, he is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Indemnification provided pursuant to the foregoing provisions is not, under
the LBCL, deemed exclusive of any other rights to which the person indemnified
is entitled under any bylaw, agreement, authorization of shareholders or
directors; however, no such other indemnification measure shall permit
indemnification of any person for the results of such person's willful or
intentional misconduct. In addition, the LBCL contains provisions to the general
effect that any director shall in the performance of his duties be fully
protected in relying in good faith upon the records of the corporation and upon
such information, opinions, reports or statements presented to the corporation,
the board of directors, or any committee thereof by any of the corporation's
officers or employees, or by any committee of the board of directors, or by any
counsel, appraiser, engineer (including a petroleum reservoir engineer), or
independent or certified public accountant selected by the board of directors or
any committee thereof with reasonable care, or by any other person as to matters
the director reasonably believes are within such other person's professional or
expert competence and which person is selected by the board of directors or any
committee thereof with reasonable care. A director shall not be liable for the
commission of a prohibited act if his dissent was either noted in the minutes of
the meetings or filed promptly thereafter in the registered office of the
corporation.
As permitted under Section 24(C)(4) of the LBCL, Article XIII of the
Restated Articles of Incorporation of the Company eliminates the personal
liability of any director or officer to the Company or its shareholders for
monetary damages for breach of fiduciary duty in such capacity, except for (i)
any breach of the duty of loyalty to the Company or its shareholders; (ii) acts
or omissions not in good faith or involving intentional misconduct or a knowing
violation of law; (iii) unlawful payment of dividends or unlawful stock purchase
or redemption; or (iv) any transaction from which the director or officer
derived an improper personal benefit.
Article VI, Section 6 of the Company's Bylaws contemplates that the Company
shall indemnify its directors and officers to the maximum extent permitted by
Louisiana law.
In addition, the Company has purchased a liability insurance policy under
which its directors and officers are indemnified against certain losses arising
from certain claims that may be made against them by reason of their serving in
such capacity.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
5 -- Opinions of Bracewell & Patterson, L.L.P. and Correro
Fishman Haygood Phelps Walmsley & Casteix, L.L.P.
regarding the legality of the shares of Common Stock
covered by this Registration Statement.
15 -- Letter of Deloitte & Touche LLP regarding unaudited
interim financial statements.
</TABLE>
3
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
23.1 -- Consents of Bracewell & Patterson, L.L.P. and Correro
Fishman Haygood Phelps Walmsley & Casteix, L.L.P.
(included in their opinions filed as Exhibit 5 hereto).
23.2 -- Consent of Deloitte & Touche LLP.
99.1 -- Southdown, Inc. 1991 Nonqualified Stock Option Plan for
Non-Employee Directors, as amended by Amendment dated
March 25, 1999.
</TABLE>
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on the 20th day of May,
1999.
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
----------------------------------
Clarence C. Comer
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ CLARENCE C. COMER President and Chief Executive Officer May 20, 1999
- -------------------------------------- and Director (Principal Executive
Clarence C. Comer Officer)
/s/ DENNIS M. THIES Executive Vice President -- Finance May 20, 1999
- -------------------------------------- and Chief Financial Officer
Dennis M. Thies (Principal Financial Officer)
/s/ ALLAN KORSAKOV Vice President and Corporate May 20, 1999
- -------------------------------------- Controller (Principal Accounting
Allan Korsakov Officer)
/s/ ROBERT S. EVANS Director May 20, 1999
- --------------------------------------
Robert S. Evans
/s/ ROBERT G. POTTER Director May 20, 1999
- --------------------------------------
Robert G. Potter
/s/ FRANK J. RYAN Director May 20, 1999
- --------------------------------------
Frank J. Ryan
/s/ WHITSON SADLER Director May 20, 1999
- --------------------------------------
Whitson Sadler
/s/ ROBERT J. SLATER Director May 20, 1999
- --------------------------------------
Robert J. Slater
/s/ DAVID J. TIPPECONNIC Director May 20, 1999
- --------------------------------------
David J. Tippeconnic
</TABLE>
5
<PAGE> 6
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ J. BRUCE TOMPKINS Director May 20, 1999
- --------------------------------------
J. Bruce Tompkins
/s/ GEORGE E. UDING, JR. Director May 20, 1999
- --------------------------------------
George E. Uding, Jr.
/s/ V. H. VAN HORN, III Director May 20, 1999
- --------------------------------------
V. H. Van Horn, III
/s/ STEVEN B. WOLITZER Director May 20, 1999
- --------------------------------------
Steven B. Wolitzer
</TABLE>
6
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
5 -- Opinions of Bracewell & Patterson, L.L.P. and Correro
Fishman Haygood Phelps Walmsley & Casteix, L.L.P.
regarding the legality of the shares of Common Stock
covered by this Registration Statement.
15 -- Letter of Deloitte & Touche LLP regarding unaudited
interim financial statements.
23.1 -- Consents of Bracewell & Patterson, L.L.P. and Correro
Fishman Haygood Phelps Walmsley & Casteix, L.L.P.
(included in their opinions filed as Exhibit 5 hereto).
23.2 -- Consent of Deloitte & Touche LLP.
99.1 -- Southdown, Inc. 1991 Nonqualified Stock Option Plan for
Non-Employee Directors, as amended by Amendment dated
March 25, 1999.
</TABLE>
<PAGE> 1
EXHIBIT 5
[Letterhead of Bracewell & Patterson, L.L.P.]
May 20, 1999
Southdown, Inc.
1200 Smith Street, Suite 2400
Houston, Texas 77002-4486
Ladies and Gentlemen:
We have acted as counsel to Southdown, Inc., a Louisiana corporation (the
"Company"), in connection with the Registration Statement on Form S-8 filed by
the Company (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to 325,000 shares (the "Shares")
of the Company's Common Stock, $1.25 par value per share (together with the
associated preferred stock purchase rights being collectively referred to as
the "Common Stock") issuable upon the exercise of stock options granted under
the Southdown, Inc. 1991 Nonqualified Stock Option Plan for Non-Employee
Directors, as amended (the "1991 Plan").
We have examined copies of (i) the Restated Articles of Incorporation of the
Company, as amended, (ii) the Bylaws of the Company, as amended, (iii) the 1991
Plan, (iv) certain resolutions of the Board of Directors and shareholders of
the Company, (v) the Registration Statement, and (vi) such other documents and
records as we have deemed necessary and relevant for purposes hereof. In
addition, we have relied on representations of officers of the Company and
certificates of public officials as to certain matters of fact relating to this
opinion and have made such investigations of law as we have deemed necessary
and relevant. We have assumed the genuineness of all signatures, the
authenticity of all documents and records submitted to us as originals, the
conformity to authentic original documents and records of all documents and
records submitted to us as copies, and the truthfulness of all statements of
fact contained therein.
Based on the foregoing, and subject to the limitations and assumptions set
forth herein, and having due regard for such legal considerations as we deem
relevant, we are of the opinion that:
1. The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Louisiana.
<PAGE> 2
Southdown, Inc.
May 20, 1999
Page 2
2. The Shares have been duly and validly authorized and, upon
issuance pursuant to the exercise of options granted under
the 1991 Plan in accordance with the terms of the 1991 Plan
and the option agreements related thereto, will be validly
issued, fully paid and nonassessable.
The foregoing opinion is based on and is limited to the law of the State of
Texas, the law of the State of Louisiana and the relevant law of the United
States of America, and we render no opinion with respect to the law of any
other jurisdiction. Insofar as the law of the State of Louisiana is applicable
to the matters discussed herein, we have relied exclusively upon the opinion of
Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P., a copy of which is
annexed hereto, and our opinion is subject to the qualifications, limitations
and assumptions set forth therein.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required pursuant to Section 7
of the Securities Act.
Very truly yours,
Bracewell & Patterson, L.L.P.
<PAGE> 3
May 20, 1999
Bracewell & Patterson, L.L.P.
711 Louisiana Street
Suite 2900
Houston, TX 77002
RE: Southdown, Inc.
325,000 Shares of Common Stock, $1.25 Par Value Per Share
Registration Statement on Form S-8
Gentlemen and Ladies:
We have been asked to render this opinion as Louisiana
counsel to Southdown, Inc., a Louisiana corporation (the "Company"), in
connection with the Registration Statement on Form S-8 filed by the Company
under the Securities Act of 1933, as amended (the "Registration Statement"),
with respect to 325,000 shares of the Company's Common Stock, $1.25 par value
per share (together with the associated preferred purchase rights, the
"Shares") issuable under the Southdown, Inc. 1991 Nonqualified
Stock Option Plan for Non-Employee Directors (the "1991 Plan").
In connection with this representation and our opinion
rendered in this letter, we have reviewed copies of the following documents:
(a) the 1991 Plan; (b) the Restated Articles of Incorporation of the Company,
as amended through this date; (c) the Bylaws of the Company, as amended through
this date; (d) certain resolutions of the shareholders and of the Board of
Directors of the Company; and (e) certificates of officers of the Company and
of public officials.
<PAGE> 4
Bracewell & Patterson, L.L.P.
May 20, 1999
Page 2
For the purpose of the opinion expressed in this letter, we
have assumed: (a) the legal capacity of all natural persons; (b) the
genuineness of all signatures; (c) the authenticity of all documents,
certificates and records submitted to us as originals, the conformity to
original documents, certificates and records of all documents, certificates and
records submitted to us as copies or facsimiles and the authenticity of the
originals of such copies or facsimiles; (d) the truthfulness of all statements
of fact and representations and warranties contained in the documents,
certificates and records submitted us; (e) the proper grant of options in
accordance with the terms and conditions of the 1991 Plan; (f) that the
purchase price for all Shares issued under the 1991 Plan will have been paid in
full in cash, property or services previously rendered to the Company prior to
the issuance thereof and will not be less than the aggregate par value of the
Shares so issued; and (g) that all documents, certificates and records referred
to in this letter, including but not limited to the 1991 Plan, comply with all
applicable laws other than the laws of the State of Louisiana. In addition, in
rendering the opinions expressed in this letter, we have assumed the accuracy
and completeness of, and have relied upon, certifications by public officials
and officers of the Company.
Based upon and in reliance on the foregoing and subject to
the qualifications, limitations and assumptions set forth herein, we are of the
opinion that:
1. The Company is duly incorporated, validly existing and in
good standing under the laws of the State of Louisiana.
2. The Shares have been duly and validly authorized and, upon
issuance in accordance with the provisions and conditions of
the 1991 Plan and the option agreements related thereto, will
be validly issued, fully paid and nonassessable.
The opinion expressed in this letter is subject to
limitations imposed by the effect of general equitable principles, including
without limitation the effect of concepts of good faith and fiduciary
requirements. In addition, the opinion expressed in this letter is given only
as of this date, is based on the law as in effect on this date and is limited
to the matters stated herein and no opinion may be inferred beyond the matters
expressly stated. We have no obligation, and will not undertake, to report to
you or any third parties changes in facts or laws, statutes or case law.
We hereby consent to the filing of this opinion with the
Securities and Exchange Commission as Exhibit 5 to the Registration Statement
and the use of our name therein.
<PAGE> 5
Bracewell & Patterson, L.L.P.
May 20, 1999
Page 3
We are members of the Louisiana Bar, and the opinion in this
letter is based on and limited to the laws of the State of Louisiana. The
opinion contained in this letter is limited in that we express no opinion with
respect to federal laws, state blue sky or other securities laws, tax or
environmental laws or matters, the laws of any municipality, county or other
political subdivision of the State of Louisiana or any agency thereof, or the
laws of any jurisdiction other than Louisiana.
Yours truly,
Correro Fishman Haygood Phelps
Walmsley & Casteix, L.L.P.
RMWmbs
<PAGE> 1
EXHIBIT 15
May 20, 1999
Southdown, Inc.
1200 Smith Street, Suite 2400
Houston, Texas 77002
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Southdown, Inc. and subsidiary companies for the periods ended
March 31, 1999 and 1998, as indicated in our report dated April 20, 1999;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which was included in your
amended Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1999,
is being used in this Registration Statement.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Southdown, Inc. on Form S-8 of our report dated January 27, 1999, incorporated
by reference in the Annual Report on Form 10-K of Southdown, Inc. for the year
ended December 31, 1998.
DELOITTE & TOUCHE LLP
Houston, Texas
May 20, 1999
<PAGE> 1
EXHIBIT 99.1
AS AMENDED 3/25/99
SOUTHDOWN, INC.
1991 NONQUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. PURPOSE OF PLAN.
The purpose of the Southdown, Inc. 1991 Nonqualified Stock Option Plan for
Non-Employee Directors ("Plan") is to attract and retain the services of
experienced and knowledgeable non-employee directors and provide an opportunity
for ownership of the common stock, $1.25 par value ("Common Stock"), of
Southdown, Inc., a Louisiana corporation ("Company").
2. ADMINISTRATION OF PLAN.
The Plan shall be administered by the Board of Directors of the Company
("Board"). Subject to the terms of the Plan, the Board shall have the power to
interpret the provisions and supervise the administration of the Plan. All
decisions made by the Board pursuant to the provisions of the Plan shall be
made by a majority of its members at a duly held regular or special meeting or
by written consent in lieu of any such meeting. A majority of the directors in
office shall constitute a quorum and all decisions made by the Board pursuant
to the provisions of the Plan shall be made by a majority of the directors
present at any duly held regular or special meeting at which a quorum is
present (unless the concurrence of a greater proportion is required by law or
by the articles or bylaws of the Company) or by the written consent of all of
the directors in lieu of any such meeting.
3. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in paragraph 11, the shares subject to the
Plan shall consist of 725,000 unissued shares of Common Stock or previously
issued shares reacquired and held by the Company and such amount of shares
shall be and is hereby reserved for issuance pursuant to this Plan. Any of such
shares that may remain unsold and that are not subject to outstanding options
at the termination of the Plan shall cease to be reserved for the purpose of
the Plan, but until termination of the Plan and the expiration, exercise,
cancellation, surrender or lapse of all outstanding options granted under the
Plan, the Company shall at all times reserve a sufficient number of shares to
meet the requirements of the Plan. Should any option expire or be cancelled
prior to its exercise in full, the shares theretofore subject to such option
may again be made subject to an option under the Plan.
4. GRANT OF OPTIONS.
Each director of the Company who is not otherwise an employee of the Company
or any of the Company's subsidiaries (as defined in Section 424(f) of the
Internal Revenue Code of 1986) (hereinafter referred to as an "Eligible
Director", which term shall include any transferee permitted pursuant to
paragraph 9 below) shall be granted one option to acquire 10,000 shares of
Common Stock ("Initial Option"), in the case of an Eligible Director serving on
the Board on the date of adoption of the Plan by the Board, on such date of
adoption and in all other cases on the date of such director's first election
to the Board. Beginning on the Annual Meeting of Shareholders held in 1999, and
on the date of each Annual Meeting of Shareholders thereafter where an Eligible
Director continues to serve as a Director of the Company after such meeting,
(i) each Eligible Director who is neither a chairman of one of the committees
of the Board nor the Chairman of the Board shall automatically be
-1-
<PAGE> 2
granted an additional option to acquire 7,500 shares of Common Stock, (ii) each
Eligible Director who is a chairman of one of the committees of the Board, but
is not Chairman of the Board, shall automatically be granted an additional
option to acquire 8,000 shares of Common Stock, and (iii) the Chairman of the
Board of Directors shall automatically be granted an additional option to
acquire 26,000 shares of Common Stock (each annual grant under (i), (ii) and
(iii) for an Eligible Director is referred to hereinafter as a "Subsequent
Option"). The options granted to Eligible Directors shall be automatic,
nondiscretionary, and subject to the following conditions and limitations in
addition to those set forth elsewhere in this Plan: (x) the exercise price of
each option shall be equal to the greater of the par value of the Common Stock
or 100% of the fair market value of the Common Stock on the Date of Grant; (y)
each option shall become exercisable six months after the Date of Grant; (z)
notwithstanding clause (y) above, each option shall become fully exercisable
upon the death or disability of the Eligible Director while serving as a
Director of the Company or upon a Change in Control of the Company while
serving as a Director of the Company.
For the purposes of this paragraph 4, the following terms shall have the
following meanings:
(a) "Date of Grant" means (i) in the case of an Initial Option granted to an
Eligible Director serving on the Board on the date of the adoption of the Plan
by the Board, on such date of adoption and in all other cases on the date on
which the Eligible Director is first elected to the Board; and (ii) in the case
of a Subsequent Option, the date of each Annual Meeting of Shareholders.
(b) The fair market value of a share of Common Stock on a particular date
shall be deemed to be the average (mean) of the reported "high" and "low" sales
prices for such shares as reported in The Wall Street Journal's NYSE-Composite
Transactions listing for such day (corrected for obvious typographical errors),
or if such shares are not reported in such listing, then the average of the
reported "high" and "low" sales prices on the largest national securities
exchange (based on the aggregate dollar value of securities listed) on which
such shares are listed or traded, or if such shares are not listed or traded on
any national securities exchange, then the average of the reported "high" and
"low" sales prices for such shares in the over-the-counter market, as reported
on the National Association of Securities Dealers Automated Quotations System,
or, if such prices shall not be reported thereon, the average between the
closing bid and asked prices so reported, or, if such prices shall not be
reported, then the average closing bid and asked prices reported by the
National Quotation Bureau Incorporated, or, in all other cases, the value
established by the Board of Directors of the Company in good faith.
5. OPTION AGREEMENT.
Each option granted under the Plan shall be evidenced by an agreement, in a
form approved by the Board, which shall be subject to the terms and conditions
of the Plan. Any agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Board.
6. TERM OF OPTION.
Each option granted under this Plan shall provide that it shall terminate
and be of no force or effect with respect to any shares not previously taken up
by the Eligible Director upon the first to occur of (a) the expiration of ten
years from the date the grant of the option or (b) the expiration of ninety
days after the termination of the Eligible Director's service as a Director of
the Company for any reason (other than death, disability or retirement under a
retirement plan of the Company) prior to a Change in Control of the Company;
provided, that if death of the Eligible Director occurs within ninety days of
termination of service as a Director of the Company prior to a Change in
Control of the Company, clause (b) shall be inapplicable. If, following a
Change in Control of the Company, the Eligible Director's service as a Director
is terminated for any reason, each option may be exercised during the remainder
of its full ten-year term to the extent unexercised.
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7. PROCEDURE FOR EXERCISE.
Options shall be exercised by written notice to the Company setting forth
the number of shares with respect to which the option is to be exercised and
specifying the address to which the certificates for such shares are to be
mailed. Such notice shall be accompanied by cash or certified check, bank
draft, or postal or express money order payable to the order of the Company,
for the amount of the option price for the number of shares of the Common Stock
with respect to which the option is then being exercised or, at the option of
the Eligible Director, accompanied by Common Stock theretofore owned by the
Eligible Director equal in value to the full amount of the option price (or any
combination of cash or such Common Stock). For purposes of determining the
amount, if any, of the purchase price satisfied by payment in Common Stock,
such Common Stock shall be valued at its fair market value on the date of
exercise in accordance with paragraph 4(b). Any Common Stock delivered in
satisfaction of all or a portion of the purchase price shall be appropriately
endorsed for transfer and assigned to the Company. As promptly as practicable
after receipt of such written notification and payment, the Company shall
deliver to the Eligible Director certificates for the number of shares with
respect to which such option has been so exercised, issued in the Eligible
Director's name; provided, however, that such delivery shall be deemed effected
for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
Eligible Director, at the address specified pursuant to this paragraph 7.
8. EFFECT OF DEATH OR DISABILITY.
(a) In the event of the death or disability of an Eligible Director
following the Date of Grant and while serving as a Director of the Company, and
while options granted hereunder are still in force and unexpired under the
terms of paragraph 6, the exercisability of the options shall be accelerated.
Such acceleration shall be effective as of the date of death or disability, as
the case may be. The options outstanding in the name of the Eligible Director
shall thereupon be exercisable in full without regard to any exercise
provisions.
(b) No transfer of an option by an Eligible Director by will, by the laws of
descent and distribution or pursuant to a qualified domestic relations order
shall be effective to bind the Company unless the Company shall have been
furnished with written notice of the same and an authenticated copy of the will
or order and such other evidence as the Board may deem necessary to establish
the validity of the transfer and the acceptance of the transferee or
transferees of the terms and conditions of such option.
9. ASSIGNABILITY.
An option shall not be assignable or otherwise transferable except by will,
by the laws of descent and distribution or pursuant to a qualified domestic
relations order as that term is defined by the Internal Revenue Code of 1986,
as amended, or Title I of the Employee Retirement Income Security Act, or the
rules thereunder.
10. NO RIGHTS AS SHAREHOLDER.
No Eligible Director shall have any rights as a shareholder with respect to
shares covered by an option until the date of issuance of a stock certificate
for such shares; except as provided in paragraph 11, no adjustment for
dividends, or otherwise, shall be made if the record date therefor is prior to
the date of issuance of such certificate.
11. STOCK DIVIDENDS, STOCK SPLITS AND CERTAIN OTHER CORPORATION TRANSACTIONS.
(a) The existence of this Plan and the Options granted hereunder shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or
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<PAGE> 4
consolidation of the Company, or any issue of bonds, debentures or preferred
or preference stocks ranking prior to or affecting the Common Stock or the
rights attendant thereto, or the dissolution or liquidation of the Company, or
any sale or transfer of all or any part of the Company's assets or business, or
any other corporate act or proceeding, whether of a similar character or
otherwise.
(b) The shares with respect to which options may be granted hereunder are
shares of Common Stock of the Company as presently constituted. If, and
whenever, prior to the delivery by the Company of all of the shares of the
Common Stock which are subject to options granted hereunder, the Company shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a stock dividend, a stock split, a combination of shares, a
recapitalization or other increase or reduction of the number of shares of the
Common Stock outstanding without receiving consideration therefor in money,
services or property, the number of shares of Common Stock available under this
Plan and the number of shares of Common Stock with respect to which options
granted hereunder may thereafter be exercised shall (i) in the event of an
increase in the number of outstanding shares, be proportionately increased, and
the cash consideration payable per share shall be proportionately reduced, and
(ii) in the event of a reduction in the number of outstanding shares, be
proportionately reduced, and the cash consideration payable per share shall be
proportionately increased.
(c) If the Company is reorganized, merged or consolidated or is otherwise a
party to a Plan of exchange with another corporation pursuant to which
reorganization, merger, consolidation or Plan of exchange shareholders of the
Company receive any shares of Common Stock or other securities or if the
Company shall distribute ("Spin Off") securities of another corporation to its
shareholders, there shall be substituted for the shares subject to the
unexercised portions of outstanding options granted hereunder an appropriate
number of shares of (i) each class of stock or other securities which were
distributed to the shareholders of the Company in respect of such shares in the
case of a reorganization, merger, consolidation or plan of exchange, or (ii) in
the case of a Spin Off, the securities distributed to shareholders of the
Company together with shares of Common Stock, such number of shares or
securities to be determined in accordance with the provisions of Section 424 of
the Code (or other applicable provisions of the Code or regulations issued
thereunder which may from time to time govern the treatment of stock options in
such a transaction); provided, however, that all such options may be cancelled
by the Company as of the effective date of (x) a reorganization, merger,
consolidation, plan of exchange or Spin Off or (y) any dissolution or
liquidation of the Company, by giving notice to each Eligible Director of its
intention to do so and by permitting the purchase for a period of at least
thirty days during the sixty days next preceding such effective date of all of
the shares subject to such outstanding options, without regard to the
installment provisions set forth in the Plan or the option agreements; and
provided further that in the event of a Spin Off, the Company may, in lieu of
substituting securities or accelerating and canceling options as contemplated
above, elect (i) to reduce the purchase price for each share of Common Stock
subject to an outstanding option by an amount equal to the fair market value,
as determined in accordance with the provisions of paragraph 4(b), of the
securities distributed in respect of each outstanding share of Common Stock in
the Spin Off or (ii) to reduce proportionately the purchase price per share and
to increase proportionately the number of shares of Common Stock subject to
each option in order to reflect the economic benefits inuring to the
shareholders of the Company as a result of the Spin Off.
(d) Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into or exchangeable
for shares of stock of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into or exchangeable for shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to options granted hereunder.
(e) Each option granted hereunder shall become fully exercisable upon a
Change in Control of the Company (as defined in the next sentence). "Change in
Control" of the Company shall be conclusively deemed to have occurred if (and
only if) any of the following shall have taken place: (i) a Change in Control
is reported by the Company in response to either Item 6 (e) of Schedule 14A of
Regulation 14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or Item 1 of Form 8-K promulgated under the
Exchange Act; (ii) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing forty percent or more of the combined voting power of
the Company's then outstanding securities; or (iii) following the election or
removal of directors, a majority of the Board consists
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of individuals who were not members of the Board two years before such election
or removal, unless the election of each director who was not a director at the
beginning of such two-year period has been approved in advance by directors
representing at least a majority of the directors then in office who were
directors at the beginning of the two-year period.
12. PURCHASE FOR INVESTMENT.
Unless the options and shares of Common Stock covered by this Plan have been
registered under the Securities Act of 1933, as amended, or the Company has
determined that such registration is unnecessary, each person exercising an
option under this Plan may be required by the Company to give a representation
in writing that he is acquiring such shares for his own account for investment
and not with a view to, or for sale in connection with, the distribution of any
part thereof.
13. TAXES.
(a) The Company may make such provisions as it may deem appropriate for the
withholding of any taxes which it determines is required in connection with any
options granted under this Plan.
(b) Any Eligible Director may pay all or any portion of the taxes required
to be withheld by the Company or paid by him in connection with the exercise of
an option by electing to have the Company withhold shares of Stock, or by
delivering previously owned shares of Common Stock, having a fair market value,
determined in accordance with paragraph 4(b), equal to the amount required to
be withheld or paid. An Eligible Director must make the foregoing election on
or before the date that the amount of tax to be withheld is determined ("Tax
Date"). All such elections are irrevocable and subject to disapproval by the
Board and are subject to the additional restriction that such election may not
be made within six months of the grant of an option, provided that this
limitation shall not apply in the event of death or disability. Where the Tax
Date in respect of an option is deferred until six months after exercise and
the Eligible Director elects share withholding, the full amount of shares of
Common Stock will be issued or transferred to him upon exercise of the option,
but he shall be unconditionally obligated to tender back to the Company the
number of shares necessary to discharge the Company's withholding obligation or
his estimated tax obligation on the Tax Date.
14. EFFECTIVE DATE OF PLAN.
This Plan shall be effective as of February 14, 1991. Options granted under
this Plan are subject to, and may not be exercised before, the approval of the
Plan at the 1991 Annual Meeting of Shareholders by the affirmative vote of the
holders of a majority of the outstanding shares of the Company present, or
represented by proxy, and entitled to vote thereat. If such approval of the
Plan by the shareholders is not forthcoming, any options granted pursuant to
this Plan shall be void.
15. AMENDMENT OR TERMINATION.
The Board may amend, alter or discontinue this Plan, except that no
amendment or alteration shall be made which would impair the rights of any
Eligible Director under any option theretofore granted, without his consent,
and except that no amendment or alteration shall be made which, without the
approval of the shareholders, would:
(a) Increase the total number of shares reserved for the purposes of this
Plan or decrease the option price provided for in paragraph 4, except in each
case as provided in paragraph 11, or change the class of persons eligible to
participate in this Plan as provided in paragraph 4;
(b) Extend the option period provided for in paragraph 6;
(c) Materially increase the benefits accruing to Eligible Directors under
this Plan; or
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<PAGE> 6
(d) Modify the requirements as to eligibility for participation in this
Plan.
Notwithstanding the foregoing, to the extent but only to the extent required in
order that Rule 16b-3(c)(2)(ii)(B), as promulgated in SEC Release No. 34-28869,
February 8, 1991, (or any replacement rule adopted pursuant to the Exchange
Act, as the same now exist and as any of the above may be amended from
time-to-time) be complied with, the Plan shall not be amended more than once
every six months, other than to comport with changes in Internal Revenue Code
of 1986, the Employee Retirement Income Security Act, or the rules thereunder.
16. GOVERNMENT REGULATIONS.
This Plan, and the grant and exercise of options thereunder, and the
obligation of the Company to sell and deliver shares under such options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required, including but not limited to the provisions of Rule 16b-3 of the
Exchange Act, (or any replacement rule adopted pursuant to the Exchange Act, as
the same now exist and as any of the above may be amended from time-to-time)
that qualify the option grant and exercise for an exemption from the provisions
of Section 16(b) of the Exchange Act. Further, if any Plan provision is found
or determined by the Board not to be in compliance with Rule 16b-3 or Section
16(b), the provision shall be deemed null and void, and shall have no effect.
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