PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
DIRECTORS.
Pursuant to a February 17, 1994 Order Confirming Debtor's
Modified Amended Consolidated Plan of Reorganization Under Chapter
11 of the Bankruptcy Code ("Confirmation Order") the Board of
Directors of the Company was reconstituted effective on that date.
The present directors are as follows: Allen E. Puckett and
David W. Wallace are Class I directors with terms expiring at the
1994 Annual Meeting of Stockholders; James E. Bacon and William M.
Troutman are Class II directors with terms expiring at the 1995
Annual Meeting of Stockholders; and Theodore F. Brophy, Robert G.
Schwartz and Jack R. Wentworth are Class III directors with terms
expiring at the 1996 Annual Meeting of Stockholders. All of the
foregoing persons had previously been directors of the Company
except for Mr. Schwartz who became a director on the date of the
Confirmation Order.
Information concerning the members of the Board of Directors
is set forth below. All of such persons are incumbent directors
and hold no other positions with Lone Star, except David W. Wallace
who is Chairman of the Board and Chief Executive Officer and
William M. Troutman who is President and Chief Operating Officer.
CLASS I - TERM TO EXPIRE 1994
Allen E. Puckett, 74, has been a director since 1976 and is
Chairman of the Audit Committee of the Board. Since April 1987 he
has been Chairman Emeritus of Hughes Aircraft Company, a
manufacturer of aerospace and missile systems, data processing
systems and industrial electronics equipment. From 1978 to 1987 he
was Chairman of the Board and Chief Executive Officer of Hughes
Aircraft Company. Dr. Puckett is also a director of General
Dynamics Corporation and Logicon, Inc.
David W. Wallace, 70, has been a director since 1970 and has
served as Chairman of the Board and Chief Executive Officer of Lone
Star since January 1991. He is also Chairman of the Executive
Committee. Mr. Wallace was Chairman of the Board and Chief
Executive Officer of Todd Shipyards Corporation during the pendency
of its Chapter 11 Bankruptcy case which began in 1987 and ended
with approval of a plan of reorganization in late 1990. Prior to
July 1984, he was Chairman of the Board and President, Bangor Punta
Corporation, a diversified company whose operations included
general aviation aircraft and law enforcement equipment. Since
1985, Mr. Wallace has been Chairman of the Board of FECO Engineered
Systems, Inc., a manufacturer and engineer of high technology
industrial ovens. Mr. Wallace is also Chairman of the Board of
National Securities & Research Corporation, an advisor to a family
of eleven mutual funds. He is Chairman of the Executive Committee
of the Board of Putnam Trust Company, and a director of Zurn
Industries, Inc., Emigrant Savings Bank, UMC Electronics
Corporation, Holmes Protective Company and Aitken Hume
International PLC.
CLASS II - TERM TO EXPIRE 1995
James E. Bacon, 63, has been a director since February 1992
and is a member of the Executive, Audit and Compensation and Stock
Option Committees of the Board. He is a private investor and
consultant. From 1986 to 1990, he was Executive Vice President and
a Director of United States Trust Company, a bank holding company,
and a Trustee of United States Trust Company of New York. Mr.
Bacon was also a director of Todd Shipyards Corporation from
September 1991 to June 1992 and a director of Prime Hospitality
Corp. from July 1992 to January 1994. He is a trustee of Nuveen
Select Tax-Free Income Portfolio and a trustee of the Federation of
Protestant Welfare Agencies (N.Y.).
William M. Troutman, 53, has been a director since July 1992
and is a member of the Executive Committee of the Board. Since
1986, he has been President and Chief Operating Officer of Lone
Star.
CLASS III - TERM TO EXPIRE 1996
Theodore F. Brophy, 70, has been a director since
November 1992 and is a member of the Executive and Audit Committees
of the Board. He is a consultant and director of various
companies. Until May 1988, Mr. Brophy was Chairman and Chief
Executive Officer of GTE Corporation, a telecommunications company.
In 1988, he was Chairman, United States Delegation to the World
Administrative Conference on Space Communications. Mr. Brophy is
also a director of Transcell Technologies Inc.
Robert G. Schwartz, 66, has been a director since
February 1994, having been elected pursuant to the Confirmation
Order and is a member of the Executive and Compensation and Stock
Option Committees of the Board. Mr. Schwartz retired as Chairman
of the Board of Directors, President and Chief Executive Officer of
the Metropolitan Life Insurance Company in 1993, having held these
positions since 1989. He has continued as a director of the
Metropolitan Life Insurance Company, and is also a director of CS
First Boston, Inc., COMSAT Corporation, Lowe's Companies, Inc.,
Mobil Corporation, Potlatch Corporation and The Reader's Digest
Association, Inc., and a member of the Board of Trustees of the
Consolidated Edison Company of New York. Mr. Schwartz is a member
of the Business Council and a Trustee of the Committee for Economic
Development.
Jack R. Wentworth, 65, has been a director since February 1992
and is Chairman of the Compensation and Stock Option Committee of
the Board. From 1984 to 1993 he was Dean of the Graduate School of
Business at Indiana University and is now Arthur M. Weimer
Professor of Business Administration. Professor Wentworth is also
a director of Kimball International, Inc., Market Facts, Inc., Bank
One Bloomington NA. and KPT Inc.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has standing Audit, Compensation and Stock Option
and Executive Committees of the Board. Eight meetings of the Board
of Directors, two meetings of the Audit Committee of the Board and
two meetings of the Compensation and Stock Option Committee of the
Board were held during 1993. No meeting of the Executive Committee
of the Board was held during 1993. Of the aggregate of (i) the
total number of meetings of the Board and (ii) the total number of
meetings of all committees of the Board on which a particular
director served, all directors attended at least 90% of such
meetings except Mr. Puckett who attended 70%.
The functions of the Audit Committee are to recommend the
principal auditors of Lone Star, to consult with the principal
auditors with regard to the plan of audit, to review the report of
audit and the accompanying management letter, to consult with the
principal auditors with regard to the adequacy of internal
controls, and to consult with Lone Star's internal auditors on the
above matters.
The functions of the Compensation and Stock Option Committee
are to approve compensation arrangements for senior management and
to approve and recommend to the Board of Directors the adoption of
any compensation plans in which officers and directors are eligible
to participate, and to grant stock options or other benefits under
any such plans.
The Executive Committee is empowered to exercise all of the
authority of the Board of Directors, except that it does not have
the power to rescind any action previously taken by the Board of
Directors or to take certain actions enumerated in the Company's
By-Laws (such as amend the Certificate of Incorporation or adopt an
agreement of merger or consolidation).
Lone Star has no nominating committee of the Board of
Directors or committee of the Board performing a similar function.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table shows compensation received by the
Company's Chief Executive Officer and the four other most highly
paid executive officers for the three fiscal years ending December
31, 1993.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Annual Long Term Long Term Long Term
Compensation Compensation Compensation Compensation Compensation
Awards Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name Annual Restricted Securities Other
and Compen- Stock Underlying LTIP Compen-
Principal sation Award(s) Options/ Payouts sation
Position Year Salary($) Bonus($) ($)(1) ($) SARs (#) ($) ($) (2)
David W. Wallace, 1993 $250,000 - - - - - 2,249
Chairman of the 1992 250,000 - - - - - 2,189
Board of Directors 1991 250,000 - * - 100,000 - *
and Chief Executive
Officer
William M. Troutman 1993 325,000 - - - - - 2,249
President and Chief 1992 325,000 - - - - - 2,189
Operating Officer 1991 325,000 - * - - - *
John J. Martin 1993 250,000 - - - - - 2,249
Senior Vice President1992 250,000 - - - - - 2,189
General Counsel and 1991 250,000 - * - - - *
Secretary
Roger J. Campbell 1993 170,000 - - - - - 2,249
Vice President-Cement1992 170,000 - - - - - 2,189
Operations 1991 170,000 - * - - - *
Pasquale P. Diccianni1993 165,000 - - - - - 2,249
Vice President-Cement1992 165,000 - 32,573 - - - 2,189
Sales and Aggregates 1991 165,000 - * - - - *
</TABLE>
(1) Perquisites and other personal benefits were less than 10% of
the total annual salary and bonus for 1992 and 1993 for each
of the named executive officers except for Mr. Diccianni in
whose case $18,782 was paid under an executive medical plan
in 1992.
(2) Contributions by the Company on behalf of the named executive
officers under the Savings Plan for Salaried Employees.
*Under the transition rules of the Securities and Exchange
Commission, no disclosure is required.
EMPLOYMENT AGREEMENTS AND PLANS
Mr. David W. Wallace has an employment agreement with the
Company pursuant to which he is employed as Chairman of the Board
of Directors and Chief Executive Officer at a salary of $250,000
per annum and is eligible for an annual bonus in the discretion
of the Compensation and Stock Option Committee of the Board of
Directors. Either party may terminate the Employment Agreement
upon six months notice to the other.
William M. Troutman and John J. Martin also have employment
agreements ("Agreements" or "Agreement") with the Company. Mr.
Troutman's Agreement is for two years from August 20, 1992 (the
"Initial Term") and Mr. Martin's Agreement is for two years from
May 18, 1992 (the "Initial Term"). Both Agreements continue
after the Initial Term until terminated by either party. In the
event that Lone Star terminates an Agreement, other than for
Cause (as defined therein), Lone Star is to make a severance
payment in an amount equal to the employee's salary for the
period from the effective date of termination through the end of
the Initial Term, or one year after the effective date of
termination, whichever is greater. As compensation, Mr. Troutman
and Mr. Martin shall continue to receive their present annual
salaries of $325,000 and $250,000, respectively. They will also
be considered for a confirmation bonus at the conclusion of the
Chapter 11 proceeding. Mr. Troutman and Mr. Martin will
participate in any employee program established by Lone Star for
its officers on the same terms and conditions as the other
officers of Lone Star.
In April 1994 the Bankruptcy Court granted an order
respecting certain claims in the Reorganization Proceedings and
certain death, disability and retirement benefits of Messrs.
Troutman and Martin.
Mr. Troutman is entitled to receive annual retirement
benefits at age 65 equal to the greater of (i) 50% of his total
annual compensation, including bonuses, averaged over the five
years prior to the termination of his employment or (ii) the
benefit payable to him pursuant to Lone Star's Salaried Employees
Pension Plan, in either case capped at $225,000. A portion of
this payment is substantially covered by an annuity purchased by
Lone Star for Mr. Troutman in 1989. If Mr. Troutman ceases full-
time employment with the Company, between ages 55 and 62 he may
elect to receive his retirement benefits reduced by 5% for each
year before age 62. Thereafter there will be no reduction. If
Mr. Troutman is disabled at any time, the retirement benefits
shall commence and upon his death the retirement benefits will be
paid to his spouse until her death.
Messrs. Troutman and Martin, and their respective spouses,
are entitled to full payment for certain medical services and
expenses. These medical benefit payments are to be reduced by an
annual deductible of $1,000 prior to age 65 and $750 thereafter,
with a lifetime benefit for each person of $1,000,000. Lone Star
will also provide Messrs. Troutman and Martin retiree life
insurance equal to that presently in effect for Lone Star's
salaried retirees.
As authorized by the Compensation and Stock Option Committee
of the Board and in recognition of their significant
contributions to the Reorganization, the Company has applied to
the Bankruptcy Court for an order authorizing it to pay
confirmation bonuses of $750,000 to Mr. Wallace; $450,000 to Mr.
Troutman; $250,000 to Mr. Martin; $100,000 to Mr. Campbell; and
$300,000 to other officers and employees. This matter is
scheduled to be heard in June 1994 by the Bankruptcy Court.
Because of the rejection and/or termination of employment
agreements with officers during 1991 and to enable the Company to
retain and, if necessary, to attract key personnel, the
Bankruptcy Court entered an Order approving a separation pay and
retention award plan (the "Plan") pursuant to which the
Compensation and Stock Option Committee could designate certain
key executive personnel for separation pay and retention payment
awards. Nineteen (19) employees of the Company, including
Messrs. Campbell and Diccianni and certain other executive
officers but not including Messrs. Wallace, Troutman and Martin,
were designated as such key employees (the "Key Employees").
The Plan is comprised of two components. The first component
provides the Key Employees with a supplement to Lone Star's
Standard Severance Pay Program (described below) in the event of
involuntary termination of their employment (the "Separation
Payments"). The second component provided for payments to Key
Employees which were designed to encourage such employees to
remain with Lone Star throughout the Reorganization Proceedings
(the "Retention Award") and in view of the effectiveness of the
Plan of Reorganization such payments totaling $1,139,598.60 have
been made to Key Employees, including $85,000 for Mr. Campbell
and $82,500 for Mr. Diccianni, less applicable withholding. The
Separation Payments are equal to three months base salary and
would be provided to the Key Employees upon the occurrence of
either of the following events which may occur on or after the
effective date of the Plan of Reorganization and prior to
February 17, 1995, the first anniversary of the confirmation of
the Plan of Reorganization (i) discharge from employment for
reasons other than Cause (as defined in the Plan); or (ii)
termination of employment for Good Reason (as defined in the
Plan). A Separation Payment has been made by the Company to only
one Key Employee.
The Separation Payments would be in addition to and
concurrent with those provided under Lone Star's Standard
Severance Payment Plan in the event of involuntary termination of
salaried employees. Under the Standard Severance Payment Plan,
those employees with less than five years service would receive a
payment equal to four weeks salary. Those employees working for
five years or more are entitled to severance payments equal to
one week's salary for each year of service, up to a maximum of
fifty two weeks.
The Order of the Bankruptcy Court approving the Plan limited
Retention and Separation Payments to an aggregate of $2,400,000.
As part of its Plan of Reorganization, Lone Star and certain
of its subsidiaries transferred to Rosebud Holdings, Inc. and its
subsidiaries certain assets which have been determined in the
Plan of Reorganization to be Non-Core Assets. It is intended
that these Non-Core Assets be sold and that the proceeds
therefrom be used to pay interest and reduce the principal on
$138,118,000 of 10% Asset Proceeds Notes issued by Rosebud
Holdings, Inc. and its subsidiaries pursuant to the Plan of
Reorganization. Lone Star has guaranteed payment of up to
$28,000,000 of the Asset Proceeds Notes. Lone Star has entered
into a Management Services and Asset Disposition Agreement with
Rosebud Holdings, Inc. and its subsidiaries pursuant to the Plan
of Reorganization under which, among other things, it will make
management personnel available to market and seek to dispose of
the Non-Core Assets. In order to ensure that the values obtained
for the Non-Core Assets are maximized, Lone Star has established
the Lone Star Industries, Inc. Rosebud Incentive Plan ("Rosebud
Plan"). The Rosebud Plan was approved by the Bankruptcy Court in
the Confirmation Order. The Rosebud Plan provides that after
payment of the Asset Proceeds Notes in full, a pool of 20% of the
net proceeds from remaining Non-Core Asset dispositions, up to a
maximum of $5,000,000, will be available for distribution among
senior officers, senior management and other key employees of
Lone Star and its affiliates to be selected by the Compensation
and Stock Option Committee of Lone Star's Board of Directors.
That Committee will also determine the amounts of the incentive
awards. No individual may receive greater than 15% of the
aggregate funds awarded nor is an individual eligible to receive
an incentive payment unless he/she is employed by Lone Star or an
affiliate on the date(s) such payments are to be distributed.
Mr. David W. Wallace, Chairman of the Board of Lone Star, is not
eligible to receive incentive payments. As yet, no individuals
have been designated by the Compensation and Stock Option
Committee to participate in the Rosebud Plan.
DIRECTORS COMPENSATION
Directors who are not Lone Star employees are compensated for
their services at an annual rate of $20,000 plus $1,000 for each
Board and Board committee meeting attended, have rights pursuant
to certain indemnification agreements, and are provided with
$100,000 of life insurance. Such insurance continues for
directors who leave the board of directors after five or more
years of service as a director. In addition, directors who are
not Lone Star employees and who have five or more years of
service as a director are entitled to receive annual payments of
$15,000 for ten years, commencing on the earlier of the
director's death or his leaving the board of directors. Except
for Messrs. Troutman and Wallace, no director is an employee of
Lone Star. Mr. Wallace, having served more than five years as a
non-employee director, is entitled to receive $15,000 for ten
years upon his retirement from the Board. In 1988 Lone Star
deposited $1,500,000 into a bank trust fund to provide for the
payment of these annual fees and claims under the directors'
indemnification agreements however, the rights of directors to
such payments are not limited by the amount of money in this
fund. At December 31, 1993 the balance in this fund was
$1,386,748.
BENEFIT PLANS
The stock option plans of Lone Star in effect at the
commencement of the Reorganization Proceedings and all options
outstanding thereunder were cancelled pursuant to the Plan of
Reorganization. Two Stock Option Plans have been adopted by the
Board of Directors and will be presented to the stockholders for
approval at the 1994 annual meeting.
MANAGEMENT STOCK OPTION PLAN
The Board of Directors of Lone Star adopted the Lone Star
Management Stock Option Plan ("Management Plan") on March 10,
1994 subject to approval by the stockholders. This action was
taken in order to provide the officers and key management of Lone
Star following the Reorganization with an increased incentive to
make significant contributions to the performance and growth of
Lone Star and its subsidiaries, to increase stock ownership of
employees, and to attract and retain employees of exceptional
ability.
Administration. The Management Plan shall be administered by
the Compensation and Stock Option Committee of Lone Star's Board
of Directors. This Committee shall have authority in its
discretion to, among other things, (i) grant options under the
Management Plan, (ii) select employees to receive options, and
(iii) determine the number of options to be granted to each
employee.
Eligibility and Participation. The class of employees
eligible to receive stock options under the Management Plan are
officers and other key management employees, including those
named in the Summary Compensation Table, who shall be selected by
the Committee from those employees who, in the opinion of the
Committee, are in positions which enable them to make significant
contributions to the performance and growth of Lone Star and its
subsidiaries.
Determination of Option Price. The option price of a share
of common stock covered by each stock option shall be determined
by the Committee but shall not be less than the fair market value
of a share of common stock on the date of grant of such stock
option. The fair market value shall be the average of trading
prices of a share of common stock on the date of grant of the
stock option.
Stock Options. Subject to adjustment, the aggregate number
of shares of new Lone Star common stock which may be issued under
options and which shall be reserved for purposes of the
Management Plan shall be 700,000. Stock options to purchase full
shares of common stock may at the discretion of the Committee be
Incentive Stock Options (as defined in Section 422(A) of the
Internal Revenue Code ("Code")).
Option Term. The term within which each stock option is
exercisable shall be for such period as the committee may
determine, but such term shall not exceed a period of ten years
in the case of Incentive Stock Options and ten years and one day
in the case of Non-Incentive Stock Options from the date of grant
of an option.
Termination of Employment. During its term, an option may be
exercised both while the holder thereof continues to be an
employee and during the three month period following termination
of employment. Such three month period shall be one year in the
case of disability or of death.
DIRECTORS STOCK OPTION PLAN
The Board of Directors of Lone Star also adopted the Lone
Star Industries, Inc. Directors Stock Option Plan ("Directors
Plan") on March 10, 1994, subject to approval by the
stockholders. This action was taken in order to increase
ownership in Lone Star by outside directors of Lone Star whose
continued services are considered essential to Lone Star's growth
and progress, and to provide them with a further incentive to
continue as directors.
Participation in the Directors Plan. Each non-employee
member of the Board of Directors shall be a participant in the
Directors Plan. No person who is also an employee of Lone Star
or one of its subsidiaries shall be a participant except with
respect to any option received prior to becoming an employee.
Stock Options. Commencing in 1994 and continuing each year
thereafter, each director who was not an employee of Lone Star or
one of its subsidiaries during the six month period preceding the
date options are distributed shall receive, on the first business
day following the final adjournment of Lone Star's annual meeting
of stockholders (commencing with the first annual meeting of
stockholders held following the confirmation of the Plan of
Reorganization), an option to purchase 1,000 shares of Lone
Star's common stock, par value $1 per share, provided there is a
sufficient number of shares available; otherwise the number of
shares subject to such option shall be prorated among the
eligible directors. Subject to adjustment, the aggregate number
of shares of new Lone Star common stock which may be issued under
options and which shall be reserved for purposes of the Directors
Plan shall be 50,000.
Determination of Option Price. The option price of a share
of common stock covered by each stock option shall be the fair
market value of a share of Lone Star's common stock on the date
of the grant of such stock option. Such fair market value shall
be the average of the high and low prices of a share of common
stock in the New York Stock Exchange composite market
transactions on the date of the grant of the stock option. In no
event shall the purchase price be less than the par value of the
shares.
Option Term. Stock options shall be exercisable for ten (10)
years from the date of distribution.
EMPLOYEES STOCK PURCHASE PLAN
The Board of Directors of the Company adopted the Employees
Stock Purchase Plan ("Stock Purchase Plan") on March 10, 1994
subject to approval by the stockholders. The purpose of the
Stock Purchase Plan is to provide eligible employees with an
opportunity to become shareholders of the Company, and to assist
them in their long-range savings program. Participation in the
Stock Purchase Plan is voluntary.
All regular full-time salaried employees and eligible hourly
employees of the Company and of participating subsidiaries who
have attained majority are eligible to participate in the Stock
Purchase Plan. Under the Stock Purchase Plan, eligible employees
may elect to purchase shares of common stock of the Company by
means of a payroll deduction system. An employee may authorize
monthly payroll deductions in amounts not less than 2% and not
more than 6% of base pay. The Company contributes 25% of such
deduction and promptly forwards the total amount to a broker for
credit to the account of the employee maintained by the broker.
The broker then purchases shares of the Company's common stock
and upon such purchase the employee acquires immediate full
ownership of the shares purchased for the account of the
employee. The Company pays all brokerage commissions on
purchases of securities under the Stock Purchase Plan.
As of December 31, 1993, approximately 518 employees
including the executive officers listed in the Summary
Compensation Table were eligible to participate in the Stock
Purchase Plan.
OTHER BENEFIT PLANS
SALARIED EMPLOYEES PENSION PLAN
In 1984 Lone Star terminated its Retirement Plan for Salaried
Employees and established the Lone Star Industries, Inc. Salaried
Employees Pension Plan with the same type of benefits as the
terminated plan. All benefits earned under the provisions of the
terminated plan became fully vested and guaranteed annuity
contracts were purchased to cover such benefits.
The following table shows the estimated annual benefits
payable upon retirement to persons in specified compensation and
years of Credited Service classifications under the Salaried
Employees Pension Plan:
<TABLE>
<CAPTION>
Estimated Annual Pension Benefit Payable at Normal Retirement
Assuming the Following Years of Credited Service
<S> <C> <C> <C> <C> <C> <C>
Assumed Average
Annual Compensation 10 15 20 25 30 35
$ 125,000 $ 18,900 $ 27,800 $ 36,800 $ 45,800 $ 54,800 $ 63,700
150,000 23,000 33,900 44,900 55,900 66,800 77,800
175,000 27,100 40,000 53,000 65,900 78,900 91,800
200,000 31,200 46,100 61,100 76,000 90,900 105,800
250,000 39,400 58,300 77,200 96,100 115,000 133,900
300,000 47,700 70,500 93,400 116,300 139,100 162,000
350,000 55,900 82,700 109,600 136,400 163,200 190,100
400,000 64,100 94,900 125,700 156,500 187,300 218,100
</TABLE>
The compensation covered by the Plan includes base pay,
subject to ERISA limitations of $228,860 for 1992, $235,840 for
1993 and $150,000 for 1994. Base pay is shown in the second
column of the Summary Compensation Table.
The years of Credited Service for Roger J. Campbell, Pasquale
P. Diccianni, John J. Martin, William M. Troutman and David W.
Wallace are 8, 29, 14, 11 and 3, respectively.
The benefits shown in this table are payable for the lifetime
of the individuals. The benefits shown are payable without
reduction at age 62 or later, and are not subject to any
deductions or offsets. However, ERISA currently limits benefits
payable at age 65 to $115,641 for 1993 and $118,800 for 1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
On the effective date of the Plan of Reorganization,
April 14, 1994, all preferred stock and all old common stock of
Lone Star was cancelled, annulled and extinguished. Pursuant to
the Plan of Reorganization the holders of old common stock
receive (a) .032441 of a share of new common stock and (b)
.165413 of a warrant to purchase one share of new common stock
for each share of cancelled old common stock. In addition,
unsecured creditors of Lone Star receive a distribution of shares
of new common stock depending on the amount of their allowed
claims. As a result of these actions the following tables are
based on reports received by the Company from the distribution
agent and transfer agent indicating the ownership or right to
ownership of new common stock and warrants issued as a result of
the Plan of Reorganization as of April 14, 1994.
(a) The following table sets forth information concerning
the persons or group of persons who owned of record or, to the
Company's knowledge, have the right to acquire ownership of more
than 5% of the outstanding new common stock and warrants of Lone
Star.
<TABLE>
<S> <C> <C> <C> <C>
Name and Address of Number Number Percent of
Beneficial Owners(1) of Shares of Warrants Class (2)
Metropolitan Life Insur- 1,807,572 891,609 16.9%
ance Company and Metro-
politan Insurance and
Annuity Company
One Madison Avenue
New York, NY 10010
The Trust Company of the 1,897,514(3) 0 11.9%(3)
West and Affiliates
21st Floor
865 South Figueroa St.
Los Angeles, CA 90071
</TABLE>
(1) Scope Industries, 233 Wilshire Boulevard, Suite 790,
Santa Monica, CA 90401 reported in Schedule 13D filings
that it owned in excess of 5% of the outstanding old
common stock prior to its cancellation.
(2) The Percent of Class is based on the 12,000,000 shares
of new common stock and the 4,003,333 warrants to
purchase shares of new common stock being issued under
the Plan of Reorganization.
(3) Does not include 105,685 shares of new common stock to
be issued upon allowance of certain claims in the
Reorganization.
(b) The following table sets forth information pertaining to
Lone Star new common stock and warrants owned by the directors
and executive officers named in the Summary Compensation Table
and by all directors and executive officers of Lone Star as a
group as of April 14, 1994.
Except as noted, each such person or group has sole voting
and investment power as to shares and warrants owned:
Name
of Individual or Number of Number of Percent
Identity of Group Shares Warrants of Class (2)
James E. Bacon 16 83 *
Theodore F. Brophy 0 0 *
Allen E. Puckett 185 413 *
Robert G. Schwartz 0 0 *
William M. Troutman 105 538 *
David W. Wallace(4) 152 777 *
Jack R. Wentworth 6 33 *
Roger J. Campbell 167 0 *
Pasquale P. Diccianni 633 663 *
John J. Martin 492 418 *
All Directors and Executive
Officers as a group
(14 persons) 2,398 2,943 *
- - ---------------------
* Represents less than 1% of the outstanding shares of Lone Star common
stock and warrants to purchase Lone Star common stock.
(4) Does not include 16 shares and 83 warrants of Mr.
Wallace's wife as to which he disclaims beneficial
ownership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
As authorized by the stockholders at the 1988 Annual Meeting,
Lone Star has entered into indemnification agreements with Mr.
John J. Martin, an executive officer, and each of the directors
named in this Annual Report except Mr. Schwartz. The Company
intends to enter into an indemnification agreement with Mr.
Schwartz.
The provisions of each indemnification agreement provide for
indemnification to the fullest extent permitted by law. They
cover all amounts paid in connection with any threatened, pending
or completed action, suit or proceeding, or any inquiry or
investigation, whether civil, criminal, administrative or
otherwise (a "proceeding"), related to the fact that such
director or officer is or was a director, officer, employee,
agent or fiduciary of Lone Star or is or was serving at the
request of Lone Star in any capacity with another entity, or by
reason of anything done or not done by such director or officer
in any such capacity.
Indemnification would not, however, be available if a person
or body appointed by Lone Star's Board of Directors who is not a
party to the proceeding for which indemnification is sought and
who may be or consist of one or more members of the Board (or,
under certain circumstances discussed below, independent legal
counsel) determines that such indemnification is not permitted
under applicable law and such determination is not successfully
challenged before a court. A director's or officer's rights
under the indemnification agreement are not exclusive of any
other indemnity rights; however, the agreements prevent double
payment.
The indemnification agreements provide for the prompt
advancement of expenses incurred in connection with any
proceeding and obligate the director or officer to reimburse Lone
Star for amounts so advanced if it is subsequently determined
that the director or officer is not entitled to indemnification.
The indemnification agreements further provide that the director
or officer is entitled to indemnification for, and advancement
of, expenses incurred in any proceeding seeking to collect from
Lone Star an indemnity claim or advancement of expenses under the
indemnification agreements, Lone Star's By-Laws or otherwise, or
in seeking to recover under a directors' and officers' liability
insurance policy, whether or not the director or officer is
successful. Pursuant to the indemnification agreements all legal
actions brought against the director or officer by or in the
right of Lone Star must be brought within a period of two years
from the date of the accrual of such actions (or any shorter
period that would otherwise be applicable), after which period
any such cause of action will be extinguished.
After a change in control (as defined) of Lone Star not
approved by Lone Star's Board of Directors, all determinations to
be made by or on behalf of Lone Star regarding a director's or
officer's right to indemnification and to the advancement of
expenses are required to be made by independent legal counsel to
be selected by the director or officer and approved by the Board.
In the event of a potential change in control (as defined) of
Lone Star, the director or officer may require Lone Star to
establish a trust for such director's or officer's benefit and to
fund such trust in an amount sufficient to cover reasonably
anticipated costs in connection with any claims. See information
in Item 11 of this Report as to a fund which may be used to pay
indemnified claims by directors.
Pursuant to the Plan of Reorganization, Lone Star assumed, to
the extent such obligations have not been rejected prior to
Confirmation, all obligations relating to indemnification and
exculpation of Lone Star, and its subsidiaries and affiliates,
respective present or former directors, officers, employees,
fiduciaries, agents or controlling persons as arise under
applicable laws or as provided in any of (i) Lone Star's Restated
Certificate of Incorporation, (ii) Lone Star's by-laws, (iii) any
agreement with Lone Star or (iv) the certificate of
incorporation, by-laws or similar documents or agreements of any
of Lone Star's subsidiaries, all as in effect prior to or as of
the Effective Date, and in each case with respect to matters
occurring on or prior to the Effective Date.
Also pursuant to the Plan of Reorganization, all of Lone
Star's present and former officers and directors (collectively,
the "Released Parties") were discharged and released from any and
all claims asserted or assertable by any person arising in any
way out of such person's relationship with or work performed for
Lone Star on or prior to the Effective Date; except, however,
that (i) the foregoing discharge and release only applies to
those claims for which the Released Parties are entitled to
indemnification by Lone Star pursuant to applicable laws or as
provided in any of (a) Lone Star's Restated Certificate of
Incorporation, (b) Lone Star's by-laws, (c) any agreement with
Lone Star, or (d) the certificates of incorporation, by-laws or
similar documents or agreements of any of Lone Star's
subsidiaries, all as in effect prior to or as of the Effective
Date, and in each case with respect to matters occurring on or
prior to the Effective Date, and (ii) the discharge and release
does not apply to (a) any of Lone Star's present officers or
directors who were released prior to the Effective Date by order
of the bankruptcy court and as to such individuals, the terms of
their respective releases shall govern, (b) any of Lone Star's
present officers or directors who are the subject of a proceeding
to recover property or money commenced by Lone Star prior to the
Effective Date, or (c) any claims asserted or assertable by or
against any of Lone Star's present or former officers or
directors in the following litigations pending in the United
States District Court for the District of Connecticut: (1) Cohn
v. Lone Star Industries, Inc., et al., Civ. No. B-89-617 (JAC),
and (2) Garbarino, et ano. v. Stewart, et al., Civ. No. B-90-631
(JAC).
Mr. Robert G. Schwartz, a director of Lone Star, was formerly
Chairman of the Board of Directors, President and Chief Executive
Officer of the Metropolitan Life Insurance Company ("MetLife")
and continues as a director of MetLife. In connection with Lone
Star's reorganization, MetLife filed claims for approximately
$1,120,000 due to the rejection by Lone Star of a lease for
office space in Houston, Texas and, with an affiliate, for
approximately $50,000,000 outstanding principal amount of Lone
Star's defaulted 9.50% Promissory Notes due 1991. These claims
have been allowed and paid in accordance with the terms of the
Plan of Reorganization. MetLife was also the holder of 275,000
shares of Lone Star's $13.50 Cumulative Convertible Preferred
Stock which has been cancelled as of the effective date of the
Plan of Reorganization and for which shares of new common stock
and warrants are being issued to MetLife in accordance with the
terms of the Plan of Reorganization.
FORM 10-K/A-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________________ to ________________
Commission File Number 1-2333
LONE STAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE No. 13-0982660
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 First Stamford Place, P. O. Box 120014, Stamford, CT 06912-0014
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 203-969-8600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which each class registered
Common Stock, par value $1 New York Stock Exchange
per share
Common Stock Purchase Warrants New York Stock Exchange
10% Senior Notes Due 2003 New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
In December, 1990, registrant and certain of its wholly-owned subsidiaries each
filed voluntary petitions for relief under Chapter 11, Title 11 of the United
States Code with the United States Bankruptcy Court for the Southern District
of New York. The registrant's Plan of Reorganization became effective on
April 14, 1994 and on that date all of its old equity securities were cancelled
and new equity securities issued to holders of claims in the Bankruptcy and
holders of old equity securities.
Aggregate market value of voting stock held by non-affiliates of the registrant
at April 22, 1994: approximately $163,450,000.
The number of shares outstanding of each of the registrant's classes of common
stock as of April 22, 1994: new common stock, par value $1 per share -
9,616,793 shares
AMENDMENT NO. 1 TO ANNUAL REPORT
FOR 1993 ON FORM 10-K
The undersigned registrant hereby amends its Annual Report for
1993 on Form 10-K by the addition of Part III, Item 10. Directors and
Executive Officers of the Registrant, Item 11. Executive
Compensation, Item 12. Security Ownership of Certain Beneficial
Owners and Management, and Item 13. Certain Relationships and Related
Transactions, as follows:
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment to be signed on
its behalf by the undersigned thereunto duly authorized.
LONE STAR INDUSTRIES, INC.
(Registrant)
By: John J. Martin
John J. Martin
Dated: April 29, 1994 Senior Vice President,
General Counsel and
Secretary
