<PAGE>
As filed with the Securities and Exchange Commission on February , 2000
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------
LONE STAR TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 75-2085454
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Rhys J. Best
Chairman of the Board,
15660 North Dallas Parkway, Suite 500 Chief Executive Officer and President
Dallas, Texas 75248 Lone Star Technologies, Inc.
P.O. Box 803546 15660 North Dallas Parkway, Suite 500
Dallas, Texas 75380 Dallas, Texas 75248
(972) 386-3981 P.O. Box 803546
(Address, including zip code, and Dallas, Texas 75380
telephone number, including (972) 386-3981
area code, (Name, address, including zip code,
of registrant's principal and telephone number,
executive offices) including area code, of agent
for service)
-------------------
COPIES TO:
David E. Morrison
Jane E. Rast
Thompson & Knight L.L.P.
1700 Pacific Avenue, Suite 3300
Dallas, Texas 75201
(214) 969-1700 (phone)
(214) 969-1751 (fax)
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
-------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
<S> <C> <C> <C> <C>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------------
Common Stock, $1.00
par value per share . . . . . . . 760,237 shares $27.72 $21,073,769.64 $5,563.48
=================================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(c) under the Securities Act of 1933 solely
for the purpose of calculating the registration fee, based on the average
of the high and low sale prices of the Common Stock on the New York Stock
Exchange Composite Tape on January 31, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY ___, 2000
PROSPECTUS
760,237 SHARES
LONE STAR TECHNOLOGIES, INC.
COMMON STOCK
-------------------
This prospectus covers the offer and sale by certain stockholders of
Lone Star Technologies, Inc. of up to 760,237 shares of Lone Star common
stock.
The selling stockholders obtained their shares of our common stock in
a private placement as part of the consideration for our purchase of
substantially all of the assets of Fintube Limited Partnership, effective as
of January 1, 2000, as described under the heading "Selling Stockholders."
The selling stockholders may offer their Lone Star common stock
through public or private transactions, on or off the New York Stock Exchange
("NYSE"), at prevailing market prices, or at privately negotiated prices.
The selling stockholders can use broker-dealers to facilitate these
transactions. To the extent required, the specific shares to be sold, the
terms of the offering, including price, the names of any agent, dealer or
underwriter, and any applicable commission, discount or other compensation
with respect to a particular sale will be set forth in an accompanying
prospectus supplement.
Our common stock is listed on the NYSE under the symbol "LSS." On
February , 2000, the last reported sale price of our common stock on the
NYSE was $ per share.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE ___
OF THIS PROSPECTUS BEFORE PURCHASING ANY SHARES OF LONE STAR COMMON STOCK.
-------------------
The shares of Lone Star common stock offered or sold under this
prospectus have not been approved by the Securities and Exchange Commission
or any state securities commission, nor have these organizations determined
that this prospectus is accurate or complete. Any representation to the
contrary is a criminal offense.
-------------------
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY
BE CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BECOMES EFFECTIVE. THIS
PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES NOR A
SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE
THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is , 2000.
<PAGE>
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
About This Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Where You Can Find More Information. . . . . . . . . . . . . . . . . . . . . .2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Cautionary Statement Regarding Forward-Looking Statements. . . . . . . . . . 10
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The Fintube Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Description of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with
the SEC. This prospectus provides you with a general description of the
securities being offered. You should read this prospectus together with
additional information described below under the heading "Where You Can Find
More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at the SEC's headquarters at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
SEC's regional offices at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and at 7 World Trade Center, Suite 1300,
New York, New York 10048. Our SEC filings are also available to the public
over the Internet at the SEC's web site at http://www.sec.gov. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference
rooms.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by
reference is an important part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d)
of the Securities Exchange Act of 1934 until all of the securities are sold.
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2
<PAGE>
- -------------------------------------------------------------------------------
- Annual Report on Form 10-K, as amended by Amendment No. 1 to Form 10-K,
for the year ended December 31, 1998.
- Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999.
- Current Report on Form 8-K filed November 22, 1999 (date of event
November 16, 1999).
- Current Report on Form 8-K filed January 18, 2000 (date of event January
3, 2000) and the amendment to the Form 8-K filed February 3, 2000. The
Form 8-K, as amended, includes audited financial statements of Fintube
Limited Partnership and unaudited pro forma financial statements of Lone
Star reflecting the acquisition by Lone Star of the Fintube assets.
- Proxy Statement dated March 23, 1999.
- Registration Statement on Form 8-A filed April 9, 1997 containing a
description of the Lone Star common stock.
You may request a copy of these filings at no cost by writing or
telephoning us at the following address:
Lone Star Technologies, Inc.
15660 North Dallas Parkway, Suite 500
Dallas, Texas 75248
P.O. Box 803546
Dallas, Texas 75380
Dallas: (972) 386-3981
United States: (800) 527-4615
------------------------
The terms "Lone Star," "we," "our" and "us" refer to Lone Star
Technologies, Inc. and its consolidated subsidiaries unless the context
suggests otherwise. The term "you" refers to a prospective investor.
------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you
with different information. You should not assume that the information
contained in this prospectus is accurate as of any date other than the date
on the front cover of this prospectus.
- -------------------------------------------------------------------------------
3
<PAGE>
RISK FACTORS
YOUR INVESTMENT IN THE COMMON STOCK INVOLVES CERTAIN RISKS. IN
ADDITION TO THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS
BEFORE DECIDING WHETHER AN INVESTMENT IN THE COMMON STOCK IS SUITABLE FOR YOU.
VOLATILITY OF THE OIL AND GAS MARKETS AFFECTS DEMAND FOR OUR PRINCIPAL
PRODUCTS.
The sale of oil country tubular goods, or "OCTG," and line pipe to the
oil and gas industry accounts for the largest source of the net sales of our
principal subsidiary, Lone Star Steel Company. Demand for these products
depends primarily upon the number of oil and gas wells being drilled in the
United States and the number of well completions, which are in turn primarily
dependent on oil and gas price expectations and realizations. Prices for oil
and gas are subject to significant fluctuations in response to relatively
minor changes in supply, market uncertainty and a variety of additional
factors which are beyond our control. These factors include:
- worldwide and domestic supplies of oil and natural gas;
- instability and volatility of oil prices and domestic and foreign
oil production levels;
- political instability or armed conflict in oil-producing regions;
- the price and level of imports of foreign products;
- the level of consumer and industrial demand;
- the price and availability of alternative fuels;
- the price and availability of imported steel and tubing;
- the availability of pipeline capacity;
- weather conditions;
- domestic and foreign governmental regulations and taxes; and
- the overall economic environment.
Oil and gas prices have historically been volatile, and we expect
those prices to continue to be volatile in the future. We cannot predict
future oil and gas price movements, and we cannot give you any assurances as
to the level of future demand for our products.
MARKET VOLATILITY ALSO AFFECTS DEMAND FOR OUR FINTUBE PRODUCTS
Our recently acquired Fintube Technologies, Inc. subsidiary produces
finned tubes and other products used in a variety of heat recovery
applications, including power generation, industrial plant processing and
petrochemical businesses. Demand for these products is subject to significant
fluctuations in response to a number of economic, market and other factors.
These factors include:
- the level of consumer and industrial demand for power generation;
- instability and volatility of oil prices and domestic and foreign
oil production levels, which factors can affect investment in
petrochemical plants;
- the price and level of imports of foreign products;
- worldwide and domestic supplies of natural gas, since construction
of new power generation and co-generation plants becomes a more
cost-effective alternative when natural gas prices are relatively
low;
- the price and availability of alternative fuels;
- the price and availability of imported and domestic steel;
- weather conditions;
- domestic and foreign governmental regulations and taxes; and
- the overall economic environment.
We cannot predict future economic and market movements, and we cannot
give you any assurances as to the level of future demand for our Fintube
products.
4
<PAGE>
EXCESSIVE CAPACITY OF SOME OF OUR PRODUCTS COULD ADVERSELY AFFECT OUR
SALES.
Industry-wide inventory levels of tubular goods for the oil and gas
industry can vary significantly from period to period and can have a direct
effect on the demand for new production of those products. As a result, our
OCTG sales and results of operations may vary significantly from period to
period. We cannot assure you that OCTG inventories will not become excessive,
which could have a material adverse effect on price levels and the quantity
of OCTG and line pipe products sold by us. Domestic and foreign manufacturers
of tubular goods for the oil and gas industry suffer from excess capacity,
which has resulted in intense competition and depressed prices for OCTG and
line pipe. If domestic drilling activity were to increase, we cannot assure
you that excess domestic capacity would be substantially absorbed since
foreign producers of OCTG and line pipe may increase their exports to the
United States market.
The level of imports of OCTG and line pipe is affected by:
- the relative value of the United States dollar;
- overall world demand for OCTG and line pipe;
- the competitiveness of domestic producers;
- the purchasing pattern of distributors and end-users; and
- domestic and foreign trade policy.
OUR INDUSTRY IS CYCLICAL AND SENSITIVE TO ECONOMIC DOWNTURNS, WHICH
COULD CAUSE OUR REVENUES TO DECREASE.
The demand for the OCTG products of our Lone Star Steel subsidiary is
cyclical in nature and dependent on oil and gas drilling activity,
industry-wide inventory levels and general economic conditions, as noted
above. The demand for our specialty tubing products, flat rolled steel and
other products is also cyclical in nature and is sensitive to general
economic conditions. Future economic downturns may adversely affect us.
Through our Lone Star Steel specialty tubing business, we manufacture
and sell high quality steel tubing used by our customers in the manufacture
of such products as automotive stabilizer bars, hydraulic cylinders and
cranes. The demand for these products and, in turn, for our specialty
tubing, is cyclical and dependent on the general economy, the automotive and
construction industries and other factors affecting domestic goods activity.
We cannot assure you that our specialty tubing inventories will not become
excessive, which could have a material adverse effect on price levels and the
quantity of specialty tubing products sold by us.
Our new subsidiary, Fintube Technologies, Inc., manufactures and sells
steel tubing with fins or studs used in a variety of heat transfer
applications, including those in municipal power plants. Our Fintube business
is therefore dependent on, among other factors, power plant construction, the
cost of alternative fuels for power generation and other factors. To a lesser
extent, the Fintube business is also dependent on industrial plant processing
and petrochemical plant construction. This construction activity and the
corresponding demand for our Fintube products are also related to oil and
natural gas prices and are therefore subject to the volatility of the oil and
gas market.
WE FACE SIGNIFICANT FOREIGN AND DOMESTIC COMPETITION IN OUR OCTG AND
FINTUBE BUSINESSES, WHICH COULD INCREASE AND HARM OUR BUSINESS,
PARTICULARLY IN THE CASE OF OCTG IF THE U.S. GOVERNMENT EASES CERTAIN
IMPORT TRADE RESTRICTIONS.
Our Lone Star Steel and Fintube Technologies subsidiaries compete with
foreign and domestic producers, many of which have substantially greater
assets and larger sales organizations than us. Our OCTG and line pipe
products are subject to competition from domestic and foreign integrated and
mini-mill producers. Our Fintube products face competition from both domestic
manufacturers and from Pacific Rim and other international producers. The
market for our products, particularly with respect to OCTG, line pipe and
finned tubes, is highly competitive. We believe that the principal competitive
factors affecting these products are availability, price, quality and service.
In the welded OCTG and line pipe market, we compete against certain
manufacturers that may be able to purchase or produce semi-finished steel,
hot rolled coils or scrap at a lower cost than we can. Our Lone Star Steel
5
<PAGE>
subsidiary satisfies its raw material requirements by purchasing
semi-finished steel and by using purchased and internally generated scrap to
make hot rolled coils in its melt shop and hot strip mill. Correspondingly,
our Fintube Technologies subsidiary must also compete with manufacturers that
may be able to purchase or produce hot rolled coils more cost-effectively
than our subsidiary can purchase them. We cannot assure you that we can
satisfy our subsidiaries' raw material requirements as cost-effectively as
our competitors. Moreover, by steel industry standards, the barriers to
entry into either the welded tubular market or the finned tube market with
respect to capital investment are low.
The domestic steel industry historically has faced significant
competition from foreign steel producers. Many foreign steel producers are
owned, controlled or subsidized by their governments and their decisions with
respect to production and sales may be influenced more by political and
economic policy considerations than by prevailing market conditions. The U.S.
government is currently imposing duties on the imports of various OCTG
products from certain foreign countries in response to antidumping and
countervailing duty cases filed by several U.S. steel companies. These
tariffs are limited to certain countries, are largely under appeal and are
subject to various reviews. Trade tariffs on OCTG from certain countries
became subject to sunset review beginning in May 1999. Trade tariffs on OCTG
from more significant importers will be subject to review in August 2000.
Under schedules proposed by the U.S. International Trade Commission,
decisions in cases should be made approximately one year after initiation.
We cannot predict the U.S. government's future actions regarding import
duties or other trade restrictions on imports of OCTG products or the impact
of such actions on our sales of OCTG products.
OUR FUTURE OPERATING RESULTS MAY FLUCTUATE, WHICH COULD RESULT IN A
LOWER PRICE FOR OUR COMMON STOCK.
We cannot assure you that we will be profitable in the future. We had
an operating loss in 1999 due to the low level of oil and gas drilling
activity that resulted from low oil and gas prices in the first half of the
year. We sustained operating losses from continuing operations in 1998 and in
1994, in each case principally as the result of a continued decline in oil
and gas drilling activity which reduced demand and prices for our OCTG
products. We had operating earnings from continuing operations in 1995, 1996
and 1997 when the levels of domestic drilling activity were higher. Our
recently acquired Fintube business has historically had fluctuating operating
results. Our future operating results may fluctuate significantly depending
upon a number of factors, including industry conditions and level of oil and
gas drilling activity, in the case of our Lone Star Steel subsidiary, and
continuing domestic and foreign demand for power generation, in the case of
our Fintube Technologies subsidiary.
WE HAVE SUBSTANTIAL CAPITAL REQUIREMENTS, AND WE MAY REQUIRE ADDITIONAL
CAPITAL IN THE FUTURE WHICH MIGHT NOT BE AVAILABLE TO US.
Both our Lone Star Steel subsidiary and our new Fintube Technologies
subsidiary operate in capital intensive businesses. Our Lone Star Steel
subsidiary has made, and we expect our Fintube Technologies subsidiary will
be required to make, significant capital expenditures each year both for the
recurring maintenance necessary to keep manufacturing facilities operational
and to comply with environmental and other legal requirements. As discussed
in the following two paragraphs, the respective borrowing capacities of us
and our Lone Star Steel and Fintube Technologies subsidiaries are
interrelated and substantially utilized.
In 1999 Lone Star Steel entered into a new credit facility providing a
$90 million revolving line of credit and a three-year $10 million term loan.
Under the revolving credit facility, Lone Star Steel can borrow an amount
based on a percentage of eligible accounts receivable and inventories,
reduced by outstanding letters of credit. In connection with our purchase
through our Fintube Technologies subsidiary of assets from Fintube Limited
Partnership, Lone Star Steel borrowed $20 million under this credit facility
to repay $20 million of its subordinated loan to Lone Star, Lone Star
guaranteed $20 million of Lone Star Steel's credit facility and Lone Star
used the loan repayment to fund a portion of the purchase price payable in
the Fintube acquisition. At January 3, 2000 borrowings by Lone Star Steel
totaled $50 million, including the term loan, with a remaining availability
of $41.7 million.
On January 3, 2000, our Fintube Technologies subsidiary entered into a
new senior credit facility providing a $20 million revolving line of credit
and a $39 million term loan used to pay part of the cash portion of the
purchase price in its acquisition of substantially all of the assets of
Fintube Limited Partnership. Under the revolving line of credit, Fintube
Technologies can borrow an amount based on a percentage of eligible accounts
receivable and
6
<PAGE>
eligible inventory, reduced by outstanding letters of credit. As of January
3, 2000, borrowings by our Fintube Technologies subsidiary totaled
approximately $46 million, including the term loan, with a remaining
availability, based on eligible accounts receivable and inventory on such
date, of approximately $6 million.
We believe our Lone Star Steel and Fintube Technologies subsidiaries
will have adequate borrowing capacity to satisfy working capital needs and
planned expenditures through 2000. However, if additional funds are
required, our subsidiaries might not be able to obtain additional financing
on reasonable terms or at all, since both of our operating subsidiaries are
highly leveraged and all of their respective assets are pledged to secure
their separate credit facilities. The revolving credit agreement of each of
our two subsidiaries restricts its ability to incur additional indebtedness
and includes various restrictive covenants, including requirements to
maintain cash flow and minimum net worth levels and certain other financial
ratios.
THE INTENSE COMPETITION FOR RAW MATERIALS AND THE VOLATILITY OF RAW
MATERIAL COSTS COULD ADVERSELY AFFECT OUR OPERATIONS.
We can use semi-finished steel, scrap steel, and steel coils in the
manufacture of our OCTG, line pipe and specialty tubing products, and steel
coils and wire rod in the manufacture of finned and studded tubes. Our Lone
Star Steel subsidiary currently uses semi-finished steel and steel coils for
most of our OCTG, line pipe and specialty tubing production needs and our
Fintube Technologies subsidiary uses steel coils and wire rod for most of its
products. The principal raw material for our internally-produced
semi-finished steel is steel scrap, which is internally generated from our
operations or can be purchased in the spot market. The price of scrap steel,
semi-finished steel, steel coils and wire rod is highly competitive and
subject to price volatility influenced by various factors beyond our control,
such as:
- supply and demand factors;
- freight costs; and
- speculation by scrap brokers.
During periods of declining steel prices, declines in steel prices may
not be as significant as declines in product prices and, likewise, a decline
in steel prices may cause a decline in selling prices for our products.
Although the availability of semi-finished steel and steel coils has not
constrained our Lone Star Steel operations historically (and, to our
knowledge, the availability of hot rolled coils and wire rod has not
constrained the operations of our recently acquired finned tube business), we
cannot predict whether it will do so in the future.
OUR ACQUISITION OF FINTUBE'S BUSINESS AND ANY OTHER ACQUISITIONS MIGHT
DISRUPT OUR BUSINESS IF OUR EXPECTATIONS ARE NOT MET OR IF WE ARE UNABLE
TO OPERATE THE ACQUIRED BUSINESS SUCCESSFULLY.
We presently intend to retain Fintube Limited Partnership's personnel
and to conduct its business in generally the same manner as such was
conducted prior to the acquisition, but we cannot assure you that we will be
successful in maintaining such continuity or that our plans regarding the
operation of the acquired Fintube business or our existing business will not
change. Any disruptions in personnel or operations could be compounded by
Lone Star's lack of familiarity with the finned tube business and could
result in quality problems, inefficiencies in production or dissatisfied or
lost customers. See "Fintube Acquisition" on page 12 of this prospectus for
more information about the Fintube acquisition and the Fintube business.
In addition, Lone Star may consider strategic acquisitions from time
to time. We must necessarily base any assessment of potential acquisitions
on inexact and incomplete information and assumptions with respect to
operations, profitability and other matters that may prove to be incorrect.
Lone Star cannot assure you that management of Lone Star would recognize the
risks and uncertainties associated with such an acquisition or that we
recognized all the risks and uncertainties in the Fintube acquisition.
7
<PAGE>
WE HAVE UNDERFUNDED PENSION PLANS, WHICH COULD RESULT IN CLAIMS AGAINST
OUR ASSETS.
Our three defined benefit pension plans for our Lone Star Steel
bargaining unit employees were underfunded by an aggregate of approximately
$29.7 million as of November 30, 1998 (as reflected in our December 31, 1998
financial statements) using an investment return assumption of 9% per annum
and a discount rate of 6.5% per annum. If the plans were terminated under
the distress termination provisions of the Employee Retirement Income
Security Act of 1974, as amended, or "ERISA," using the actuarial assumptions
specified by the Pension Benefit Guaranty Corporation, or "PBGC," the PBGC
would have claims against our assets for the amount necessary to satisfy the
plans' unfunded benefit liabilities under the PBGC assumptions (which amount
would likely be greater than the $29.7 million liability determined using the
assumptions described in the preceding sentence).
POTENTIAL CASUALTIES AND PRODUCT LIABILITY CLAIMS COULD HARM OUR
BUSINESS.
Our OCTG products are sold primarily for use in oil and gas drilling
activities, which are subject to inherent risks, including blowouts and
fires, that could result in death, personal injury, property damage,
pollution or loss of production. Any of these hazards and risks can result
in the loss of hydrocarbons, environmental pollution, personal injury claims
and damage to property. Correspondingly, defects in products made by our
Fintube subsidiary could result in death, personal injury, property damage,
pollution, damage to equipment and facilities or inefficient heat recovery.
If an event occurs that is not covered, or not fully covered, by insurance,
it could harm our financial condition and results of operations. We warrant
our OCTG products and our Fintube products to be free of certain defects. As
protection against such risks, we maintain insurance coverage against some,
but not all, potential losses, and we believe this insurance is adequate. We
cannot assure you that our insurance will be adequate or available to protect
us in the event of a claim or that the coverage will not be canceled or
otherwise terminated.
OUR SALES AND OPERATIONS OUTSIDE OF THE UNITED STATES INVOLVE CERTAIN
RISKS OF SALES DECREASES OR BUSINESS INTERRUPTIONS.
Lone Star Steel's direct foreign revenues as a percentage of total
revenues constituted approximately 8%, 9% and 9% of our total revenues for
the years 1998, 1997 and 1996, respectively. The success of our sales to
foreign markets depends on numerous factors, many of which are beyond our
control. Such factors include economic conditions in the foreign countries in
which we sell our products and services. Our international sales may also
expose us to certain risks inherent in doing business outside the United
States, including currency fluctuations, restrictions on the repatriation of
profits and assets, compliance with foreign laws and standards and political
risks.
Our entry into the finned tube business has increased our foreign
exposure, as our Fintube Technologies subsidiary maintains manufacturing
facilities in Quebec, Canada and Veracruz, Mexico. Before we acquired the
Fintube business, Fintube Limited Partnership had direct and indirect sales
relating to projects outside the United States of approximately $8.6 million,
$15.8 million and $24.3 million in 1998, 1997 and 1996, respectively. See
"Fintube Acquisition" on page 12 of this prospectus for more information
about the Fintube acquisition and the Fintube business.
VARIOUS GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL RISKS APPLICABLE TO
OUR BUSINESS MAY REQUIRE US TO TAKE ACTION WHICH WILL ADVERSELY AFFECT
OUR RESULTS OF OPERATIONS.
Our business is subject to United States and foreign federal, state,
provincial and local laws and regulations relating to manufacturing
operations, as well as safety matters. Although we believe we are in
substantial compliance with all applicable laws and regulations, legal
requirements are frequently changed and subject to interpretation, and we are
unable to predict the ultimate cost of compliance with these requirements or
their effect on our operations. We may be required to make significant
expenditures to comply with governmental laws and regulations.
Our operations are subject to extensive environmental regulations
imposed by United States and foreign federal, state, provincial and local
authorities with respect to air emissions, wastewater discharges, and the
generation, handling, storage, transportation, treatment, and disposal of
waste materials. The domestic steel industry, including Lone Star, has spent
substantial amounts to comply with these regulations. Although we believe
that we are generally in compliance with the various environmental
regulations applicable to our businesses,
8
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environmental laws and regulations change frequently, and the implementation
of new, or the modification of existing, laws or regulations could harm us.
We cannot be certain that existing environmental laws or regulations, as
currently interpreted or reinterpreted in the future, or future laws or
regulations will not harm our results of operations and financial condition.
WE HAVE NEVER PAID DIVIDENDS ON OUR COMMON STOCK.
We have not paid any dividends on our common stock since becoming a
publicly held corporation in 1985, and we do not anticipate paying dividends
on our common stock at any time in the foreseeable future.
VOLATILITY IN THE PRICE OF OUR COMMON STOCK COULD RESULT IN A LOWER
TRADING PRICE THAN YOU PAID.
The market price of our common stock may be adversely affected by
factors such as actual or anticipated fluctuations in Lone Star's operating
results, acquisition activity, the impact of international markets, changes
in financial estimates by securities analysts, general market conditions and
other factors. Broad market fluctuations may adversely affect the market
price of our common stock. Lone Star cannot assure you that the market price
of the common stock will not decline below the levels prevailing at the time
of this offering.
CERTAIN OF OUR SIGNIFICANT STOCKHOLDERS CONTROL A SUBSTANTIAL PORTION
OF THE OUTSTANDING COMMON STOCK.
Certain stockholders of Lone Star report their ownership of Lone Star
common stock as a group pursuant to Sections 13 and 16 of the Securities and
Exchange Act of 1934. Based on the most recent amendment to their Schedule
13D and a subsequent Form 4 filing, as of March 31, 1999, they collectively
owned 11,245,772 shares of our common stock, representing approximately
49.978% of our outstanding common stock as of such date, or 48.1% based on
the number of shares of our common stock outstanding on January 5, 2000.
Accordingly, these stockholders, as a group, will be able to significantly
influence the outcome of stockholder votes, including votes concerning the
election of directors, the adoption or amendment of provisions in our
certificate of incorporation or bylaws, and the approval of mergers and other
significant corporate transactions. Historically, this significant
stockholder group has been a passive investor in Lone Star and has generally
not affirmatively acted to control or impact our management. However, we
cannot assure you that such passive ownership will continue in the future.
The existence of these levels of ownership concentrated in a few persons
makes it less likely that any other holder of common stock will be able to
affect our management or direction. These factors may also have the effect of
delaying or preventing a change in our management or voting control or the
acquisition of Lone Star by a third party. In addition, this group's
ownership of approximately 48% of our common stock reduces the trading volume
in such stock from that which might otherwise exist.
CERTAIN PROVISIONS IN OUR CHARTER AND BYLAWS MAY AFFECT YOUR RIGHTS AS A
STOCKHOLDER AND LIMIT THE PRICE SOME INVESTORS MIGHT BE WILLING TO PAY
FOR OUR COMMON STOCK.
Certain provisions of our certificate of incorporation and bylaws may
make it more difficult for a third party to acquire Lone Star, or may
discourage acquisition bids for Lone Star and could limit the price that
certain investors might be willing to pay in the future for shares of our
common stock. For example, our Board of Directors has the authority to
issue up to 10,000,000 shares of preferred stock and to fix the rights,
preferences, privileges and restrictions of those shares without any further
vote or action by the stockholders. Our certificate of incorporation also
provides for a staggered board. We are also subject to provisions of the
Delaware General Corporation Law and provisions in our certificate of
incorporation that may make some business combinations more difficult. See
"Description of Capital Stock--Delaware Law and Charter and Bylaw Provisions,
Anti-Takeover Effects" for more information about these types of charter and
bylaws provisions and applicable Delaware law.
THE NUMBER OF SHARES OF OUR STOCK ELIGIBLE FOR FUTURE SALE MAY ADVERSELY
AFFECT THE PRICE OF COMMON STOCK.
As of January 5, 2000, Lone Star had a total of 23,359,110 shares of
common stock outstanding. Except for the 760,237 shares covered by this
prospectus, all of the shares of our common stock are freely tradeable
without restriction or registration under the Securities Act, except for
shares held by "affiliates" of Lone Star (as defined in Rule 144 under the
Securities Act of 1933). We issued all of the 760,237 shares which may be
offered or sold
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<PAGE>
under this prospectus in reliance on exemptions from the registration
requirements of the Securities Act, and those shares are "restricted"
securities under Rule 144 and may not be sold unless they are registered
under the Securities Act, sold in compliance with Rule 144, or sold in a
transaction which is exempt from registration. The registration statement of
which this prospectus is a part registers the resale of the shares.
As of December 31, 1999, Lone Star had outstanding options entitling
their holders to acquire an aggregate of 1,308,125 shares of our common
stock, of which options covering 563,125 shares were currently exercisable.
An aggregate of 1,267,900 shares of our common stock are reserved for
issuance upon the exercise of options that may be granted in the future under
our stock option plan.
The market price of our common stock could drop due to sales of a
large number of shares of our common stock or the perception that such sales
could occur. These factors could also make it more difficult to raise funds
through future offerings of common stock.
OUR OPERATIONS ARE SUBJECT TO VARIOUS COLLECTIVE BARGAINING AGREEMENTS.
Lone Star Steel has (i) a collective bargaining agreement expiring May
31, 2001 with the United Steelworkers of America, Local 4134, covering 1,023,
or substantially all, of Lone Star Steel's employees; (ii) a collective
bargaining agreement expiring July 31, 2000 with the same union covering 105,
or substantially all, of the employees at T&N Lone Star Warehouse Company, a
subsidiary of Lone Star Steel; and (iii) a collective bargaining agreement
expiring September 30, 2000 with the United Plant Guard Workers of America,
Local 258, covering 14 employees, which represent all or substantially all of
our guards. These agreements generally cover wages, health care benefits and
retirement plans, seniority, job classes and certain work rules. While we
believe our present labor relations to be good, there can be no assurance
that these collective bargaining agreements will be renewed upon expiration
or that new collective bargaining agreements on terms acceptable to us will
be established.
Fintube Technologies' subsidiaries have (i) a collective bargaining
agreement expiring December 31, 2000 with Syndicat des Travailleurs de
Biraghi (CSN) covering 21, or substantially all, of the employees in Quebec,
Canada and (ii) a collective bargaining agreement expiring December 31, 2000
with Sindicato de Trabajadores y Operadores en Talleres y Fabricas de
Maquinaria Industrial, Similares y Conexos de la Region de Veracruz, Ver.
(F.O.E.V.) covering 18, or substantially all, of the employees in Veracruz,
Mexico.
POTENTIAL PROBLEMS RELATED TO THE YEAR 2000 MAY ADVERSELY AFFECT OUR
BUSINESS.
As of the date of this prospectus, we have not experienced any
significant year 2000 problems with our internal systems or equipment, nor
have we detected any significant year 2000 problems affecting our customers
or suppliers. While we believe that our systems are year 2000 compliant, our
business could be adversely affected if any of the systems on which we depend
to conduct our operations are not in fact Year 2000 compliant. In particular,
in December 1999 our Fintube Technologies subsidiary completed installation
of some replacement software systems. While we believe these systems are
year 2000 compliant, there has been a relatively short period of time to use
and test these systems for year 2000 compliance or any software conversion
problems. We also cannot reasonably estimate the potential impact on our
financial condition and operations if key third parties including, among
others, suppliers, contractors, financial institutions, customers and
governments did not become Year 2000 compliant on a timely basis. We cannot
assure you that those with whom we conduct business were successful in
implementing timely solutions.
Any failure by us to address our Year 2000 compliance issues
successfully, or of our suppliers, customers and other third parties with
which we conduct business to address their Year 2000 issues successfully,
could have a harmful effect on our business, financial position and results
of operations.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this document and in the
documents referred to in this document which are subject to risks and
uncertainties. These forward-looking statements include statements regarding
our financial position, business strategy and other plans and objectives for
future operations and any other
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<PAGE>
statements which are not historical facts. Although we believe that the
expectations reflected in these forward-looking statements are reasonable, we
cannot assure you that the actual results or developments we anticipate will
be realized or, even if substantially realized, that they will have the
expected effects on our business or operations. Among the factors that could
cause actual results to differ materially from our expectations are the
following:
- industry conditions;
- competition;
- our ability to successfully manage the Fintube business;
- general economic conditions;
- government regulations; and
- other factors disclosed under "Risk Factors" and elsewhere in this
prospectus.
These factors expressly qualify all subsequent oral and written
forward-looking statements attributable to us or persons acting on our
behalf. Except for our ongoing obligations to disclose material information
as required by the federal securities laws, we do not have any intention or
obligation to update forward-looking statements after we distribute this
document.
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THE COMPANY
Lone Star Technologies, Inc. is a management and holding company that
currently has two principal operating subsidiaries, Lone Star Steel Company
and Fintube Technologies, Inc. Lone Star Steel is a manufacturer and global
marketer of tubular goods and line pipe for the oil and gas industry and
specialty tubing products for other industrial applications. Our Lone Star
Steel subsidiary also manufactures flat rolled steel, markets various tubular
products for third parties and offers other customer services. Through our
Fintube Technologies subsidiary, we design and produce finned and studded
tubes and other products which are used in a variety of heat recovery
applications.
Lone Star Technologies, Inc. was incorporated in Delaware in 1986 to
serve as the holding company of Lone Star Steel. Lone Star acquired Fintube
Technologies effective as of January 1, 2000.
FINTUBE ACQUISITION
GENERAL
In November 1999, we and our newly-formed and wholly-owned subsidiary
Fintube Technologies, Inc. executed an asset purchase agreement for the
acquisition by our new subsidiary of substantially all of the assets of
Fintube Limited Partnership and its subsidiaries. We closed the purchase as
of January 1, 2000 for a base purchase price of $82 million plus a $2.5
million adjustment for working capital. The purchase price adjustments were
estimated prior to the closing and are expected to be adjusted on an actual,
post-closing basis by approximately March 31, 2000. We paid $20 million of
the purchase price through the issuance of 760,237 shares of Lone Star common
stock directly to the selling stockholders. We are registering the resale of
these shares pursuant to a stock registration agreement entered into at the
closing.
Lone Star's acquisition subsidiary directly or indirectly acquired
substantially all of the assets of Fintube Limited Partnership and its
subsidiaries, including the stock of the partnership's Mexican subsidiary.
The partnership retained certain promissory notes receivable from its
managerial employees in the approximate aggregate amount of $2 million.
While Lone Star's acquisition subsidiary assumed substantially all of the
contractual obligations of Fintube Limited Partnership and its subsidiaries,
certain liabilities were not assumed. The excluded liabilities included,
among other things, the partnership's's bank debt ($17.2 million as of
January 3, 2000); Fintube's litigation; brokers', accounting and legal fees
and expenses incurred by Fintube in connection with the sale of its assets to
Lone Star; and various non-assumed pre-closing liabilities. In the following
discussion and in the "Risk Factors" section of this prospectus, we refer to
the assets acquired by Lone Star's acquisition subsidiary from Fintube
Limited Partnership and its subsidiaries, and the related operations, as "the
Fintube business."
Lone Star, after giving pro forma effect to the Fintube acquisition,
would have had $493.6 million of net revenues and $25.7 million of operating
loss for the 12 months ended December 31, 1998 and $301.1 million in net
revenues and $3.7 million of operating income for the nine months ended
September 30, 1999. We have filed audited historical financial statements
of Fintube and unaudited pro forma condensed consolidated financial
statements of Lone Star reflecting the Fintube acquisition with the SEC in a
Current Report on Form 8-K. For a more complete understanding of the
financial information relating to the Fintube business, you should read those
financial statements. See "Where You Can Find More Information" on page 2.
FINTUBE BUSINESS
The Fintube business involves the production of finned tubes and other
products which are used in a variety of heat recovery applications. In
addition to heat recovery product operations, the Fintube business includes
storage and processing of steel coils for other steel manufacturers. The
Fintube business also includes the rights to a manufacturing process for
flattening steel rod into narrow bands of thin-gauge steel.
The Fintube business is vertically integrated, with four non-finned
tube operating divisions that support the Fintube business' core finned tube
manufacturing business. Three of the four divisions manufacture components
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such as boiler tubes and thin-gauge steel fin strip used in the manufacture
of finned tubes. The fourth division manufactures economizers, whose primary
component is finned tubes manufactured as part of the Fintube business.
HEAT RECOVERY PRODUCTS. The heat recovery products designed and
produced in the Fintube business primarily serve electricity generation,
petrochemical production and food processing industries. Finned tubes are
steel tubes with various types of fins or studs welded to the outside surface
so that the recovery of heat from fluids flowing on either side of the tube
is maximized. The primary uses of the Fintube business' finned tubes are in
power generation facilities and petrochemical plants.
In addition to finned tubes, the Fintube business includes the design
and manufacture of other products relating to large-scale applied heat
recovery technology, such as boiler tubing and economizers. The Fintube
business also includes the manufacture and sale of X-ID tubing, which has
specific patterns on the interior surface of the tube. Economizers
manufactured in the Fintube business are bundles of finned tubes arranged to
maximize the amount of heat captured from boiler exhaust gases. Boiler
economizers are normally used on large boilers, such as for office buildings,
hospitals, universities, prisons, breweries and food processing plants.
STEEL PRODUCTS AND PROCESSING SERVICES. The Fintube business'
vertical integration has resulted in the development of a stand-alone steel
coil slitting business and invention of a new manufacturing process. The
Fintube business includes a steel coil storage and processing business, where
Fintube acts as a toll slitting agent for major steel customers such as AK
Steel, Ispat and U.S. Steel and also provides steel storage and custom
cutting. The steel coil division ships its processed steel on a just-in-time
basis to outside customers and to other divisions of the Fintube business.
Another component of the Fintube business is the ownership of the rights to a
patented cold-rolling process for flattening steel rod into narrow bands of
thin-gauge steel.
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<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders,
the aggregate number of shares owned by each selling stockholder as of
January 6, 2000, the percentage of our outstanding common stock owned by each
such selling stockholder as of such date, the aggregate number of shares to
be offered by each selling stockholder, the aggregate number of shares to be
owned by each selling stockholder after the sale of all shares in this
offering and the percentage of our outstanding common stock that will be
owned by each such selling stockholder thereafter, in each case assuming the
offering and sale of all shares covered by this prospectus and no additional
issuances to or purchases by these selling stockholders of our common stock
or other issuances of our common stock.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED IF ALL SHARES
SHARES BENEFICIALLY OWNED BEING REGISTERED
PRIOR TO OFFERING HEREUNDER ARE SOLD (2)
------------------------- NUMBER OF ----------------------
SHARES BEING
NUMBER OF PERCENT REGISTERED NUMBER OF PERCENT
SELLING STOCKHOLDERS SHARES (1) FOR SALE SHARES (1)
- ------------------------- ---------- ------- ------------ --------- --------
<S> <C> <C> <C> <C> <C>
H. Michael Ashford 59 * 59 0 0%
Charles A. Ballard 297 * 297 0 0%
John P. Birkelund 1,978 * 1,978 0 0%
William S. Brenizer 197 * 197 0 0%
John Connor Briggs 3,385 * 3,385 0 0%
Raymond M. Briggs 95,644 * 95,644 0 0%
Travis J. Briggs 3,385 * 3,385 0 0%
William Clinton Briggs 3,385 * 3,385 0 0%
John G. Brim 989 * 989 0 0%
Brown University Third Century Fund 9,896 * 9,896 0 0%
Larry J. Bump 95,644 * 95,644 0 0%
Tina L. Bump 3,385 * 3,385 0 0%
Thomas J. Butchko 2,711 * 2,711 0 0%
Patrick S. Ciampi 19 * 19 0 0%
Concord Partners, L.P. 39,586 * 39,586 0 0%
Concord Partners II, L.P. 27,710 * 27,710 0 0%
Concord Partners Japan Limited 1,979 * 1,979 0 0%
David Crowell 4,167 * 4,167 0 0%
Douglas A. Darby 15 * 15 0 0%
Sally A. Dean 59 * 59 0 0%
Marion Deaton 3,614 * 3,614 0 0%
Charles P. Durkin 494 * 494 0 0%
Tricia L. Eichler 3,385 * 3,385 0 0%
Peter M. Flanigan 890 * 890 0 0%
Terry L. Gilbert 3,385 * 3,385 0 0%
Gerald Greenwald 1,187 * 1,187 0 0%
Robert A. Hanson 1,563 * 1,563 0 0%
John H. F. Haskell, Jr. 1,978 * 1,978 0 0%
Franklin W. Hobbs 593 * 593 0 0%
Tracy Ryan Jerd "S" Trust 3,385 * 3,385 0 0%
Craig A.T. Jones 297 * 297 0 0%
Kurt Kalm 98 * 98 0 0%
W. Howard Keenan, Jr. 445 * 445 0 0%
Michel Labelle 2,683 * 2,083 600 *
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<PAGE>
SHARES BENEFICIALLY
OWNED IF ALL SHARES
SHARES BENEFICIALLY OWNED BEING REGISTERED
PRIOR TO OFFERING HEREUNDER ARE SOLD (2)
------------------------- NUMBER OF ----------------------
SHARES BEING
NUMBER OF PERCENT REGISTERED NUMBER OF PERCENT
SELLING STOCKHOLDERS SHARES (1) FOR SALE SHARES (1)
- ------------------------- ---------- ------- ------------ --------- --------
<S> <C> <C> <C> <C> <C>
Bryan H. Lawrence 1,583 * 1,583 0 0%
Lexington Partners III, L.P. 1,385 * 1,385 0 0%
Emmett D. Mantle 1,563 * 1,563 0 0%
Hartman Mitchell 2,083 * 2,083 0 0%
John H. Mullin, III 445 * 445 0 0%
John J. Murabito 119 * 119 0 0%
Jerry R. Nichols 95,644 * 95,644 0 0%
Kris Nichols Custodian for Justin
Nichols under the Oklahoma Uniform
Transfers to Minors Act 3,385 * 3,385 0 0%
Nancy Nichols 3,385 * 3,385 0 0%
David W. Niemiec 890 * 890 0 0%
Erin Nichols Peters 3,385 * 3,385 0 0%
Peggy Peters 4,167 * 4,167 0 0%
Robert A. Pilkington 593 * 593 0 0%
Thomas L. Piper, III 59 * 59 0 0%
Don R. Reid 780 * 780 0 0%
Bret E. Russell 297 * 297 0 0%
Andrew C. Ryan "S" Trust 3,385 * 3,385 0 0%
Jerry E. Ryan 95,644 * 95,644 0 0%
Sloane Renee Ryan "S" Trust 3,385 * 3,385 0 0%
Francois de Saints Phalle 1,978 * 1,978 0 0%
Larry Sims 12,499 * 12,499 0 0%
Stuart L. Sindell 88 * 88 0 0%
H. C. Bowen Smith 890 * 890 0 0%
Michael I. Somers 98 * 98 0 0%
Danforth W. Starr 297 * 297 0 0%
F. Davis Terry, Jr. 593 * 593 0 0%
Warburg Dillon Read LLC 317 * 317 0 0%
Lorenzo Weisman 494 * 494 0 0%
Chris Weierman 3,124 * 3,124 0 0%
Edward B. Whitney 989 * 989 0 0%
George A. Wiegers 1,484 * 1,484 0 0%
Gary Willis 1,807 * 1,807 0 0%
Richard C. Yancey 98 * 98 0 0%
Yorktown Energy Partners, L.P. 194,765 * 194,765 0 0%
Robert A. Young 593 * 593 0 0%
------- ------- --- ---
Total...................... 760,837 3.26% 760,237 600 *
</TABLE>
- -----------------------
* Less than 1%.
(1) Based on 23,359,110 shares of Lone Star common stock issued and
outstanding as of January 5, 2000.
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<PAGE>
(2) The shares may be offered from time to time by the selling stockholders.
The selling stockholders are not obligated to sell all or any portion of
their shares, nor are they obligated to sell any of their shares
immediately pursuant to this prospectus. The decision of any selling
stockholder to sell some or all of such stockholder's shares of our
common stock is dependent upon a variety of factors, including the price
of our common stock and such stockholder's personal financial
circumstances. Because the selling stockholders may sell all or some of
their shares, no estimate can be given as to the amount of common stock
actually to be offered for sale by a selling stockholder or as to the
amount of common stock that will be held by a selling stockholder upon
the termination of this offering.
The selling stockholders obtained their shares of our common stock in
a private placement as part of the consideration for our purchase as of
January 1, 2000 of substantially all of the assets of Fintube Limited
Partnership pursuant to an Asset Purchase Agreement dated November 16, 1999
among Lone Star, Fintube Technologies, Inc. (our wholly-owned subsidiary) and
Fintube Limited Partnership. We are registering the resale of these shares
pursuant to a stock registration agreement entered into as of January 1, 2000.
As part of our acquisition of the Fintube business, our Fintube
Technologies subsidiary entered into customary employment agreements with the
following officers, among others: David Crowell (Managing Director of Coil
Products), Marion Deaton (Managing Director of Engineered & Tubular
Products), Michel Labelle (Biraghi Division General Manager), Peggy Peters
(Vice President and Managing Director of Finning), Larry Sims (President and
Chief Executive Officer) and Gary Willis (Director of Fintool Technologies
and Business Development). We also entered into agreements implementing our
Employment Retention Policy with respect to each of these six persons, among
others, and we granted stock options to several employees, including these
six persons and Thomas J. Butchko, Don R. Reid and Jerry E. Ryan. Our
Fintube Technologies subsidiary also executed a consulting employment
agreement with Mr. Ryan. Raymond M. Briggs, Larry J. Bump, Jerry R. Nichols,
Jerry E. Ryan, W. Howard Keenan, Jr., Bryan H. Lawrence and Peter A. Leidel
executed noncompetition agreements with our Fintube Technologies subsidiary.
Messrs. Keenan, Lawrence and Leidel are Managing Members of Yorktown Partners
L.L.C., an affiliate of Yorktown Energy Partners, L.P. Finally, we entered
into an arrangement whereby we may utilize legal services provided by
Nichols, Wolfe, Stamper, Nally, Fallis & Robertson, Inc., a law firm of which
Mr. Nichols is a shareholder.
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PLAN OF DISTRIBUTION
The Lone Star common stock may be sold from time to time by the
selling stockholders, or by their donees or pledgees selling shares received
after the date of this prospectus, subject to certain restrictions, on any
stock exchange or automated interdealer quotation system on which the shares
are listed, in privately negotiated transactions or otherwise. The shares
may be sold at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at fixed prices that may be changed
or at prices otherwise negotiated. The common stock may be sold by one or
more of the following methods, without limitation:
- block trades in which the broker or dealer so engaged will attempt
to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by the
broker or dealer for its own account pursuant to this prospectus;
- an exchange distribution in accordance with the rules of any stock
exchange on which the shares are listed;
- ordinary brokerage transactions and transactions in which the
broker solicits purchases;
- privately negotiated transactions;
- short sales;
- through the writing of options on the shares, whether or not the
options are listed on an options exchange;
- through the distribution of the shares by any selling stockholder
to its partners, members or stockholders;
- one or more underwritten offerings on a firm commitment or best
efforts basis; and
- any combination of any of these methods of sale.
The selling stockholders may also transfer the shares by gift. We do
not know of any arrangements by the selling stockholders for the sale of any
of the shares.
The selling stockholders may effect such transactions by selling the
common stock directly to purchasers or through or to brokers or dealers, and
such brokers or dealers may receive compensation in the form of discounts,
concessions or commissions from the selling stockholders, and/or from the
purchasers of the common stock for whom they may act as agent or to whom they
may sell as principal, or both (which compensation as to a particular broker
or dealer might be in excess of customary commissions). Any brokers and
dealers engaged by the selling stockholders may arrange for other brokers or
dealers to participate in effecting sales of the shares. These brokers or
dealers may act as principals, or as an agent of a selling stockholder.
Broker-dealers may agree with a selling stockholder to sell a specified
number of the shares at a stipulated price per share. If the broker-dealer
is unable to sell shares acting as agent for a selling stockholder, it may
purchase as principal any unsold shares at the stipulated price.
Broker-dealers who acquire shares as principals may thereafter resell the
shares from time to time in transactions on any stock exchange or automated
interdealer quotation system on which the shares are then listed, at prices
and on terms then prevailing at the time of sale, at prices related to the
then-current market price or in negotiated transactions. Broker-dealers may
use block transactions and sales to and through broker-dealers, including
transactions of the nature described above.
Upon our being notified by a selling stockholder that any material
arrangement has been entered into with a
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<PAGE>
broker-dealer for the sale of any of the common stock offered hereby through
a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, to the extent required a
prospectus supplement will be filed that will set forth the specific shares
to be sold and the terms of the offering, including the name or names of any
underwriters or dealer-agents, any discounts, commissions and other items
constituting compensation from the selling stockholders and any discounts,
commission or concessions allowed or reallowed or paid to dealers. In
addition, upon our being notified that a donee or pledgee intends to sell
more than 500 shares, if required a supplement to this prospectus will be
filed.
Any of the shares covered by this prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act of 1933 may be sold under that
rule rather than pursuant to this prospectus.
We cannot assure you that the selling stockholders will sell any or all
of the common stock offered by them under this prospectus.
A selling stockholder may enter into hedging transactions with
broker-dealers, and the broker-dealers may engage in short sales of the
shares in the course of hedging the positions they assume with that selling
stockholder, including, without limitation, in connection with distributions
of the shares by those broker-dealers. A selling stockholder may enter into
option or other transactions with broker-dealers that involve the delivery of
the shares offered hereby to the broker-dealers, who may then resell or
otherwise transfer those shares pursuant to this prospectus (as supplemented
or amended to reflect such transaction). In addition, a selling stockholder
may, from time to time, sell the shares short, and, in those instances, this
prospectus may be delivered in connection with the short sales and the shares
offered under this prospectus may be used to cover short sales. A selling
stockholder may also pledge the shares offered hereby to a broker-dealer or
other financial institution, and, upon a default, the broker-dealer or other
financial institution may effect sales of the pledged shares pursuant to this
prospectus (if required, as supplemented or amended to reflect such
transaction).
We will pay all fees and expenses incident to the preparation and filing
of the registration statement and this prospectus, including legal and
accounting fees and expenses and any printing expenses, except for transfer
taxes payable on the sale of the common stock and the fees and expenses of
selling stockholders' counsel and accountants. All underwriting discounts and
any selling commissions payable with respect to sales of the common stock will
be paid by the selling stockholders. We will receive no part of the proceeds
from sales of the common stock. We intend to keep the registration statement
effective until the earlier of the date that is 240 days after the effective
date of the registration statement (subject to extension under certain
circumstances) or the date on which the distribution of all the securities
covered by the registration statement is completed.
The selling stockholders and any broker-dealer acting in connection with
the sale of the common stock offered hereby may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, in which event any discounts,
concessions or commissions received by them, which are not expected to exceed
those customary in the types of transactions involved, or any profit on resales
of the common stock by them, may be deemed to be underwriting commissions or
discounts under the Securities Act of 1933. We have advised the selling
stockholders that the anti-manipulation rules of Regulation M promulgated by the
SEC may apply to their sales in the market and have informed them that they will
be subject to the prospectus delivery requirements of the Securities Act of 1933
which may include delivery through the facilities of the New York Stock Exchange
pursuant to Rule 153 under the Securities Act of 1933. The selling stockholders
may agree to indemnify any agent, broker or dealer that participates in
transactions involving sales of our common stock against certain liabilities,
including liabilities under the Securities Act of 1933. We have agreed to
indemnify the selling stockholders against certain liabilities arising under the
Securities Act of 1933 from sales of our common stock.
USE OF PROCEEDS
All net proceeds from the sale of the shares of Lone Star common stock
will go to the selling stockholders. Accordingly, we will not receive any
proceeds from sales of the Lone Star shares.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 80 million shares of common
stock, $1.00 par value, and 10 million shares of preferred stock, $1.00 par
value.
The following summary of the terms and provisions of our capital stock
does not purport to be complete, and we refer you to the certificate of
incorporation and bylaws, which we filed as exhibits to the registration
statement of which this prospectus is a part, and applicable law.
COMMON STOCK
Lone Star is authorized to issue up to 80 million shares of common stock,
par value $1.00 per share. The holders of our common stock are entitled to one
vote for each share held of record on all matters submitted to the stockholders.
The holders of our common stock are entitled to participate equally in
dividends, if any, declared by our Board of Directors out of legally available
funds, and in the distribution of assets in the event of liquidation. However,
the payment of any dividends and the distribution of assets to holders of our
common stock will be subject to any prior rights of outstanding shares of Lone
Star preferred stock. We have never paid cash dividends on our common stock. The
holders of our common stock have no preemptive or conversion rights, redemption
rights, or sinking fund provisions. Our common stock is not assessable.
PREFERRED STOCK
Lone Star is authorized to issue up to 10 million shares of preferred
stock. No shares of Lone Star preferred stock are issued or outstanding. Our
Board of Directors may establish, without stockholder approval, one or more
classes or series of Lone Star preferred stock having the number of shares,
designations, relative voting rights, dividend rates, liquidation and other
rights, preferences, and limitations that our Board of Directors may designate.
The issuance of Lone Star preferred stock could adversely affect the voting
power of holders of Lone Star common stock and restrict their rights to receive
payments upon our liquidation. It could also have the effect of delaying,
deferring or preventing a change in control of Lone Star. We have no present
intention to issue Lone Star preferred stock.
DELAWARE LAW AND CHARTER AND BYLAW PROVISIONS, ANTI-TAKEOVER EFFECTS
BOARD OF DIRECTORS
Our certificate of incorporation provides that our Board of Directors
will set the number of members of our board by resolution and that our Board of
Directors will be divided into three classes, each class to be as nearly equal
in number of directors as possible. In addition, under our certificate of
incorporation, directors may be removed only for cause by the affirmative vote
of 80% of the then-outstanding shares of capital stock of Lone Star entitled to
vote. Thus, the holder or holders of as little as one share more than 20% of
the voting power may veto the removal of any director. Our certificate of
incorporation also provides that vacancies on the Board will be filled by the
affirmative vote of a majority of the remaining directors, even if less than a
quorum, and that the newly elected director serves for the unexpired term of his
or her predecessor. The likely effect of the classified board and limitations
on the removal of directors and filling of vacancies is an increase in the time
required for the stockholders to change the composition of the Board of
Directors. These classification provisions are subject to the rights of holders
of preferred stock which may be established by the Board pursuant to our
certificate of incorporation in order to permit the holders of preferred stock
to elect directors under certain specified circumstances relating to the payment
of dividends by, and the liquidation of, Lone Star.
Our bylaws provide that nominations for the election of directors may be
made by the Board of Directors, by a proxy committee appointed by the Board or
by any stockholder entitled to vote in the election of directors. Under the
bylaws, stockholders intending to nominate director candidates for election must
give proper advance
19
<PAGE>
notice to the secretary of Lone Star. The chairman of any stockholder
meeting may refuse to acknowledge the nomination of any person not nominated
in compliance with the procedure established in the bylaws. Although this
does not give the Board of Directors any power to approve or disapprove
stockholder nominations for election of directors, it may have the effect of
precluding a contest for the election of directors if these procedures are
not followed.
STOCKHOLDER MEETINGS
Our certificate of incorporation provides that any action required or
permitted to be taken by the stockholders of Lone Star at an annual meeting or
special meeting of stockholders may not be taken by written consent. Our
certificate of incorporation further provides that special meetings of the
stockholders may be called only by the Chairman of the Board of Directors or by
a majority of the Board of Directors. The foregoing provisions could have the
effect of delaying until the next stockholders' meeting stockholder actions that
are favored by the holders of a majority of the outstanding voting securities of
Lone Star.
SPECIAL VOTE REQUIRED FOR CERTAIN BUSINESS COMBINATIONS
Lone Star is subject to the provisions of Section 203 of the Delaware
General Corporation Law and provisions in our certificate of incorporation which
relate to transactions with interested stockholders. Section 203 prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales having an aggregate market value
equal to 10% or more of either the aggregate market value of all the assets of
the corporation determined on a consolidated basis or the aggregate market value
of all the outstanding stock of the corporation and other transactions resulting
in a financial benefit to the interested stockholder. An "interested
stockholder" is generally a person who, together with affiliates and associates,
owns, or within the prior three years did own, 15% or more of the corporation's
outstanding voting stock.
Our certificate of incorporation contains additional provisions relating
to business combinations that supplement Section 203 and prohibit Lone Star from
engaging in a "business combination" with an "interested stockholder" for a
period of two years after the date of the transaction in which the person became
an interested stockholder, unless the business combination is approved in a
prescribed manner. A "business combination" includes:
- mergers;
- assets sales and other transactions having an aggregate fair
market value of $100 million dollars or more;
- the adoption of any plan or proposal for the liquidation or
dissolution of Lone Star proposed by any "interested stockholder"
or an affiliate of any "interested stockholder"; and
- any reclassification of securities or other transaction that has
the effect of increasing the proportionate share of the
outstanding shares of any class of equity or convertible
securities of Lone Star or any subsidiary which is directly or
indirectly owned by any "interested stockholder" or any affiliate
of any "interested stockholder".
An "interested stockholder" is a person who, together with affiliates and
associates, owns, or within the prior two years did own, 20% or more of the
corporation's outstanding voting stock or who is an assignee of any shares which
were at any time within the two-year period immediately prior to the date in
question beneficially owned by any "interested stockholder", if the assignment
did not involve a public offering within the meaning of the Securities Act of
1933.
AMENDING OUR CERTIFICATE OF INCORPORATION AND BYLAWS
20
<PAGE>
The Delaware General Corporation Law provides generally that the
affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or bylaws unless
the certificate of incorporation or bylaws, as the case may be, requires a
greater percentage. The majority stockholder vote would be in addition to any
separate class vote that might be required by the terms of any series of
preferred stock that might be outstanding at the time any amendments are
submitted to stockholders. Many of the provisions in our certificate of
incorporation require the affirmative vote of 80% or more of the
then-outstanding shares of capital stock of Lone Star for their amendment.
LEGAL MATTERS
The legality of the common stock offered hereby will be passed upon for
us by Thompson & Knight L.L.P., Dallas, Texas.
EXPERTS
The audited consolidated financial statements and schedules of Lone Star
and Fintube incorporated by reference or included, respectively, in this
prospectus and elsewhere in the registration statement to the extent and for the
periods indicated in their reports have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included or incorporated by reference herein in reliance upon
the authority of said firm as experts in giving said reports.
21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Except for the SEC registration fee, all expenses are estimated. All
such expenses will be paid by the Registrant.
<TABLE>
<S> <C>
SEC registration fee. . . . . . . . . . . . . . . . . . . . . . $ 5,563.48
New York Stock Exchange fee . . . . . . . . . . . . . . . . . . $ 2,661
Accounting fees and expenses. . . . . . . . . . . . . . . . . . $ 5,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . $ 8,000
Printing and engraving expense. . . . . . . . . . . . . . . . . $ 1,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . $ 775.52
--------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
In accordance with Section 102(b)(7) of the Delaware General Corporation
Law ("DGCL"), Registrant's Certificate of Incorporation includes a provision
that, to the fullest extent permitted by law, limits the personal liability of
members of its Board of Directors to Registrant or its stockholders for monetary
damages for breach of fiduciary duty as a director to a total of $25,000. Such
provision does not eliminate or limit the liability of a director for (1) any
breach of a director's duty of loyalty to Registrant or its stockholders, (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of a law, (3) paying an unlawful dividend or approving an
illegal stock repurchase (as provided in Section 174 of the DGCL) or (4) any
transaction from which the director derived an improper personal benefit.
Under Section 145 of the DGCL, the Registrant has the power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding (other than an
action by or in the right of the corporation) by reason of the fact that the
person is or was a director, officer, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise, reasonably incurred in
connection with such action, suit or proceeding. The power to indemnify applies
only if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe the person's conduct was unlawful.
In the case of an action by or in the right of the Registrant, no
indemnification may be made with respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Registrant unless
and only to the extent that the court of chancery or the court in which such
action or suit was brought shall determine that despite the adjudication of
liability such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Section 145 of the DGCL further
provides that to the extent a director or officer of the Registrant has been
successful in the defense of any action, suit or proceeding referred to above or
in the defense of any claim, issue or matter therein, that person shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith.
The Registrant also has the power to purchase and maintain insurance on
behalf of any person covering any liability incurred in that person's capacity
as a director, officer, employee or agent of the corporation, or arising out of
that person's status as such, whether or not the corporation would have the
power to indemnify against the liability.
The Certificate of Incorporation and Bylaws provide that the Registrant
will indemnify its officers and directors and former officers and directors
against any expenses, liability or loss reasonably incurred or suffered by
II-1
<PAGE>
such persons as a result of having acted as an officer or director of the
Registrant, or, at the request of the Registrant, as an officer, director,
agent or employee of another business entity. The Certificate of
Incorporation and Bylaws further provide that the Registrant may, by action
of its Board of Directors, provide indemnification to employees and agents of
the Registrant with the same scope and effect as the indemnification of
directors and officers.
ITEM 16. EXHIBITS.
The information required by this Item 16 is set forth in the Index to
Exhibits accompanying this Registration Statement.
ITEM 17. UNDERTAKINGS.
(a) RULE 415 OFFERING.
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 the 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 the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(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 by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
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.
II-2
<PAGE>
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY
REFERENCE.
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
Securities Exchange Act of 1934 that is incorporated by reference in the
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.
(h) REQUEST FOR ACCELERATION OF EFFECTIVE DATE.
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 provisions described in Item 15 above, 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 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 of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Dallas, State of Texas, on January 31, 2000.
LONE STAR TECHNOLOGIES, INC.
(Registrant)
By: /s/ Rhys J. Best
-------------------------------
Rhys J. Best
Chairman of the Board,
Chief Executive Officer and
President
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Rhys
J. Best and Charles J. Keszler, and each of them (with full power to each of
them to act alone), his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities to sign on his behalf individually and in each
capacity stated below any amendment, including post-effective amendments, to
this Registration Statement under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and either of them, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Rhys J. Best Chairman of the Board, Chief Executive Officer January 31, 2000
- ----------------------------- and President (principal executive officer)
Rhys J. Best
/s/ Charles J. Keszler Vice President --Finance and Treasurer January 31, 2000
- ----------------------------- (principal financial and accounting officer)
Charles J. Keszler
/s/ Charles L. Blackburn Director January 27, 2000
- -----------------------------
Charles L. Blackburn
/s/ Dean P. Guerin Director January 26, 2000
- -----------------------------
Dean P. Guerin
/s/ Frederick B. Hegi, Jr. Director January 30, 2000
- -----------------------------
Frederick B. Hegi, Jr.
II-4
<PAGE>
/s/ James E. McCormick Director January 31, 2000
- -----------------------------
James E. McCormick
/s/ M. Joseph McHugh Director January 31, 2000
- -----------------------------
M. Joseph McHugh
/s/ Thomas M. Mercer Director January 31, 2000
- -----------------------------
Thomas M. Mercer, Jr.
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
<S> <C>
3.1 Certificate of Incorporation of Registrant (incorporated by reference
to Exhibit 3(a) to Form S-4 Registration Statement of Lone Star as
filed on April 4, 1986, File No. 33-4581).
3.2* Certificate of Amendment to Certificate of Incorporation dated
September 30, 1986.
3.3 Certificate of Amendment to Certificate of Incorporation dated May 20,
1998 (incorporated by reference to same numbered Exhibit to Form 10-Q
for the quarter ended June 30, 1998).
3.4 Agreement and Plan of Merger dated March 6, 1986, among Lone Stare
Steel Company, a Texas corporation, Lone Star Technologies, Inc., a
Delaware corporation, and Lone Star Steel Company Merging
Corporation, a Delaware corporation (incorporated by reference to
Exhibit II to Form S-4 Registration Statement of Lone Star as filed
on April 4, 1986, File No. 33-4581).
3.5* By-Laws as adopted March 6, 1986, as amended by amendments effective
September 30, 1986 and March 15, 1990.
4.1* Stock Registration Agreement dated January 1, 2000 among Lone Star
Technologies, Inc., Fintube Limited Partnership, Yorktown Energy
Partners, Brown University Third Century Fund, Warburg, Dillon, Reed,
L.L.C. and Ticonderoga Partners and the stockholders named therein.
5.1* Opinion of Thompson & Knight L.L.P.
23.1* Consent of counsel (included in the opinion of Thompson & Knight L.L.P.
filed herewith as Exhibit 5.1).
23.2* Consent of independent accountants.
23.3* Consent of independent accountants.
24* Power of Attorney (a power of attorney pursuant to which amendments to
this Registration Statement may be filed is included on the signature
page hereof).
</TABLE>
- ----------------------
* Filed herewith.
II-6
<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
LONE STAR TECHNOLOGIES, INC.
LONE STAR TECHNOLOGIES, INC. (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware, DOES HEREBY CERTIFY THAT:
FIRST: The Board of Directors of the Corporation, at a meeting duly called
and held on August 14, 1986, duly adopted resolutions setting forth a proposed
amendment to the Corporation's Certificate of Incorporation, declaring such
amendment to be advisable and directing that such amendment be submitted to the
stockholders of the Corporation for approval in accordance with Section 242 of
the General Corporation Law of the State of Delaware. The resolutions
describing the proposed amendment are as follows:
RESOLVED, that this Board of Directors deems it advisable that Article
Thirteenth of the Certificate of Incorporation of the Corporation be
amended (i) to define the scope of personal liability of the Corporation's
Directors to the Corporation and (ii) to define and clarify the rights of
certain individuals, including the Corporation's directors and officers, to
indemnification by the Corporation in the event of personal liability or
expenses incurred by them as a result of certain litigation against them by
amending, changing and altering Article Thirteenth.
RESOLVED, that a Special Meeting of Stockholders of this Corporation
is hereby called to be held in accordance with applicable law and the
By-Laws of the Corporation at 10:00 A.M., Dallas time, on September 30,
1986,
...to consider and vote upon a proposal to amend the Certificate of
Incorporation of the Corporation to include a new Article Thirteenth
which would (i) define the scope of personal liability of the
Corporation's Directors to the Corporation and (ii) define and clarify
the rights of certain individuals, including the Corporation's
directors and officers, to indemnification by the Corporation in the
event of personal liability or expenses incurred by them as a result
of certain litigation against them...
<PAGE>
SECOND, the text of such Amendment, as set forth is as follows:
THIRTEENTH:
A. LIMITATION OF CERTAIN LIABILITY OF DIRECTORS.
The personal liability of a director of the Corporation to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, shall be limited to a total of $25,000 for all liabilities for all
claims, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended after approval by
the stockholders of this Article THIRTEENTH to authorize corporate action
further eliminating or limiting the personal liability of directors, then, other
than the personal liability limitation of $25,000 for all claims, the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing paragraph by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification.
B. INDEMNIFICATION AND INSURANCE.
1. RIGHT TO INDEMNIFICATION. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; PROVIDED, HOWEVER, that, except
as provided in paragraph (2) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such
2
<PAGE>
person only if such proceeding (or part thereof) was authorized by the Board
of Directors of the Corporation. The rights to indemnification conferred in
this Section B shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such
proceeding in advance of its final disposition; PROVIDED, HOWEVER, that, if
the Delaware General Corporation Law requires, the payment of such expenses
incurred by a director or officer in his or her capacity as a director or
officer (and not in any other capacity in which service was or is rendered by
such person while a director or officer, including, without limitation,
service to an employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the Corporation of an
undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director
or officer is not entitled to be indemnified under this Section B or
otherwise. The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same
scope and effect as the foregoing indemnification of directors and officers.
2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph 1 of this
Section B is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the Delaware General Corporation Law for the Corporation to
indemnify the claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section B shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
4. INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
3
<PAGE>
THIRD: The stockholders of the Corporation, at a meeting duly called and
held on September 30, 1986, voted to approve such amendment to the Certificate
of Incorporation.
FOURTH: Such amendment to the Certificate of Incorporation was duly
adopted in accordance with the applicable provisions of Section 242 of the
General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, LONE STAR TECHNOLOGIES, INC. has caused this
Certificate to be signed by Wm. Howard Beasley III, Chairman of the Board and
Chief Executive Officer, and attested to by its Assistant Secretary this 30th
day of September, 1986.
(SEAL)
LONE STAR TECHNOLOGIES, INC.
By /s/ Wm. Howard Beasley
-----------------------------------
Wm. Howard Beasley III
Chairman of the Board and
Chief Executive Officer
ATTEST:
/s/ Ellis A. Brock
- -----------------------------------
Ellis A. Brock,
Assistant Secretary
<PAGE>
EXHIBIT 3.5
BY-LAWS
OF
LONE STAR TECHNOLOGIES, INC.
As Adopted March 6, 1986
As Amended September 30, 1986
As Amended March 15, 1990
----------------------------------
ARTICLE I
OFFICES
SECTION 1.1. REGISTERED OFFICE. The registered office of LONE STAR
TECHNOLOGIES, INC. ("the Corporation") in the State of Delaware shall be located
at 1209 Orange Street, in the City of Wilmington, County of New Castle, and the
name of its registered agent is The Corporation Trust Company.
SECTION 1.2. OTHER OFFICES. The Corporation may also have offices at such
other places both within or without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 2.1. ANNUAL MEETING. The annual meeting of the stockholders shall
be held on the second Wednesday in May or such other day before or after the
second Wednesday of May as the Board of Directors shall set as the date of the
annual meeting for the purpose of electing directors and for the transaction of
such other business as may properly come before the meeting. If the election of
directors shall not be held on the day hereinbefore designated for the annual
meeting, or at any adjournment thereof, the Board of Directors shall cause such
election to be held at a special meeting of stockholders as soon thereafter as
convenient.
SECTION 2.2. SPECIAL MEETINGS. Except as otherwise prescribed by statute,
special meetings of the stockholders for any purpose or purposes, may be called
and the location thereof designated by the Chairman of the Board or by a
majority of the Board of Directors.
SECTION 2.3. PLACE OF MEETINGS. Each meeting of the stockholders for the
election of directors shall be held at the office of the Corporation in Dallas,
Texas, unless the Board of Directors shall by resolution designate any other
place, within or without. the, State of Delaware, as the place of such meeting.
Meetings of stockholders for any other purpose may be held at such place, within
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or without the State of Delaware, and at such time as shall be determined
pursuant to Section 2.2 and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
SECTION 2.4. NOTICE OF MEETINGS, Written or printed notice stating the
place and time of each annual or special meeting of the stockholders and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be given not less than ten (10) days nor more than sixty (60) days
before the date of the meeting. (See also Articles IV and X.)
When a meeting is adjourned to another time or place, no notice of the
adjourned meeting other than an announcement at the meeting need be given unless
the adjournment is for more than thirty (30), days or a new record date is fixed
for the adjourned meeting after such adjournment.
SECTION 2.5. STOCKHOLDER LIST. At least ten (10) days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
such meeting, arranged in alphabetical order, and showing the address of each
such stockholder and the number of shares registered in the name of each such
stockholder, shall be prepared by the Secretary. Such list shall be open to
examination of any stockholder of the Corporation during ordinary business
hours, for any purpose germane to the meeting, for a period of at least ten (10)
days prior to the meeting, at the office of the Corporation in Dallas, Texas,
and the list shall be produced and kept at the time and place of meeting during
the whole time thereof, and subject to the inspection for any purpose germane to
the meeting of any stockholder who may be present. Failure to comply with any
requirement of this Section 2.5 shall not affect the validity of any action
taken at such meeting.
SECTION 2.6. QUORUM. The holders of capital stock of the Corporation
having a majority of the voting power thereof, present in person or represented
by proxy, shall be requisite for, and shall constitute, a quorum at all meetings
of the stockholders of the Corporation for the transaction of business, except
as otherwise provided by statute, the certificate of incorporation or these
by-laws. If, however, such quorum shall not be present or represented at any
meeting of the stockholders, the stockholders entitled to vote thereat present
in person or represented by proxy shall have power to adjourn the meeting from
time to time until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
SECTION 2.7. PROXIES. At every meeting of the stockholders, each
stockholder having the right to vote thereat shall be entitled to vote in person
or by proxy. Such proxy shall be appointed by an instrument in writing
subscribed by such stockholder and bearing a date not more than three (3) years
prior to such meeting, unless such proxy provides for a longer period; and it
shall be filed with the Secretary of the Corporation before, or at the time of,
the meeting.
SECTION 2.8. VOTING. Unless the certificate of incorporation provides
otherwise, at every meeting of stockholders, each stockholder shall be entitled
to one (1) vote for each share of stock of the Corporation entitled to vote
thereat and registered in the name of such stockholder on the books of the
Corporation on the pertinent record date. When a quorum is present at any
meeting of the stockholders, the vote of the holders of a majority of the stock
having voting power which is present in person or represented by proxy shall
decide any question brought before such meeting,
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unless the question is one upon which, by provision of the statutes, the
certificate of incorporation or these by-laws, a different vote is required,
in which case such provision shall govern and control the decision of such
question. If the certificate of incorporation provides for more or less than
one (1) vote for any share on any matter, every reference in these by-laws to
a majority or other proportion of stock shall refer to such majority or other
proportion of the votes of such stock.
SECTION 2.9. VOTING OF CERTAIN SHARES. Shares standing in the name of
another corporation, domestic or foreign, and entitled to vote may be voted by
such officer, agent, or proxy as the by-laws of such corporation may prescribe
or, in the absence of such provision, as the board of directors of such
corporation may determine. Shares standing in the name of a deceased person, a
minor or an incompetent and entitled to vote may be voted by the administrator,
executor, guardian or conservator of such person, as the case may be, either in
person or by proxy. Shares standing in the name of a trustee, receiver or
pledgee and entitled to vote may be voted by such trustee, receiver or pledgee
either in person or by proxy as provided by the Delaware General Corporation Law
(the "Delaware Statute").
SECTION 2.10. ACTION WITHOUT MEETING. No action required to be taken or
which may be taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting and no consent in writing, without a
meeting, shall be allowed.
SECTION 2.11. TREASURY STOCK. Shares of its own stock belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held by this
Corporation, shall not be voted at any meeting and shall not be counted in
determining the total number of outstanding shares for the purpose of
determining whether a quorum is present. Nothing in this section shall be
construed to limit the right of this Corporation to vote shares of its own stock
held by it in a fiduciary capacity.
ARTICLE III
DIRECTORS
SECTION 3.1. NUMBER AND ELECTION. Subject to the provisions of Article
Fourth of the certificate of incorporation relating to the rights of the holders
of any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect additional directors under specified
circumstances, the number of directors shall be fixed from time to time by
resolution of the Board of Directors. The Directors, other than those who may
be elected by the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation, shall be classified,
with respect to the time for which they severally hold office, into three
(3) classes as nearly equal in number as possible. Such classes shall
originally consist of one (1) class of directors who shall be elected in 1986
for a term expiring at the annual meeting of stockholders to be held in 1987;
a second class of directors who shall be elected in 1986 for a term expiring
at the annual meeting of stockholders to be held in 1988; and a third class
of directors who shall be elected in 1986 for a term expiring at the annual
meeting of stockholders to be held in 1989. The Board of Directors shall
increase or decrease the number of directors in one (1) or more classes as may
be appropriate whenever it increases or decreases the number of Directors
pursuant to this
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Section 3.1, in order to ensure that the three (3) classes shall be as nearly
equal in number as possible. At each annual meeting of the stockholders of
the Corporation, the successors of the class of directors whose term expires
at that meeting shall be elected to hold office for a term expiring at the
annual meeting of stockholders held in the third year following the year of
their election, Directors shall be elected annually by the stockholders-as
provided in Section 2.1 or in accordance with Section 3.2 of these by-laws
and each director elected shall hold office until the successor of such
director is elected and qualified or until the death or resignation of such
director or until such director shall have been removed in the manner
hereinafter provided. Directors need not be residents of the State of
Delaware or stockholders of this Corporation.
SECTION 3.2. RESIGNATION AND VACANCIES. Any director may resign at any
time by giving written notice to the Board of Directors or to the Chairman of
the Board. Any such resignation shall take effect at the date of the receipt of
such notice or at any later time specified therein; and, unless otherwise
specified therein, the acceptance of such resignation shall not be necessary to
make it effective. Subject to the provisions of Article Fourth of the
certificate of incorporation relating to the rights of the holders of any class
of stock having a preference over the Common Stock as to dividends or upon
liquidation to elect directors under specified circumstances, if, at any other
time than the annual meeting of the stockholders, any vacancy occurs in the
Board of Directors caused by resignation, death, retirement, disqualification or
removal from office of any director or otherwise, or any new directorship is
created by an increase in the authorized number of directors in accordance with
Section 3.1 of these by-laws, a majority of the directors then in office,
although less than a quorum, may choose a successor, or fill the newly created
directorship, and the director so chosen shall hold office until the next annual
election of directors by the stockholders and until such director's successor
shall be duly elected and qualified, unless sooner displaced. No decrease in
the number of Directors constituting the Board of Directors shall shorten the
term of any incumbent director.
SECTION 3.3. REMOVAL. Subject to the rights of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation to elect Directors under specified circumstances, any director may
be removed, at any meeting of the stockholders, only for cause and then only by
the affirmative vote of the holders of eighty percent (80%) of the combined
voting power of the then outstanding shares of stock entitled to vote generally
in the election of directors, voting together as a single class. The vacancy in
the Board of Directors caused by such removal may be filled by the stockholders
at such meeting.
SECTION 3.4. NOTIFICATION OF NOMINATIONS. Subject to the rights of
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, nominations for the election of
directors may be made by the Board of Directors or a committee appointed by the
Board of Directors or by any stockholder entitled to vote in the election of
directors generally. However, any stockholder entitled to vote in the election
of directors generally may nominate one (1) or more persons for election as
directors at a meeting only if written notice of such stockholder's intent to
make such nomination or nominations has been given, either by personal delivery
or by United States mail, postage prepaid, to the Secretary of the Corporation
not later than (i) with respect to an election to be held at an annual meeting
of stockholders, sixty (60) days in advance of such meeting, and (ii) with
respect to an election to be held at a special meeting of
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stockholders for the election of directors, the close of business on the
seventh day following the date on which notice of such meeting is first given
to stockholders. Each such notice shall set forth: (a) the name and address
of the stockholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation that the stockholder is a
holder of record of stock of the Corporation entitled to vote at such meeting
and intends to appear in person or by proxy at the meeting to nominate the
person or persons specified in the notice; (c) a description of all
arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (d) such
other information regarding each nominee proposed by such stockholder as
would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had the nominee been
nominated, or intended to be nominated, by the Board of Directors; and (e)
the consent of each nominee to serve as a director of the Corporation if so
elected. The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedure.
SECTION 3.5. MANAGEMENT OF AFFAIRS OF CORPORATION. The property and
business of the Corporation shall be managed by its Board of Directors, which
may exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the certificate of incorporation or by these
by-laws directed or required to be exercised or done by stockholders. In case
the Corporation shall transact any business or enter into any contract with a
director, or with any firm of which one or more of its directors are members, or
with any trust, firm, corporation or association in which any director is a
stockholder, director or officer or otherwise interested, the officers of the
Corporation and directors in question shall be severally under the duty of
disclosing all material facts as to their interest to the remaining directors
promptly if and when such interested officers or such interested directors in
question shall become advised of the circumstances. In the case of continuing
relationships in the normal course of business such disclosure shall be deemed
effective, when once given, as to all transactions and contracts subsequently
entered into.
SECTION 3.6. DIVIDEND AND RESERVES. Dividends upon stock of the
Corporation may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, in shares
of stock or otherwise in the form, and to the extent, permitted by law. The
Board of Directors may set apart, out of any funds of the Corporation available
for dividends, a reserve or reserves for working capital or for any other lawful
purpose, and also may abolish any such reserve in the manner in which it was
created.
SECTION 3.7. REGULAR MEETINGS. An annual meeting of the Board of
Directors shall be held, without other notice than this by-law, immediately
after, and at the same place as, the annual meeting of the stockholders. The
Board of Directors way provide, by resolution, the time and place, either within
or without the State of Delaware, for the holding of additional regular meetings
without other notice than such resolution.
SECTION 3.8. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by the Chairman of the Board or the President and shall be called
by the Secretary at the request of any two (2) directors, to be held at such
time and place, either within or without the State of
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Delaware, as shall be designated by the call and specified in the notice of
such meeting; and notice thereof shall be given as provided in Section 3.9 of
these by-laws.
SECTION 3.9. NOTICE OF SPECIAL MEETINGS. Except as otherwise prescribed
by the Delaware Statute, written or actual oral notice of the time and place of
each special meeting of the Board of Directors shall be given at least two (2)
days prior to the time of holding the meeting. Any director may waive notice of
any meeting. (See also Articles IV and X.)
SECTION 3.10. QUORUM. At each meeting of the Board of Directors, the
presence of not less than a majority of the whole board shall be necessary and
sufficient to constitute a quorum for the transaction of business, and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or these by-laws. If a quorum shall not be
present at any meeting of directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Unless otherwise restricted by the certificate of incorporation, any member
of the Board of Directors or of any committee designated by the Board may
participate in a meeting of the directors or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
by means of such equipment shall constitute presence in person at such meeting.
SECTION 3.11. PRESUMPTION OF ASSENT. Unless otherwise provided by the
Delaware Statute, a director of the Corporation who is present at a meeting of
the Board of Directors at which action is taken on any corporate matter shall be
presumed to have assented to the action taken unless the dissent of such
director shall be entered in the minutes of the meeting or unless such director
shall file a written dissent to such action with the person acting as Secretary
of the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
SECTION 3.12. ACTION WITHOUT MEETING. Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting, if a written consent thereto is signed
by all members of the board or of such committee, as the case may be, and such
written consent is filed with the minutes of proceedings of the board or
committee.
SECTION 3.13. PRESIDING OFFICER. The presiding officer at any meeting of
the Board of Directors shall be the Chairman of the Board, or in the absence of
the Chairman of the Board, the President or, in the absence of both the Chairman
of the Board and the President, any other director elected acting chairman of
the meeting by vote of a majority of the directors present at the meeting.
SECTION 3.14. EXECUTIVE COMMITTEE. The Board of Directors, as soon as may
be practicable after the annual meeting each year, may appoint an Executive
Committee to consist of the Chairman of the Board, the President and such number
of the directors as the Board may from
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time to time determine. The Executive Committee shall have and nay exercise,
during the intervals between meetings of the Board, all the powers of the
Board, subject to such limitations as may be provided by resolution of the
Board of Directors or by law. The Board shall have the power at any time to
change the membership of such committee and to fill vacancies in it, but the
Chairman of the Board and the President shall always be members of the
Executive Committee by virtue of their offices. The Chairman of the Board
shall be the Chairman of the Executive Committee, and such committee shall
make such rules for the conduct of its business and appoint such committees
and assistants as it may deem necessary. A majority of the members of such
committee shall constitute a quorum.
SECTION 3.15. OTHER COMMITTEES. The Board of Directors may appoint such
other committees in addition to the Executive Committee as it may from time to
time determine to be necessary or desirable. Each such committee shall consist
of one (1) or such greater number of directors and shall have and may exercise
such powers of the Board as may be provided in the resolution of the Board
appointing such committee, subject to such limitations as may be provided by
law. The Board shall have the power at any time to change the membership of any
such committee, to fill vacancies in it and to change the powers which the
committee may exercise, subject to such limitations as nay be provided by law.
The Board of Directors may specify a member of any such committee to serve as
the chairman thereof, and in the absence of such specification by the Board, the
committee may appoint one of its members as its chairman. Each such committee
shall make such rules for the conduct of its business as it deems necessary. A
majority of the members of any such committee shall constitute a quorum.
SECTION 3.16. ALTERNATES. The Board of Directors may from time to time
designate from among the directors alternates to serve on one or more committees
as occasion may require. Whenever a quorum cannot be secured for any meeting of
any committee from among the regular members thereof and designated alternates,
the member or members of such committee present at such meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of such absent or disqualified member.
SECTION 3.17. QUORUM AND MANNER OF ACTING - COMMITTEES. The presence of a
majority of members of any committee shall constitute a quorum for the
transaction of business at any meeting of such committee, and the act of a
majority of those present shall be necessary for the taking of any action
thereat.
SECTION 3.18. COMMITTEE BOOKS AND RECORDS, ETC. Each committee shall keep
a record of its acts and proceedings, and all actions of each committee shall be
reported to the Board of Directors at its next meeting.
Each committee shall fix its own rules of procedure not inconsistent with
these by-laws or the resolution of the Board of Directors designating such
committee and shall meet at such times and places and upon such call or notice
as shall be provided by such rules.
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SECTION 3.19. FEES AND COMPENSATION OF DIRECTORS. Directors shall not
receive any stated salary for their services as such; but, by resolution of the
Board of Directors, a fixed fee, with or without expenses of attendance, may be
allowed for attendance at each regular or special meeting of the board. Members
of the board shall be allowed their reasonable traveling expenses when actually
engaged in the business of the Corporation. Members of any committee may be
allowed like fees and expenses for attending committee meetings. Nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefore.
SECTION 3.20. RELIANCE UPON RECORDS. Every director of the Corporation,
or member of any committee designated by the Board of Directors pursuant to
authority conferred by these by-laws, shall, in the performance of the duties of
such director or member, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officials, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by such committee, or in relying in
good faith upon other records of the Corporation, including, without limiting
the generality of the foregoing, records setting forth or relating to the value
and amount of assets, liabilities and profits of the Corporation or any other
facts pertinent to the existence and amount of surplus or other funds from which
dividends might properly be declared or paid or with which stock of the
Corporation might lawfully be purchased or redeemed.
ARTICLE IV
NOTICES
SECTION 4.1. MANNER OF NOTICE. Whenever under the provision of the
statutes, the certificate of incorporation or these by-laws notice is required
to be given to any stockholder, director or member of any committee designated
by the Board of Directors, it shall not be construed to require personal
delivery and such notice may be given in writing by depositing it, in a sealed
envelope, in the United States mails, air mail or first class, postage prepaid,
addressed (or by delivering it to a telegraph company, charges prepaid, for
transmission) to such stockholder, director or member either at the address of
such stockholder, director or member as it appears on the books of the
Corporation or, in the case of such a director or member, at the business
address of such director or member; and such notice shall be deemed to be given
at the time when it is thus deposited in the United States mails (or delivered
to the telegraph company). Such requirement for notice shall be deemed
satisfied, except in the case of stockholder meetings with respect to which
written notice is mandatorily required by law, if actual notice is received
orally or in writing by the person entitled thereto as far in advance of the
event with respect to which notice is given as the minimum notice period
required by law or these by-laws.
SECTION 4.2. WAIVER OF NOTICE. Whenever any notice is required to be
given under the provisions of the statutes, the certificate of incorporation, or
these by-laws, a waiver thereof in writing signed by the person or persons
entitled to such notice, whether before, at or after the time stated therein,
shall be deemed equivalent thereto. Attendance by a person at a meeting shall
constitute a waiver of notice of such meeting, except when the person attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business
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because the meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special meeting of
the stockholders, directors or committee of directors need be specified in
any written waiver of notice unless so required by statute, the certificate
of incorporation or these by-laws.
ARTICLE V
OFFICERS
SECTION 5.1. OFFICES AND OFFICIAL POSITIONS. The officers of the
Corporation may be a Chairman of the Board, President, one or more Vice
Presidents, a Secretary, a Treasurer, a Controller and such Assistant
Secretaries, Assistant Treasurers, and other officers as the Board of Directors
may determine. Any two (2) or more offices may be held by the same person.
None of the officers need be a director, a stockholder of the Corporation or a
resident of the State of Delaware. The officers of the Corporation shall have
such powers and duties as usually pertain to their offices, as well as such
powers and duties as may from time to time be conferred by the Board of
Directors.
SECTION 5.2. ELECTION AND TERM OF OFFICE. The officers of the Corporation
shall be elected annually by the Board of Directors at their first meeting held
after each regular annual meeting of, the stockholders. If the election of
officers shall not be held at such meeting of the board, such election shall be
held at a regular or special meeting of the Board of Directors as soon
thereafter as may be convenient. Each officer shall hold office until the
successor of such officer is elected and qualified or until the death or
resignation of such officer or until such officer shall have been removed in the
manner hereinafter provided.
SECTION 5.3. REMOVAL AND RESIGNATION. Any officer may be removed, either
with or without cause, by a majority of the directors then in office at any
regular or special meeting of the board; but such removal shall be without
prejudice to the contract rights, if any, of such person so removed. Any
officer may resign at any time by giving written notice to the Board of
Directors, to the Chairman of the Board, to the President or to the Secretary of
the Corporation. Any such resignation shall take effect at the date of the
receipt of such notice or at any later time specified therein; and, unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 5.4. VACANCIES. A vacancy in any office because of death,
resignation, removal, or any other cause may be filled for the unexpired portion
of the term by the Board of Directors.
SECTION 5.5. SALARIES. The salaries of the officers shall be fixed from
time to time by the Board of Directors or by such officer as it shall designate
for such purpose or as it shall otherwise direct. No officer shall be prevented
from receiving a salary or other compensation by reason of the fact that such
officer is also a director of the Corporation.
ARTICLE VI
CHECKS AND DEPOSITS
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SECTION 6.1. CHECKS, DRAFTS, ETC. All checks, demands, drafts or other
orders for the payment of money, notes or other evidences of indebtedness issued
in the name of the Corporation shall be signed by such officer or officers,
agent or agents of the Corporation, and in such manner. as shall from time to
time be authorized by the Board of Directors.
SECTION 6.2. DEPOSITS. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII
CERTIFICATES OF STOCK AND THEIR TRANSFER
SECTION 7.1. CERTIFICATES OF STOCK. The certificates of stock of the
Corporation shall be in such form as may be determined by the Board of
Directors, shall be numbered and shall be entered in the books of the
Corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the Chairman of the Board, the President or a
Vice President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary. If any stock certificate is signed (a) by a transfer
agent or an assistant transfer agent or (b) by a transfer clerk acting on behalf
of the Corporation and a registrar, the signature of any officer of the
Corporation may be facsimile. In case any such officer whose facsimile
signature has thus been used on any such certificate shall cease to be such
officer, whether because of death, resignation or otherwise, before such
certificate has been delivered by the Corporation, such certificate may
nevertheless be delivered by the Corporation, as though the person whose
facsimile signature has been used thereon had-not ceased to be such officer.
All certificates properly surrendered to the Corporation for transfer shall be
canceled and no new certificate shall be issued to evidence transferred shares
until the former certificate for at least a like number of shares shall have
been surrendered and canceled and the Corporation reimbursed for any applicable
taxes on the transfer, except that in the case of a lost, stolen, or destroyed
certificate a new one may be issued therefor upon such terms, and with such
indemnity (if any) to the Corporation, as the Board of Directors may prescribe
specifically or in general terms or by delegation to a transfer agent for the
Corporation. (See Section 7.2.)
SECTION 7.2. LOST, STOLEN OR DESTROYED CERTIFICATES. The Board of
Directors in individual cases, or by general resolution or by delegation to the
transfer agent, may direct a new certificate or certificates to be issued in
place of any certificate or certificates theretofore issued by the Corporation
alleged to have been lost, stolen or destroyed, upon the making of an affidavit
of that fact by the person claiming the certificate of stock to be lost, stolen
or destroyed. When authorizing such issue of a new certificate or certificates,
the Board of Directors may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or destroyed
certificates, or the legal representative of such owner, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond in such
sum as it may direct as indemnity against any claim that may be made against the
Corporation with respect to the certificate alleged to have been lost, stolen or
destroyed.
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SECTION 7.3. TRANSFERS OF STOCK. Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, and upon payment of applicable taxes with respect to such transfer,
and in compliance with any restrictions on transfer applicable to the
certificate or shares represented thereby of which the Corporation shall have
notice and subject to such rules and regulations as the Board of Directors may
from time to time deem advisable concerning the transfer and registration of
certificates for shares of capital stock of the Corporation, the Corporation
shall issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books. Transfers of shares
shall be made only an the books of the Corporation by the registered holder
thereof or by the attorney or successor of such bolder duly authorized as
evidenced by documents filed with the Secretary or transfer agent of the
Corporation.
SECTION 7.4. RESTRICTIONS ON TRANSFER. Any stockholder may enter into an
agreement with other stockholders or with the Corporation providing for
reasonable limitation or restriction on the right of such stockholder to
transfer shares of capital stock of the Corporation held by such stockholder,
including, without limiting the generality of the foregoing, agreements granting
to such other stockholders or to the Corporation the right to purchase for a
given period of time any of such shares. Any such limitation or restriction on
the transfer of shares of this Corporation may be set forth on certificates
representing shares of capital stock, in which case the Corporation or the
transfer agent shall not be required to transfer such shares upon the books of
the Corporation without receipt of satisfactory evidence of compliance with the
terms of such limitation or restriction.
SECTION 7.5. FRACTIONAL SHARE CERTIFICATES. Certificates may be issued
representing fractional shares of stock.
SECTION 7.6. FIXING RECORD DATE. The Board of Directors may fix in
advance a date, not exceeding sixty (60) days, nor less than ten (10) days,
preceding the date of any meeting of stockholders, or the date for the payment
of any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect, or a
date in connection with obtaining any consent, as a record date for the
determination of the stockholders entitled to notice of, and to vote at, any
such meeting, or adjournment thereof, or entitled to receive payment of any such
dividend, or to any such allotment of rights, or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such stockholders as
shall be stockholders of record on the date so fixed shall be entitled to notice
of, and to vote at, such meeting and any adjournment thereof, or to receive
payment of such dividend, or to receive such allotment of rights, or to exercise
such rights, or to give such consent, as the case may be, notwithstanding any
transfer of any stock on the books of the Corporation after any such record date
fixed as aforesaid.
SECTION 7.7. STOCKHOLDERS OF RECORD. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in fact
thereof and accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
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ARTICLE VIII
INDEMNIFICATION AND INSURANCE
SECTION 8.1. RIGHT TO INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted to the Corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent and shall inure to the benefit of
his or her heirs, executors and administrators; PROVIDED, HOWEVER, that, except
as provided in Section 8.2 hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Article VIII shall be a contract right and
shall include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; PROVIDED,
HOWEVER, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or officer (and not in any other capacity in which service was or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Article VIII or otherwise.
The Corporation may, by action of its Board of Directors, provide
indemnification to employees and agents of the Corporation with the same scope
and effect as the foregoing indemnification of directors and officers.
SECTION 8.2. RIGHT OF CLAIMANT TO BRING SUIT. If a claim under Section
8.1 of this Article VIII is not paid in full by the Corporation within thirty
(30) days after a written claim has been received by the Corporation, the
claimant may at any time thereafter bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall be entitled to be paid also the expense of prosecuting such
claim. It shall be a defense to any such action (other than an action brought
to enforce a claim for expenses incurred in defending any proceeding in advance
of its final disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the standards of
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conduct which make it permissible under the Delaware General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because be or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of Conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
SECTION 8.3. NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article VIII shall not be exclusive of any
other right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
SECTION 8.4. INSURANCE. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the Delaware General Corporation Law.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. FISCAL YEAR. The fiscal year of the Corporation shall be a
calendar year.
SECTION 9.2. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation and the words "CORPORATE SEAL" and "DELAWARE"; and it
shall otherwise be in the form approved by the Board of Directors. Such seal
may be used by causing it, or a facsimile thereof, to be impressed or affixed or
otherwise reproduced.
ARTICLE X
AMENDMENTS
SECTION 10.1. IN GENERAL. Subject to the laws of the State of Delaware,
the certificate of incorporation and these by-laws, the Board of Directors may
by the affirmative vote of a majority of the directors then qualified and acting
at any regular or special meeting of the board at which a quorum is present
amend these by-laws or enact such other by-laws as in their Judgment may be
advisable for the regulation of the conduct of the affairs of the Corporation.
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STOCK REGISTRATION AGREEMENT
This Stock Registration Agreement (this "Agreement") dated as of
January 1, 2000, is entered into by and among Lone Star Technologies, Inc., a
Delaware corporation (the "Corporation"), Fintube Limited Partnership, a
Delaware limited partnership (the "Fintube Representative"), Yorktown Energy
Partners, L.P., a Delaware limited partnership (the "Yorktown
Representative"), Brown University Third Century Fund, Inc., a Rhode Island
corporation (the "Brown Representative"), Warburg, Dillon, Reed, L.L.C., a
Delaware limited liability company (the "WDR Representative") and Ticonderoga
Capital, Inc., a Delaware corporation (the "Ticonderoga Representative"), and
the Stockholders (as defined hereafter).
RECITALS
WHEREAS, pursuant to the Asset Purchase Agreement dated November 16,
1999 by and among the Corporation, Fintube Technologies, Inc., an Oklahoma
corporation, and the Fintube Representative (the "Purchase Agreement"), the
Stockholders will receive an aggregate of 760,237 shares of the Corporation's
common stock, par value $1.00 per share (the "Common Stock").
WHEREAS, as set forth in the Purchase Agreement, the Corporation has
agreed to grant to the Stockholders certain registration rights with respect
to their Registrable Securities (defined hereafter).
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the
respective meanings assigned to them in this Section 1 or in the recitals
above or the sections below.
"Closing Date" shall mean the date on which the consummation of the
transactions contemplated by the Purchase Agreement occurs.
"Commission" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Person" shall mean a corporation, an association, a partnership, a
business, an individual, a governmental or political subdivision thereof or a
governmental agency.
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"Registrable Securities" shall mean the shares of Common Stock issued
to the Stockholders pursuant to the Purchase Agreement and any securities
issued or issuable with respect to any Common Stock referred to in the
foregoing caused by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or
other reorganization or otherwise.
"Securities Act" shall mean the Securities Act of 1933, or any similar
Federal statute, and the rules and regulations of the Commission thereunder,
all as of the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933 shall include a reference to
the comparable section, if any, of any such similar federal statute.
"Stockholders" shall mean the Designated Recipients (as defined in the
Purchase Agreement) who prior to the execution of this Agreement have
provided to the Corporation their executed and completed Accredited Investor
Questionnaires, Unaccredited Investor Letters and/or Accredited Investor
Letters. The names of these Persons are set forth on Exhibit "A" attached
hereto and incorporated herein by reference.
2. REPRESENTATIVES. For the purposes of this Agreement, the
Stockholders listed on Exhibit "B" attached hereto and incorporated herein by
reference authorize the Fintube Representative to act on their behalf and to
cooperate with the Corporation to fulfill their obligations set forth herein,
the Stockholders listed on Exhibit "C" attached hereto and incorporated
herein by reference authorize the Yorktown Representative to act on their
behalf and to cooperate with the Corporation to fulfill their obligations set
forth herein, the Stockholders listed on Exhibit "D" attached hereto and
incorporated herein by reference authorize the Brown Representative to act on
their behalf and to cooperate with the Corporation to fulfill their
obligations set forth herein, the Stockholders listed on Exhibit "E" attached
hereto and incorporated herein by reference authorize the WDR Representative
to act on their behalf and to cooperate with the Corporation to fulfill their
obligations set forth herein and the Stockholders listed on Exhibit "F"
attached hereto and incorporated herein by reference authorize the
Ticonderoga Representative to act on their behalf and to cooperate with the
Corporation to fulfill their obligations set forth herein, (collectively, the
Fintube Representative, the Yorktown Representative, the Brown
Representative, the WDR Representative and the Ticonderoga Representative are
referred to as the "Representatives"). A Representative shall not for any
purpose under this Agreement be deemed to be the agent or representative of a
Stockholder not set forth on the above designated Exhibit applicable to such
Representative. Any requests by the Stockholders relating to the
responsibilities and obligations of the Corporation will be made by the
Representatives on behalf of their respective Stockholders. Additionally,
the Corporation is authorized to act directly with the Representatives rather
than the individual Stockholders to fulfill any or all of its obligations
under this Agreement and to facilitate the registration of the Registrable
Securities.
3. REGISTRATION UNDER SECURITIES ACT, ETC.
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a. REGISTRATION RIGHTS. Promptly after the Closing Date, the
Representatives will provide to the Corporation all information, including
the Fintube Representative's financial statements, regarding the
Representatives and the Stockholders that is required by the Securities Act
to be included in the registration statement on Form S-3 (the "Registration
Statement"). Thirty (30) days after the Closing Date or five (5) days after
receiving all information from the Representatives that is required to be
included in the Registration Statement by the Securities Act (whichever
occurs later), the Corporation shall file the Registration Statement pursuant
to Rule 415 under the Securities Act (or any similar rule that may be adopted
by the Commission) covering the sale of all the Registrable Securities in
accordance with this Section 3 and shall cause the registration to become
effective and the Registrable Securities to be freely tradeable within one
hundred twenty (120) days after the Closing Date; provided, however, if the
Commission elects to review the Registration Statement, the Corporation shall
use its best efforts to cause the Registration Statement to become effective
and the Registrable Securities to be freely tradeable as soon as practicable
after receiving the Commission's comments. The Corporation has provided the
Fintube Representative with a draft of the Registration Statement.
b. REGISTRATION PROCEDURES. After the Closing Date the
Corporation will:
i. Prepare and file the Registration Statement with the
Commission in accordance with Section 3.1 of this Agreement.
ii. Prepare and file with the Commission such amendments and
supplements to the Registration Statement and prospectus used in connection
therewith including any preliminary prospectus or amended prospectus as may
be necessary to keep the Registration Statement continuously effective and to
comply with the provisions of the Securities Act with respect to the offer of
the Registrable Securities during the period that will expire on the earlier
of (i) the date that is two hundred forty (240) days after the effective date
of the Registration Statement, or (ii) the date on which the distribution of
all the Registrable Securities covered by the Registration Statement is
completed.
iii. Furnish to the Representatives who will then distribute
to the Stockholders such number of conformed copies of the Registration
Statement and of each such amendment and supplement thereto (in each case
including all exhibits), and such number of copies of the prospectus
(including any preliminary prospectus or supplemental or amended prospectus)
as the Representatives on behalf of the Stockholders may reasonably request
in order to facilitate the sale and distribution of the Registrable
Securities.
iv. Prior to any public offering of Registrable Securities,
register or qualify or cooperate with the Representatives, the underwriters,
if any, and respective counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions in the United States as the
Representatives on behalf of the Stockholders or an underwriter reasonably
requests in writing; keep each such registration or qualification effective
during the period the Registration Statement is required to be kept
effective;
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provided, however, the Corporation will not be required in connection
therewith or as a condition thereto to qualify generally to do business or
subject itself to general service of process in any such jurisdiction where
it is not then so subject.
v. Notify the Representatives, at any time when a
prospectus relating to the Registration Statement is required to be delivered
under the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, and promptly prepare and furnish to
the Representatives a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were
made.
vi. Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and furnish to the
Representatives at least five (5) business days prior to the filing thereof a
copy of any amendment or supplement to such registration statement or
prospectus and shall not file any thereof to which the Representatives on
behalf of the Stockholders shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects with
the requirements of the Securities Act.
vii. Provide and cause to be maintained a transfer agent and
registrar for all Registrable Securities covered by the Registration
Statement from and after a date not later than the effective date of the
Registration Statement.
viii. Use its best efforts (i) to list all Registrable
Securities covered by the Registration Statement on any securities exchange
on which any of the Corporation's securities of the same class as the
Registrable Securities are then listed and (ii) for two (2) years after the
Closing Date to avoid taking any action which would cause the Registrable
Securities to cease being eligible for inclusion on any such securities
exchange on which they may become listed other than in connection with the
Corporation's decision to list its securities of the same class as the
Registrable Securities on another securities exchange.
ix. Notify the Representatives (i) as to the filing of the
Registration Statement and of all amendments or supplements thereto filed
prior to the effective date of such Registration Statement, (ii) promptly
after the Corporation shall receive notice thereof, of the time when such
Registration Statement became effective or when any amendment or supplement
to any prospectus forming a part of said Registration Statement has been
filed, and (iii) promptly, of any request by the Commission for the amending
or supplementing of such Registration Statement or prospectus or for
additional information.
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x. Prepare and file with the Commission, promptly upon the
written request of the Representatives, any amendments or supplements to such
Registration Statement or prospectus which may be reasonably necessary or
advisable in connection with the distribution of the Registrable Securities,
including amendments to add as selling stockholders under the Registration
Statement or prospectus those Persons whose names were removed from Schedule
1.1 to the Purchase Agreement pursuant to the provisions of Section 2.3(b) of
the Purchase Agreement if such Persons are unable to lawfully sell to the
public the Registrable Securities they have acquired except as part of a
requested offering.
xi. Advise the Representatives promptly after the
Corporation shall receive notice or obtain knowledge of the issuance of any
stop order by the Commission suspending the effectiveness of any such
Registration Statement or amendment thereto or of the initiation or
threatening of any proceeding for that purpose, and promptly use its
reasonable efforts to prevent the issuance of any stop order or obtain its
withdrawal promptly if such stop order should be issued.
c. LIMITATIONS. The Corporation's obligation to take or continue
any action to effect the Registration Statement pursuant to Section 3.2 of
this Agreement shall be subject to the following:
i. If any of the audited financial statements required to
be included in the Registration Statement for the most recent fiscal year
ended are not available, the Corporation shall have the right to delay the
effectiveness of the Registration Statement for such period of time until the
Corporation receives such required audited financial statements.
ii. If the Corporation is in good faith engaged in
activities relating to a material event or transaction that has not yet been
publicly disclosed, the Corporation shall have the right to delay the filing
of the Registration Statement or, if filed, the effective date of the
Registration Statement or, if effective, the filing of an amendment or
supplement to the Registration Statement until such time as the material
event or transaction is disclosed to the public by the Corporation (but in no
event longer than 45 days). In that event, the periods defined in Section
3.2.2(i) and 3.2.8 shall be extended by the number of days of such delay.
There shall be no more than three (3) such events during the time period set
forth in Section 3.2.2(i) as extended by this Section 3.3.2.
iii. The registration shall not be deemed to have been
effected (i) unless it has become effective and remained effective for the
period specified in Section 3.2.2 or (ii) if, after it has become effective,
such registration is terminated by a stop order, injunction or other order of
the Commission or other governmental agency or court. If such registration
is terminated by a stop order, injunction or other order of the Commission or
other governmental agency or court, the periods defined in Sections 3.2.2(i)
and 3.2.8 shall be extended by the number of days of such delay.
4. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. The Stockholders
will not sell the Registrable Securities in an underwritten offering unless
(a) the Stockholders agree to sell the Registrable Securities on the basis
provided in any underwriting arrangements, and (b) the Representatives
deliver to the Corporation completed and executed questionnaires, powers of
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attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements from each of the
Stockholders.
5. EXPENSES. The Corporation will bear all registration fees, the
New York Stock Exchange filing fees, all fees and expenses of complying with
securities or blue sky laws (including fees and disbursements of counsel for
the Corporation in connection with blue sky qualifications and filings), all
word processing, duplicating and printing expenses, all messenger and
delivery expenses, the fees and disbursements of counsel for the Corporation
and of its independent public accountants and all other fees and expenses in
connection with the registration and sale of the Registrable Securities
pursuant to this Agreement, except for transfer taxes payable on the sale of
the Registrable Securities, the fees and expenses of counsel to the
Representatives and Stockholders, and the Representatives' and Stockholders'
accountants and fees and commissions of brokers, dealers and underwriters.
6. RECALL OF PROSPECTUSES, ETC. With respect to the Registration
Statement or any amendment thereto filed with the Commission pursuant to this
Agreement, if, at any time, the Corporation in good faith notifies the
Representatives that an amendment or supplement to the Registration Statement
or amendment to the prospectus included therein is necessary or appropriate,
the Representatives shall so inform the Stockholders and the Representatives
and the Stockholders will forthwith cease selling and distributing shares
thereunder and will forthwith redeliver to the Corporation all copies of the
Registration Statement and prospectuses then in their possession or under
their control. The Corporation will use its best efforts to cause any such
amendment or supplement to become effective as soon as practicable (except as
provided in Section 3.3.2) and will promptly furnish to the Representatives
who will then distribute to the Stockholders a reasonable number of copies of
such amended or supplemented prospectus (and the period defined in both
Section 3.2.2(i) and 3.2.8 shall be extended by the period from the date on
which the Stockholders ceased selling and distributing shares thereunder to
the date on which such amendment or supplement becomes effective).
7. COOPERATION BY THE REPRESENTATIVES AND THE STOCKHOLDERS.
a. The Representatives and the Stockholders will cooperate with
the Corporation in connection with the registration of Registrable Securities
pursuant to this Agreement, and the Representatives will furnish and the
Stockholders will supply to the Representatives (i) such information as may
be reasonably required by the Corporation or the Commission in connection
therewith and (ii) such representations, undertakings and agreements as may
be required by the Commission in connection therewith.
b. Upon the acquisition of any shares of the Corporation's Common
Stock in addition to the number of shares set forth opposite the signature on
this Agreement of each Stockholder, each Stockholder shall promptly advise
the appropriate Representative of such acquisition, and such Representative
shall so inform the Corporation.
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8. INDEMNIFICATION.
a. In the event of any registration of any securities under the
Securities Act pursuant to this Agreement, the Corporation will indemnify and
hold harmless the Representatives and the Stockholders and each other Person,
if any, who controls a Representative or a Stockholder within the meaning of
the Securities Act (the "Fintube Indemnified Parties"), against any losses,
claims, damages or liabilities, joint or several, to which any such Fintube
Indemnified Party may become subject, under the Securities Act or otherwise
as the same are incurred, insofar as such losses, claims, damages or
liabilities (or action in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained
in such Registration Statement or preliminary prospectus (if used prior to
the effective date of such Registration Statement) or final or summary
prospectus contained therein (if used during the period the Corporation is
required to keep the Registration Statement effective), or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements made therein not misleading, and will
reimburse the Fintube Indemnified Parties for any legal or any other expenses
reasonably incurred by the Fintube Indemnified Parties in connection with
investigating or defending any such action or claim, excluding any amounts
paid in settlement of any litigation, commenced or threatened, if such
settlement is effected without prior written consent of the Corporation such
consent not to be unreasonably withheld or delayed; provided, however, the
Corporation will not be liable to any Fintube Indemnified Party in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon an untrue statement or omission or alleged
untrue statement or omission made in said Registration Statement, said
preliminary prospectus or said final or summary prospectus or any amendment
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Corporation by any Fintube Indemnified Party,
including without limitation the Fintube Representative, specifically for use
in the preparation thereof; and provided further that the indemnity agreement
contained in this Section 8 with respect to any preliminary prospectus shall
not inure to the benefit of the Stockholders or to any Person selling the
same in respect of any loss, claim, damage, liability or action asserted by
someone who purchased shares from such Person if a copy of the final
prospectus (as the same may be amended or supplemented) in connection with
the Registration Statement was not sent or given to such Person with or prior
to written confirmation of the sale and if a copy of the final prospectus (as
the same may be amended or supplemented) was promptly delivered to the
Representatives by the Corporation and if the untrue statement or omission or
alleged untrue statement or omission of a material fact contained in such
preliminary prospectus was corrected in the final prospectus.
b. In the event of any registration of Registrable Securities
under the Securities Act pursuant to this Agreement, the Representatives, on
a several basis in proportion to the relative partnership interests in
Fintube Limited Partnership represented by them (except to the extent
indemnification under this Section 8.2 is recovered directly from any of the
Stockholders represented by such Representative), and the Stockholders, on a
several basis in proportion to their relative partnership interests in
Fintube Limited Partnership, will indemnify and hold harmless the
Corporation, each of its directors and officers, and each other Person, if
any, who controls the
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Corporation within the meaning of the Securities Act (the "Lone Star
Indemnified Parties"), against any losses, claims, damages or liabilities,
joint or several, to which any such Lone Star Indemnified Party may become
subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or action in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement or preliminary
prospectus or final or summary prospectus contained therein, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements made therein not misleading, and
will reimburse such Lone Star Indemnified Parties for any legal or any other
expenses as reasonably incurred by them in connection with investigating or
defending any such action or claim, excluding any amounts paid in settlement
of any litigation, commenced or threatened, if such settlement is effected
without prior written consent of the Representatives, the Stockholders or the
Representatives on behalf of the Stockholders, such consent not to be
unreasonably withheld or delayed; but in all cases only if, and to the
extent, that any such loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission therein made in reliance upon and in conformity with
written information furnished to the Corporation by (i) such Stockholder or
its affiliates or by its Representative on the Stockholder's behalf, (ii)
such Representative or its affiliates, or (iii) the Fintube Representative,
other than as related to information furnished by the Fintube Representative
specifically and solely on behalf of its various represented Stockholders in
their capacities as such, in any case specifically for use in the preparation
of such Registration statement or prospectus. The amount of liability of a
Stockholder resulting from this Section 8.2 shall not exceed the total
proceeds to such Stockholder from the sale of the Registrable Securities
pursuant to the Registration Statement. The amount of liability of a
Representative resulting from this Section 8.2 shall not exceed the total
proceeds to such Representative and/or the Stockholders represented by it
from the sale of the Registrable Securities pursuant to the Registration
Statement less the amount of indemnification under this Section 8.2 recovered
directly from any of such represented Stockholders. For the purposes of this
Section 8, all information relating to the various Stockholders or
Representatives included in the Registration Statement or preliminary
prospectus or final or summary prospectus contained therein is deemed to have
been provided by such Stockholder or its Representative only, except that all
information furnished by the Fintube Representative relating to Fintube
Limited Partnership and its affiliates, other than information furnished by
the Fintube Representative specifically and solely on behalf of its various
represented Stockholders in their capacities as such, included in the
Registration Statement or preliminary prospectus or final prospectus
contained therein is deemed to have been provided by each and every
Stockholder and Representative.
c. Promptly after receipt by a party entitled to indemnification
under subsection 8.1 or 8.2 hereof of notice of the commencement of any
action, such Fintube Indemnified Party or Lone Star Indemnified Party (in
either case, the "Indemnified Party") will, if a claim in respect thereof is
to be made against the Person obligated to provide indemnification under
either of such subsections (the "Indemnifying Party"), notify the
Indemnifying Party in writing of the commencement thereof. In case any such
action is brought against the Indemnified Party and it shall so notify the
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<PAGE>
Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled to participate in, and, to the extent that it so chooses, to
assume the defense thereof with counsel reasonably satisfactory to such
Indemnified Party, and, after notice from the Indemnifying Party that it so
chooses, such Indemnifying Party shall not be liable for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with
the defense thereof, provided, however, that if the Indemnifying Party fails
to take reasonable steps necessary to defend such claim within twenty (20)
days after receiving notice from the Indemnified Party that the Indemnified
Party believes the Indemnifying Party has failed to take such steps, the
Indemnified Party may assume its own defense and the Indemnifying Party shall
be liable for any expenses therefor. If, in the reasonable judgment of the
Indemnified Party, a conflict of interest does or may exist in respect of
such claim, the Indemnified Party or Parties shall have the right to select
separate counsel to participate in the defense of such action on behalf of
such Indemnified Party or Parties, in which case the Indemnifying Party shall
bear costs of such defense; provided, however, that the Indemnifying Party
shall not be obligated to pay such fees and expenses for more than one firm
to separately represent all the Indemnified Parties in all jurisdictions. If
more than one firm is selected as separate counsel, the Indemnifying Party
shall pay the Representatives an amount equal to the average of the fees and
expenses of all the firms so solicited. The Indemnity agreements in this
Section 8.3 shall be in addition to any liabilities which the Indemnifying
Parties may have pursuant to law.
d. If the indemnification provided for in this Section 8 from the
Indemnifying Party is unavailable to an Indemnified Party hereunder in
respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages, liabilities or expenses
taking into account the relative benefit of the registration of the
Registrable Securities to the Indemnifying Party and the Indemnified Party
and the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the Parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. For the purposes of this Section 8, all information relating to the
various Representatives included in the Registration Statement or preliminary
prospectus or final or summary prospectus contained therein is deemed to have
been provided by the such Representatives, except that all information
furnished by the Fintube Representative relating to Fintube Limited
Partnership and its affiliates, other than information furnished by the
Fintube Representative specifically and solely on behalf of its various
represented Stockholders in their capacities as such, included in the
Registration Statement or preliminary prospectus or final prospectus
contained therein is deemed to have been provided by each and every
Stockholder and Representative. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set
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<PAGE>
forth in this Section 8, any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
The indemnification required by this Section 8 shall be made by prompt
payments of the amounts thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or liability
is incurred.
9. SALES UNDER RULE 144. With a view to making available to the
Stockholders the benefits of Rule 144 promulgated under the Securities Act
and any other similar rule or regulation of the Commission that may at any
time permit the Stockholders to sell the Registrable Securities without
registration:
(1) The Corporation agrees to (i) file with the Commission in a
timely manner all reports required of the Corporation under the Exchange
Act for so long as the Registrable Securities shall be outstanding, and
(ii) after any sale of Registrable Securities pursuant to Rule 144, to
the extent allowed by law and upon the Corporation's receipt of a written
opinion of counsel reasonably satisfactory to it, cause any restrictive
legends to be removed and any transfer restrictions to be rescinded with
respect to such Registrable Securities;
(2) The Corporation represents and warrants to the
Representatives and the Stockholders that is has filed registration
statements pursuant to the requirements of Section 12 of the Exchange Act
and/or pursuant to the requirements of the Securities Act, and has filed
the reports required to be filed by it under the Securities Act and the
Exchange Act and the Rules and Regulations adopted by the Commission
thereunder; and
(3) The Corporation represents and warrants to the
Representatives and the Stockholders that it currently meets the
applicable eligibility requirements for use of registration statement on
Form S-3 under the Securities Act.
10. REMOVAL OF LEGEND. The Corporation agrees to remove any
legends on certificates representing Registrable Securities describing
transfer restrictions applicable to such securities upon the sale of such
securities pursuant to an effective Registration Statement under the
Securities Act.
11. NOTICES. Any notice to be given by any party hereunder to any
other shall be in writing, mailed by certified or registered mail, postage
prepaid and return receipt requested, and shall be addressed to the other
party at the addresses listed on the signature pages hereof. All such
notices
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<PAGE>
shall be deemed to be given three (3) days after the date of mailing thereof.
Notice to a Stockholder shall be valid if given to such Stockholder's
respective Representative in accordance with the terms and provisions set
forth in this Section 11.
12. MODIFICATION. Notwithstanding anything to the contrary in this
Agreement or otherwise, no modification, amendment or waiver of any of the
provisions of this Agreement shall be effective unless in writing and signed
by the Corporation and the Stockholders.
13. PARTIAL INVALIDITY. If any clause, sentence, paragraph,
section or part of this Agreement shall be deemed invalid, unenforceable or
against public policy, the part which is invalid, unenforceable or contrary
to public policy shall not affect, impair, invalidate or nullify the
remainder of this Agreement, but the invalidity, unenforceability or
contrariness to public policy shall be confined only to the clause, sentence,
paragraph, section or part of this Agreement so invalidated, unenforceable or
against public policy.
14. CONSTRUCTION. The language in all parts of this Agreement
shall in all cases be construed simply, according to its fair meaning, and
shall not be construed strictly for or against either of the parties hereto.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO ITS CONFLICTS
OF LAW PRINCIPLES.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute but one and the same instrument.
17. SUCCESSORS AND ASSIGNS. This Agreement is not assignable by
the Stockholders. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the Corporation and the Representatives and
their respective successors and assigns and by the Stockholders and their
respective heirs, legal representatives and assignees by operation of law.
18. ATTORNEYS' FEES. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover and the court shall award, reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
19. REMEDY. In the event of a breach by the Corporation of its
obligations under this Agreement, the Stockholders and the Representatives,
in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of
their rights under this Agreement. The Corporation agrees that monetary
damages would not be adequate compensation for any loss incurred by reason of
a breach by it of any of the provisions of
-11-
<PAGE>
this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
20. NO INCONSISTENT AGREEMENTS. The Corporation shall not, on or
after the date of this Agreement, enter into any agreement with respect to
the Common Stock which would prohibit the Corporation from performing the
obligations set forth in this Agreement. The Corporation has not previously
entered into or become a party to, nor is it bound by any agreement with
respect to, the Common Stock granting any registration rights to any person
which is inconsistent with the rights granted hereunder.
21. TIME IS OF THE ESSENCE. Time is of the essence in the
performance of the parties' obligations under this Agreement.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
"CORPORATION"
LONE STAR TECHNOLOGIES, INC.
By: /s/ RHYS J. BEST
---------------------------------
Name: Rhys J. Best
Title: Chairman of the Board,
Chief Executive Officer and President
Address for Notice:
Lone Star Technologies, Inc.
15560 N. Dallas Parkway, Suite 500
Dallas, Texas 75248
Fax: (972) 770-6411
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<PAGE>
"FINTUBE REPRESENTATIVE"
FINTUBE LIMITED PARTNERSHIP
By: Division Fintube Corporation,
Its General Partner
By: /s/ JERRY E. RYAN
---------------------------------
Name: Jerry E. Ryan
Title: Chairman of the Board
Address for Notice:
Fintube Limited Partnership
3201 E. 65th
Tulsa, Oklahoma 74136
Fax: (918) 495-1374
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<PAGE>
"YORKTOWN REPRESENTATIVE"
YORKTOWN PARTNERS L.L.C.
By: /s/ PETER A. LEIDEL
---------------------------------
Its Managing Member
By: /s/ PETER A. LEIDEL
---------------------------------
Name: Peter A. Leidel
-------------------------------
Title: /s/ Member
------------------------------
Address for Notice:
Yorktown Partners L.L.C.
c/o Peter A. Leidel
410 Park Avenue
New York, New York 10022
Fax:
-15-
<PAGE>
"BROWN REPRESENTATIVE"
BROWN UNIVERSITY THIRD CENTURY FUND
By: /s/ JONATHON L. SHEAR
---------------------------------
Its Treasurer
------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
Address for Notice:
Brown University Third Century Fund
168 Angell Street, Box C
Providence, Rhode Island 02912
Fax:
-16-
<PAGE>
"WDR REPRESENTATIVE"
WARBURG, DILLON, READ, L.L.C.
By: /s/ STEVE CHRAPPA
---------------------------------
Its Associate Director
By: /s/ STEVE CHRAPPA
---------------------------------
Name: Steve Chrappa
-------------------------------
Title: Associate Director
------------------------------
Address for Notice:
Warburg, Dillon, Reed, L.L.C.
c/o Joe DeCicco
299 Park Avenue
New York, New York 10171
Fax:
-17-
<PAGE>
"TICONDEROGA REPRESENTATIVE"
TICONDEROGA PARTNERS.
By: /s/ TICONDEROGA CAPITAL, INC.
---------------------------------
Its Investment Mgr
---------------------------------
By:/s/ ROBERT HANNON
---------------------------------
Name: Robert Hannon
-------------------------------
Title: Vice President Finance
------------------------------
Address for Notice:
Ticonderoga Partners
20 Williams Street, Suite G40
Wellesley, MA 02481
Fax:
-18-
<PAGE>
"STOCKHOLDERS"
/s/ JERRY E. RYAN
---------------------------------------
Jerry E. Ryan
3201 East 65th Street
Tulsa, Ok 74136
Tracie Ryan Jerd "S" Trust
By: /s/ TRACIE RYAN JERD
-----------------------------------
Name: Tracie Ryan Jerd
Title:
-----------------------------
11 Mallard Drive
Mt. Laurel, NJ 08054
Andrew C. Ryan "S" Trust
By: /s/ ANDREW RYAN
-----------------------------------
Name: Andrew Ryan
-----------------------------
Title:
-----------------------------
40 N. Kingshighway, Apt. 13L
St. Louis, MO 63108
Sloane Renee Ryan "S" Trust
By: /s/ BARBARA N. RYAN
-----------------------------------
Name: Barbara N. Ryan
-----------------------------
Title: Trustee
-----------------------------
3201 East 65th Street
Tulsa, Oklahoma 74136
/s/ RAYMOND M. BRIGGS
--------------------------------------
Raymond M. Briggs
3211 East 65th Street
Tulsa, Oklahoma 74136
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<PAGE>
/s/ TRAVIS J. BRIGGS
------------------------------------------
Travis J. Briggs
4676 Southern Ave.
Dallas, TX 75209
/s/ JOHN CONNOR BRIGGS
------------------------------------------
John Connor Briggs
5526 W. Amhurst
Dallas, TX 75209
/s/ WILLIAM CLINTON BRIGGS
------------------------------------------
William Clinton Briggs
3211 E. 65th Street
Tulsa, Oklahoma 74136
/s/ JERRY R. NICHOLS
------------------------------------------
Jerry R. Nichols
1379 East 29th
Tulsa, Oklahoma 74144
/s/ NANCY K. NICHOLS
------------------------------------------
Nancy Nichols
1389 East 27th
Tulsa, Oklahoma 74114
/s/ ERIN NICHOLS
------------------------------------------
Erin Nichols
1427 East 34th
Tulsa, Oklahoma 74105
/s/ KRIS NICHOLS,
------------------------------------------
CUSTODIAN FOR JUSTIN NICHOLS
Kris Nichols, Custodian for Justin Nichols
1379 E. 29th
Tulsa, Oklahoma 74114
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<PAGE>
/s/ LARRY J. BUMP
------------------------------------------
Larry J. Bump
7538 S. Gary Place
Tulsa, Oklahoma 74136
/s/ TINA L. BUMP
------------------------------------------
Tina L. Bump
P.O. Box 18884
Golden, CO 80402
/s/ TRICIA L. EICHLER
------------------------------------------
Tricia L. Eichler
6231 S. Jamaica Court
Englewood, CO 80111
/s/ TERRY L. GILBERT
------------------------------------------
Terry L. Gilbert
1522 N. Minnesota
Shawnee, OK 74801
/s/ LARRY SIMS
------------------------------------------
Larry Sims
4500 W. 89th
Tulsa, Oklahoma 74132
/s/ PEGGY PETERS
------------------------------------------
Peggy Peters
7255 Oak Fairway
Tulsa, Oklahoma 74131
/s/ DAVID CROWELL
------------------------------------------
David Crowell
2717 W. 67th
Tulsa, Oklahoma 74132
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<PAGE>
/s/ CHRIS WEIERMAN
------------------------------------------
Chris Weierman
Route 1, Box 143
Pryor, Oklahoma 74361
/s/ HARTMAN MITCHELL
------------------------------------------
Hartman Mitchell
4824 S. Yorktown Ct.
Tulsa, Oklahoma 74105
/s/ GARY WILLIS
------------------------------------------
Gary Willis
7528 S. 96th East Avenue
Tulsa, OK 74133
/s/ MARION DEATON
------------------------------------------
Marion Deaton
1364 E. 43rd Place
Tulsa, Oklahoma 74105
/s/ THOMAS J. BUTCHKO
------------------------------------------
Thomas J. Butchko
245 E. 28th Street
Tulsa, Oklahoma 74114
/s/ EMMETT D. MANTLE
------------------------------------------
Emmett D. Mantle
3331 S. 76th W. Ave.
Tulsa, Oklahoma 74107
/s/ ROBERT A. HANSON
------------------------------------------
Robert A. Hanson
3159 E. Atlanta
Tulsa, Oklahoma 74105
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<PAGE>
/s/ DON R. REID
------------------------------------------
Don R. Reid
724 W. 97th Court
Jenks, Oklahoma 74037
/s/ MICHEL LABELLE
------------------------------------------
Michel Labelle
1544 Chemin de L'Etoile
St-Adolphe D'Howard, Quebec
JOT 2B0
Brown University Third Century Fund
By: /s/ JONATHON L. SHEAR
--------------------------------------
Name: Jonathon L. Shear
-------------------------------
Title: Treasurer
-------------------------------
168 Angell St., Box C
Providence, RI 02912
Yorktown Energy Partners
By: /s/ PETER A. LEIDEL
--------------------------------------
Name: Peter A. Leidel
-------------------------------
Title: Member
-------------------------------
c/o Peter A. Leidel
Yorktown Partners L.L.C.
410 Park Ave
New York, New York 10022-4407
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<PAGE>
Lexington Partners III, L.P.
By: /s/ WARBURG DIUION READ LLC
--------------------------------------
ITS GENERAL PARTNER
Name: Steve Chrappa
-------------------------------
Title: Associate Director
-------------------------------
c/o Joe De Cicco
Warburg, Dillon Read, L.L.C.
299 Park Ave.
New York, New York 10171
Concord Partners, L.P.
By: /s/ ROBERT HANNON
--------------------------------------
Name: Robert Hannon
-------------------------------
Title: VP of Ticonderoga Capital
Investment Mgr
-------------------------------
c/o Robert Hannon
Ticonderoga Partners
20 William St.
Suite G40
Wellesley, MA 02481
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<PAGE>
Concord Partners Japan Limited
By: /s/ ROBERT HANNON
--------------------------------------
Name: Robert Hannon
--------------------------------
Title: VP of Ticonderoga Capital
Investment Mgr
--------------------------------
c/o Robert Hannon
Ticonderoga Partners
20 William St.
Suite G40
Wellesley, MA 02481
/s/ DENNIS H. ADLER
------------------------------------------
Dennis H. Adler
/s/ H. MICHAEL ASHFORD
------------------------------------------
H. Michael Ashford
Route 1, Box 177
Maud, TX 75567
/s/ CHARLES A. BALLARD
------------------------------------------
Charles A. Ballard
Armitage Farm
P.O. Box 196
Solsbury, PA 18963
/s/ JOHN P. BIRKELUND
------------------------------------------
John P. Birkelund
956 Fifth Avenue, Apt. 14A
New York, New York 10021
/s/ WILLIAM S. BRENIZER
------------------------------------------
William S. Brenizer
1035 Park Avenue, Apt. 5A
New York, New York 10028
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<PAGE>
/s/ JOHN G. BRIM
------------------------------------------
John G. Brim
120 East End Avenue
Apt. 5A
New York, New York 10028
/s/ PATRICK S. CIAMPI
------------------------------------------
Patrick S. Ciampi
149 Woodgate Rd.
Middletown, NY 07748
/s/ DOUGLAS A. DARBY
------------------------------------------
Douglas A. Darby
P.O. Box 164
Plymouth Montserrat
British West Indies
/s/ SALLY A. DEAN
------------------------------------------
Sally A. Dean
1724 West Sussex Road, N.E.
Atlanta, Georgia 30306
/s/ FRANCOIS DE SAINTS PHALLE
------------------------------------------
Francois de Saints Phalle
1107 5th Avenue, Apt. 6N
New York, NY 10128
/s/ CHARLES P. DURKIN
------------------------------------------
Charles P. Durkin
142 East 71st Street
New York, NY 10021
/s/ PETER M. FLANIGAN
------------------------------------------
Peter M. Flanigan
Anderson Hill Road
Purchase, NY 10577
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<PAGE>
/s/ GERALD GREENWALD
------------------------------------------
Gerald Greenwald
c/o United Airlines
P.O. Box 66100
Chicago, IL 60666
/s/ JOHN H. F. HASKELL, JR.
------------------------------------------
John H. F. Haskell, JR.
120 East End Avenue
Apt. 3A
New York, NY 10028
/s/ FRANKLIN W. HOBBS
------------------------------------------
Franklin W. Hobbs, IV
151 East 79th Street
New York, NY 10021
/s/ CRAIG A.T. JONES
------------------------------------------
Craig A. T. Jones
123 Abbott Road
Wellesley, MA 02181-6124
/s/ KURT KALM
------------------------------------------
Kurt Kalm
11 Palmer Lane
Riverside, CT 06878
/s/ W. HOWARD KEENAN, JR.
------------------------------------------
W. Howard Keenan, Jr.
1170 Fifth Ave., Apt. 7a
New York, NY 10029
/s/ BRYAN B. LAWRENCE
------------------------------------------
Bryan B. Lawrence
116 E. 63rd St., Apt. 9D
New York, NY 10021
-27-
<PAGE>
/s/ JOHN H. MULLIN, III
------------------------------------------
John H. Mullin, III
c/o Ridgeway Farms
RIDGEWAY FARM LANE
Brookneal, VA 23528
/s/ JOHN J. MURABITO
------------------------------------------
John J. Murabito
9 Westwood Lane
Woodbury, NY 11797
/s/ DAVID W. NIEMIEC
------------------------------------------
David W. Niemiec
139 East 79th Street
New York, NY 10021
/s/ ROBERT A. PILKINGTON
------------------------------------------
Robert A. Pilkington
152 Wheatley Road
Glen Head, NY 11545
/s/ THOMAS L. PIPER, III
------------------------------------------
Thomas L. Piper, III
Windrow Lane
New Canaan, CT 06840
/s/ BRET E. RUSSELL
------------------------------------------
Bret E. Russell
325 West End Ave. Apt. 8B
New York, NY 10023
/s/ STUART L. SINDELL
------------------------------------------
Stuart L. Sindell
300 Cascade Road
Stamford, CT 06903
-28-
<PAGE>
/s/ MICHAEL I. SOMERS
------------------------------------------
Michael I. Somers
900 Park Avenue, Apt. #26A
New York, NY 10021-0231
/s/ DANFORTH W. STAR
------------------------------------------
Danforth W. Star
12 Bayberry lane
Greenwich, CT 06831
/s/ F. DAVIS TERRY, JR.
------------------------------------------
F. Davis Terry, Jr.
1035 Fifth Avenue, Apt. 16C
New York, NY 10028
/s/ LORENZO D. WEISMAN
------------------------------------------
Lorenzo D. Weisman
1107 Fifth Ave.
New York, NY 10128
/s/ EDWARD B. WHITNEY
------------------------------------------
Edward B. Whitney
307 West 102nd Street
New York, NY 10025
/s/ GEORGE A. WIEGERS
------------------------------------------
George A. Wiegers
230 Bridge Street
Vail, CO 81657-3614
/s/ RICHARD C. YANCEY
------------------------------------------
Richard C. Yancey
42 Monroe Place
Brooklyn, NY 11201
-29-
<PAGE>
/s/ ROBERT A. YOUNG
------------------------------------------
Robert A. Young
52 Indian Rock Road
New Canaan, CT 06840
/s/ H. C. BOWEN SMITH
------------------------------------------
H.C. Bowen Smith
c/o Warburg, Dillon Read, L.L.C.
299 Park Ave.
New York, New York 10171
Warburg, Dillon Read, L.L.C.
By: /s/ STEVE CHRAPPA,
---------------------------------------
Associate Director
---------------------------------------
Joe De Cicco
299 Park Ave.
New York, New York 10171
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<PAGE>
EXHIBIT 5.1
THOMPSON & KNIGHT L.L.P.
1700 PACIFIC AVENUE, SUITE 3300
DALLAS, TEXAS 75201
(214) 969-1700
February 4, 2000
Lone Star Technologies, Inc.
15660 North Dallas Parkway, Suite 500
Dallas, Texas 75248
Re: LONE STAR TECHNOLOGIES, INC.; FORM S-3 REGISTRATION STATEMENT
Gentlemen:
We have acted as counsel for Lone Star Technologies, Inc. (the
"Company"), in connection with the preparation of its Registration Statement
on Form S-3 (the "Registration Statement"), filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), covering the proposed sale of up to 760,237
shares (the "Shares") of Common Stock, par value $1.00 per share, of the
Company by the selling stockholders named therein (the "selling
stockholders"). The Shares are proposed to be sold by the selling
stockholders in the manner set forth in the prospectus constituting Part I of
the Registration Statement under the caption "Plan of Distribution."
In connection with the foregoing, we have examined the originals or
copies, certified or otherwise authenticated to our satisfaction, of such
corporate records of the Company, certificates of public officials and other
instruments and documents as we have deemed necessary to require as a basis
for the opinion hereinafter expressed. As to questions of fact material to
such opinion, we have, where relevant facts are not independently
established, relied upon statements of officers of the Company.
On the basis of the foregoing and in reliance thereon, we advise you
that in our opinion the Shares to be sold by the selling stockholders
pursuant to the Registration Statement have been duly and validly authorized
by the Company and, when sold by the selling stockholders as described in the
Registration Statement, will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 of the Registration Statement and to the reference to us in the
prospectus under the caption "Legal Matters." In giving this consent, we do
not thereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act or the rules or regulations
of the Commission thereunder.
Respectfully submitted,
THOMPSON & KNIGHT L.L.P.
By: /s/ David E. Morrison
---------------------------
David E. Morrison, Attorney
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 22, 1999,
except with respect to Note F as to which the date is March 16, 1999, included
in Lone Star Technologies, Inc. Form 10-K for the year ended December 31, 1998
and to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Dallas, Texas,
February 4, 2000
<PAGE>
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report on the consolidated
financial statements of Fintube Limited Partnership, dated January 27, 1999
included in Lone Star Technologies, Inc. Form 8-K(A) dated January 3, 2000 and
to all references to our Firm included in this registration statement.
/s/ Arthur Andersen LLP
Tulsa, Oklahoma,
February 4, 2000
