<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Quarterly Period Ended January 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- -----------------------
Commission File Number
-----------------------------
FWT, INC.
(Exact Name of Registrant as Specified in Its Charter)
Texas 75-1040743
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1901 East Loop 820 South
Fort Worth, Texas 76112-7899
(Address, Including Zip Code, of Registrant's Principal Executive Offices)
(817) 457-3060
(Telephone number, including area code, of
Registrant's Principal Executive Offices)
Not Applicable
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
Indicated below is the number of shares outstanding of each class of
the registrant's common stock as of April 27, 1998.
<TABLE>
<CAPTION>
Title of Each Class of Common Stock Number Outstanding
Not Applicable Not Applicable
<S> <C>
</TABLE>
1
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PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
Index to Financial Statements
<TABLE>
<CAPTION>
Page
<S> <C>
Balance Sheets as of January 31, 1998 and April 30, 1997 3
Statements of Income for the Three and Nine Month Periods Ending
January 31, 1998 and 1997 4
Statement of Shareholders' Equity (Deficit) for the Nine Month
Period Ending January 31, 1998 5
Statements of Cash Flows for the Three and Nine Month Periods
Ending January 31, 1998 and 1997 6
Notes to Financial Statements 7
</TABLE>
2
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FWT, INC.
BALANCE SHEETS
AS OF JANUARY 31, 1998 AND APRIL 30, 1997
UNAUDITED
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
January 31, April 30,
1998 1997
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 6,988 $ 4,483
Accounts receivable, less allowance for doubtful
accounts of $175 and $75, respectively 6,900 17,560
Inventories 11,290 8,357
Prepaid expenses 2,549 984
Other assets 632 519
--------- ---------
Total current assets 28,359 31,903
Property, Plant, And Equipment :
Land and land improvements 780 867
Buildings and building improvements 4,548 4,467
Machinery and equipment 6,187 5,463
--------- ---------
11,515 10,797
Less accumulated depreciation (3,103) (2,497)
--------- ---------
Net property, plant, and equipment 8,412 8,300
Deferred tax asset 20,000 --
Other noncurrent assets 5,537 --
--------- ---------
Total assets $ 62,308 $ 40,203
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Current portion of long-term debt $ -- $ 188
Accounts payable 5,684 10,195
Accrued interest 2,187 --
Other accrued expenses and liabilities 1,976 2,543
Notes payable 1,976 468
--------- ---------
Total current liabilities 11,823 13,394
Long-term debt, less current portion 105,000 1,512
--------- ---------
Total liabilities 116,823 14,906
Commitments and Contingencies
Shareholders' Equity (Deficit):
Common stock, $10 par value; 1,000 shares
authorized, 372 shares issued, 136.14 and
372 shares outstanding, respectively 4 4
Additional paid-in capital 29,676 1
Treasury stock, at cost, 235.86 shares as of
January 31, 1998 (83,054) --
Retained earnings (deficit) (1,141) 25,292
--------- ---------
Total shareholders' equity (deficit) (54,515) 25,297
--------- ---------
Total liabilities and shareholders' equity (deficit) $ 62,308 $ 40,203
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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FWT, INC.
STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTH PERIODS ENDING JANUARY 31, 1998 AND 1997
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Month Period Ending Nine Month Period Ending
January 31, January 31,
------------------------- ------------------------
1998 1997 1998 1997
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 20,691 $ 22,169 $ 58,041 $ 49,301
Cost of sales 14,692 15,337 41,344 34,108
-------- -------- -------- --------
Gross profit 5,999 6,832 16,697 15,193
Selling, administrative and general expenses 2,874 3,237 8,263 6,179
-------- -------- -------- --------
Operating income 3,125 3,595 8,434 9,014
Interest income 65 75 311 191
Interest expense (2,601) (30) (3,004) (44)
Other income (expense), net 105 79 386 120
-------- -------- -------- --------
Income before tax provision 694 3,719 6,127 9,281
Income tax provision 255 99 368 224
-------- -------- -------- --------
Net income before extraordinary item 439 3,620 5,759 9,057
Extraordinary item, net of tax benefit of $863 (1,517) -- (1,517) --
-------- -------- -------- --------
Net income (loss) $ (1,078) $ 3,620 $ 4,242 $ 9,057
======== ======== ======== ========
Pro Forma Financial Information:
Pro Forma adjustment for federal tax
provision 1,230 2,038 3,079
-------- -------- --------
Pro Forma net income $ 2,390 $ 2,204 $ 5,978
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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FWT, INC.
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTH PERIOD ENDING JANUARY 31, 1998
UNAUDITED
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
Total
Common Stock Additional Retained Treasury Stock Shareholders'
----------------- Paid-in Earnings ----------------- Equity
Shares Amount Capital (Deficit) Shares Amount (Deficit)
------ ------ ------- --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, April 30, 1997 372 $ 4 $ 1 $ 25,292 -- $ -- $ 25,297
Distributions to shareholders -- -- -- (21,000) -- -- (21,000)
Net income, May 1, 1997 to November 11, 1997 -- -- -- 5,383 -- -- 5,383
Reclassification of undistributed Subchapter
S corporation earnings -- -- 9,675 (9,675) -- -- --
Recapitalization of the Company -- -- 20,000 -- 235.86 (83,054) (63,054)
Net loss, November 12, 1997 to
January 31, 1998 -- -- -- (1,141) -- -- (1,141)
------ ------ ------- --------- -------- -------- --------
Balance, January 31, 1998 372 $ 4 $29,676 $ (1,141) 235.86 $(83,054) $(54,515)
====== ====== ======= ========= ======== ======== ========
</TABLE>
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FWT, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE AND NINE MONTH PERIODS ENDING JANUARY 31, 1998 AND 1997
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Month Period Ending Nine Month Period Ending
January 31, January 31,
------------------------- ------------------------
1998 1997 1998 1997
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income before extraordinary item $ 439 $ 3,620 $ 5,759 $ 9,057
Adjustments to reconcile net income before
extraordinary item to net cash provided by
operating activities :
Depreciation 264 127 674 379
Amortization 142 -- 142 --
Net gain on dispositions of property and
equipment (45) (12) (187) (15)
Adjustments to working capital accounts :
Accounts receivable 533 (2,831) 10,660 (3,932)
Inventories 137 (720) (2,933) (4,543)
Prepaid expenses (208) 85 (1,565) (966)
Other assets 610 3 272 148
Accounts payable 500 793 (4,511) 2,342
Accrued expenses and other liabilities 192 (362) 1,620 232
--------- --------- --------- ---------
Net cash provided by operating activities 2,564 703 9,931 2,702
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures for property and equipment (316) (1,266) (985) (2,346)
Proceeds from sales of property and equipment 34 12 239 10
--------- --------- --------- ---------
Net cash used in investing activities (282) (1,254) (746) (2,336)
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable, net of financing costs 97,141 -- 117,141 555
Payments of notes payable (120,468) (880) (120,468) --
Proceeds from long-term debt, net of issuance costs 99,830 1,435 99,830 555
Payments of long-term debt (1,598) -- (1,700) (50)
Payments for acquisition of treasury stock (80,483) -- (80,483) --
Distributions paid to shareholders -- (98) (21,000) (98)
--------- --------- --------- ---------
Net cash used in financing activities (5,578) 457 (6,680) 962
--------- --------- --------- ---------
Net increase (decrease) in cash and cash equivalents (3,296) (94) 2,505 1,328
Cash and cash equivalents, beginning of period 10,284 5,470 4,483 4,048
--------- --------- --------- ---------
Cash and cash equivalents, end of period $ 6,988 $ 5,376 $ 6,988 $ 5,376
========= ========= ========= =========
SUPPLEMENTAL CASH FLOW INFORMATION :
Cash paid during the period for :
Interest $ 540 $ 28 $ 819 $ 42
Taxes -- 23 22 23
Non Cash Investing and Financing Activities:
Additional paid-in capital resulting from
deferred tax asset 20,000 -- 20,000 --
Additional paid-in capital resulting from
undistributed S corporation earnings 9,675 -- 9,675 --
Subordinated promissory notes payable issued
in connection with Recapitalization 1,946 -- 1,946 --
Distribution of assets in connection with
Recapitalization $ 625 $ -- $ 625 $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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FWT, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - Background
FWT, Inc., formerly Fort Worth Tower Company, Inc. ("FWT" or the "Company"), a
Texas corporation, manufactures, sells and installs transmitting towers, poles,
PowerMounts(TM) and related accessories used principally to support
communications and broadcasting antennae for the telecommunications industry.
This includes cellular telephone, personal communications systems (PCS),
commercial and amateur broadcasting, private microwave and television. Operating
results are strongly influenced by growth in demand for telecommunications
infrastructures services. The Company also produces shelters and cabinets used
to house electronic communications and broadcasting equipment. The Company
conducts its business principally through its two plants located near Fort
Worth, Texas.
Basis of Presentation
These financial statements reflect all normal and recurring adjustments that
are, in the opinion of management, necessary to present a fair statement of
FWT's financial position as of January 31, 1998 and the results of its
operations for the three and nine month periods ending January 31, 1998 and
1997. These financial statements include estimates and assumptions made by
management that affect the reported amounts of assets and liabilities, the
reported amounts of revenues and expenses, and provisions for and the disclosure
of contingent assets and liabilities. Actual results could differ from such
estimates. Results of operations for interim periods are not necessarily
indicative of results to be obtained for the full fiscal year.
Recapitalization and Stock Purchase
On November 12, 1997, the Company, FWT Acquisition, Inc. (a wholly-owned
subsidiary of Baker Communication Fund, L.P.), T.W. Moore, Betty Moore, Roy J.
Moore, Thomas F. Moore and Carl R. Moore (each of the natural persons, the
"Existing Shareholders") entered into and consummated the transactions set forth
in a Stock Purchase and Redemption Agreement and related agreements. Such
agreements contemplated two primary transactions. The first transaction
included (i) the incurrence by the Company of $100 million senior secured
indebtedness (the "Senior Credit Facility"), (ii) redemption by the Company of
an aggregate of 235.86 shares of the Company's common stock from the Existing
Shareholders for consideration totaling approximately $83.1 million, (iii) the
repayment of outstanding indebtedness of the Company totaling approximately
$22.1 million, and (iv) the distribution of an immaterial amount of selected
assets to certain Existing Shareholders (such transactions are collectively
referred to as the "Recapitalization"). The second transaction included the
purchase by FWT Acquisition, Inc. of an aggregate of 108.91 shares of the
Company's common stock from Existing Shareholders for consideration totaling
approximately $36 million (the "Stock Purchase", and together with the
Recapitalization, the "Transactions"). As a result of the Stock Purchase, FWT
Acquisition, Inc. holds 80% of FWT's outstanding common stock and three of the
Existing Shareholders hold 20% of FWT's outstanding common stock. For financial
reporting purposes, the Recapitalization was accounted for by the Company as an
acquisition of treasury stock.
Note 2 - Cash Equivalents
The Company considers all highly liquid short-term investments purchased with
original maturities of three months or less to be cash equivalents. As of
January 31, 1998, short-term investments totaling $6,700,000 are included in
cash equivalents. The cost of such short-term investments approximated fair
value.
Note 3 - Inventories
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method. Inventory costs include material,
labor and factory overhead. Total inventories as of January 31, 1998 and April
30, 1997 included the following (amounts in thousands) :
<TABLE>
<CAPTION>
January 31, April 30,
1998 1997
-------------- ------------
<S> <C> <C>
Finished goods $ 6,291 $ 6,408
Work-in process and raw materials 4,999 1,949
-------------- ------------
Total Inventories $ 11,290 $ 8,357
============== ============
</TABLE>
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Note 4 - Revenue Recognition
Revenue from sales is recognized when the earnings process is complete, which
is generally at the time of product shipment. In circumstances where shipments
are delayed at the customer's request, revenue is recognized upon completion of
the product and payment is received from the customer. Management believes
that payment represents acknowledgment by the customer that all contractual
terms are binding, the product has been manufactured according to customer
specifications and engineering design, the product is available for delivery
according to the schedule fixed by the customer, and the Company is not
responsible for delivery or installation. Accordingly, management believes
that the risk of ownership has passed and the earnings process is complete.
Note 5 - Federal and State Income Taxes
Effective November 12, 1997, the Company elected to be taxed as a Subchapter C
corporation and, accordingly, has recorded a provision for federal income taxes
since such date in the accompanying statements of income for the three and nine
month periods ended January 31, 1998. Prior to November 12, 1997, the Company
was a Subchapter S corporation. Accordingly, no provision for federal income
taxes is reflected in the accompanying statements of income for the three and
nine month periods ended January 31, 1997, as well as for the period from May
1, 1997 through November 11, 1997 included in the accompanying statements of
income for the three and nine month periods ended January 31, 1998.
During the time that the Company was a Subchapter S corporation, it had made an
election under Section 444 of the Internal Revenue Code to retain a fiscal year
of April 30. As a result of such election, the Company was required to pay an
amount held by the IRS to offset timing differences in the payment of estimated
taxes by the Company's shareholders. As of January 31, 1998, the Company had
made payments pursuant to this requirement of $1,960,702 that are included in
prepaid expenses in the accompanying balance sheet as of January 31, 1998. As a
result of the Company electing to be taxed as a Subchapter C corporation, the
Company has filed for a refund of such payments from the IRS.
The income tax provisions included in the accompanying statements of income
include provisions for state income taxes. For the periods from May 1, 1996 to
November 11, 1997, such provisions include amounts for various states in which
the Company was subject to income taxes because those states did not recognize
Subchapter S corporations.
In connection with the transactions discussed in Note 1, the parties to the
transactions elected jointly to treat the Recapitalization and Stock Purchase as
an asset acquisition under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended. As a result, the Company recorded a deferred tax asset of
approximately $20.0 million (net of a valuation allowance of approximately $20.0
million) that is included in the accompanying balance sheet as of January 31,
1998, with a corresponding credit to additional paid-in capital. The deferred
tax asset relates to future tax deductions for the net excess of the tax bases
of the assets and liabilities over the financial statement carrying amounts.
Management anticipates future taxable income after debt service sufficient to
realize the net deferred tax asset. Any future change in the valuation
allowance will be reflected as a component of the Company's income tax
provision.
Note 6 - Notes Payable and Long-Term Debt
Notes payable and long-term debt of the Company as of January 31, 1998 and
April 30, 1997, consisted of the following :
<TABLE>
<CAPTION>
January 31, April 30,
1998 1997
----------- ----------
<S> <C> <C>
Unsecured note payable to a bank, maximum
borrowing of $1,500,000, bearing interest at
adjusted LIBOR (as defined), principal due at
original maturity of 1/1/98, paid in full during
November 1997 $ -0- $ 468,000
</TABLE>
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<TABLE>
<S> <C> <C>
Note payable to a bank, bearing interest at 6%,
payable in quarterly installments of $25,000,
original maturity of 12/31/2000, secured by all
receivables of the Company, paid in full during
November 1997 -0- 375,000
Unsecured note payable to a bank, bearing
interest at Adjusted LIBOR (as defined), payable
in monthly installments of $7,361, original maturity
date of 4/1/2000, paid in full during November 1997 -0- 1,325,000
Subordinated promissory notes payable, interest at
prime (8.5% at 1/31/98), principal and accrued
interest due 4/10/98 1,582,500 -0-
Subordinated promissory notes payable, interest at
prime (8.5% at 1/31/98), payable in monthly installments
of principal and accrued interest through November 15,
1998 363,348 -0-
Note payable under revolving line of credit, interest
at prime plus 1% (9.5% at 1/31/98), due 11/30/00,
collateralized by substantially all assets 30,208 -0-
Senior subordinated notes, bearing interest at 9 7/8% and
payable semiannually on 5/15 and 11/15, principal due
at maturity on 11/15/07. 105,000,000 -0-
------------ ----------
Total notes payable and long-term debt 106,976,056 2,168,000
Less - notes payable and current portion of long-term debt (1,976,056) (656,332)
------------ ----------
Long-term debt, less current portion $105,000,000 $1,511,668
============ ==========
</TABLE>
In connection with the Transactions discussed in Note 1, the Company issued
subordinated promissory notes to each of the Existing Shareholders totaling
$911,853 (the "Purchase Price Adjustment Notes") and $1,582,500 (the "Tax
Notes"). The Purchase Price Adjustment Notes bear interest at prime and were
originally payable (subject to adjustment based upon the audited working capital
of the Company as of November 10, 1997), in monthly installments of principal of
$75,987, plus accrued interest, through October 15, 1998, with a final principal
installment of $75,994, plus accrued interest, on November 15, 1998. Based
upon the audited working capital of FWT as of November 10, 1997, the principal
amount of the Purchase Price Adjustment Notes were subsequently reduced by
$548,505, with a corresponding reduction in the cost of the treasury stock
acquired pursuant to the Recapitalization. The Tax Notes bear interest at prime
and were payable on April 10, 1998, plus accrued interest. Each of the Purchase
Price Adjustment Notes and Tax Notes are unsecured obligations of the Company.
In November, 1997, the Company entered into a revolving credit facility that
allows the Company to borrow up to $25,000,000, subject to borrowing base
limitations and the satisfaction of customary borrowing conditions. The
revolving credit facility contains certain financial covenants that require the
Company to maintain , based upon the latest twelve months of operations, minimum
ratios of consolidated EBITDA (as defined) to consolidated interest expense,
minimum ratios of consolidated total debt to consolidated EBITDA, and minimum
levels of consolidated EBITDA. The revolving credit facility also limits, among
other items, the Company's annual capital expenditures and the Company's
ability to incur additional
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indebtedness. Borrowing under the revolving credit facility were approximately
$30,000 as of January 31, 1998. Availability under the revolving credit
facility, based upon the Company's borrowing base, was approximately $12.1
million as of January 31, 1998. As of January 31, 1998, the Company was in
compliance with all financial covenants and similar limitations set forth in the
agreement.
Subsequent to the completion of the Transactions discussed in Note 1, the
Company issued $105,000,000 aggregate principal amount of 9 7/8% Senior
Subordinated Notes (the "Notes"), the net proceeds from which were used to repay
borrowings incurred by the Company under the Senior Credit Facility in
connection with the Recapitalization. Interest on the Notes is payable
semiannually on May 15 and November 15 of each year, commencing on May 15, 1998.
The Notes mature on November 15, 2007. The Notes are unsecured senior
subordinated obligations of the Company and are subordinated in right of payment
to all existing and future Senior Indebtedness (as defined) of the Company. The
Notes are redeemable, in whole or in part, at the option of the Company on or
after November 15, 2002. In addition, at any time on or prior to November 15,
2000, the Company may, at its option, redeem up to 35% of the aggregate
principal amount of the Notes from the proceeds of one or more public equity
offerings, at a redemption price equal to 109.875% plus accrued and unpaid
interest. Upon a change of Control (as defined), each holder of the Notes will
have the right to require that the Company make an offer to purchase all
outstanding Notes at a price equal to 101% plus accrued interest. The Indenture
contains certain covenants that limit the ability of the Company to, among other
things, incur additional indebtedness, pay dividends or make investments and
certain other restricted payments, consummate certain asset sales, enter into
certain transactions with affiliates, incur liens, merge or consolidate with any
other person or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of the assets of the Company. In addition, the Company
will be obligated to offer to repurchase the Notes at 100% plus accrued and
unpaid interest in the event of certain Asset Sales (as defined). The Notes
also contain certain registration rights.
As a result of the repayment of borrowings under the Senior Credit Facility,
during the quarterly period ending January 31, 1998 the Company recorded a
charge to operations of approximately $2.4 million representing the writeoff of
deferred financing costs. This charge, net of a tax benefit of approximately
$863 thousand, is reflected as an extraordinary item in the accompanying
statements of income for the three and nine month periods ended January 31,
1998.
Note 7 - Events Subsequent to January 31, 1998
During March 1998, the Company, pursuant to a filing with the Securities and
Exchange Commission, initiated an Exchange Offer to redeem the Notes for senior
subordinated notes having the same principal amount and interest rate, and
substantially the same terms and conditions. The Exchange Offer was completed
in April 1998 and resulted in the redemption of all of the outstanding Notes.
On February 27, 1998, an executive officer and shareholder of the Company
entered into a Voluntary Retirement Agreement with the Company. In connection
with the agreement, he agreed to resign from office as an executive officer and
voluntarily retire. As part of the agreement, the Company agreed to pay this
former executive officer and shareholder $237,500 annually through December 31,
2000 and one-half of any bonus that otherwise would have been payable to him
under his employment agreement with the Company had his employment with the
Company continued through December 31, 2000.
On March 30, 1998, a shareholder and former executive officer of the Company
terminated his employment with the Company. Pursuant to the terms of his
employment agreement with the Company, this shareholder and former executive
officer will be entitled to receive his annual salary of $200,000, an annual
bonus based upon the earnings and performance of the Company, and various other
benefits through December 31, 2000.
On April 3, 1998, an executive officer and shareholder of the Company
terminated his employment with the Company. Pursuant to the terms of his
employment agreement with the Company, this shareholder and former executive
officer will be entitled to receive his annual salary of $200,000, an annual
bonus based upon the earnings and performance of the Company, and various other
benefits through December 31, 2000.
As a result of the above terminations of employment, the Company expects to
record a charge to operations during the quarterly period ending April 30, 1998
reflecting the estimated amounts payable to the above individuals through
December 31, 2000.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
OVERVIEW
On November 12, 1997, the Company, FWT Acquisition, Inc.( a
wholly-owned subsidiary of Baker Communication Fund, L.P. ), T.W. Moore, Betty
Moore, Roy J. Moore, Thomas F. Moore and Carl R. Moore (each of the natural
persons, the "Existing Shareholders") entered into and consummated the
transactions set forth in a Stock Purchase and Redemption Agreement and related
agreements. Such agreements contemplated two primary transactions. The first
transaction included (i) the incurrence by the Company of $100 million senior
secured indebtedness (the "Senior Credit Facility"), (ii) redemption by the
Company of an aggregate of 235.86 shares of the Company's common stock from the
Existing Shareholders for consideration totaling approximately $83.1 million,
(iii) the repayment of outstanding indebtedness of the Company totaling
approximately $22.1 million, and (iv) the distribution of an immaterial amount
of selected assets to certain Existing Shareholders (such transactions are
collectively referred to as the "Recapitalization"). The second transaction
included the purchase by FWT Acquisition, Inc. of an aggregate of 108.91 shares
of the Company's common stock from Existing Shareholders for consideration
totaling approximately $36 million (the "Stock Purchase"). As a result of the
above transactions, FWT Acquisition, Inc. holds 80% of the issued and
outstanding Common Stock, and three of the Existing Shareholders hold 20% of the
issued and outstanding Common Stock. For financial reporting purposes, the
Recapitalization was accounted for as an acquisition of treasury stock.
The borrowings under the Senior Credit Facility, cash from the Company
of approximately $5.0 million, subordinated promissory notes payable of
approximately $1.9 million to the Existing Shareholders, and distribution of
selected assets to certain Existing shareholders, were used to consummate the
Recapitalization. In order to repay the Senior Credit Facility, the Company
issued $105.0 million aggregate principal amount of 9 7/8% Senior Subordinated
Notes (the "Notes"). The Notes were subsequently redeemed pursuant to an
Exchange Offer that expired on April 12,1998. All outstanding Notes were
redeemed in the Exchange Offer for 9 7/8% senior subordinated notes having
substantially the same terms and conditions.
RESULTS OF OPERATIONS
Sales. Sales for the three-month period ended January 31, 1998 were $20.7
million as compared to sales of $22.2 million for the same period in 1997. The
decrease in sales of $1.5 million or 6.7% for the three- months ended January
31,1998 compared to the same period in 1997, is primarily attributed to a
decrease in demand for monopole and related products. The Company believes the
decrease in demand for these products reflects a shift in demand toward heavier
structures, such as towers, which are used in co-location and corridor sites.
The Company experienced an increase in the sale of towers during the
three-month period ended January 31,1998 as compared to the same period in
1997, partially offsetting the decline in sales attributable to monopole
products. In addition, the Company's customer base of primary
telecommunication service providers has, in some instances, postponed the
capital expenditure process for the construction of cell site locations due to
the recent entry into the market of "build-to-suit" providers, who are also
part of the Company's customer base. As a result of the entry of build-to-suit
providers into the market, the Company believes the demand for the Company's
products has been pushed to future periods.
Sales for the nine month period ended January 31,1998 were $58.0
million as compared to sales of $49.3 million for the same period in 1997. The
increase in sales of $8.7 million or 17.7% for the nine months ended January
31,1998 compared to the same period in 1997 is primarily attributable to an
increase in demand of towers and related products. The Company believes the
increase in demand for these products is due to the focus by the primary
telecommunication service providers in the construction of co-location and
corridor sites.
Gross Profit. Gross profit for the three-month period ended January 31,1998
decreased by $833 thousand as compared to the same period in 1997. As a
percent of sales, gross profit decreased to 28.99% from 30.82% for the
three-month period ended January 31,1998 as compared to the same period in
1997. The decrease is due to under-absorption of direct labor and
manufacturing overhead during the three-months
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<PAGE> 12
ended January 31,1998. The Company reduced its labor force by approximately 100
employees in mid-January to mitigate the effect of cost increases associated
with its manufacturing operations in future periods. Due to the short tenure of
those employees that were terminated, the Company was not required to incur
additional costs associated with the reduction in its workforce. In addition,
the Company experienced some pricing pressure on its monopole products due to
excess capacity levels in the market.
Gross profit for the nine-month period ended January 31,1998 increased
by $1.5 million as compared to the same period in 1997. As a percent of sales,
gross profit decreased to 28.77% from 30.82% for the nine-month period ended
January 31,1998 as compared to the same period in 1997. The decrease in gross
profit as a percent of sales is due to under-absorption of direct labor and
manufacturing overhead during the nine-month period, and the excess capacity
levels of monopole manufacturing resulting in some pricing pressure on sales of
these products.
Selling, Administrative and General Expenses. Operating expenses decreased by
$363 thousand for the three-month period ended January 31,1998 as compared to
the same period in 1997. As a percent of sales, operating expenses decreased
to 13.89% from 14.60% for the three-month period ended January 31,1998 as
compared to the same period in 1997. The decrease is due to bonuses paid to
the former executives of the Company during the three-month period ended
January 31,1997. No bonuses were paid to executives in the same period of
1998.
Operating expenses increased by $2.1 million for the nine-month period
ended January 31,1998 as compared to the same period in 1997. As a percent of
sales, operating expenses increased to 14.24% from 12.53% for the nine-month
period ended January 31,1998 as compared to the same period in 1997. The
dollar increase for the nine-month period ended January 31,1998 was primarily
attributed to the following:
(i) An increase in personnel cost due to an increase in the number of
personnel and the resultant increase in personnel related costs.
(ii) An increase in systems related expenses as the Company began to
depreciate a job tracking information system that was placed in
service during fiscal year 1998 and improved the capability of its
engineering information systems.
(iii) An increase in selling related expenses such as sales travel, show
expenses, and commission expense.
Operating Income. Operating income for the three-month period ended January
31,1998 decreased by $470 thousand as compared to the same period in 1997. The
decrease in operating income was due to a decrease in sales for the period, and
the decrease in the gross profit. The decreases were partially offset in the
period by a decrease in operating expenses.
Operating income for the nine-month period ended January 31,1998
decreased by $580 thousand as compared to the same period in 1997. The decrease
in operating income was due to an increase in operating expenses for the period
ended January 31,1998 as compared to the same period in 1997. The decrease in
operating income was partially offset by the increase in sales and the resultant
increase in volume related gross profit.
Interest Expense. Interest expense increased for the three-month period ended
January 31,1998 by $2.6 million as compared to the same period in 1997. The
increase in interest expense is due to the additional interest incurred as a
result of the Recapitalization of the Company and issuance of the related debt.
Interest expense increased for the nine-month ended January 31,1998 by
$2.9 million as compared to the same period in 1997. The increase in interest
expense was due to the additional interest incurred as a result of the
Recapitalization, the financing of distributions made to certain Existing
Shareholders and the issuance of the related debt.
Other Income and Expense, Net. Other income and expense, net increased for the
three-month period ended January 31,1998 by $16 thousand as compared to the same
period in 1997. The increase was due to the sale of capital assets no longer
required by the Company.
Other income and expense, net increased for the nine-month period
ended January 31,1998 by $386 thousand as compared to the same period in 1997.
The increase was due to the sale of capital assets no longer required
12
<PAGE> 13
by the Company, an increase in interest income as the Company invested its cash
in overnight investments, and management improvements and controls related to
the sale of scrap.
Income Tax Provision. The provision for income taxes increased for the
three-month period ended January 31,1998 by $156 thousand as compared to the
same period in 1997. The Company's effective tax rate increased to 36.7% from
2.7% for the three-month period ended January 31,1998 as compared to the same
period in 1997. The increase in the tax rate is the result of the Company's
election to be taxed as a Subchapter C corporation instead of a Subchapter S
Corporation.
The provision for income taxes increased for the nine-month period
ended January 31,1998 by $144 thousand as compared to the same period in 1997.
The Company's effective tax rate increased to 6.0% from 2.4% for the nine-month
period January 31,1998 as compared to the same period in 1997. The increase in
the effective tax rate is the result of the Company's election to be taxed as a
Subchapter C corporation instead of a Subchapter S Corporation.
Extraordinary Item, Net of Tax Benefit. Extraordinary items increased for the
three-month and nine-month periods ended January 31,1998 by $1.5 million (net of
tax benefit of $863 thousand) as compared to the same periods in 1997. The
extraordinary item represents the write-off of deferred financing costs
associated with repayment of the Senior Credit Facility used as initial
financing for the Recapitalization.
Net Income ( Loss ). Net income (loss) decreased for the three-month period
and nine-month period ended January 31,1998 by $4.7 million and $4.8 million,
respectively, as compared to the same period in 1997. The decrease in net
income was due primarily to : ( i ) an increase in operating expenses, ( ii )
higher interest expense associated with the Recapitalization of the Company,
and ( iii ) the write-off of deferred financing costs associated with the
initial financing of the Recapitalization of the Company. The decrease in net
income (loss) was partially offset by the increase in sales and the resultant
increase in gross profit for the period ended January 31,1998.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations through
internally generated funds and existing cash reserves. The Company produced
a net cash flow (deficit) of $(3.3) million and $2.5 million for the three month
and nine month periods ending January 31, 1998, respectively.
The net cash flow provided by operating activities for the three and
nine month periods ending January 31, 1998 was $2.6 million and $9.9 million,
respectively. The primary changes in working capital accounts for the three
month period ending January 31, 1998 were as follows:
(i) accounts receivable decreased by approximately $533 thousand as a
result of an intensified collection effort by management;
(ii) other assets increased by approximately $610 thousand due to
the net tax benefit resulting from the writeoff of deferred
financing costs associated with repayment of the Senior Credit
Facility in connection with the Recapitalization; and
(iii) accounts payable increased by approximately $500 thousand due to
a higher volume of purchasing activities during the period.
The primary changes in working capital accounts for the nine month period
ending January 31, 1998 were as follows:
(i) accounts receivable decreased by approximately $10.6 million as
a result of an intensified collection effort by management;
(ii) inventories increased by approximately $2.9 million primarily as
a result of delays in shipments to customers at the customer's
request;
(iii) prepaid expenses increased by approximately $1.6 million
primarily as a result of payments made to the IRS pursuant to
Section 444 of the Internal Revenue Code relating to the
Company's Subchapter S status prior to November 12, 1997 and its
fiscal year election of April 30;
(iv) accounts payable decreased by approximately $4.5 million due to
the lower volume of purchasing activities as compared to the
same nine month period of fiscal year 1997; and
(v) accrued expenses increased by approximately $1.6 million
primarily as a result of interest accrued relating to the senior
subordinated notes issued subsequent to the Recapitalization.
The cash flow used by investing activities was $282 thousand and $746
thousand for the three and nine month periods ending January 31, 1998,
respectively, reflecting the Company's capital equipment requirements during
such periods.
The cash flow used by financing activities was ($5.6) million and
($6.7) million for the three and nine month periods ending January 31, 1998,
respectively. The net cash flow from notes payable issued in the
Recapitalization was approximately $97.1 million. The proceeds were used to
repay approximately $22.1 million in notes payable and long-term debt, and to
purchase treasury shares from the Existing Shareholders. The cash flow from
the issuance of the long-term debt was approximately $100 million and was used
to repay the notes payable from the Recapitalization. Approximately $21.0
million was distributed to certain of the Existing Shareholders prior to, and
in anticipation of, the Recapitalization and was financed by a note payable.
The note payable was a portion of the $22.1 million repaid as part of the
Recapitalization.
The Company determines its short-term liquidity needs based upon its
cash requirements over the next twelve months, and its long-term liquidity
needs based upon its cash requirements for periods in excess of twelve months.
The Company entered into a Revolving Credit Facility that, subject to
13
<PAGE> 14
borrowing base limitations and the satisfaction of customary borrowing
conditions and financial covenants, allows the Company to borrow up to $25.0
million. The Company's principal sources of short-term and long-term liquidity
are cash flow generated from operations and borrowings under the Revolving
Credit Facility. The principal uses of liquidity are to meet debt service
requirements, finance the Company's capital expenditures, and provide working
capital needs. As of January 31, 1998, the Company would have had approximately
$12.1 million of availability under the terms of the Revolving Credit Facility.
The Company had approximately $30 thousand drawn against the Revolving Credit
Facility as of January 31, 1998.
The Company has a capital expenditure budget of approximately $4.5
million for the calendar year 1998, of which an estimated $1.5 million is
expected to be spent in Fiscal Year 1998, depending on the timing of certain
projects. The Company has budgets of $1.9 million for the build-out of
additional production facilities, and $1.8 million for additional manufacturing
equipment. The additional capital expenditures are to be spent on site
development and miscellaneous office equipment. The Company has undertaken a
search for new information systems and is currently reviewing several proposals
from information systems providers. The selection of the new information systems
will be made and implementation will begin in early fiscal year 1999. Management
believes the estimated cost of the system change, depending on the software
selected, to be between $2.5 and $3.5 million. Depending on financing
opportunities currently being considered, the cash outlays may occur over a
three or four year period. In addition, the Company has leased additional office
space in Arlington, Texas for its administrative staff. The Company plans to
consolidate its current manufacturing operations in the Fort Worth, Texas
location into the Kennedale, Texas location and either sell or lease the Fort
Worth, Texas facility. The current schedule for the consolidation of the
manufacturing and administrative operations has been delayed until early fiscal
year 1999. The Company expects annual capital expenditures on an annual going
forward basis of approximately $3.0 million.
As the Company's business grows, its equipment and working capital
requirements will also continue to increase. The Company believes that the
combination of cash from operations and funds drawn under the Revolving Credit
Facility will be adequate to meet short-term liquidity needs and to finance
working capital and capital expenditures for the next twelve months. However,
there can be no assurance that such resources will be sufficient to meet the
Company's anticipated requirements or that the Company will not require
additional debt or equity financing within this time frame.
INFLATION
Certain of the Company's expenses, such as compensation benefits, raw
materials and equipment repair and replacement, are subject to normal
inflationary pressures. While the Company to date has been able to offset
inflationary cost increases through increased operating efficiencies and price
increases to its
14
<PAGE> 15
customers, there can be no assurance that the Company will be able to offset
any future inflationary cost increases through these or similar means.
CERTAIN FACTORS THAT MAY AFFECT THE COMPANY'S BUSINESS OR FUTURE OPERATING
RESULTS
This report contains various forward-looking statements and information that
are based on Management's beliefs as well as assumptions made by and
information currently available to Management. When used in this report, the
words "anticipate", "estimate", "expect", "predict", "project", and similar
expressions are intended to identify forward- looking statements. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, expected or projected. Among the key factors that may have a
direct bearing on the Company's results are set forth below.
Future trends for revenue and profitability remain difficult to predict. The
Company continually faces risks and uncertainties including, among others,
general and specific market economic conditions, dependence on certain key
customers and the wireless communications industry in general, risk of
nonpayment of accounts receivable, competitive factors, supplier related
issues, manufacturing capacity constraints and the ability to service a high
level of indebtedness.
General economic conditions in the United States could affect the pricing on
raw materials such as steel and zinc used in many of the Company's products.
Because steel and zinc constitute a substantial portion of the Company's cost
of goods sold, any increase in the price of such materials could have a
material effect on future profitability. There can be no assurance that the
Company will be successful in passing along any cost increases to its
customers.
A substantial portion of the Company's revenues are generated from a few key
customers. As customers seek to establish close relationships with their
suppliers, the Company expects that its customer base will continue to become
more concentrated. Loss of key customers, or significant declines in revenues
from key customers, could have a material adverse effect on the Company's
business, financial condition and profitability.
The Company's business depends upon the capital expenditures of wireless service
providers that, in turn, depend upon current and anticipated market demand for
wireless communications. The future success of the Company depends to a
considerable extent upon the continued growth and increased availability of
cellular and other wireless communications services. The wireless
communications industry may experience downturns that may result in a decrease
in demand for the Company's products. There can be no assurance that the
wireless communications industry will not experience severe and prolonged
downturns in the future or that the industry will expand as rapidly as
forecasted. Any significant decreases in the level of capital expenditures by
the wireless service providers could have a material adverse effect on the
Company's business, financial condition and profitability.
Management continues to closely monitor customer orders and the
creditworthiness of its customers. The Company has not experienced abnormal
increases in losses associated with accounts receivable. The Company has
provided allowances that it believes to be adequate to reflect the risk
associated with collection of accounts receivable. Unforeseen market
conditions may, however, compel the Company to increase such allowances.
The telecommunications infrastructure industry is highly competitive. The
Company faces substantial competition in each of its markets from established
competitors, some of which have greater financial, engineering, manufacturing
and marketing resources than the Company. The Company's competitors can be
expected to continue to improve the design of their products, to introduce new
products with competitive prices and to improve customer satisfaction. Although
the Company has not historically been forced to reduce its prices significantly,
there can be no assurance that competitive pressures will not necessitate
15
<PAGE> 16
future price reductions that would adversely affect operating results.
Although the Company believes it has certain advantages over its competitors, a
continued high level of investment in sales, marketing and other services will
be required in order to maintain these advantages. There can be no assurance
that the Company will have sufficient resources to make such investments or
that the Company will be able to maintain its current competitive advantages.
Certain components used in the Company's products are obtained from a single
source or a limited number of suppliers. Reliance on these suppliers involves
certain risks, including a potential inability to obtain an adequate supply of
required components in a timely manner and on terms favorable to the Company,
as well as maintenance of the Company's quality standards. The Company
continually seeks to reduce its dependence on its sole or limited source
suppliers; however, the loss of certain of these suppliers could have at least
a temporary material adverse effect on the Company. Further, significant price
increases in one or more of these components could materially adversely affect
future profitability.
The Company's future success will, in part, depend upon its ability to increase
its production volume on a timely basis while maintaining product quality and
per unit production costs. The Company has, in the past, experienced delays in
its ability to fulfill customer orders on a timely basis due to limits on its
production capacity. Any significant delays in fulfilling customer orders for
an extended period could damage customer relations that could materially
adversely affect the Company's business, financial condition and profitability.
Production schedules for each of the Company's products are based upon orders
for such products and the Company has limited ability to modify short-term
production schedules. A significant increase in demand for any of the
Company's products could result in the Company's inability, on a short-term
basis, to fully satisfy demand. Failure by the Company to forecast its
production requirements accurately could result in inventory surpluses or
shortages that could have a material adverse impact on the Company's financial
condition and profitability.
The Company maintains a high level of indebtedness. As a result, a significant
portion of the Company's cash flow is dedicated to the payment of interest on,
and the repayment of, such indebtedness. The Company's ability to satisfy its
obligations will depend upon its future operating performance. Although the
Company anticipates that it will have adequate operating cash flow, there can
be no assurance that operating cash flow will be sufficient to meet operating
expenses and satisfy debt service requirements.
IMPACT OF THE YEAR 2000
The Year 2000 Issue is the result of computer programs written using two digits
rather than four digits to define "date" fields. Information systems have time
sensitive operations that, as a result of this data field limitation, could
disrupt activities in the normal business cycle. The Company has undertaken a
search for new information systems and will select and begin implementation in
early fiscal year 1999. The new information systems will replace existing
systems that should mitigate the Year 2000 Issue with respect to the Company's
information systems.
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<PAGE> 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In the normal course of business, the Company is involved in various pending
legal proceedings and claims. In the opinion of management, after consultation
with counsel, the ultimate resolution of such matters will not have a material
impact on the financial condition or the future results of operations of the
Company.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 5. Other Information.
On April 21, 1998, a Special Meeting of Shareholders of the Company was held at
which the shareholders elected Douglas A. Standley to the Board of Directors
and approved the Restated Articles of the Company (the "Restated Articles").
Mr. Standley is the President and Chief Executive Officer of the Company. The
Restated Articles, among other things, limit the liability of directors of the
Company, provide for indemnification of directors, officers, or employees of
the Company, allow interested director transactions (subject to certain
restrictions), and provide for shareholder action without unanimous written
consent.
On April 24, 1998, the Board of Directors of the Company approved executive
employment agreements between the Company and Douglas A. Standley, William R.
Estill, and Jerry Sharkey, respectively. Pursuant to their respective
employment agreements, Mr. Standley will serve as President and Chief Executive
Officer for five years at a base salary of $250,000, Mr. Estill will serve as
Vice President of Finance for three years at a base salary of $150,000, and Mr.
Sharkey will serve as Vice President - Manufacturing at a base salary of
$140,000. Each of the foregoing employment agreements also provides for the
potential payment of a bonus equal to 100% of base salary, and contain
provisions for the payment of all base salary throughout the term of the
agreement if the employee is terminated without cause, a three-year
noncompetition provision, and a provision regarding non-disclosure of trade
secrets.
The Board of Directors also approved employment agreements between the Company
and Mark Silva and Charles Hammond, respectively. Pursuant to their respective
employment agreements, Mr. Silva will serve as Director of Information Systems
for three years at a base salary of $90,000, and Mr. Hammond will serve as
Manufacturing Manager for three years at a base salary of $120,000. Each of
these employment agreements also provides for the potential payment of a bonus
equal to 50% of base salary. Both Mr. Silva and Mr. Hammond are entitled to 30
days base salary if they are terminated without cause.
Moreover, the Board of Directors approved the stock appreciation rights
agreements of Mr. Standley, Mr. Sharkey and William R. Estill. These agreements
provide stock appreciation rights equivalent to 2.7228, 1.3614, and 1.3614
shares of Common Stock, respectively. These agreements contain a provision
allowing each of the named executive's legal representative to exercise the
stock appreciation right should the executive die and the stock appreciation
right become exercisable at the time of, or at any time after, such executive's
death.
On April 24, 1998, the Board of Directors also amended the Bylaws of the
Company to provide for, among other things, shareholder action by majority
written consent, the appointment of one or more committees consisting of one or
more directors to, from time to time, review certain matters and make
recommendations to the Board for final action, and the procedure by which the
Company may indemnify directors, officers, or employees.
The Board of Directors also terminated the Company's Profit Sharing Plan as of
April 30, 1998.
Item 6. Exhibits and Reports on Form 8-K.
6 (a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C> <C>
1.1 - Purchase Agreement dated November 12, 1997, by and among the Company, BT Alex. Brown
Incorporated, SBC Warburg Dillon Read Inc. and Smith Barney Inc.*
3.1 - Restated Articles of Incorporation of the Company.
3.2 - Bylaws of the Company (as amended effective as of April 24, 1998).
4.1 - Indenture dated as of November 15, 1997, by and between the
Company, as Issuer, the guarantors identified therein, and Norwest
Bank Minnesota, N.A., as Trustee.*
4.2 - Registration Rights Agreement dated November 15, 1997, by and among the Company, BT Alex.
Brown Incorporated, SBC Warburg Dillon Read Inc. and Smith Barney Inc.*
4.3 - Registration Rights Agreement dated November 12, 1997, by and among FWT, Inc., Roy J. Moore,
Thomas F. "Fred" Moore, Carl R. Moore and FWT Acquisition, Inc.*
4.4 - Form of Exchange Note (included in Exhibit 4.1).*
5.1 - Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.*
10.1 - Stock Purchase and Redemption Agreement dated November 12, 1997, by and among the Company, FWT
Acquisition, Inc. and T.W. Moore, Betty Moore, Carl Moore, Fred Moore and Roy J. Moore. *
10.2 - General Supply Agreement, dated as of September 1, 1997, between the Company and AT&T Wireless
Services, Inc.*
10.3 - Cooperative Production Agreement dated March 10, 1997 between the Company and Delta Steel,
Inc.*
10.4 - Transportation Contract dated March 26, 1997 between the Company and Delta Steel, Inc.*
</TABLE>
17
<PAGE> 18
<TABLE>
<S> <C> <C>
10.5 - Lease Agreement dated February 18, 1997 between the Company and Delta Steel, Inc. covering
property located at 9217 South Freeway, Fort Worth, Texas.*
10.6 - Employment Agreement dated November 14, 1997 between the Company and Douglas A. Standley.*
Exhibit A to the Employment Agreement has been filed previously as Exhibit 10.16. *
10.7 - Employment Agreement dated November 12, 1997 between the Company and Roy J. Moore.* Exhibit A
to the Employment Agreement has been filed previously as Exhibit 10.12. *
10.8 - Employment Agreement dated November 12, 1997 between the Company and Thomas F. Moore.*
10.9 - Employment Agreement dated November 12, 1997 between the Company and Carl R. Moore.*
10.10 - Shareholders' Agreement dated November 12, 1997 by and among the Company, Carl R. Moore, Thomas
F. Moore, Roy J. Moore, and for certain limited purposes, Baker Communications Fund, L.P.*
10.11 - Credit Agreement dated November 12, 1997 by and among the Company, Bankers Trust Company and BT
Commercial Corporation.*
10.12 - Stock Appreciation Rights Agreement dated November 12, 1997 between FWT, Inc. and Roy J.
Moore.*
10.13 - Financial Advisory Agreement dated November 12, 1997 between the Company and Baker Capital
Corp.*
10.14 - First Amendment to Credit Agreement dated February 11, 1998 by and among the Company, Bankers
Trust Company and BT Commercial Corporation.*
10.15 - Voluntary Retirement Agreement dated February 27, 1998 between the Company and Thomas F.
Moore.*
10.16 - Stock Appreciation Rights Agreement dated November 14, 1997 between FWT, Inc. and Douglas A.
Standley.*
10.17 - Collateral Account Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
</TABLE>
18
<PAGE> 19
<TABLE>
<S> <C> <C>
10.18 - Blocked Account Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
10.19 - Non-offset Agreement dated November 10, 1997 by and between the Company and BT Commercial
Corporation. *
10.20 - Lockbox Agreement dated as of November 12, 1997 by and among the Company, BT Commercial
Corporation and Bank One Texas, N.A. *
10.21 - Company Security Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
10.22 - Company Pledge Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
10.23 - Company Trademark Collateral Security Agreement dated as of November 12, 1997 by and between
the Company and BT Commercial Corporation. *
10.24 - Company Patent Collateral Assignment and Security Agreement dated as of November 12, 1997 by
and between the Company and BT Commercial Corporation. *
10.25 - Intercreditor and Collateral Agency Agreement dated as of November 10, 1997 by and among the
Company, BT Commercial Corporation and Bankers Trust Company. *
12.1 - Computation of Ratio of Earnings to Fixed Charges. *
23.1 - Consent of Arthur Andersen LLP, independent public accountants. *
23.2 - Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in Exhibit 5.1).*
24.1 - Powers of Attorney.*
25.1 - Statement of Eligibility of Trustee on Form T-1 of Norwest Bank Minnesota, National
Association. *
27.1 - Financial Data Schedule.
99.1 - Letter of Transmittal. *
99.1 - Press Release, dated March 19, 1998. **
</TABLE>
19
<PAGE> 20
6(b) Reports on form 8-K:
The following is the date and description of the events reported on Form 8-K
filed during the quarterly period ended January 31, 1998 and the Forms 8-K
filed subsequently:
<TABLE>
<CAPTION>
DATE OF EARLIEST EVENT
- ----------------------
REPORTED ON FORM 8-K DESCRIPTION
- -------------------- -----------
<S> <C>
March 19, 1998 On March 19, 1998, the Company announced that, for the nine months
ended January 31, 1998, it had recorded net income of $4.2 million
on sales of $58 million, as compared with net income of $9 million
on sales of $49.3 million for the comparable nine month 1997 period.
The Company also reported a net loss of $1.1 million for the three
months ended January 31, 1998, on sales of $20.7 million. For the
comparable 1997 period, net income was $3.6 million on sales of
$22.2 million. The Company also announced that Roy J. Moore had
been named Vice Chairman and Douglas A. Standley had been named
President and Chief Executive Officer of the Company. Previously,
Mr. Moore had served as President and Chief Executive Officer and
Mr. Standley had served as Chief Operations Officer and President,
Ft. Worth Division, of the Company.
March 30, 1998 On March 30, 1998, Roy J. Moore terminated his employment with
Company. Mr. Moore had previously served as President and Chief
Executive Officer of the Company and, since March 19, 1998, had
served as Vice Chairman of the Company. Under the terms of his
Employment Agreement with FWT, Mr. Moore will be entitled to receive
an annual salary of $200,000, an annual bonus based on the earnings
and performance of the Company, and various other benefits with an
estimated annual value of $25,000 through December 31, 2000.
Mr. Moore continues to serve as a member of the Board of Directors
of the Company. In addition, on April 3, 1998, Carl R. Moore
terminated his employment with FWT. Under the terms of his
Employment Agreement with the Company, Mr. Moore, who had previously
served as Vice President of FWT, will be entitled to receive an
annual salary of $200,000, an annual bonus based on the earnings and
performance of the Company, and various other benefits with an
estimated annual value of $25,000 through December 31, 2000.
</TABLE>
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<PAGE> 21
- ------------------
* Incorporated by reference. Previously filed as an Exhibit to the
Company's Registration Statement on Form S-4 (Registration No. 333-44273).
** Incorporated by reference. Previously filed as an Exhibit to the
Company's Current Report on Form 8-K, dated March 23, 1998.
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<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FWT, INC.
April 27, 1998 By: /s/ William R. Estill
------------------------------
William R. Estill
Vice President of Finance
(signing in the capacity of
principal financial officer and
principal accounting officer)
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C> <C>
1.1 - Purchase Agreement dated November 12, 1997, by and among the Company, BT Alex. Brown
Incorporated, SBC Warburg Dillon Read Inc. and Smith Barney Inc.*
3.1 - Restated Articles of Incorporation of the Company.
3.2 - Bylaws of the Company (as amended effective as of April 24, 1998).
4.1 - Indenture dated as of November 15, 1997, by and between the
Company, as Issuer, the guarantors identified therein, and Norwest
Bank Minnesota, N.A., as Trustee.*
4.2 - Registration Rights Agreement dated November 15, 1997, by and among the Company, BT Alex.
Brown Incorporated, SBC Warburg Dillon Read Inc. and Smith Barney Inc.*
4.3 - Registration Rights Agreement dated November 12, 1997, by and among FWT, Inc., Roy J. Moore,
Thomas F. "Fred" Moore, Carl R. Moore and FWT Acquisition, Inc.*
4.4 - Form of Exchange Note (included in Exhibit 4.1).*
5.1 - Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.*
10.1 - Stock Purchase and Redemption Agreement dated November 12, 1997, by and among the Company, FWT
Acquisition, Inc. and T.W. Moore, Betty Moore, Carl Moore, Fred Moore and Roy J. Moore. *
10.2 - General Supply Agreement, dated as of September 1, 1997, between the Company and AT&T Wireless
Services, Inc.*
10.3 - Cooperative Production Agreement dated March 10, 1997 between the Company and Delta Steel,
Inc.*
10.4 - Transportation Contract dated March 26, 1997 between the Company and Delta Steel, Inc.*
</TABLE>
<PAGE> 24
<TABLE>
<S> <C> <C>
10.5 - Lease Agreement dated February 18, 1997 between the Company and Delta Steel, Inc. covering
property located at 9217 South Freeway, Fort Worth, Texas.*
10.6 - Employment Agreement dated November 14, 1997 between the Company and Douglas A. Standley.*
Exhibit A to the Employment Agreement has been filed previously as Exhibit 10.16. *
10.7 - Employment Agreement dated November 12, 1997 between the Company and Roy J. Moore.* Exhibit A
to the Employment Agreement has been filed previously as Exhibit 10.12. *
10.8 - Employment Agreement dated November 12, 1997 between the Company and Thomas F. Moore.*
10.9 - Employment Agreement dated November 12, 1997 between the Company and Carl R. Moore.*
10.10 - Shareholders' Agreement dated November 12, 1997 by and among the Company, Carl R. Moore, Thomas
F. Moore, Roy J. Moore, and for certain limited purposes, Baker Communications Fund, L.P.*
10.11 - Credit Agreement dated November 12, 1997 by and among the Company, Bankers Trust Company and BT
Commercial Corporation.*
10.12 - Stock Appreciation Rights Agreement dated November 12, 1997 between FWT, Inc. and Roy J.
Moore.*
10.13 - Financial Advisory Agreement dated November 12, 1997 between the Company and Baker Capital
Corp.*
10.14 - First Amendment to Credit Agreement dated February 11, 1998 by and among the Company, Bankers
Trust Company and BT Commercial Corporation.*
10.15 - Voluntary Retirement Agreement dated February 27, 1998 between the Company and Thomas F.
Moore.*
10.16 - Stock Appreciation Rights Agreement dated November 14, 1997 between FWT, Inc. and Douglas A.
Standley.*
10.17 - Collateral Account Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
</TABLE>
<PAGE> 25
<TABLE>
<S> <C> <C>
10.18 - Blocked Account Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
10.19 - Non-offset Agreement dated November 10, 1997 by and between the Company and BT Commercial
Corporation. *
10.20 - Lockbox Agreement dated as of November 12, 1997 by and among the Company, BT Commercial
Corporation and Bank One Texas, N.A. *
10.21 - Company Security Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
10.22 - Company Pledge Agreement dated as of November 12, 1997 by and between the Company and BT
Commercial Corporation. *
10.23 - Company Trademark Collateral Security Agreement dated as of November 12, 1997 by and between
the Company and BT Commercial Corporation. *
10.24 - Company Patent Collateral Assignment and Security Agreement dated as of November 12, 1997 by
and between the Company and BT Commercial Corporation. *
10.25 - Intercreditor and Collateral Agency Agreement dated as of November 10, 1997 by and among the
Company, BT Commercial Corporation and Bankers Trust Company. *
12.1 - Computation of Ratio of Earnings to Fixed Charges. *
23.1 - Consent of Arthur Andersen LLP, independent public accountants. *
23.2 - Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in Exhibit 5.1).*
24.1 - Powers of Attorney.*
25.1 - Statement of Eligibility of Trustee on Form T-1 of Norwest Bank Minnesota, National
Association. *
27.1 - Financial Data Schedule.
99.1 - Letter of Transmittal. *
99.1 - Press Release, dated March 19, 1998. **
</TABLE>
<PAGE> 26
- ------------------
* Incorporated by reference. Previously filed as an Exhibit to the
Company's Registration Statement on Form S-4 (Registration No. 333-44273).
** Incorporated by reference. Previously filed as an Exhibit to the
Company's Current Report on Form 8-K, dated March 23, 1998.
<PAGE> 1
EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
FWT, INC.
ARTICLE ONE
FWT, Inc. (the "CORPORATION"), pursuant to the provisions of Article
4.07 of the Texas Business Corporation Act, hereby adopts Restated Articles of
Incorporation (the "RESTATED ARTICLES") which accurately copy the Articles of
Incorporation (the "ARTICLES") and all amendments thereto that are in effect to
date and as further amended by such restated articles of incorporation as
hereinafter set forth and which contain no other change in any provision
thereof.
ARTICLE TWO
The Articles of the Corporation are amended by the Restated Articles as
follows:
Article Three is hereby amended to read as follows: "The purpose for
which the corporation is organized is the transaction of any or all lawful
business for which corporations may be incorporated under the Texas Business
Corporation Act."
Article Four is hereby amended to read as follows: "The aggregate
number of shares of capital stock which the corporation shall have authority to
issue is ONE THOUSAND (1000) shares with a par value of TEN ($10.00) DOLLARS
EACH. All of such shares shall be common stock of the corporation. Unless
specifically provided otherwise herein, the holders of such shares shall be
entitled to one vote for each share held in any shareholder vote in which any of
such holders is entitled to participate.
The board of directors may establish series of unissued shares of any
class of capital stock by fixing and determining the designation and
preferences, limitations and relative rights, including voting rights, of the
shares of any series so established and may increase or decrease the number of
shares within each such series; provided, however, that the board of directors
may not decrease the number of shares within a series to less than the number of
shares within such series that are then issued.
The preemptive right of any shareholder of the corporation to acquire
additional, unissued or treasury shares of the corporation, or securities of the
corporation convertible into or carrying a right to subscribe to or acquire
shares of the corporation, is hereby denied; provided, however, that nothing
herein shall preclude the corporation from granting preemptive rights by
contract or agreement to any person, corporation or other entity. Cumulative
voting by the shareholders of the corporation at any election of directors of
the corporation is hereby prohibited."
Article Six is hereby amended to read as follows: "The post office
address of its registered office is 1901 East Loop 820 South, Fort Worth, Texas
76112; and the name of its registered agent at such address is Douglas A.
Standley."
<PAGE> 2
Article Seven is hereby amended to read as follows: "The number of
directors constituting the board of directors is five (5), and the names and
addresses of the persons who are to serve as directors, until their successors
are elected and qualified are:
Roy J. Moore 1901 East Loop 820 South, Fort Worth, TX 76112
Douglas A. Standley 1901 East Loop 820 South, Fort Worth, TX 76112
John C. Baker 575 Madison Avenue, 10th Floor, New York, NY 10022
Edward W. Scott 575 Madison Avenue, 10th Floor, New York, NY 10022
Lawrence A. Bettino 575 Madison Avenue, 10th Floor, New York, NY 10022"
The following new Article Ten is an addition to the original Articles
and the full text of Article Ten reads as follows:
ARTICLE TEN
To the fullest extent permitted by any applicable law, as the same
exists or may hereafter be amended, a director of the corporation shall not be
liable to the corporation or its shareholders for monetary damages for an act or
omission in the director's capacity as a director. Any repeal or amendment of
this Article Ten by the shareholders of the corporation or by changes in
applicable law shall, to the extent permitted by applicable law, be prospective
only, and shall not adversely affect any limitation on the personal liability of
any director of the corporation at the time of such repeal or amendment.
The following new Article Eleven is an addition to the original
Articles and the full text of Article Eleven reads as follows:
ARTICLE ELEVEN
The corporation shall 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, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or proceeding and any inquiry
or investigation that could lead to such an action, suit or proceeding (whether
or not by or in the right of the corporation), by reason of the fact that he is
or was a director, officer or employee of the corporation or is or was serving
at the request of the corporation as a director, officer, partner, venturer,
proprietor, trustee, employee or similar functionary of another corporation,
employee benefit plan, other enterprise, or other entity, against all judgments,
penalties (including excise and similar taxes), fines, settlements and
reasonable expenses (including attorneys' fees and court costs) actually and
reasonably incurred by him in connection with such action, suit or proceeding to
the fullest extent permitted by any applicable law, and such indemnity shall
inure to the benefit of the heirs, executors and administrators of any such
person so indemnified pursuant to this Article Eleven. The right to
indemnification under this Article Eleven shall be a contract right and shall
not be deemed exclusive of any other right to which those seeking
2
<PAGE> 3
indemnification may be entitled under any law, bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office. Any repeal or amendment of this Article Eleven by the shareholders of
the corporation or by changes in applicable law shall, to the extent permitted
by applicable law, be prospective only, and shall not adversely affect the
indemnification of any person who may be indemnified at the time of such repeal
or amendment.
The following new Article Twelve is an addition to the original
Articles and the full text of Article Twelve reads as follows:
ARTICLE TWELVE
An otherwise valid contract or other transaction between the
corporation and any other corporation and otherwise valid acts of the
corporation with relation to any other corporation shall, in the absence of
fraud, be valid notwithstanding whether any one or more of the directors or
officers of the corporation are pecuniarily or otherwise interested in, or are
directors or officers of, such other corporation. Any director or officer of the
corporation individually, or any firm or association of which any director or
officer may be a member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the corporation, provided that the
fact that he individually or as a member of such firm or association is such a
party or is so interested shall be disclosed or shall have been known to the
board of directors or a majority of such members thereof as shall be present at
any meeting of the board of directors at which action upon any such contract or
transaction shall be taken; and any director of the corporation who is also a
director or officer of such other corporation or who is such a party or so
interested may be counted in determining the existence of a quorum at any
meeting of the board of directors which shall authorize any such contract or
transaction and may vote thereat to authorize any such contract or transaction,
with like force and effect as if he were not such a director or officer of such
other corporation or not so interested. Any director of the corporation may vote
upon any contract or any other transaction between the corporation and any
subsidiary or affiliated corporation without regard to the fact that he is also
a director or officer of such subsidiary or affiliated corporation.
Any contract, transaction, act of the corporation or of the directors,
which shall be ratified at any annual meeting of the shareholders of the
corporation, or at any special meeting of the shareholders of the corporation,
or at any special meeting called for such purpose, shall, insofar as permitted
by law, be as valid and as binding as though ratified by every shareholder of
the corporation; provided, however, that any failure of the shareholders to
approve or ratify any such contract, transaction or act, when and if submitted,
shall not be deemed in any way to invalidate the same or deprive the
corporation, its directors, officers or employees, of its or their right to
proceed with such contract, transaction or act.
Subject to any express agreement which may from time to time be in
effect, any shareholder, director or officer of the corporation may carry on and
conduct in his own right and for his own personal account, or as a partner in
any partnership, or as a joint venturer in any joint venture, or as an officer,
director or shareholder of any corporation, or as a participant in any
syndicate, pool, trust or association, any business which competes with the
business of the
3
<PAGE> 4
corporation and shall be free in all such capacities to make investments in any
kind of property in which the corporation may make investments.
The following new Article Thirteen is an addition to the original
Articles and the full text of Article Thirteen reads as follows:
ARTICLE THIRTEEN
Any action which would otherwise be taken at any annual or special
meeting of shareholders may be taken without a meeting, without prior notice,
and without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.
The following new Article Fourteen is an addition to the original
Articles of Incorporation and the full text of Article Ten reads as follows:
ARTICLE FOURTEEN
With respect to any matter for which the affirmative vote of the
holders of a specified portion of the shares entitled to vote is required by the
Texas Business Corporation Act, the act of the shareholders on that matter shall
be the affirmative vote of the holders of more than fifty percent of the
outstanding shares entitled to vote thereon, rather than the affirmative vote
otherwise required by the Texas Business Corporation Act. With respect to any
matter for which the affirmative vote of the holders of a specified portion of
the shares of any class or series is required by the Texas Business Corporation
Act, the act of the holders of shares of that class or series on that matter
shall be the affirmative vote of the holders of more than fifty percent of the
outstanding shares of that class or series, rather than the affirmative vote of
the holders of shares of that class or series otherwise required by the Texas
Business Corporation Act. Without limiting the generality of the foregoing, the
provisions of this Article Fourteen shall be applicable to any required
shareholder authorization or approval of any amendment to the articles of
incorporation, any plan of merger, share exchange or reorganization involving
the corporation, any sale, lease, exchange or disposition of all, or
substantially all, the property and assets of the corporation and any voluntary
dissolution of the corporation.
The following new Article Fifteen is an addition to the original
Articles of Incorporation and the full text of Article Fifteen reads as follows:
4
<PAGE> 5
ARTICLE FIFTEEN
Election of directors need not be by written ballot. Any director or
the entire board of directors may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors, except as otherwise provided by law. In furtherance and not in
limitation of the powers conferred by statute, the board of directors of the
corporation is expressly authorized to adopt the bylaws of the corporation, to
amend or repeal the bylaws or to adopt new bylaws, subject to any limitations
which may be contained in such bylaws.
ARTICLE THREE
Each such amendment made by the Restated Articles has been effected in
conformity with the provisions of the Act and such Restated Articles and each
such amendment made by the Restated Articles was duly adopted by the
shareholders of the Corporation on the 21st day of April, 1998.
ARTICLE FOUR
The number of shares of the Corporation outstanding at the time of such
adoption was 136.14; and the number of shares entitled to vote thereon was
136.14.
The holders of at least two-thirds of the shares outstanding and
entitled to vote on the Restated Articles have adopted the Restated Articles at
a special meeting in accordance with Article 2.28 of the Act and notice of such
action has been given in writing to those holders who did not consent to this
action.
ARTICLE FIVE
The Articles and all amendments and supplements thereto are hereby
superseded by the following Restated Articles which accurately copy the entire
text thereof and as amended as above set forth:
ARTICLE ONE
The name of the corporation is FWT, Inc.
ARTICLE TWO
The period of its duration is perpetual.
ARTICLE THREE
The purpose for which the corporation is organized is the transaction
of any or all lawful business for which corporations may be incorporated under
the Texas Business Corporation Act.
5
<PAGE> 6
ARTICLE FOUR
The aggregate number of shares of capital stock which the corporation
shall have authority to issue is ONE THOUSAND (1000) shares with a par value of
TEN ($10.00) DOLLARS EACH. All of such shares shall be common stock of the
corporation. Unless specifically provided otherwise herein, the holders of such
shares shall be entitled to one vote for each share held in any shareholder vote
in which any of such holders is entitled to participate.
The board of directors may establish series of unissued shares of any
class of capital stock by fixing and determining the designation and
preferences, limitations and relative rights, including voting rights, of the
shares of any series so established and may increase or decrease the number of
shares within each such series; provided, however, that the board of directors
may not decrease the number of shares within a series to less than the number of
shares within such series that are then issued.
The preemptive right of any shareholder of the corporation to acquire
additional, unissued or treasury shares of the corporation, or securities of the
corporation convertible into or carrying a right to subscribe to or acquire
shares of the corporation, is hereby denied; provided, however, that nothing
herein shall preclude the corporation from granting preemptive rights by
contract or agreement to any person, corporation or other entity. Cumulative
voting by the shareholders of the corporation at any election of directors of
the corporation is hereby prohibited.
ARTICLE FIVE
The corporation will not commence business until it has received for
the issuance of its shares consideration of the value of ONE THOUSAND DOLLARS
($1000.00) in actual cash paid in.
ARTICLE SIX
The post office address of its registered office is 1901 East Loop 820
South, Fort Worth, Texas 76112; and the name of its registered agent at such
address is Douglas A. Standley.
ARTICLE SEVEN
The number of directors constituting the board of directors is five
(5), and the names and addresses of the persons who are to serve as directors,
until their successors are elected and qualified are:
Roy J. Moore 1901 East Loop 820 South, Fort Worth, TX 76112
Douglas A. Standley 1901 East Loop 820 South, Fort Worth, TX 76112
John C. Baker 575 Madison Avenue, 10th Floor, New York, NY 10022
Edward W. Scott 575 Madison Avenue, 10th Floor, New York, NY 10022
Lawrence A. Bettino 575 Madison Avenue, 10th Floor, New York, NY 10022
6
<PAGE> 7
ARTICLE EIGHT
The names and addresses of the three incorporators are:
T.W. Moore 2621 Cravens Rd., Fort Worth, Texas
George Parks 3413 Bilglade Rd., Fort Worth, Texas
Irvin W. Shelman 5100 Cliffview Dr. Fort Worth, Texas
ARTICLE NINE
The corporation may sell, lease, convey, exchange, transfer or
otherwise dispose of all or substantially all of its assets if the principal
terms are approved by the Board of Directors of the corporation and the
principal terms are approved by the vote or the written consent of the holders
of in excess of fifty percent (50.0%) of the outstanding voting shares of the
corporation and not otherwise.
ARTICLE TEN
To the fullest extent permitted by any applicable law, as the same
exists or may hereafter be amended, a director of the corporation shall not be
liable to the corporation or its shareholders for monetary damages for an act or
omission in the director's capacity as a director. Any repeal or amendment of
this Article Ten by the shareholders of the corporation or by changes in
applicable law shall, to the extent permitted by applicable law, be prospective
only, and shall not adversely affect any limitation on the personal liability of
any director of the corporation at the time of such repeal or amendment.
ARTICLE ELEVEN
The corporation shall 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, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such an action, suit or proceeding and any inquiry
or investigation that could lead to such an action, suit or proceeding (whether
or not by or in the right of the corporation), by reason of the fact that he is
or was a director, officer or employee of the corporation or is or was serving
at the request of the corporation as a director, officer, partner, venturer,
proprietor, trustee, employee or similar functionary of another corporation,
employee benefit plan, other enterprise, or other entity, against all judgments,
penalties (including excise and similar taxes), fines, settlements and
reasonable expenses (including attorneys' fees and court costs) actually and
reasonably incurred by him in connection with such action, suit or proceeding to
the fullest extent permitted by any applicable law, and such indemnity shall
inure to the benefit of the heirs, executors and administrators of any such
person so indemnified pursuant to this Article Eleven. The right to
indemnification under this Article Eleven shall be a contract right and shall
not be deemed exclusive of any other right to which those seeking
indemnification may be entitled under any law, bylaw, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in
7
<PAGE> 8
another capacity while holding such office. Any repeal or amendment of this
Article Eleven by the shareholders of the corporation or by changes in
applicable law shall, to the extent permitted by applicable law, be prospective
only, and shall not adversely affect the indemnification of any person who may
be indemnified at the time of such repeal or amendment.
ARTICLE TWELVE
An otherwise valid contract or other transaction between the
corporation and any other corporation and otherwise valid acts of the
corporation with relation to any other corporation shall, in the absence of
fraud, be valid notwithstanding whether any one or more of the directors or
officers of the corporation are pecuniarily or otherwise interested in, or are
directors or officers of, such other corporation. Any director or officer of the
corporation individually, or any firm or association of which any director or
officer may be a member, may be a party to, or may be pecuniarily or otherwise
interested in, any contract or transaction of the corporation, provided that the
fact that he individually or as a member of such firm or association is such a
party or is so interested shall be disclosed or shall have been known to the
board of directors or a majority of such members thereof as shall be present at
any meeting of the board of directors at which action upon any such contract or
transaction shall be taken; and any director of the corporation who is also a
director or officer of such other corporation or who is such a party or so
interested may be counted in determining the existence of a quorum at any
meeting of the board of directors which shall authorize any such contract or
transaction and may vote thereat to authorize any such contract or transaction,
with like force and effect as if he were not such a director or officer of such
other corporation or not so interested. Any director of the corporation may vote
upon any contract or any other transaction between the corporation and any
subsidiary or affiliated corporation without regard to the fact that he is also
a director or officer of such subsidiary or affiliated corporation.
Any contract, transaction, act of the corporation or of the directors,
which shall be ratified at any annual meeting of the shareholders of the
corporation, or at any special meeting of the shareholders of the corporation,
or at any special meeting called for such purpose, shall, insofar as permitted
by law, be as valid and as binding as though ratified by every shareholder of
the corporation; provided, however, that any failure of the shareholders to
approve or ratify any such contract, transaction or act, when and if submitted,
shall not be deemed in any way to invalidate the same or deprive the
corporation, its directors, officers or employees, of its or their right to
proceed with such contract, transaction or act.
Subject to any express agreement which may from time to time be in
effect, any shareholder, director or officer of the corporation may carry on and
conduct in his own right and for his own personal account, or as a partner in
any partnership, or as a joint venturer in any joint venture, or as an officer,
director or shareholder of any corporation, or as a participant in any
syndicate, pool, trust or association, any business which competes with the
business of the corporation and shall be free in all such capacities to make
investments in any kind of property in which the corporation may make
investments.
8
<PAGE> 9
ARTICLE THIRTEEN
Any action which would otherwise be taken at any annual or special
meeting of shareholders may be taken without a meeting, without prior notice,
and without a vote, if a consent or consents in writing, setting forth the
action so taken, shall be signed by the holder or holders of shares having not
less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.
ARTICLE FOURTEEN
With respect to any matter for which the affirmative vote of the
holders of a specified portion of the shares entitled to vote is required by the
Texas Business Corporation Act, the act of the shareholders on that matter shall
be the affirmative vote of the holders of more than fifty percent of the
outstanding shares entitled to vote thereon, rather than the affirmative vote
otherwise required by the Texas Business Corporation Act. With respect to any
matter for which the affirmative vote of the holders of a specified portion of
the shares of any class or series is required by the Texas Business Corporation
Act, the act of the holders of shares of that class or series on that matter
shall be the affirmative vote of the holders of more than fifty percent of the
outstanding shares of that class or series, rather than the affirmative vote of
the holders of shares of that class or series otherwise required by the Texas
Business Corporation Act. Without limiting the generality of the foregoing, the
provisions of this Article Fourteen shall be applicable to any required
shareholder authorization or approval of any amendment to the articles of
incorporation, any plan of merger, share exchange or reorganization involving
the corporation, any sale, lease, exchange or disposition of all, or
substantially all, the property and assets of the corporation and any voluntary
dissolution of the corporation.
ARTICLE FIFTEEN
Election of directors need not be by written ballot. Any director or
the entire board of directors may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors, except as otherwise provided by law. In furtherance and not in
limitation of the powers conferred by statute, the board of directors of the
corporation is expressly authorized to adopt the bylaws of the corporation, to
amend or repeal the bylaws or to adopt new bylaws, subject to any limitations
which may be contained in such bylaws.
Dated April 21, 1998.
FWT, INC.
By: /s/ WILLIAM R. ESTILL
-----------------------------------
Its Authorized Officer - Vice
President - Finance
9
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
FWT, INC.
A TEXAS CORPORATION
(ADOPTED EFFECTIVE AS OF APRIL 24, 1998)
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I. OFFICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Registered Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Additional Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. SHAREHOLDERS MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.4 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.5 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.5.1. Voting Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.5.2. Votes Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.5.3. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.5.4. Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.6 Consents in Lieu of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III. DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.1 Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.3 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.4 Vacancies and Newly-Created Directorships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.4.1. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.4.2. Newly-Created Directorships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.4.3. Election by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.5 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.6 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV. BOARD MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.1 Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.2 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.3 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4.4 Quorum, Required Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4.5 Consent In Lieu of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V. COMMITTEES OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.1 Establishment; Standing Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.1.1. Finance Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.1.2. Audit Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5.1.3. Compensation Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.2 Available Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
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Section 5.3 Alternate Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 5.4 Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.1 Elected Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 6.1.1. Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1.2. President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1.3. Chief Operating Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1.4. Vice President. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1.5. Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1.6. Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1.7. Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 6.1.8. Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.1.9. Divisional Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.2 Election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.3 Appointed Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.4 Multiple Officeholders, Shareholder and Director Officers . . . . . . . . . . . . . . . . . . . . . 8
Section 6.5 Compensation, Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 6.6 Additional Powers and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 6.7 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VII. SHARE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7.1 Entitlement to Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7.2 Multiple Classes of Stock; Preemptive Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7.3 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.4 Issuance and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.5 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 7.6 Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 7.7 Registered Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VIII. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8.2 Mandatory Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8.3 Prohibited Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8.4 Termination of Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8.5 Judgments, Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 8.6 Determination of Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.7 Determination of Reasonableness of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.8 Indemnification Against Reasonable Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.9 Payments in Advance of Disposition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 8.10 Written Undertaking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.11 Consistency with Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.12 Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.13 Officers and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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Section 8.14 Other Capacities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.15 Further Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.16 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8.17 Report To Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.18 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 8.19 Change in Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX. INTERESTED DIRECTORS, OFFICERS AND SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.1 Validity; Disclosure; Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.2 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 9.3 Non-exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE X. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 10.1 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 10.2 Fixing Record Dates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 10.3 Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.4 Attendance via Communications Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.5 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.6 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.7 Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.8 Contracts and Negotiable Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 10.9 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.10 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.11 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.12 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.13 Surety Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 10.14 Proxies in Respect of Securities of Other Corporations . . . . . . . . . . . . . . . . . . . . 19
Section 10.15 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
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BYLAWS
OF
FWT, INC.
ARTICLE I.
OFFICES
Section 1.1 Registered Office. The registered office of the
Company within the State of Texas shall be located at either (i) the principal
place of business of the Company in the State of Texas or (ii) the office of
the corporation or individual acting as the Company's registered agent in
Texas.
Section 1.2 Additional Offices. The Company may, in addition to
its registered office in the State of Texas, have such other offices and places
of business, both within and without the State of Texas, as the Board of
Directors of the Company (the "BOARD") may from time to time determine or as
the business and affairs of the Company may require.
ARTICLE II.
SHAREHOLDERS MEETINGS
Section 2.1 Annual Meetings. Annual meetings of shareholders
shall be held at a place and time on any weekday which is not a holiday and
which is not more than 120 days after the end of the fiscal year of the Company
as shall be designated by the Board and stated in the notice of the meeting, at
which the shareholders shall elect the directors of the Company and transact
such other business as may properly be brought before the meeting.
Section 2.2 Special Meetings. Special meetings of the
shareholders, for any purpose or purposes, unless otherwise prescribed by law
or by the articles of incorporation, (i) may be called by the chairman of the
board or the president and (ii) shall be called by the president or secretary
at the request in writing of a majority of the Board or shareholders owning
capital stock of the Company representing at least ten percent (10%) of the
votes of all capital stock of the Company entitled to vote thereat. Such
request of the Board or the shareholders shall state the purpose or purposes of
the proposed meeting.
Section 2.3 Notices. Written or printed notice of each
shareholders' meeting stating the place, date and hour of the meeting shall be
given to each shareholder of record entitled to vote thereat by or at the
direction of the president, the secretary or the officer or person calling such
meeting not less than ten (10) nor more than sixty (60) days before the date of
the meeting. If said notice is for a shareholders' meeting other than an
annual meeting, it shall in addition state the purpose or purposes for which
said meeting is called, and the business transacted at such meeting shall be
limited to the matters so stated in said notice and any matters reasonably
related thereto. If mailed, such notice shall be deemed to be delivered when
deposited in the United
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States mail addressed to each shareholder at his address as it appears on the
stock transfer books of the Company, with postage thereon prepaid.
Section 2.4 Quorum. The presence at a shareholders' meeting of
the holders, present in person or represented by proxy, of capital stock of the
Company representing a majority of the votes of all capital stock of the
Company entitled to vote thereat shall constitute a quorum at such meeting for
the transaction of business except as otherwise provided by law, the articles
of incorporation or these Bylaws. If a quorum shall not be present or
represented at any meeting of the shareholders, a majority of the shareholders
entitled to vote thereat and present in person or represented by proxy shall
have the power to adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall be present or
represented. At any such reconvened 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. If the adjournment is for more than
thirty (30) days, or if after the adjournment a new record date is fixed for
the reconvened meeting, a notice of said reconvened meeting shall be given to
each shareholder entitled to vote at said meeting. The shareholders present at
a duly convened meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
Section 2.5 Voting of Shares.
Section 2.5.1. Voting Lists. The officer or agent who has
charge of the stock transfer books of the Company shall prepare, at least ten
(10) days before every meeting of shareholders, a complete list of the
shareholders entitled to vote thereat arranged in alphabetical order and
showing the address and the number of shares registered in the name of each
shareholder. Such list shall be open to the examination of any such
shareholder, for any purpose germane to the meeting, during ordinary business
hours for a period of at least ten (10) days prior to the meeting, either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held and at the registered office of the Company.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any shareholder who is
present. The original stock transfer books shall be prima facie evidence as to
who are the shareholders entitled to examine such list or transfer books or to
vote at any meeting of shareholders. Failure to comply with the requirements
of this section shall not affect the validity of any action taken at said
meeting.
Section 2.5.2. Votes Per Share. Unless otherwise provided
by law or in the articles of incorporation, each shareholder shall be entitled
to one vote, in person or by proxy, on each matter submitted to a vote at a
meeting of the shareholders, for each share of capital stock held by such
shareholder.
Section 2.5.3. Proxies. Every shareholder entitled to vote
at a meeting or to express consent or dissent without a meeting or a
shareholder's duly authorized attorney-in-fact may authorize another person or
persons to act for him by proxy. Each proxy shall be in writing, executed by
the shareholder group, the proxy or by his duly authorized attorney. No proxy
shall be voted on or after eleven (11) months from its date, unless the proxy
provides for a
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longer period. Each proxy shall be revocable unless expressly provided therein
to be irrevocable and unless otherwise made irrevocable by law.
Section 2.5.4. Required Vote. When a quorum is present at
any meeting, the vote of the holders of capital stock of the Company
representing a majority of the votes of all capital stock of the Company
entitled to vote thereat and present in person or represented by proxy shall
decide any question brought before such meeting, unless the question is one
upon which, by express provision of law or the articles of incorporation or
these Bylaws, a different vote is required, in which case such express
provision shall govern and control the decision of such question.
Section 2.6 Consents in Lieu of Meeting. Any action required to
be or which may be taken at any meeting of shareholders may be taken without a
meeting, without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of shares having not less than the minimum number of votes that would
be necessary to take such action at a meeting at which the holders of all
shares entitled to vote on the action were present and voted. Such signed
consent shall have the same force and effect as a unanimous vote of
shareholders and shall be filed with the minutes of proceedings of the
shareholders.
ARTICLE III.
DIRECTORS
Section 3.1 Purpose. The business and affairs of the Company
shall be managed by or under the direction of the Board, which may exercise all
such powers of the Company and do all such lawful acts and things as are not by
law, the articles of incorporation or these Bylaws directed or required to be
exercised or done by the shareholders. Directors need not be shareholders or
residents of the State of Texas.
Section 3.2 Number. The number of directors constituting the
Board shall never be less than two (2) and shall be determined by resolution of
the Board, except for the number of directors constituting the initial Board,
which number is fixed by the articles of incorporation.
Section 3.3 Election. Directors shall be elected by the
shareholders by plurality vote at each annual meeting of shareholders, except
as hereinafter provided, and each director so elected shall hold office until
his successor has been duly elected and qualified.
Section 3.4 Vacancies and Newly-Created Directorships.
Section 3.4.1. Vacancies. Any vacancy occurring in the
Board may be filled in accordance with subsection 3.4.3 of this Section 3.4 or
may be filled by the affirmative vote of a majority of the remaining directors
though less than a quorum of the Board. A director elected to fill a vacancy
shall be elected for the unexpired term of his predecessor in office.
3
<PAGE> 8
Section 3.4.2. Newly-Created Directorships. A directorship
to be filled by reason of an increase in the number of directors may be filled
in accordance with subsection 3.4.3 of this Section 3.4 or may be filled by the
Board for a term of office continuing only until the next election of one or
more directors by the shareholders; provided that the Board may not fill more
than two such directorships during the period between any two successive annual
meetings of shareholders.
Section 3.4.3. Election by Shareholders. Any vacancy
occurring in the Board or any directorship to be filled by reason of an
increase in the number of directors may be filled by election at an annual or
special meeting of shareholders called for that purpose.
Section 3.5 Removal. Unless otherwise restricted by law, the
articles of incorporation or these Bylaws, any director or the entire Board may
be removed, with or without cause, by a majority vote of the shares then
entitled to vote at an election of directors, if notice of the intention to act
upon such matter shall have been given in the notice calling such meeting.
Section 3.6 Compensation. Unless otherwise restricted by the
articles of incorporation or these Bylaws, the Board shall have the authority
to fix the compensation of directors. The directors may be reimbursed for
their expenses, if any, of attendance at each meeting of the Board and may be
paid either a fixed sum for attendance at each meeting of the Board or a stated
salary as director. No such payment shall preclude any director from serving
the Company in any other capacity and receiving compensation therefor. Members
of committees of the Board may be allowed like compensation for attending
committee meetings.
ARTICLE IV.
BOARD MEETINGS
Section 4.1 Annual Meetings. The Board shall meet as soon as
practicable after the adjournment of each annual shareholders' meeting at the
place of such shareholders' meeting. No notice to the directors shall be
necessary to legally convene this meeting, provided a quorum is present.
Section 4.2 Regular Meetings. Regularly scheduled, periodic
meetings of the Board may be held without notice at such times and places as
shall from time to time be determined by resolution of the Board and
communicated to all directors.
Section 4.3 Special Meetings. Special meetings of the Board (i)
may be called by the chairman of the board or president and (ii) shall be
called by the president or secretary on the written request of two directors or
the sole director, as the case may be. Notice of each special meeting of the
Board shall be given, either personally or as hereinafter provided, to each
director at least (i) twenty-four (24) hours before the meeting if such notice
is delivered personally or by means of telephone, telegram, telex or facsimile
transmission delivery; (ii) two days before the meeting if such notice is
delivered by a recognized express delivery service; and (iii) three days before
the meeting if such notice is delivered through the United States mail. Any
and all
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<PAGE> 9
business may be transacted at a special meeting which may be transacted at a
regular meeting of the Board. Except as may be otherwise expressly provided by
law, the articles of incorporation or these Bylaws, neither the business to be
transacted at, nor the purpose of, any special meeting need be specified in the
notice or waiver of notice of such meeting.
Section 4.4 Quorum, Required Vote. A majority of the directors
shall constitute a quorum for the transaction of business at any meeting of the
Board, 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, except as may be
otherwise specifically provided by law, the articles of incorporation or these
Bylaws. If a quorum shall not be present at any meeting, a majority of the
directors present may adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum is present.
Section 4.5 Consent In Lieu of Meeting. Unless otherwise
restricted by the articles of incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board or any committee
thereof may be taken without a meeting, if a consent in writing, setting forth
the action so taken, is signed by all the members of the Board or committee, as
the case may be. Such signed consent shall have the same force and effect as a
unanimous vote at a meeting and shall be filed with the minutes of proceedings
of the Board or committee.
ARTICLE V.
COMMITTEES OF DIRECTORS
Section 5.1 Establishment; Standing Committees. The Board may by
resolution establish, name or dissolve one or more committees, each committee
to consist of one or more of the directors. Each committee shall keep regular
minutes of its meetings and report the same to the Board when required.
Section 5.1.1. Finance Committee. The Finance Committee
shall, from time to time, meet to review the Company's consolidated operating
and financial affairs, with respect to the Company, and to report its findings
and recommendations to the Board for final action. The Finance Committee shall
not be empowered to approve any corporate action, of whatever kind or nature,
and the recommendations of the Finance Committee shall not be binding on the
Board, except when, pursuant to the provisions of Section 5.2 hereof, such
power and authority have been specifically delegated to such committee by the
Board of resolution. In addition to the foregoing, the specific duties of the
Finance Committee shall be determined by the Board by resolution.
Section 5.1.2. Audit Committee. The Audit Committee shall,
from time to time, but no less than two times per year, meet to review and
monitor the financial and cost accounting practices and procedures of the
Company, and to report its findings and recommendations to the Board for final
action. The Audit Committee shall not be empowered to approve any corporate
action, of whatever kind or nature, and the recommendations of the Audit
Committee shall not be binding on the Board, except when, pursuant to the
provisions of Section 5.2 hereof, such power
5
<PAGE> 10
and authority have been specifically delegated to such committee by the Board
by resolution. In addition to the foregoing, the specific duties of the Audit
Committee shall be determined by the Board by resolution.
Section 5.1.3. Compensation Committee. The Compensation
Committee shall, from time to time, meet to review the various compensation
plans, policies and practices of the Company, and to report its findings and
recommendations to the Board for final action. The Compensation Committee
shall not be empowered to approve any corporate action, of whatever kind or
nature, and the recommendations of the Compensation Committee shall not be
binding on the Board, except when, pursuant to the provisions of Section 5.2
hereof , such power and authority have been specifically delegated to such
committee by the Board by resolution. In addition to the foregoing, the
specific duties of the Compensation Committee shall be determined by the Board
by resolution.
Section 5.2 Available Powers. Any committee established pursuant
to Section 5.1 hereof, including the Finance Committee, the Audit Committee and
the Compensation Committee, but only to the extent provided in the resolution
of the Board establishing such committee or otherwise delegating specific power
and authority to such committee and as limited by law, the articles of
incorporation and these Bylaws, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Company, and may authorize the seal of the Company to be affixed to all papers
which may require it.
Section 5.3 Alternate Members. The Board may designate one or
more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of such committee.
Section 5.4 Procedures. Time, place and notice, if any, of
meetings of a committee shall be determined by the members of such committee.
At meetings of a committee, a majority of the number of members designated by
the Board shall constitute a quorum for the transaction of business. The act
of a majority of the members present at any meeting at which a quorum is
present shall be the act of the committee, except as otherwise specifically
provided by law, the articles of incorporation or these Bylaws. If a quorum is
not present at a meeting of a committee, the members present may adjourn the
meeting from time to time, without notice other than an announcement at the
meeting, until a quorum is present.
ARTICLE VI.
OFFICERS
Section 6.1 Elected Officers. The Board shall elect a president
and a secretary (collectively, the "REQUIRED OFFICERS") having the respective
duties enumerated below and may elect such other officers having the titles and
duties set forth below which are not reserved for the Required Officers or such
other titles and duties as the Board may by resolution from time to time
establish:
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Section 6.1.1. Chairman of the Board. The chairman of the
board, or in his absence, the president, shall preside when present at all
meetings of the shareholders and the Board. The chairman of the board shall
advise and counsel the president and other officers and shall exercise such
powers and perform such duties as shall be assigned to or required of him from
time to time by the Board or these Bylaws. The chairman of the board may
execute bonds, mortgages and other contracts requiring a seal under the seal of
the Company, except where required by law to be otherwise signed and executed
and except where the signing and execution thereof shall be expressly delegated
by the Board to some other officer or agent of the Company. The chairman of
the board may delegate all or any of his powers or duties to the president, if
and to the extent deemed by the chairman of the board to be desirable or
appropriate.
Section 6.1.2. President. The president shall be the chief
executive officer of the Company, shall have general and active management of
the business and affairs of the Company and shall see that all orders and
resolutions of the Board are carried into effect. In the absence of the
chairman of the board or in the event of his inability or refusal to act, the
president shall perform the duties and exercise the powers of the chairman of
the board.
Section 6.1.3. Chief Operating Officer. In the absence of
the president or in the event of his inability or refusal to act, the chief
operations officer shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the president. The chief operations officer shall perform such other
duties and have such other powers as the Board may from time to time prescribe.
Section 6.1.4. Vice Presidents. The vice presidents shall
perform such duties and have such powers as the Board may from time to time
prescribe.
Section 6.1.5. Secretary. The secretary shall attend all
meetings of the shareholders, the Board and (as required) committees of the
Board and shall record all the proceedings of such meetings in minute books to
be kept for that purpose. He shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board and shall
perform such other duties as may be prescribed by the Board or the president.
He shall have custody of the corporate seal of the Company and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it, and when so affixed, it may be attested by his signature or by
the signature of such assistant secretary. The Board may give general
authority to any other officer to affix the seal of the Company and to attest
the affixing thereof by his signature.
Section 6.1.6. Assistant Secretaries. The assistant
secretary, or if there be more than one, the assistant secretaries in the order
determined by the Board (or if there be no such determination, then in the
order of their election or appointment) shall, in the absence of the secretary
or in the event of his inability or refusal to act, perform the duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the Board may from time to time prescribe.
Section 6.1.7. Treasurer. Unless the Board by resolution
otherwise provides, the treasurer shall be the chief accounting and financial
officer of the Company. The Treasurer shall
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have the custody of the corporate funds and securities, shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Company and shall deposit all moneys and other valuable effects in the name and
to the credit of the Company in such depositories as may be designated by the
Board. He shall disburse the funds of the Company as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall render to the
president and the Board, at its regular meetings, or when the Board so
requires, an account of all his transactions as treasurer and of the financial
condition of the Company.
Section 6.1.8. Assistant Treasurers. The assistant
treasurer, or if there shall be more than one, the assistant treasurers in the
order determined by the Board (or if there be no such determination, then in
the order of their election or appointment) shall, in the absence of the
treasurer or in the event of his inability or refusal to act, perform the
duties and exercise the powers of the treasurer and shall perform such other
duties and have such other powers as the Board may from time to time prescribe.
Section 6.1.9. Divisional Officers. Each division of the
Company, if any, may have a president, secretary, treasurer or controller and
one or more vice presidents, assistant secretaries, assistant treasurers and
other assistant officers. Any number of such offices may be held by the same
person. Such divisional officers will be appointed by, report to and serve at
the pleasure of the Board and such other officers that the Board may place in
authority over them. The officers of each division shall have such authority
with respect to the business and affairs of that division as may be granted
from time to time by the Board, and in the regular course of business of such
division may sign contracts and other documents in the name of the division
where so authorized; provided that in no case and under no circumstances shall
an officer of one division have authority to bind any other division of the
Company except as necessary in the pursuit of the normal and usual business of
the division of which he is an officer.
Section 6.2 Election. All elected officers shall serve until
their successors are duly elected and qualified or until their earlier death,
disqualification, retirement, resignation or removal from office.
Section 6.3 Appointed Officers. The Board may also appoint or
delegate the power to appoint such other officers, assistant officers and
agents, and may also remove such officers and agents or delegate the power to
remove same, as it shall from time to time deem necessary, and the titles and
duties of such appointed officers may be as described in Section 6.1 hereof for
elected officers; provided that the officers and any officer possessing
authority over or responsibility for any functions of the Board shall be
elected officers.
Section 6.4 Multiple Officeholders, Shareholder and Director
Officers. Any number of offices may be held by the same person, unless the
articles of incorporation or these Bylaws otherwise provide. Officers need not
be shareholders or residents of the State of Texas. Officers, such as the
chairman of the board and president, possessing authority over or
responsibility for any function of the Board must be directors.
Section 6.5 Compensation, Vacancies. The compensation of elected
officers shall be set by the Board. The Board shall also fill any vacancy in
an elected office. The compensation
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of appointed officers and the filling of vacancies in appointed offices may be
delegated by the Board to the same extent as permitted by these Bylaws for the
initial filling of such offices.
Section 6.6 Additional Powers and Duties. In addition to the
foregoing especially enumerated powers and duties, the several elected and
appointed officers of the Company shall perform such other duties and exercise
such further powers as may be provided by law, the articles of incorporation or
these Bylaws or as the Board may from time to time determine or as may be
assigned to them by any competent committee or superior officer.
Section 6.7 Removal. Any officer or agent or member of a
committee elected or appointed by the Board may be removed by the Board
whenever in its judgment the best interest of the Company will be served
thereby, but such removal shall be without prejudice to the contract rights, if
any, of the person so removed. Election or appointment of an officer or agent
or member of a committee shall not of itself create contract rights.
ARTICLE VII.
SHARE CERTIFICATES
Section 7.1 Entitlement to Certificates. Every holder of the
capital stock of the Company, unless and to the extent the Board by resolution
provides that any or all classes or series of stock shall be uncertificated,
shall be entitled to have a certificate, in such form as is approved by the
Board and conforms with applicable law, certifying the number of shares owned
by him. Each certificate representing shares shall state upon the face
thereof:
(1) that the corporation is organized under the laws of the State
of Texas;
(2) the name of the person to whom issued;
(3) the number and class of shares and the designation of the
series, if any, which such certificate represents; and
(4) the par value of each share represented by such certificate,
or a statement that the shares are without par value.
Section 7.2 Multiple Classes of Stock; Preemptive Rights. In the
event the Company shall be authorized to issue shares of more than one class,
each certificate representing shares issued by the Company (1) shall
conspicuously set forth on the face or back of the certificate a full statement
of (a) all of the designations, preferences, limitations and relative rights of
the shares of each class authorized to be issued and, (b) if the Company is
authorized to issue shares of any preferred or special class in series, the
variations in the relative rights and preferences of the shares of each such
series to the extent they have been fixed and determined and the authority of
the Board to fix and determine the relative rights and preferences of
subsequent series; or (2) shall conspicuously state on the face or back of the
certificate that (a) such a statement is set forth in the articles of
incorporation on file in the office of the Secretary of State of the State of
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Texas and (b) the Company will furnish a copy of such statement to the record
holder of the certificate without charge on written request to the Company at
its principal place of business or registered office. Each certificate
representing shares issued by the Company (1) shall conspicuously set forth on
the face or back of the certificate a full statement of the limitation or
denial of preemptive rights contained in the articles of incorporation, or (2)
shall conspicuously state on the face or back of the certificate that (a) such
a statement is set forth in the articles of incorporation on file in the office
of the Secretary of State of the State of Texas and (b) the Company will
furnish a copy of such statement to the record holder of the certificate
without charge on request to the Company at its principal place of business or
registered office.
Section 7.3 Signatures. Each certificate representing capital
stock of the Company shall be signed by or in the name of the Company by (1)
the chairman of the board, the president or a vice president; and (2) the
treasurer, an assistant treasurer, the secretary or an assistant secretary of
the Company. The signatures of the officers of the Company may be facsimiles.
In case any officer who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to hold such office before such
certificate is issued, it may be issued by the Company with the same effect as
if he held such office on the date of issue.
Section 7.4 Issuance and Payment. The Board or, in the case of
shares to be issued pursuant to a plan of conversion by a corporation that is a
converted entity, the plan of conversion, or, in the case of shares to be
issued pursuant to a plan of merger by a corporation created pursuant to the
plan of merger, the plan of merger may authorize shares to be issued for
consideration consisting of any tangible or intangible benefit to the Company
or other property of any kind or nature, including, cash, promissory notes,
services performed, contracts for services to be performed, other securities of
the Company, or securities of any other corporation, domestic or foreign, or
other entity. Shares may not be issued until the full amount of the
consideration, fixed as provided by law, has been paid or delivered as required
in connection with the authorization of the shares. When such consideration
shall have been paid or delivered the shares shall be deemed to have been
issued and the subscriber or shareholder entitled to receive such issue shall
be a shareholder with respect to such shares, and the shares shall be
considered fully paid and non-assessable. In the absence of fraud in the
transaction, the judgment of the Board or the shareholders, or the party or
parties approving the plan of conversion or the plan of merger, as the case may
be, as to the value of the consideration received for shares shall be
conclusive.
Section 7.5 Lost Certificates. The Board may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Company 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 may, in
its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it shall require
and/or to give the Company a bond in such sum as it may direct as indemnity
against any claim that may be made against the Company with respect to the
certificate alleged to have been lost, stolen or destroyed.
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Section 7.6 Transfer of Stock. Upon surrender to the Company or
its transfer agent, if any, of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer and of the payment of all taxes applicable to the transfer of said
shares, the Company shall be obligated to issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
its books; provided, however, that the Company shall not be so obligated unless
such transfer was made in compliance with applicable state and federal
securities laws.
Section 7.7 Registered Shareholders. The Company shall be
entitled to recognize the exclusive right of a person registered on its books
as the owner of shares to receive dividends, vote and be held liable for calls
and assessments and shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any person other
than such registered owner, whether or not it shall have express or other
notice thereof, except as otherwise provided by law.
ARTICLE VIII.
INDEMNIFICATION
Section 8.1 Definitions. For purposes of this Article VIII:
(1) "Corporation" includes any domestic or foreign predecessor
entity of the Company in a merger, conversion, or other
transaction in which some or all of the liabilities of the
predecessor are transferred to the Company by operation of law
and in any other transaction in which the Company assumes the
liabilities of the predecessor but does not specifically
exclude liabilities that are the subject matter of this
article;
(2) "Director" means any person who is or was a director of the
Company and any person who, while a director of the Company,
is or was serving at the request of the Company as a director,
officer, partner, venturer, proprietor, trustee, employee, or
similar functionary of another foreign or domestic
corporation, employee benefit plan, other enterprise, or other
entity;
(3) "Expenses" include court costs and attorneys' fees;
(4) "Official capacity" means
(i) when used with respect to a Director, the office of
Director in the Company, but does not include service
for any other foreign or domestic corporation or any
employee benefit plan, other enterprise, or other
entity;
(ii) when used with respect to a person other than a
Director, the elective or appointive office in the
Company held by the officer or the employment
relationship undertaken by the employee on behalf of
the Company, but
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does not include service for any other foreign or
domestic corporation, employee benefit plan, other
enterprise, or other entity; and
(5) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in
such an action, suit, or proceeding, and any inquiry or
investigation that could lead to such an action, suit, or
proceeding.
Section 8.2 Mandatory Indemnification. The Company shall
indemnify a person who was, is, or is threatened to be made a named defendant
or respondent in a proceeding because the person is or was a Director only if
it is determined in accordance with Section 8.6 hereof that the person:
(1) conducted himself in good faith;
(2) reasonably believed:
(i) in the case of conduct in his official capacity as a
Director of the Company, that his conduct was in the
Company's best interests; and
(ii) in all other cases, that his conduct was at least not
opposed to the Company's best interests; and
(3) in the case of any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.
Section 8.3 Prohibited Indemnification. Except to the extent
permitted by Section 8.5 hereof, a Director may not be indemnified under
Section 8.2 hereof in respect of a proceeding:
(1) in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official
capacity; or
(2) in which the person is found liable to the Company.
Section 8.4 Termination of Proceedings. The termination of a
proceeding by judgment, order, settlement, or conviction, or on a plea of nolo
contendere or its equivalent is not of itself determinative that the person did
not meet the requirements set forth in Section 8.2 hereof. A person shall be
deemed to have been found liable in respect of any claim, issue or matter only
after the person shall have been so adjudged by a court of competent
jurisdiction after exhaustion of all appeals therefrom.
Section 8.5 Judgments, Expenses, etc. A person may be
indemnified under Section 8.2 hereof against judgments, penalties (including
excise and similar taxes), fines, settlements, and reasonable expenses actually
incurred by the person in connection with the proceeding; but if the person is
found liable to the Company or is found liable on the basis that
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personal benefit was improperly received by the person, the indemnification (1)
is limited to reasonable expenses actually incurred by the person in connection
with the proceeding and (2) shall not be made in respect of any proceeding in
which the person shall have been found liable for willful or intentional
misconduct in the performance of his duty to the Company.
Section 8.6 Determination of Indemnification. A determination of
indemnification under Section 8.2 hereof must be made:
(1) by a majority vote of a quorum consisting of directors who at
the time of the vote are not named defendants or respondents
in the proceeding;
(2) if such a quorum cannot be obtained, by a majority vote of a
committee of the Board, designated to act in the matter by a
majority vote of all directors, consisting solely of two or
more directors who at the time of the vote are not named
defendants or respondents in the proceeding;
(3) by special legal counsel selected by the Board or a committee
thereof by vote as set forth in subsection (1) or (2) of this
Section 8.6, or, if such a quorum cannot be obtained and such
a committee cannot be established, by a majority vote of all
Directors; or
(4) by the shareholders of the Company in a vote that excludes the
shares held by Directors who are named defendants or
respondents in the proceeding.
Section 8.7 Determination of Reasonableness of Expenses.
Determination as to reasonableness of expenses must be made in the same manner
as the determination that indemnification is permissible, except that if the
determination that indemnification is permissible is made by special legal
counsel, determination as to reasonableness of expenses must be made in the
manner specified by subsection (3) of Section 8.6 hereof for the selection of
special legal counsel.
Section 8.8 Indemnification Against Reasonable Expenses. The
Company shall indemnify a Director against reasonable expenses incurred by him
in connection with a proceeding in which he is a named defendant or respondent
because he is or was a Director if he has been wholly successful, on the merits
or otherwise, in the defense of the proceeding.
Section 8.9 Payments in Advance of Disposition. Reasonable
expenses incurred by a Director who was, is, or is threatened to be made a
named defendant or respondent in a proceeding shall be paid or reimbursed by
the Company, in advance of the final disposition of the proceeding and without
any of the determinations specified in Sections 8.6 and 8.7 hereof, after the
Company receives a written affirmation by the Director of his good faith belief
that he has met the standard of conduct necessary for indemnification under
this Article VIII and a written undertaking by or on behalf of the Director to
repay the amount paid or reimbursed if it is ultimately determined that he has
not met those requirements.
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Section 8.10 Written Undertaking. The written undertaking
required by Section 8.9 hereof must be an unlimited general obligation of the
Director but need not be secured. It may be accepted without reference to
financial ability to make repayment.
Section 8.11 Consistency with Articles of Incorporation. Any
provision for the Company to indemnify or to advance expenses to a Director who
was, is, or is threatened to be made a named defendant or respondent in a
proceeding, whether contained in the articles of incorporation, these Bylaws, a
resolution of shareholders or Directors, an agreement, or otherwise, except in
accordance with Section 8.16 hereof, is valid only to the extent it is
consistent with this Article VIII as limited by the articles of incorporation,
if such a limitation exists.
Section 8.12 Other Expenses. Notwithstanding any other provision
of this Article VIII, the Company may pay or reimburse expenses incurred by a
Director in connection with his appearance as a witness or other participation
in a proceeding at a time when he is not a named defendant or respondent in the
proceeding.
Section 8.13 Officers and Employees . An officer or employee of
the Company shall be indemnified as, and to the same extent, provided by
Section 8.8 hereof for a Director and is entitled to seek indemnification under
such section to the same extent as a Director. The Company shall advance
expenses to an officer and may advance expenses to an employee of the Company
to the same extent that it shall advance expenses to Directors under this
Article VIII.
Section 8.14 Other Capacities. A corporation may indemnify and
advance expenses to persons who are not or were not officers or employees of
the Company, but who are or were serving at the request of the Company as a
director, officer, partner, venturer, proprietor, trustee, employee or similar
functionary of another foreign or domestic corporation, employee benefit plan,
other enterprise, or other entity to the same extent that it shall indemnify
and advance expenses to Directors under this Article VIII.
Section 8.15 Further Indemnification. The Company may indemnify
and advance expenses to an officer, employee or person identified in Section
8.14 hereof and who is not a Director to such further extent, consistent with
law, as may be provided by the articles of incorporation, these Bylaws, general
or specific action of the Board, or contract or as permitted or required by
common law.
Section 8.16 Insurance. The Company may purchase and maintain
insurance or another arrangement on behalf of any person who is or was a
Director, officer or employee of the Company or who is or was serving at the
request of the Company as a director, officer, partner, venturer, proprietor,
trustee, employee or similar functionary of another foreign or domestic
corporation, employee benefit plan, other enterprise, or other entity against
any liability asserted against him and incurred by him in such a capacity or
arising out of his status as such a person, whether or not the Company would
have the power to indemnify him against that liability under this Article VIII.
If the insurance or other arrangement is with a person or entity that is not
regularly engaged in the business of providing insurance coverage, the
insurance or arrangement may provide for payment of a liability with respect to
which the Company would not have the
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power to indemnify the person only if including coverage for the additional
liability has been approved by the shareholders of the Company. Without
limiting the power of the Company to procure or maintain any kind of insurance
or other arrangement, the Company may, for the benefit of persons indemnified
by the Company, (1) create a trust fund; (2) establish any form of
self-insurance; (3) secure its indemnity obligation by grant of a security
interest or other lien on the assets of the Company; or (4) establish a letter
of credit, guaranty, or surety arrangement. The insurance or other arrangement
may be procured, maintained, or established within the Company or with any
insurer or other person deemed appropriate by the Board regardless of whether
all or part of the stock or other securities of the insurer or other person are
owned in whole or part by the Company. In the absence of fraud, the judgment
of the Board as to the terms and conditions of the insurance or other
arrangement and the identity of the insurer or other person participating in an
arrangement shall be conclusive and the insurance or arrangement shall not be
voidable and shall not subject the Directors approving the insurance or
arrangement to liability, on any ground, regardless of whether Directors
participating in the approval are beneficiaries of the insurance or
arrangement.
Section 8.17 Report To Shareholders. Any indemnification of or
advance of expenses to a Director in accordance with this Article VIII shall be
reported in writing to the shareholders with or before the notice or waiver of
notice of the next shareholders' meeting or with or before the next submission
to shareholders of a consent to action without a meeting pursuant to Section A,
Article 9.10, of the Texas Business Corporation Act and, in any case, within
the 12-month period immediately following the date of the indemnification or
advance.
Section 8.18 Employee Benefit Plans. For purposes of this Article
VIII, the Company is deemed to have requested a Director to serve as a trustee,
employee or similar functionary of an employee benefit plan whenever the
performance by him of his duties to the Company also imposes duties on or
otherwise involves services by him to the plan or participants or beneficiaries
of the plan. Excise taxes assessed on a Director with respect to an employee
benefit plan pursuant to applicable law are deemed fines. Action taken or
omitted by a director with respect to an employee benefit plan in the
performance of his duties for a purpose reasonably believed by him to be in the
interest of the participants and beneficiaries of the plan is deemed to be for
a purpose which is not opposed to the best interests of the Company.
Section 8.19 Change in Governing Law. In the event of any
amendment or addition to Article 2.02-1 of the Texas Business Corporation Act
or the addition of any other section to such law which shall limit
indemnification rights thereunder, the Company shall, to the extent permitted
by the Texas Business Corporation Act, indemnify to the fullest extent
authorized or permitted hereunder, 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, whether civil, criminal, administrative or investigative
(including an action by or in the right of the Company), by reason of the fact
that he is or was a Director, officer or employee of the Company or is or was
serving at the request of the Company as a director, officer, partner,
venturer, proprietor, trustee, employee or similar functionary of another
foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise, against all
judgments, penalties (including excise and similar taxes), fines, settlements
and reasonable
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expenses (including attorneys' fees and court costs) actually and reasonably
incurred by him in connection with such action, suit or proceeding.
ARTICLE IX.
INTERESTED DIRECTORS, OFFICERS AND SHAREHOLDERS
Section 9.1 Validity; Disclosure; Approval. An otherwise valid
contract or transaction between the Company and one or more of its directors or
officers, or between the Company and any other domestic or foreign corporation,
or other entity in which one or more of its directors or officers are directors
or officers or have a financial interest, shall be valid notwithstanding
whether the director or officer is present at or participates in the meeting of
the Board or committee thereof which authorizes the contract or transaction, or
solely because his or their votes are counted for such purpose, if any one of
the following is satisfied:
(1) the material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to
the Board or the committee, and the Board or committee in good faith
authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors, even though the disinterested
directors be less than a quorum; or
(2) the material facts as to his relationship or interest
and as to the contract or transaction are disclosed or are known to
the shareholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
shareholders; or
(3) the contract or transaction is fair as to the Company
as of the time it is authorized, approved, or ratified by the Board, a
committee thereof, or the shareholders.
Section 9.2 Quorum. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board or by
a committee which authorizes the contract or transaction.
Section 9.3 Non-exclusive. This Article IX shall not be
construed to invalidate any contract or transaction which would be valid in the
absence of this Article IX.
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ARTICLE X.
MISCELLANEOUS
Section 10.1 Place of Meetings. All shareholders, directors and
committee meetings shall be held at such place or places, within or without the
State of Texas, as shall be designated from time to time by the Board or such
committee and stated in the notices thereof. If no such place is so
designated, said meetings shall be held at the principal business office of the
Company.
Section 10.2 Fixing Record Dates.
(a) In order that the Company may determine the
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, to receive payment of any dividend or other
distribution or allotment of any rights, to exercise any rights in respect of
any change, conversion or exchange of stock or to effect any other lawful
action, or to make a determination of shareholders for any other proper purpose
(other than determining shareholders entitled to consent to action by
shareholders proposed to be taken without a meeting of shareholders), the Board
may fix, in advance, a record date for any such determination of shareholders,
which shall not be more than sixty (60) nor less than ten (10) days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. In the absence of any action by the Board, the
date on which a notice of meeting is given, or the date the Board adopts the
resolution declaring a dividend or other distribution or allotment or approving
any change, conversion or exchange, as the case may be, shall be the record
date. A record date validly fixed for any meeting of shareholders and the
determination of shareholders entitled to vote at such meeting shall be valid
for any adjournment of said meeting except where such determination has been
made through the closing of stock transfer books and the stated period of
closing has expired.
(b) In order that the Company may determine the
shareholders entitled to consent to corporate action in writing without a
meeting, the Board may fix a record date, which record date shall not precede
the date upon which the resolution fixing the record date is adopted by the
Board, and which date shall not be more than ten (10) days after the date upon
which the resolution fixing the record date is adopted by the Board. If no
record date has been fixed by the Board, the record date for determining
shareholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board is otherwise required, shall be the
first date on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Company by delivery to its registered
office in the State of Texas, its principal place of business, or an officer or
agent of the Company having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the Company's
registered office shall be by hand or by certified or registered mail, return
receipt requested. If no record date has been fixed by the Board and prior
action by the Board is required, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be
at the close of business on the day on which the Board adopts the resolution
taking such prior action.
17
<PAGE> 22
Section 10.3 Waiver of Notice. Whenever any notice is required to be
given under law, the articles of incorporation or these Bylaws, a written
waiver of such notice, signed before or after the date of such meeting by the
person or persons entitled to said notice, shall be deemed equivalent to such
required notice. All such waivers shall be filed with the corporate records.
Attendance at a meeting shall constitute a waiver of notice of such meeting,
except where a person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 10.4 Attendance via Communications Equipment. Unless
otherwise restricted by law, the articles of incorporation or these Bylaws,
members of the Board, members of any committee thereof or the shareholders may
hold a meeting by means of conference telephone or other communications
equipment by means of which all persons participating in the meeting can
effectively communicate with each other. Such participation in a meeting shall
constitute presence in person at the meeting, except where a person
participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
Section 10.5 Dividends. Dividends on the capital stock of the
Company, paid in cash, property, or securities of the Company, or any
combination thereof, and as may be limited by applicable law and applicable
provisions of the articles of incorporation (if any), may be declared by the
Board at any regular or special meeting.
Section 10.6 Reserves. Before payment of any dividend, there may
be set aside out of any funds of the Company available for dividends such sum
or sums as the Board from time to time, in its absolute discretion, thinks
proper as a reserve or reserves to meet contingencies, for equalizing
dividends, for repairing or maintaining any property of the Company, or for
such other purpose as the Board shall determine to be in the best interest of
the Company; and the Board may modify or abolish any such reserve in the manner
in which it was created.
Section 10.7 Reports to Shareholders. The Board shall present at
each annual meeting of shareholders, and at any special meeting of shareholders
when called for by vote of the shareholders, a statement of the business and
condition of the Company.
Section 10.8 Contracts and Negotiable Instruments. Except as
otherwise provided by law or these Bylaws, any contract or other instrument
relative to the business of the Company may be executed and delivered in the
name of the Company and on its behalf by the chairman of the board, the
president or any vice president; and the Board may authorize any other officer
or agent of the Company to enter into any contract or execute and deliver any
contract in the name and on behalf of the Company, and such authority may be
general or confined to specific instances as the Board may by resolution
determine. All bills, notes, checks or other instruments for the payment of
money shall be signed or countersigned by such officer, officers, agent or
agents and in such manner as are permitted by these Bylaws and/or as, from time
to time, may be prescribed by resolution (whether general or special) of the
Board. Unless authorized so to do by these Bylaws or by the Board, no officer,
agent or employee shall have any power or authority to bind the Company by any
contract or engagement, or to pledge its credit, or to render it liable
pecuniarily for any purpose or to any amount.
18
<PAGE> 23
Section 10.9 Fiscal Year. The fiscal year of the Company shall be
fixed by resolution of the Board.
Section 10.10 Seal. The seal of the Company shall be in such form as
shall from time to time be adopted by the Board. The seal may be used by
causing it or a facsimile thereof to be impressed, affixed or otherwise
reproduced.
Section 10.11 Books and Records. The Company shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of its shareholders, Board and committees and shall keep at its registered
office or principal place of business, or at the office of its transfer agent
or registrar, a record of its shareholders, giving the names and addresses of
all shareholders and the number and class of the shares held by each.
Section 10.12 Resignation. Any director, committee member, officer
or agent may resign by giving written notice to the chairman of the board, the
chief operations officer, the president or the secretary. The resignation
shall take effect at the time specified therein, or immediately if no time is
specified. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 10.13 Surety Bonds. Such officers and agents of the Company
(if any) as the chairman of the board, the president or the Board may direct,
from time to time, shall be bonded for the faithful performance of their duties
and for the restoration to the Company, in case of their death, resignation,
retirement, disqualification or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in their possession or
under their control belonging to the Company, in such amounts and by such
surety companies as the chairman of the board, the president or the Board may
determine. The premiums on such bonds shall be paid by the Company and the
bonds so furnished shall be in the custody of the Secretary.
Section 10.14 Proxies in Respect of Securities of Other Corporations.
The chairman of the board, the president, the chief operations officer, any
vice president or the secretary may from time to time appoint an attorney or
attorneys or an agent or agents for the Company to exercise, in the name and on
behalf of the Company, the powers and rights which the Company may have as the
holder of stock or other securities in any other corporation to vote or consent
in respect of such stock or other securities, and the chairman of the board,
the president, the chief operations officer, any vice president or the
secretary may instruct the person or persons so appointed as to the manner of
exercising such powers and rights; and the chairman of the board, the
president, the chief operations officer, any vice president or the secretary
may execute or cause to be executed, in the name and on behalf of the Company
and under its corporate seal or otherwise, all such written proxies or other
instruments as he may deem necessary or proper in order that the Company may
exercise such powers and rights.
Section 10.15 Amendments. These Bylaws may be altered, amended,
repealed or replaced by the shareholders, or by the Board when such power is
conferred upon the Board by the articles of incorporation, at any annual
shareholders meeting or annual or regular meeting of the Board, or at any
special meeting of the shareholders or of the Board if notice of such
19
<PAGE> 24
alteration, amendment, repeal or replacement is contained in the notice of such
special meeting. If the power to adopt, amend, repeal or replace these Bylaws
is conferred upon the Board by the articles of incorporation, the power of the
shareholders to so adopt, amend, repeal or replace these Bylaws shall not be
divested or limited thereby.
20
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