<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 11, 1998
REGISTRATION NO. 333-44273
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
---------------------
FWT, INC.
(Exact Name of Registrant as Specified in Its Charter)
---------------------
<TABLE>
<S> <C> <C>
TEXAS 3663 75-1040743
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
</TABLE>
1901 EAST LOOP 820 SOUTH
FORT WORTH, TEXAS 76112-7899
(817) 457-3060
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
ROY J. MOORE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1901 EAST LOOP 820 SOUTH
FORT WORTH, TEXAS 76112-7899
(817) 457-3060
(Name, Address, Including Zip Code, And Telephone Number,
Including Area Code Of Agent For Service)
---------------------
Copy to:
GARY M. LAWRENCE, ESQ.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
1700 PACIFIC AVENUE, SUITE 4100
DALLAS, TEXAS 75201-4675
(214) 969-2800
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the registration statement becomes effective.
---------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: [ ]
---------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED(1) REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 7/8% Senior Subordinated
Notes Due 2007............. $105,000,000 100% $105,000,000 $30,975
=====================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
amount of the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE
ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 11, 1998
PROSPECTUS
FWT, INC.
OFFER TO EXCHANGE
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ALL THE OUTSTANDING
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
($105,000,000 PRINCIPAL AMOUNT)
---------------------
The Exchange Offer will expire at 5:00 p.m., New York City time, on April
12, 1998, unless extended.
---------------------
FWT, Inc., a Texas corporation (the "Company"), hereby offers (the
"Exchange Offer"), upon the terms and subject to the conditions set forth in
this Prospectus and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), to exchange up to an aggregate principal amount of $105,000,000
of its outstanding 9 7/8% Senior Subordinated Notes due 2007 (the "Outstanding
Notes") for an equal principal amount of its 9 7/8% Senior Subordinated Notes
due 2007 in integral multiples of $1,000 (the "Exchange Notes" and, together
with the Outstanding Notes, the "Notes"). The Exchange Notes will be general
unsecured obligations of the Company and are substantially identical (including
principal amount, interest rate, maturity and redemption rights) to the
Outstanding Notes for which they may be exchanged pursuant to this Exchange
Offer, except for certain transfer restrictions and registration rights relating
to the Outstanding Notes. The Outstanding Notes have been, and the Exchange
Notes will be, issued under an Indenture dated as of November 15, 1997 (the
"Indenture"), between the Company and Norwest Bank Minnesota, N.A., as trustee
(the "Trustee"). See "Description of Exchange Notes." There will be no proceeds
to the Company from the Exchange Offer; however, pursuant to that certain
Registration Rights Agreement dated as of November 12, 1997 (the "Registration
Rights Agreement") among the Company and the Initial Purchasers (as defined
herein) of the Outstanding Notes, the Company will bear certain offering
expenses.
(Cover text continued on next page)
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 FOR A DISCUSSION OF CERTAIN RISKS
TO BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER AND IN EVALUATING AN
INVESTMENT IN THE EXCHANGE NOTES.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is March 13, 1998.
<PAGE> 3
The Company will accept for exchange any and all validly tendered
Outstanding Notes on or prior to 5:00 p.m., New York City time, on April 12,
1998, unless extended (the "Expiration Date"). Tenders of Outstanding Notes may
be withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date; otherwise such tenders are irrevocable. Norwest Bank Minnesota,
N.A. is acting as exchange agent (the "Exchange Agent") in connection with the
Exchange Offer. The minimum period of time that the Exchange Offer will remain
open is 30 days (or longer if required by applicable law) after the date notice
of the Exchange Offer is mailed to the holders of the Outstanding Notes. The
Exchange Offer is not conditioned upon any minimum principal amount of
Outstanding Notes being tendered for exchange, but is otherwise subject to
certain customary conditions.
The Exchange Notes will bear interest from the Issue Date (as defined
below) at a rate equal to 9 7/8% per annum on the same terms as the Outstanding
Notes. Interest on the Exchange Notes will be payable semi-annually in arrears
on May 15 and November 15 of each year, commencing May 15, 1998. Outstanding
Notes that are accepted for exchange will cease to accrue interest upon issuance
of the Exchange Notes.
The Outstanding Notes in an aggregate principal amount of $105.0 million
were sold by the Company on November 17, 1997 (the "Initial Offering"), to BT
Alex. Brown Incorporated, SBC Warburg Dillon Read Inc. and Smith Barney Inc.
(collectively, the "Initial Purchasers") in a transaction not registered under
the Securities Act of 1933, as amended (the "Securities Act"), in reliance upon
the exemption provided in Section 4(2) of the Securities Act. The Initial
Purchasers subsequently placed the Outstanding Notes with qualified
institutional buyers in reliance upon Rule 144A under the Securities Act.
Accordingly, the Outstanding Notes may not be re-offered, resold or otherwise
transferred in the United States unless registered or unless an applicable
exemption from the registration requirements of the Securities Act is available.
The Exchange Notes are being offered hereunder in order to satisfy the
obligations of the Company under the Registration Rights Agreement. See "The
Exchange Offer."
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in no-action letters issued to third
parties (including Exxon Capital Holdings (available April 13, 1989), Morgan
Stanley & Co., Inc. (available June 5, 1991) and Mary Kay Cosmetics, Inc.
(available June 5, 1991)), the Company believes that the Exchange Notes issued
pursuant to this Exchange Offer may be offered for resale, resold and otherwise
transferred by a holder who is not an affiliate of the Company without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that the holder is acquiring the Exchange Notes in its
ordinary course of business and is not participating in and has no arrangement
or understanding with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Notes. Persons wishing to
exchange Outstanding Notes in the Exchange Offer must represent to the Company
that such conditions have been met.
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer (a "Participating Broker-Dealer") must
acknowledge that it will deliver a prospectus in connection with any resale of
Exchange Notes. The Letter of Transmittal for the Exchange Offer states that by
so acknowledging and delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Outstanding Notes where such Outstanding Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed to make this Prospectus available to any
Participating Broker-Dealer for use in connection with any such resale during
the period required by the Securities Act. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with the intention to
participate, or for the purpose of participating, in a distribution of the
Exchange Notes could not rely on the position of the staff of the Commission
enunciated in the foregoing no-action letters or similar no action letters and,
in the absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction. Failure to comply with such requirements in such instance
may result in such holder incurring liability under the Securities Act for which
the holder is not indemnified by the Company.
<PAGE> 4
The Outstanding Notes are traded on the Private Offering, Resales and
Trading through Automated linkages ("PORTAL") Market of the National Association
of Securities Dealers, Inc. The Company does not intend to list the Exchange
Notes on any national securities exchange or to seek the admission thereof to
trading on the National Association of Securities Dealers automatic quotation
system ("NASDAQ"). The Initial Purchasers have advised the Company that they
intend to make a market in the Exchange Notes; however, they are not obligated
to do so and any market-making may be discontinued at any time without notice.
Accordingly, no assurance can be given that an active public or other market
will develop for the Exchange Notes or as to the liquidity of or the trading
market for the Exchange Notes.
Any Outstanding Notes not tendered and accepted in the Exchange Offer will
remain outstanding. To the extent that any Outstanding Notes of other holders
are tendered and accepted in the Exchange Offer, a holder's ability to sell
untendered Outstanding Notes could be adversely affected. Following consummation
of the Exchange Offer, the holders of untendered Outstanding Notes will continue
to be subject to the existing restrictions upon transfer thereof.
The Company expects that the Exchange Notes issued pursuant to this
Exchange Offer will be issued in the form of a Global Exchange Note (as defined
herein), which will be deposited with, or on behalf of, The Depository Trust
Company ("DTC") and registered in the name of a nominee of DTC. Beneficial
interests in the Global Exchange Note representing the Exchange Notes will be
shown on, and transfers thereof to qualified institutional buyers will be
effected through, records maintained by DTC and its participants. After the
initial issuance of the Global Exchange Note, Exchange Notes in certificated
form will be issued in exchange for the Global Exchange Note on the terms set
forth in the Indenture. See "Book-Entry; Delivery and Form."
---------------------
No dealer, salesperson or other person has been authorized to give
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any security
other than the Exchange Notes offered hereby, nor does it constitute an offer to
sell or the solicitation of an offer to buy any of the Exchange Notes to any
person in any jurisdiction in which it is unlawful to make such an offer or
solicitation to such person. Neither the delivery of this Prospectus nor any
sale made hereunder shall under any circumstances create any implication that
the information contained herein is correct as of any date subsequent to the
date hereof.
MARKET DATA USED THROUGHOUT THIS PROSPECTUS WERE OBTAINED FROM INTERNAL
COMPANY SURVEYS AND INDUSTRY PUBLICATIONS. INDUSTRY PUBLICATIONS GENERALLY STATE
THAT THE INFORMATION CONTAINED THEREIN HAS BEEN OBTAINED FROM SOURCES BELIEVED
TO BE RELIABLE, BUT THE ACCURACY AND COMPLETENESS OF SUCH INFORMATION IS NOT
GUARANTEED. THE COMPANY HAS NOT INDEPENDENTLY VERIFIED ANY SUCH MARKET DATA.
SIMILARLY, INTERNAL COMPANY SURVEYS, WHILE BELIEVED BY THE COMPANY TO BE
RELIABLE, HAVE NOT BEEN VERIFIED BY ANY INDEPENDENT SOURCES.
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (which term shall encompass any amendment thereto) under the Securities Act,
for the registration of the Exchange Notes offered hereby. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all of
the information set forth in the Registration Statement, certain items of which
are contained in the financial statement schedules and exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, including the financial statement schedules and exhibits filed as a
part thereof. Statements made in this Prospectus concerning the contents of any
document referred to herein are not necessarily complete. With respect to each
such document filed with the Commission as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved and each such statement shall be deemed qualified in its
entirety by such reference. The Registration Statement and the exhibits thereto
filed by the Company with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.W., Washington, DC 20549, and at the following regional offices
of the Commission: Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials can be obtained by mail from the
Public Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington DC 20549, at prescribed rates. In addition the Commission
maintains a site on the World Wide Web that contains reports, proxy and
information statements and other information filed electronically by the Company
with the Commission which can be accessed over the Internet at
http://www.sec.gov.
As a result of the Exchange Offer, the Company will be subject to the
periodic reporting and other informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). As long as the Company is
subject to such periodic reporting and informational requirements, it will
furnish all reports and other information required thereby to the Commission and
pursuant to the Indenture will furnish copies of such reports and other
information to the Trustee.
The Company will deliver to the Trustee within 15 days after the filing of
the same with the Commission, copies of the quarterly and annual reports and of
the information, documents and other reports, if any, which the Company is
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide (without
exhibits) the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of Section 314(a) of
the Trust Indenture Act of 1939.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS AND THE ACCOMPANYING LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE EXCHANGE AGENT. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH TOGETHER, NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING LETTER OF TRANSMITTAL, OR BOTH
TOGETHER, CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial data, including
the financial statements and notes thereto, appearing elsewhere in this
Prospectus. Unless otherwise stated in this Prospectus, references to "FWT" or
the "Company" mean FWT, Inc. and its predecessors and successors. All references
to a fiscal year in this Prospectus refer to the Company's fiscal year ending on
April 30 (the "Fiscal Year") of the specified year. All references to market
share and demographic data in this Prospectus are based on industry and
government publications and Company data, and unless otherwise indicated,
references to years denote calendar, rather than fiscal, years. The Company's
most recent fiscal quarter for which financial and statistical data are
available ended on October 31, 1997, and all interim historical financial and
statistical data presented herein relating to the Company's financial condition
and results of operations, unless otherwise indicated, are calculated as of
October 31, 1997. All pro forma financial and statistical data presented herein
relating to the Company's financial condition and results of operations, unless
otherwise indicated, reflect the consummation of the Transactions (as defined
below) and the Initial Offering. The description of any agreement or
understanding described in this Prospectus does not purport to be complete, and
is qualified in its entirety by reference to such agreement, which will be made
available upon request to the Company.
THE COMPANY
The Company is a recognized name in the design, manufacture and marketing
of wireless communications infrastructure products, including antenna support
structures such as monopoles and towers. The Company's product line is used by
customers in the cellular, personal communications services ("PCS"), enhanced
specialized mobile radio ("ESMR"), paging, radio and television broadcasting and
microwave industries. The Company's customers include many of the larger
communications service providers, such as AT&T Wireless, MCI, Nextel and Sprint
Spectrum. Because all wireless service providers need infrastructure products,
the Company believes it is well-positioned to capitalize on the continued growth
of the wireless communications industry, regardless of which technologies or
service providers dominate the industry in the future.
The Company's sales have grown from $14.7 million in Fiscal Year 1993 to
$71.2 million in Fiscal Year 1997, representing a compound annual growth rate
("CAGR") of 48.4%. For the 12 months ended April 30, 1997, the Company generated
pro forma sales of $71.2 million, and pro forma earnings before interest, taxes,
depreciation and amortization ("EBITDA") of $15.5 million.
According to the Cellular Telecommunications Industry Association ("CTIA"),
the number of wireless communications cell sites in the U.S. has grown at a CAGR
of 35.3% from mid-1993 through mid-1997. During the same period, FWT outpaced
that growth with a revenue CAGR of 48.4%. The Company believes its success has
resulted from its reputation for customer service, on-time delivery, high
quality products and a position as a low cost provider. The use of a direct
sales force enables the Company to provide a high degree of customer service.
The Company's reputation for customer service has resulted in the Company
entering into master purchase agreements with key customers which, in Fiscal
Year 1997, accounted for approximately 70.0% of sales. The Company's use of
proprietary software in the product design phase has enabled it to reduce
product lead time. The Company's automated design and its manufacturing and job
tracking processes, as well as quality control measures, enable it to
consistently produce and ship products accurately in a timely manner.
Additionally, the Company believes its relationship with certain vendors has
significantly reduced its cost structure and investment in plant and working
capital.
The Company believes considerable growth opportunities exist. Global
communications markets are deregulating, resulting in the entry of new
communications service providers. In addition to deregulation, communications
regulators throughout the world continue to make more spectrum available for new
service providers. Many of the Company's customers are expanding their
operations throughout the world which, in turn, could provide significant growth
opportunities for the Company. The Company believes this trend will continue to
drive demand for its infrastructure products. Further, the Company believes new
product and market opportunities exist, particularly in the area of high
definition television ("HDTV"), electrical utility and wireless local loop
("WLL").
1
<PAGE> 7
INDUSTRY OVERVIEW
The monopole and tower segments of the communications infrastructure
industry have seven and six significant participants, respectively, who together
have a large market share position in their particular market segment. Builders
of wireless networks typically seek to purchase antenna support structures from
established manufacturers who can accurately produce large numbers of products
in a timely fashion. The Company believes these requirements often lead wireless
service providers to enter into master purchase agreements with a limited number
of communications infrastructure companies, including the Company.
The Company believes the following four trends are driving the growth of
the communications industry: (i) deregulation of global communications markets;
(ii) introduction of new competitors; (iii) the development of cost efficient
and capacity enhanced technology; and (iv) elasticity of demand for
communications products and services. These factors increase minutes of use
("MOU"), which is the main factor driving wireless communications infrastructure
spending because wireless service providers plan their capital spending based on
anticipated MOU. Emerging digital wireless technologies and an increase in the
number of service providers are increasing capacity and quality and lowering the
cost per minute per subscriber. This lower cost enables service providers to
lower rates which makes wireless services more affordable to a broader consumer
base. This encourages increased MOU which, in turn, drives additional
infrastructure spending.
COMPETITIVE STRENGTHS
The Company believes that its products and customer service distinguish it
as one of the leading designers and manufacturers of telecommunications
infrastructure products and that the Company's strong market position in its
product segments and continued opportunities for growth and profitability are
attributable to the following competitive strengths:
- REPUTATION FOR CUSTOMER SERVICE AND ON-TIME DELIVERY. Management
believes that one of FWT's competitive advantages is its strong tradition
of, and reputation for, customer service. The use of a direct sales force
plays a significant role in customer service. In addition, over the past
three years, the Company has invested in the implementation of a
computer-aided-design/computer-aided-manufacturing ("CAD/CAM") system
which allows the Company to respond efficiently to customers' requests
and helps the Company to ensure on-time delivery. The majority of the
Company's customers are wireless service providers that compete in an
industry where time to market is critical. Because time to market is
critical, if the Company does not continue to provide on-time delivery,
the Company could lose customers. FWT believes it has a significant
competitive advantage in meeting these customers' needs by reliably
meeting their often aggressive time frames.
- REPUTATION FOR HIGH QUALITY PRODUCTS. The Company's design and
production processes allow the Company to achieve and maintain a
consistent product quality. Moreover, the Company maintains rigorous
quality control standards which help to ensure accurate shipments to
customers.
- LOW COST STRUCTURE THROUGH STRATEGIC RELATIONSHIPS. The Company believes
it enjoys a position as a low cost provider. This position has resulted
from the formation of two key relationships which management believes
will enable it to (i) reduce purchasing and manufacturing costs as a
percentage of total sales, (ii) focus on its core competencies in product
design and finishing, quality control, customer service and sales and
marketing, and (iii) limit its plant and working capital investments. The
first of these key strategic relationships allows FWT to take delivery of
steel on a just-in-time basis. The second relationship will allow FWT to
galvanize its monopoles at a third party-owned facility adjacent to its
present manufacturing facility located near Fort Worth, Texas.
Construction has begun on such facility and completion is expected in the
late spring or early summer of 1998. These strategic relationships are
important and, should they terminate, the Company's profits could decline
significantly.
- SOLID MARKET POSITIONS IN GROWTH INDUSTRY. The Company believes it is
currently the second largest participant in each of the monopole and
tower markets and, in recent years, it has significantly increased its
market share in each of these markets. Although the Company believes it
is well
2
<PAGE> 8
positioned to benefit from the expected growth in the wireless communications
industry because of its strong market position, there are other competitors in
both the monopole and tower markets who could increase their market share. This
could reduce the benefit that the Company might derive from industry
growth.
- EXPERIENCED MANAGEMENT TEAM. Substantially all of the Company's
executive officers have spent considerable portions of their careers in
manufacturing. Moreover, Roy J. Moore and Carl R. Moore, who are
President and Vice President, respectively, of the Company, have played a
significant role in the Company's growth over the last five years.
Management's expertise and in depth knowledge of the Company's products
and customers are further complemented by the experience of the
principals at Baker Communications Fund, L.P. ("Baker"), a private equity
fund that focuses specifically on investment in telecommunications
services, equipment and applications providers.
BUSINESS AND GROWTH STRATEGY
Management believes that the Company's growth will be driven by leveraging
its competitive strengths, and in particular its excellent reputation, into a
stronger market position, by (i) capitalizing on the growth of the wireless
communications industry, (ii) broadening its base of product offerings, (iii)
pursuing certain acquisitions and alliances on a forward integrated basis, and
(iv) expanding into international markets.
- CAPITALIZE ON GROWTH IN THE WIRELESS COMMUNICATION INDUSTRY. The Company
has grown rapidly over the past five years by taking advantage of the
growing demand for wireless communications services, and by positioning
itself as a reliable, customer focused provider of infrastructure
products. However, the Company must work to manage its growth so that it
can continue to satisfy its customers. The Company believes that there
are several industry trends which indicate an increase in demand for
wireless communications infrastructure products. These include: (i) the
continued construction of cellular networks which is expected to grow as
providers make capacity enhancements and transition from analog to
digital; (ii) the widespread introduction of PCS; (iii) the launch of
HDTV; and (iv) the growth of WLL systems which is expected to increase,
particularly in emerging economies.
- BROADEN PRODUCT OFFERINGS. The Company has developed relationships with
numerous electrical utility companies through the introduction of its
PowerMount(TM) product, which provides a co-location opportunity within a
standard electrical transmission structure. The Company plans to market
this product and other utility applications in the future and believes
these relationships will prove beneficial in entering these markets. In
addition, the introduction of HDTV will require towers of over one
thousand feet and are expected to sell for approximately $1.0 million
each. The Company believes it is well-positioned to take advantage of
each of these opportunities.
- PURSUE STRATEGIC ALLIANCES AND ACQUISITIONS. The Company plans to
evaluate selective opportunities that will enhance its position within
the cell site development process. The Company believes there are various
opportunities beyond providing infrastructure products used in the
construction of communication networks. These include site installation
services, tower ownership and management businesses. The Company believes
these closely related businesses could be integrated with its current
operations to increase the value the Company provides to its customer
base. From time to time, the Company engages in discussions or otherwise
evaluates opportunities that may lead to the acquisition by the Company
of one or more closely related businesses. The ability of the Company to
complete any such acquisitions is subject to limitations imposed by the
terms and conditions of the Credit Agreement dated November 12, 1997, as
amended, by and among the Company, Bankers Trust Company and BT
Commercial Corporation (the "Revolving Credit Facility") and the
Indenture. Moreover, Baker has informed the Company that it is in
negotiations relative to an investment in one or more businesses closely
related to that of the Company. It is possible that in the future Baker
may engage in discussions with the Company with a view to combining any
business acquired by Baker with that of the Company. Moreover, in an
acquisition currently under negotiation by Baker, it is contemplated that
the Company would enter into a mutually acceptable management services
agreement with the business that is the subject of such negotiations,
pursuant to which the Company would provide certain management
3
<PAGE> 9
services and receive a management fee. The definitive terms and
conditions of such management services agreement have not been
determined. The ability of the Company to engage in any transaction with
Baker or any of its affiliates is limited by the terms and conditions of
the Revolving Credit Facility and the Indenture.
- EXPAND INTO INTERNATIONAL MARKETS. The Company believes there are
considerable opportunities to expand its geographical reach, particularly
into Asia and Latin America. The trend towards global deregulation of
telecommunications markets provides substantial growth opportunities for
wireless infrastructure providers. The Company believes its strong
relationships with its customers, many of whom are already building
networks internationally, provide an advantage in competing for
infrastructure business in new international markets. In addition, the
Company believes there may be strategic opportunities for joint ventures
in foreign markets, and that by allying itself with local businesses the
Company can further position itself to take advantage of growth in
international markets. Although the growth of international markets
provides the Company with significant opportunities, cultural differences
may provide the Company with obstacles that may impede the Company's
expansion into international markets.
The Company's headquarters are at 1901 East Loop 820 South, Fort Worth,
Texas 76112-7899, its telephone number is (817) 457-3060 and its facsimile
number is (817) 429-6010.
4
<PAGE> 10
RECAPITALIZATION AND STOCK PURCHASE
On November 12, 1997, the Company, FWT Acquisition, Inc. ("FWT
Acquisition") (a newly formed wholly-owned subsidiary of Baker), 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, that certain Stock Purchase and Redemption Agreement
and related documents (collectively, the "Transaction Agreements"). The
Transaction Agreements contemplated, among other things, two primary
transactions. The first transaction contemplated by the Transaction Agreements
included (i) the incurrence by the Company of $100.0 million senior secured
indebtedness (the "Senior Credit Facility"), (ii) the redemption by the Company
from the Existing Shareholders of an aggregate of 235.86 shares of the Company's
common stock, par value $10.00 per share (the "Common Stock"), for aggregate
consideration of approximately $83.6 million, including related consulting,
legal and accounting costs of $1.2 million, (iii) the repayment of all the
outstanding funded indebtedness of the Company in an aggregate amount of
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 redemption price per
share is subject to an adjustment based upon the final determination of the
Company's working capital as determined as of the closing date. The second
transaction contemplated by the Transaction Agreements included the purchase by
FWT Acquisition of an aggregate of 108.91 shares of the Common Stock from
Existing Shareholders for aggregate consideration of approximately $36.0 million
(the "Stock Purchase," and together with the Recapitalization, the
"Transactions"). As a result of the Transactions, FWT Acquisition holds
approximately 80.0% of the issued and outstanding shares of Common Stock, and
Roy J. Moore, Thomas F. Moore and Carl R. Moore (collectively, the "Roll-over
Shareholders") hold in the aggregate approximately 20.0% of the issued and
outstanding shares of the 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, notes payable of approximately $2.5 million, and the
distribution of selected assets, were used to consummate the Recapitalization.
In order to repay the Senior Credit Facility, the Company issued $105.0 million
in the aggregate principal amount of Outstanding Notes in the Initial Offering.
5
<PAGE> 11
THE EXCHANGE OFFER
THE OUTSTANDING NOTES...The Outstanding Notes were sold by the Company on
November 17, 1997, in the Initial Offering, to the
Initial Purchasers pursuant to the Purchase Agreement.
The Initial Purchasers subsequently resold the
Outstanding Notes to qualified institutional buyers
pursuant to Rule 144A under the Securities Act.
REGISTRATION
REQUIREMENTS............Pursuant to the Purchase Agreement dated November 12,
1997, by and among the Company, BT Alex. Brown
Incorporated, SBC Warburg Dillon Read Inc. and Smith
Barney Inc. (the "Purchase Agreement"), the Company and
the Initial Purchasers entered into the Registration
Rights Agreement, which grants the holders of the
Outstanding Notes certain exchange and registration
rights. The Exchange Offer is intended to satisfy such
exchange and registration rights, which terminate upon
the consummation of the Exchange Offer. If applicable
law or applicable interpretations of the staff of the
Commission do not permit the Company to effect the
Exchange Offer, the Company has agreed to file a shelf
registration (the "Shelf Registration Statement")
covering resales of the Outstanding Notes. See "The
Exchange Offer -- Resale of Exchange Notes" and "The
Exchange Offer -- Shelf Registration Statement."
THE EXCHANGE OFFER......The Company is offering to exchange $1,000 principal
amount of the Exchange Notes for each $1,000 principal
amount of Outstanding Notes. As of the date hereof,
$105.0 million aggregate principal amount of Outstanding
Notes are outstanding. The Company will issue the
Exchange Notes on April 13, 1998 (the "Exchange Date").
Based on an interpretation by the staff of the
Securities and Exchange Commission (the "Commission")
set forth in no-action letters issued to third parties
(including Exxon Capital Holdings Corporation (available
May 13, 1988), Morgan Stanley & Co. Inc. (available June
5, 1991) and Mary Kay Cosmetics, Inc. (available June 5,
1991)), the Company believes that the Exchange Notes
issued pursuant to this Exchange Offer may be offered
for resale, resold and otherwise transferred by a holder
who is not an affiliate of the Company without
compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that the
holder is acquiring the Exchange Notes in its ordinary
course of business and is not participating in and has
no arrangement or understanding with any person to
participate in the distribution (within the meaning of
the Securities Act) of the Exchange Notes. Persons
wishing to exchange Outstanding Notes in the Exchange
Offer must represent to the Company that such conditions
have been met.
Each Participating Broker-Dealer must acknowledge that
it will deliver a prospectus in connection with any
resale of Exchange Notes. The Letter of Transmittal for
the Exchange Offer states that by so acknowledging and
by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it
may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of
Exchange Notes received in exchange for Outstanding
Notes where such Outstanding Notes were acquired by such
broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed to make
this Prospectus available to any
6
<PAGE> 12
Participating Broker-Dealer for use in connection with
any such resale during the period required by the
Securities Act. See "Plan of Distribution."
Any holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of
participating, in a distribution of the Exchange Notes
could not rely on the position of the staff of the
Commission enunciated in the foregoing no-action letters
or similar no action letters and, in the absence of an
exemption therefrom, must comply with the registration
and prospectus delivery requirements of the Securities
Act in connection with the resale transaction. Failure
to comply with such requirements in such instance may
result in such holder incurring liability under the
Securities Act for which the holder is not indemnified
by the Company.
EXPIRATION DATE.........5:00 p.m., New York City time, on April 12, 1998.
INTEREST ON THE
EXCHANGE NOTES........The Exchange Notes will bear interest from the Issue
Date at a rate equal to 9 7/8% per annum and will be
payable semi-annually on May 15 and November 15 of each
year commencing May 15, 1998. Interest on each Exchange
Note will accrue (A) from the later of (i) the last
interest payment date on which interest was paid on the
Outstanding Note surrendered in exchange therefor, or
(ii) if the Outstanding Note is surrendered for exchange
on a date in a period which includes the record date for
an interest payment date to occur on or after the date
of such exchange and as to which interest will be paid,
the date of such interest payment date or (B) if no
interest has been paid on the Outstanding Notes, from
the Issue Date.
PROCEDURES FOR TENDERING
OUTSTANDING NOTES.....Each holder of Outstanding Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions contained
herein and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together with
the Outstanding Notes and any other required
documentation to the Exchange Agent at the address set
forth herein. By executing the Letter of Transmittal,
each holder will represent to the Company that, among
other things, the holder or person receiving such
Exchange Notes, whether or not such person is the
holder, is acquiring the Exchange Notes in the ordinary
course of business and that neither the holder nor any
such other person has any arrangement or understanding
with any person to participate in the distribution of
such Exchange Notes. In lieu of physical delivery of the
certificates representing Outstanding Notes, tendering
holders may transfer Outstanding Notes pursuant to the
procedure for book-entry transfer as set forth under
"The Exchange Offer -- Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS.....Any beneficial owner whose Outstanding Notes are
registered in the name of a broker-dealer, commercial
bank, trust company or other nominee and who wishes to
tender should contact such registered holder promptly
and instruct such registered holder to tender on such
beneficial owner's behalf.
If such beneficial owner wishes to tender on such
owner's own behalf, such owner must prior to completing
and executing the Letter of Transmittal and delivering
its Outstanding Notes, either make appropriate
arrangements to register ownership of the Outstanding
Notes in such owner's name or obtain a properly
completed bond power from the registered holder. The
transfer of record ownership may take considerable time.
7
<PAGE> 13
GUARANTEED DELIVERY
PROCEDURES............Holders of Outstanding Notes who wish to tender their
Outstanding Notes and whose Outstanding Notes are not
immediately available or who cannot deliver their
Outstanding Notes, the Letter of Transmittal or any
other documents required by the Letter of Transmittal to
the Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date must
tender their Outstanding Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer -- Guaranteed Delivery Procedures."
WITHDRAWAL RIGHTS.......Tenders may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date pursuant to
the procedures described under "The Exchange
Offer -- Withdrawal of Tenders."
ACCEPTANCE OF
OUTSTANDING NOTES AND
DELIVERY OF EXCHANGE
NOTES.................Subject to certain conditions, the Company will accept
for exchange any and all Outstanding Notes that are
properly tendered in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date. The
Exchange Notes issued pursuant to the Exchange Offer
will be delivered on the Exchange Date. See "The
Exchange Offer -- Terms of the Exchange Offer."
FEDERAL INCOME TAX
CONSEQUENCES..........The exchange pursuant to the Exchange Offer should not
be a taxable event for federal income tax purposes. See
"Federal Income Tax Consequences."
EFFECT ON HOLDERS OF
OUTSTANDING NOTES.....As a result of the making of this Exchange Offer, the
Company will have fulfilled one of its obligations under
the Registration Rights Agreement, and holders of
Outstanding Notes who do not tender their Outstanding
Notes will not have any further registration rights
under the Registration Rights Agreement or otherwise.
Such holders will continue to hold the untendered
Outstanding Notes and will be entitled to all the rights
and subject to all the limitations applicable thereto
under the Indenture, except to the extent such rights or
limitations, by their terms, terminate or cease to have
further effectiveness as a result of the Exchange Offer.
All untendered Outstanding Notes will continue to be
subject to certain restrictions on transfer.
Accordingly, if any Outstanding Notes are tendered and
accepted in the Exchange Offer, the trading market of
the untendered Outstanding Notes could be adversely
affected. See "The Exchange Offer" and "Risk
Factors -- Absence of Public Market; Restrictions on
Transfer."
EXCHANGE AGENT..........Norwest Bank Minnesota, N.A.
USE OF PROCEEDS.........There will be no cash proceeds payable to the Company
from the issuance of the Exchange Notes pursuant to the
Exchange Offer. See "Use of Proceeds."
8
<PAGE> 14
SUMMARY AND TERMS OF THE EXCHANGE NOTES
SECURITIES OFFERED......$105.0 million aggregate principal amount of 9 7/8%
Senior Subordinated Notes due 2007.
ISSUER..................FWT, Inc., a Texas corporation.
MATURITY DATE...........November 15, 2007.
INTEREST ON THE
EXCHANGE NOTES........The Exchange Notes will bear interest at a rate equal to
9 7/8% per annum and will be payable semi-annually on
May 15 and November 15 of each year commencing May 15,
1998. Interest on each Exchange Note will accrue (A)
from the later of (i) the last interest payment date on
which interest was paid on the Outstanding Note
surrendered in exchange therefor, or (ii) if the
Outstanding Note is surrendered for exchange on a date
in a period which includes the record date for an
interest payment date to occur on or after the date of
such exchange and as to which interest will be paid, the
date of such interest payment date or (B) if no interest
has been paid on the Outstanding Notes, from the Issue
Date.
INTEREST PAYMENT
DATES...................Interest will be payable semi-annually in arrears on
each May 15 and November 15, commencing May 15, 1998.
RANKING.................The Notes will be unsecured senior subordinated
obligations of the Company and will be subordinated in
right of payment to all existing and future Senior
Indebtedness (as defined herein) of the Company. The
Notes will rank without preference with any future
senior subordinated indebtedness of the Company and will
rank senior to all other subordinated indebtedness of
the Company. As of October 31, 1997, on a pro forma
basis, the Company would have had no Senior Indebtedness
and approximately $11.4 million of availability under
the Revolving Credit Facility. See "Management's
Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital
Resources" and "Description of the Revolving Credit
Facility."
OPTIONAL REDEMPTION.....The Notes will be redeemable, in whole or in part, at
the option of the Company on or after November 15, 2002,
at the redemption prices set forth herein, plus accrued
and unpaid interest to the date of redemption. 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 originally
issued with the net cash proceeds of one or more public
equity offerings, at a redemption price equal to
109.875% of the aggregate principal amount of the Notes
to be redeemed plus accrued and unpaid interest to the
date of redemption; provided, however, that, after
giving effect to any such redemption, at least 65% of
the aggregate principal amount of the Notes originally
issued remain outstanding.
CHANGE OF CONTROL.......Upon a Change of Control (as defined herein), 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% of the principal amount
thereof plus accrued interest to the date of purchase.
See "Description of Exchange Notes."
CERTAIN COVENANTS.......The Indenture contains certain covenants that limit the
ability of the Company and its subsidiaries 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, impose restrictions on the ability of a
subsidiary to pay dividends or make certain payments to
the Company and its subsidiaries, and 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% of the
9
<PAGE> 15
principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase in the event
of certain Asset Sales (as defined herein).
For additional information regarding the Exchange Notes, see "Description of
Exchange Notes."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating the Exchange Offer.
10
<PAGE> 16
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL DATA
The summary historical income statement data for Fiscal Year 1995, Fiscal
Year 1996 and Fiscal Year 1997 and the summary historical balance sheet data for
Fiscal Year 1996 and Fiscal Year 1997 presented below were derived from the
historical financial statements of the Company audited by Arthur Andersen LLP,
independent public accountants, whose report appears elsewhere in this
Prospectus. The summary historical financial data as of and for the six month
periods ended October 31, 1996 and 1997 were derived from the Company's
unaudited financial statements which, in the opinion of management, reflect all
adjustments (consisting of normal recurring adjustments) necessary for the fair
presentation of the financial condition and results of operations for such
period. The summary unaudited pro forma financial data give effect to the
Transactions and Initial Offering as if they had occurred as of the beginning of
the period presented for the income statement and other data, and as of the last
day of the period presented for the balance sheet data. The summary unaudited
pro forma income statement and other data do not (i) purport to represent what
the Company's results of operations actually would have been if the Transactions
and Initial Offering had actually occurred as of such dates or what such results
will be for any future periods or (ii) give effect to certain non-recurring
charges expected to result from the Transactions and Initial Offering. The
information contained in this table should be read in conjunction with "Selected
Historical Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Financial Statements and
accompanying notes thereto included elsewhere in this Prospectus.
11
<PAGE> 17
<TABLE>
<CAPTION>
SIX MONTH PRO FORMA
PERIOD -----------------
FISCAL YEAR ENDED ENDED FISCAL YEAR ENDED
APRIL 30, OCTOBER 31, -----------------
--------------------------- ----------------- APRIL 30,
1995 1996 1997 1996 1997 1997
------- ------- ------- ------- ------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.............................. $30,388 $42,701 $71,188.. $27,132 $37,350 $71,188
Cost of sales...................... 23,838 32,006 49,249 18,771 26,652 49,249
------- ------- ------- ------- ------- -------
Gross profit....................... 6,550 10,695 21,939 8,361 10,698 21,939
Selling, general and
administrative................... 4,139 4,244 8,353 2,942 5,389 7,303
------- ------- ------- ------- ------- -------
Operating income................... 2,411 6,451 13,586 5,419 5,309 14,636
Interest income (expense), net..... 69 123 197 102 (157) (10,831)
Other income(1).................... 3 512 571 41 281 125
------- ------- ------- ------- ------- -------
Income before income tax
provision........................ 2,483 7,086 14,354 5,562 5,433 3,930
Income tax provision
(benefit)(2)..................... 53 162 316 125 113 1,493
------- ------- ------- ------- ------- -------
Net income(2)...................... $ 2,430 $ 6,924 $14,038 $ 5,437 $ 5,320 $ 2,437
======= ======= ======= ======= ======= =======
OTHER FINANCIAL DATA:
EBITDA(3).......................... $ 2,827 $ 7,494 $14,937 $ 5,835 $ 6,248 $15,541
Depreciation....................... 299 375 508 259 412 508
Capital expenditures............... 1,324 1,198 4,341 1,086 664 $ 4,341
Cash flows provided by operating
activities....................... 1,422 4,846 5,783 1,993 7,369 --
Cash flows used in investing
activities....................... (1,262) (1,182) (4,323) (1,076) (466) --
Cash flows provided by (used in)
financing activities............. $ (300) $(1,459) $(1,025) $ 505 $(1,102) --
Ratio of earnings to fixed
charges.......................... 56.18x 215.73x 192.39x 398.29x 14.48x 1.35x
BALANCE SHEET DATA:
Working capital.................... $ 5,278 $ 9,815 $18,509 $14,370 $ 2,531 --
Total assets....................... 11,854 19,489 40,203 27,523 40,838 --
Long term debt, less current
maturities....................... 475 375 1,512 325 1,410 --
Shareholders' equity (deficit)..... $ 8,412 $13,977 $25,297 $19,414 $ 9,617 --
<CAPTION>
PRO FORMA
-----------------------------------
SIX MONTH PERIOD ENDED
-----------------------------------
OCTOBER 31, OCTOBER 31,
1996 1997
---------------- ----------------
<S> <C> <C>
INCOME STATEMENT DATA:
Sales.............................. $27,132 $ 37,350
Cost of sales...................... 18,771 26,652
------- --------
Gross profit....................... 8,361 10,698
Selling, general and
administrative................... 3,067 5,514
------- --------
Operating income................... 5,294 5,184
Interest income (expense), net..... (5,435) (5,305)
Other income(1).................... 45 277
------- --------
Income before income tax
provision........................ (96) 156
Income tax provision
(benefit)(2)..................... (37) 59
------- --------
Net income(2)...................... $ (59) $ 97
======= ========
OTHER FINANCIAL DATA:
EBITDA(3).......................... $ 5,714 $ 6,119
Depreciation....................... 259 412
Capital expenditures............... $ 1,086 $ 664
Cash flows provided by operating
activities....................... -- --
Cash flows used in investing
activities....................... -- --
Cash flows provided by (used in)
financing activities............. -- --
Ratio of earnings to fixed
charges.......................... .98x 1.03x
BALANCE SHEET DATA:
Working capital.................... -- $ 13,991
Total assets....................... -- 60,284
Long term debt, less current
maturities....................... -- 105,000
Shareholders' equity (deficit)..... -- $(56,365)
</TABLE>
12
<PAGE> 18
- ---------------
(1) Other income consists primarily of income related to farm operations and the
disposition of farm assets. These assets have been distributed in connection
with the Transactions.
(2) The historical financial statements do not include a provision for federal
taxes as the Company has elected to be taxed as a Subchapter S corporation.
A provision for federal taxes has been reflected in the pro forma
information to reflect the change in tax status of the Company from a
Subchapter S corporation to a Subchapter C corporation. The following table
presents historical net income on a pro forma basis adjusted for a federal
tax provision.
<TABLE>
<CAPTION>
SIX MONTH PERIOD
FISCAL YEAR ENDED APRIL 30, ENDED OCTOBER 31, LTM PERIOD
- ------------------------------ ------------------ ENDED
1995 1996 1997 1996 1997 OCTOBER 31, 1997
- ------ ------ ------ ------ ------ ----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
$1,604 $4,570 $9,265 $3,588 $3,511 $9,188
</TABLE>
(3) EBITDA consists of net income before interest expense, taxes, depreciation
and amortization. EBITDA is included because it is widely used as a measure
of a company's operating performance, but should not be construed as an
alternative either (i) to net income (determined in accordance with
generally accepted accounting principles) as a measure of profitability or
(ii) to cash flows from operating activities (determined in accordance with
generally accepted accounting principles). EBITDA does not take into account
the Company's debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be available
for discretionary use. In addition, as EBITDA may not be calculated in the
same manner by all companies and analysts, the EBITDA measures presented may
not be comparable to other similarly titled measures of other companies.
13
<PAGE> 19
RISK FACTORS
Prospective investors should carefully consider the following factors, in
addition to the other information set forth in this Prospectus, before making an
investment in the Exchange Notes offered hereby.
HIGH LEVEL OF INDEBTEDNESS
In connection with the Recapitalization and the Initial Offering, the
Company has incurred a significant amount of indebtedness. At October 31, 1997,
the Company's long-term indebtedness would have been $105.0 million and its
total shareholders' deficit would have been $56.4 million, in each case on a pro
forma basis after giving effect to the Recapitalization and the Initial Offering
as if they had occurred on such date. In addition, as of October 31, 1997 on a
pro forma basis including the effect of obtaining the Revolving Credit Facility,
the Company would have had approximately $11.4 million of availability under the
Revolving Credit Facility. Further, subject to the restrictions in the Revolving
Credit Facility and the Indenture, the Company may incur additional
indebtedness, including senior indebtedness with respect to the additional Notes
that may be issued under the Indenture from time to time to finance
acquisitions, capital expenditures, working capital or for other purposes.
The level of the Company's indebtedness could have important consequences
to holders of the Notes, including, but not limited to, the following: (i) a
substantial portion of the Company's cash flow from operations must be dedicated
to the repayment of indebtedness and will not be available for other purposes;
(ii) the Company's future ability to obtain additional debt financing for
working capital, capital expenditures, acquisitions or other purposes may be
limited; and (iii) the Company's level of indebtedness could limit its
flexibility in reacting to changes in the industry and general economic
conditions and its ability to withstand a prolonged downturn in the wireless
communications industry or the telecommunications infrastructure industry.
Certain of the Company's competitors currently operate on a less leveraged basis
and have significantly greater operating and financing flexibility than the
Company.
ABILITY TO SERVICE DEBT
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend upon its future operating performance, which will
be affected by prevailing economic conditions in the telecommunications
infrastructure industry and financial, business and other factors, certain of
which are beyond its control. Should they occur, factors that will affect
operating performance include loss of market share, prolonged disruption in the
operations at any of the Company's manufacturing facilities and decreased demand
for the Company's products. The Company anticipates that its operating cash
flow, together with borrowings under the Revolving Credit Facility, will be
sufficient to meet its operating expenses and to service its debt requirements
as they become due. However, if the Company is unable to generate sufficient
cash flow from operations to service its indebtedness, it will be forced to
adopt an alternative strategy that may include actions such as reducing or
delaying capital expenditures, selling assets, restructuring or refinancing its
indebtedness, or seeking additional equity capital. There can be no assurance
that any of these strategies could be effected on satisfactory terms, if at all.
In addition, in the event of bankruptcy, liquidation or reorganization of the
Company, the assets of the Company will be available to pay obligations on the
Notes only after all Senior Indebtedness has been paid in full, and there may
not be sufficient assets remaining to pay amounts due on any or all of the Notes
then outstanding. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
RESTRICTIONS IMPOSED BY TERMS OF THE COMPANY'S INDEBTEDNESS
The Indenture restricts, among other things, the Company's ability to incur
additional indebtedness, incur liens, pay dividends or make certain other
restricted payments, consummate certain asset sales, enter into certain
transactions with affiliates, incur indebtedness that is subordinate in right of
payment to any indebtedness and not subordinated in right of payment to the
Notes, impose restrictions on the ability of a subsidiary to pay dividends or
make certain payments to the Company, 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.
14
<PAGE> 20
In addition, the Revolving Credit Facility contains other and more
restrictive covenants and prohibits the Company from prepaying its indebtedness
(including the Notes). The Revolving Credit Facility also requires the Company
to maintain specified financial ratios and satisfy certain financial condition
tests. The Company's ability to meet those financial ratios and tests can be
affected by events beyond its control, and there can be no assurance that the
Company will meet those tests. A breach of any of these covenants could result
in a default under the Revolving Credit Facility and the Indenture. If an event
of default should occur under the Revolving Credit Facility, the lenders can
elect to declare all amounts of principal outstanding under the Revolving Credit
Facility, together with all accrued interests, to be immediately due and
payable. If the Company were unable to repay those amounts, the lenders could
proceed against the collateral granted to them to secure that indebtedness. If
the Revolving Credit Facility indebtedness were to be accelerated, there can be
no assurance that the assets of the Company would be sufficient to repay in full
that indebtedness and the other indebtedness of the Company, including the
Notes. Substantially all the assets of the Company are pledged as security under
the Revolving Credit Facility. See "Description of the Revolving Credit
Facility" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Liquidity and Capital Resources."
DEPENDENCE ON WIRELESS COMMUNICATIONS INDUSTRY
The Company's business depends upon the capital expenditures of wireless
service providers, which, in turn, depend upon the current and anticipated
market demand for wireless communications. The wireless communications industry
may experience downturns, which may result in a decrease in the industry's
demand for capital equipment, including antenna support structures. There can be
no assurance that the wireless communications industry will not experience
severe and prolonged downturns in the future or that the wireless communications
industry will expand as quickly as forecasted. Any significant decrease in the
level of capital expenditures by the wireless communications industry could have
a material adverse effect on the Company's business, financial condition and
results of operations. See "Recent Developments" and "Industry Overview."
AVAILABILITY OF WIRELESS COMMUNICATIONS SERVICES
A substantial majority of the Company's revenues are derived from the sale
of antenna support structures and related shelters for wireless communications
networks, and 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, including PCS, domestically and
internationally. There can be no assurance that either subscriber use or the
implementation of wireless communications services will continue to grow, or
that such factors will create demand for the Company's products. The Company
believes that continued growth in the use of wireless communications services
depends on significant reductions in infrastructure capital equipment cost per
subscriber, the corresponding reductions in wireless service pricing and the
ability of the wireless communications industry to obtain the permits, licenses
and zoning relief necessary for the growth of wireless communications networks.
While in the U.S., the Federal Communications Commission has adopted regulations
requiring local phone companies to reduce the rates charged to cellular carriers
for connection to their wireline networks, it is anticipated that wireless
service rates will remain higher than rates charged by traditional wireline
companies. The growth in the implementation of wireless communications services
is dependent upon both developed countries, such as the U.S., allowing continued
deployment of new networks, and less developed foreign countries deploying
wireless infrastructures. Foreign countries or local government authorities may
decline to construct wireless communications systems, place moratoriums on
building base stations or terminate or delay construction of such systems for a
variety of reasons, including environmental issues, public resistance to tower
construction, political unrest, economic downturns, the availability of
favorable pricing for other communications services, the availability and cost
of related equipment or other delays in the implementation of these systems, in
which event demand for the Company's products will be similarly reduced or
delayed, which would materially adversely affect the Company's business,
financial condition and results of operations. See "-- Risks Associated with
International Sales," "-- Dependence on Permits, Licenses and Zoning."
15
<PAGE> 21
FLUCTUATIONS IN QUARTERLY RESULTS
The Company experiences, and expects to continue to experience, significant
fluctuations in sales and operating results from quarter to quarter, which
typically falls in the fourth and first quarters of the calendar year, which
approximately correspond to the third and fourth quarters of FWT's Fiscal Year.
Quarterly results fluctuate due to a number of factors, any of which could have
a material adverse effect on the Company's business, results of operations and
financial condition. In particular, the Company's quarterly results of
operations can vary due to, among other things, the following factors: (i) the
timing, cancellation, or rescheduling of customer orders and shipments; (ii)
variations in manufacturing capacities; (iii) efficiencies and costs; (iv) the
availability and cost of components; (v) capacity and production constraints
associated with single source component suppliers; (vi) changes in the mix of
products having differing gross margins; (vii) customer service expenses; and
(viii) changes in average sales prices. In addition, the Company's quarterly
results of operations are influenced by competitive factors, including pricing,
availability and demand for the Company's products. A large portion of the
Company's expenses are fixed and difficult to reduce in a short period of time.
If sales do not meet the Company's expectations, the Company's fixed expenses
would exacerbate the effect of such sales shortfall. Furthermore, announcements
by the Company or its competitors regarding new products and technologies could
cause customers to defer purchases of the Company's products. See
"-- Concentration of Customers; Dependence on Customer Satisfaction" and "Recent
Developments." Order deferrals and cancellations by the Company's customers,
declining average sales prices, changes in the mix of products sold and longer
than anticipated sales cycles for the Company's products have in the past
adversely affected the Company's quarterly results of operations. There can be
no assurance that the Company's quarterly results of operations will not be
similarly adversely affected in the future.
Due to the foregoing factors, the Company believes that period-to-period
comparisons of its operating results are not necessarily meaningful and that
such comparisons cannot be relied upon as indicators of future performance.
There can be no assurance that the Company will maintain its current
profitability in the future or that future revenues and operating results will
not be below the expectations of management, public market analysts and
investors. In any case, the Company could be materially adversely affected. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
CONCENTRATION OF CUSTOMERS
During Fiscal Year 1997, sales to AT&T Wireless accounted for approximately
25.0% of the Company's net revenues, and sales to the Company's top five
customers in the aggregate accounted for approximately 55.0% of the Company's
net revenues. As customers seek to establish close relationships with their
suppliers, the Company expects that its customer base will continue to become
more concentrated. If, for any reason, any of the Company's key customers were
to purchase significantly less of the Company's products in the future, such
decreased level of purchases could have a material adverse effect on the
Company's business, financial condition and results of operations. See "Recent
Developments" and "Business -- Customers."
DEPENDENCE ON CUSTOMER SATISFACTION
The Company depends, in large part, on its ability to maintain a high level
of customer satisfaction. From time to time, however, the Company receives
customer complaints regarding the quality of its products and services. While
the Company works to resolve all such customer complaints to the satisfaction of
all parties, there can be no assurance that any customer will continue to
purchase the Company's products.
MANUFACTURING CAPACITY CONSTRAINTS
The Company's success will depend upon its ability to increase its
production volume on a timely basis while maintaining product quality and per
unit production costs. Manufacturers often encounter difficulties in increasing
production volumes, including difficulties involving delays, quality control and
shortages of qualified personnel. Any significant increase in production volume
will require that the Company increase its manufacturing capacity.
The Company has in the past experienced, and may in the future experience,
delays in its ability to fill orders for certain products on a timely basis
because of limits on its production capacity. Significant delays in filling
orders over an extended period would damage customer relations, which would
materially adversely
16
<PAGE> 22
affect the Company's business, financial condition and results of operations.
The production schedules for each of the Company's products are based on orders
for such products, and the Company has only limited ability to modify short-term
production schedules. If the Company were to experience a significant increase
in the demand for any of its products, it would not be able, on a short-term
basis, to satisfy such demand fully. The ability of the Company to estimate
demand may be less precise during periods of rapid growth or with respect to new
products. The failure of the Company to forecast its requirements accurately
could lead to inventory shortages or surpluses that could have a material
adverse effect on the results of operations and lead to fluctuations in
quarterly operating results.
GROWTH OPPORTUNITIES
Although management believes that opportunities may exist for the Company
to grow through either acquisitions of related businesses or entering into
strategic joint ventures, there can be no assurance that the Company will be
able to identify appropriate acquisitions or joint venture opportunities on
terms acceptable to the Company. Certain provisions of the Revolving Credit
Facility or the Indenture may limit the Company's ability to effect acquisitions
or enter into joint ventures. See "-- Restrictions Imposed by Terms of the
Company's Indebtedness."
MANAGEMENT OF GROWTH
The Company has undergone a period of significant growth, and its expansion
may significantly strain the Company's management, financial and other
resources. In order to sustain this growth, the Company must attract and retain
highly qualified personnel. It may become increasingly difficult for the Company
to hire such personnel. The Company believes that improvements in management and
operational controls, and operational, financial and management information
systems are needed to manage further growth. The Company currently plans to
augment its information systems. There can be no assurance that the management
information system will produce the desired efficiencies or that other
improvements will not be needed. The failure to implement such improvements
could have a material adverse effect on the Company's business, financial
condition and results of operations.
COMPETITION
The telecommunications infrastructure industry is highly competitive. The
Company faces substantial competition in each of the markets it serves from
established competitors, some of which have greater financial, engineering,
manufacturing and marketing resources than the Company. The Company's
competitors in each product area can be expected to continue to improve the
design of their products, to introduce new products with competitive prices and
performance characteristics 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 price
reductions, adversely affecting operating results, in the future. Although the
Company believes that it has certain advantages over its competitors,
maintaining such advantages will require a continued high level of investment by
the Company in sales, marketing and other services. There can be no assurance
that the Company will have sufficient resources to continue to make such
investments or that the Company will be able to maintain the competitive
advantages it currently enjoys.
RISKS ASSOCIATED WITH INTERNATIONAL SALES
International sales accounted for less than 5.0% of the Company's total
revenues for Fiscal Year 1997. The Company's business plan relies on
international sales to account for a portion of its revenue in the future.
International sales are subject to certain risks, including unexpected changes
in exchange rates, regulatory requirements, currency controls, tariffs and other
market barriers, political and economic instability, potentially adverse tax
consequences, natural disasters, outbreaks of hostilities, difficulties in
accounts receivable collection, extended payment terms, difficulties in managing
foreign sales representatives and difficulties in staffing and managing foreign
branch operations. Currently the Company's international sales are denominated
in U.S. dollars, and sales to international customers may be affected by
fluctuations in the U.S. dollar, which could increase the sales price in local
currencies of the Company's products. The Company is also subject to the risks
associated with the imposition of legislation and import and export regulations.
The Company cannot predict whether tariffs, quotas, duties, taxes or other
changes or restrictions will be
17
<PAGE> 23
implemented by the U.S. or other countries upon the import or export of the
Company's products in the future. In addition, the laws of certain countries in
which the Company's products are or may be sold may not provide the Company's
products and intellectual property rights with the same degree of protection as
the laws of the U.S. There can be no assurance that these factors will not have
a material adverse effect on the Company's business, financial condition and
results of operations.
DEPENDENCE ON SUPPLIERS
Certain of the components used in the Company's products are obtained from
a single source or a limited group of suppliers. The Company's reliance on such
suppliers involves several risks, including a potential inability to obtain an
adequate supply of required components in a timely manner, price increases and
component quality. Although the Company seeks to reduce dependence on those sole
and limited source suppliers, the partial or complete loss of certain of those
sources could have at least a temporary material adverse effect on the Company's
results of operations and damage customer relationships. Further, a significant
increase in the price of one or more of these components could materially
adversely affect the Company's results of operations.
The Company relies on Delta Steel, Inc. ("Delta Steel") as its sole source
for braking and shaping the steel for monopoles. While the Company believes that
its contract with Delta Steel is adequate to supply its foreseeable needs, there
can be no assurance that Delta Steel will adequately or fully perform its
contractual obligations or that Delta Steel will not experience a partial or
complete loss of the equipment necessary to perform its contractual obligations.
The failure of Delta Steel to adequately or fully perform its obligations would
have a material adverse effect on the Company's business, financial condition
and results of operations.
AVAILABILITY AND PRICE OF STEEL AND ZINC
The Company's principal raw materials are steel and zinc. The Company's
ability to continue to acquire steel and zinc on favorable terms may be
adversely affected by factors beyond its control. 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 adverse effect on
the Company's profit margin. There can be no assurance that the Company will be
successful in passing along any of these cost increases to its customers.
RISKS ASSOCIATED WITH THREE MANUFACTURING FACILITIES
The Company produces all of its products in three manufacturing facilities
located in Texas. As a result, any prolonged disruption in the operations at any
of the Company's manufacturing facilities, whether due to labor difficulties,
destruction of or damage to a facility or other reasons, could have a material
adverse effect on the Company's financial condition or results of operations.
See "Business -- Facilities."
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of key management, engineering, sales and marketing, customer
support and finance and manufacturing personnel, certain of whom would be
difficult to replace. The loss of the services of certain of these executives
could have a material adverse effect on the Company. There can be no assurance
that the services of such personnel will continue to be available to the
Company. The Company has entered into employment agreements with certain members
of its senior management team. In addition, the Company believes that its
success depends on its ability to attract and retain additional qualified
employees and that the failure to recruit such other skilled personnel could
have a material adverse effect on the Company. See "Management -- Employment
Agreements" and "Certain Relationships and Related Transactions."
DEPENDENCE ON PERMITS, LICENSES AND ZONING
The Company's success will depend on the ability of the telecommunications
infrastructure industry to obtain the permits, licenses and zoning relief
necessary for the growth of the wireless communications networks. The
telecommunications infrastructure industry often encounters significant public
resistance when attempting to obtain the necessary permits, licenses and zoning
relief. There can be no assurance that the telecommunications infrastructure
industry can obtain the number of permits, licenses and zoning changes necessary
to continue the growth of the wireless communications networks. The failure of
the telecommunications infrastructure industry to obtain such permits, licenses
and zoning relief would have a material adverse effect on the Company's
business, financial condition and results of operations.
18
<PAGE> 24
DECREASED DEMAND FOR COMPANY'S PRODUCTS
The Company's success will depend on the continued demand for its products.
Certain factors could have the effect of significantly reducing or even
eliminating the demand for the Company's products, including technological
advancements, public resistance to infrastructure build-out, alternatives such
as co-location and non-tower or pole mounts, and the possible linkage of adverse
health consequences to wireless communication devices. Any decrease in demand
for the Company's products would have a material adverse effect on the Company's
business, financial condition and results of operations.
ENVIRONMENTAL AND WORKER HEALTH AND SAFETY REGULATIONS
The Company is subject to various federal, state, local and foreign
environmental laws and regulations relating to the discharge, storage,
treatment, handling and disposal of certain materials, substances and water used
in, or resulting from, its operations and the remediation of contamination
associated with releases of hazardous substances both at the Company's
facilities and at offsite disposal locations. The Company's operations are also
governed by laws and regulations relating to workplace safety and worker health
that, among other things, regulate employee exposure to hazardous substances in
the workplace. The nature of the Company's operations exposes it to the risk of
liabilities or claims with respect to environmental and workplace health and
safety matters, and there can be no assurance that material costs will not be
incurred in connection with such liabilities or claims.
Based on information currently available to management, the Company
believes that the cost of compliance with existing environmental and health and
safety laws and regulations (and liability for known environmental conditions)
will not have a material adverse effect on the Company's business, financial
condition or results of operations. However, management cannot predict which
environmental or health and safety legislation or regulations will be enacted in
the future or how existing or future laws or regulations will be enforced,
administered or interpreted, nor can it predict the amount of future
expenditures that may be required in order to comply with such environmental or
health and safety laws or regulations or the response to such environmental
claims.
CONTROLLING SHAREHOLDERS
As a result of the Transactions, FWT Acquisition, a newly formed
wholly-owned subsidiary of Baker, holds approximately 80.0% of the Company's
outstanding voting stock. Therefore, Baker has the power to control all matters
submitted to shareholders of the Company, to elect a majority of the directors
of the Company and to exercise control over the business, policies and affairs
of the Company. The interests of Baker as an equity holder may differ from the
interests of holders of the Exchange Notes. See "Certain Relationships and
Related Transactions -- Transaction Agreements."
ABILITY TO PURCHASE NOTES UPON A CHANGE OF CONTROL
The source of funds for any repurchase required as a result of a Change of
Control will be the Company's available cash or cash generated from operating or
other sources, including borrowing, sales of assets, sales of equity or funds
provided by a new controlling person. Further, a Change of Control will likely
trigger an event of default under the Revolving Credit Facility, which would
permit the lenders thereto to accelerate the debt under the Revolving Credit
Facility. However, there can be no assurance that sufficient funds will be
available at the time of any Change of Control to make any required repurchases
of Notes tendered and to repay debt under the Revolving Credit Facility. Any
future credit agreements or other agreements relating to secured indebtedness to
which the Company may become a party may contain similar restrictions and
provisions. See "Description of Exchange Notes" and "Description of the
Revolving Credit Facility."
RISKS ASSOCIATED WITH FRAUDULENT CONVEYANCE LIABILITY
In connection with the Recapitalization, the Company has incurred
substantial indebtedness, including the indebtedness under the Notes and the
Revolving Credit Facility. If under relevant federal and state fraudulent
conveyance statutes in a bankruptcy, reorganization or rehabilitation case or
similar proceeding or a lawsuit by or on behalf of unpaid creditors of the
Company, a court were to find that, at the time the Notes were issued, (i) the
Company issued the Notes with the intent of hindering, delaying or defrauding
current or future creditors or (ii) (A) the Company received less than
reasonably equivalent value or fair consideration for issuing the Notes and (B)
the Company, (1) was insolvent or was rendered insolvent by reason of the
19
<PAGE> 25
Transactions, (2) was engaged, or about to engage, in a business or transaction
for which its assets constituted unreasonably small capital, (3) intended to
incur, or believed that it would incur, debts beyond its ability to pay as such
debts matured (as all of the foregoing terms are defined in or interpreted under
such fraudulent conveyance statutes) or (4) was a defendant in an action for
money damages, or had a judgment for money damages docketed against it (if, in
either case, after final judgment, the judgment is unsatisfied), such court
could avoid or subordinate the Notes to presently existing and future
indebtedness of the Company and take other action detrimental to the holders of
the Notes, including, under certain circumstances, invalidating the Notes.
The measure of insolvency for purposes of the foregoing considerations will
vary depending upon the federal or local law that is being applied in any such
proceeding. Generally, however, the Company would be considered insolvent if, at
the time it incurs the indebtedness constituting the Notes, either (i) the fair
market value (or fair saleable value) of its assets is less than the amount
required to pay its total existing debts and liabilities (including the probable
liability on contingent liabilities) as they become absolute and mature or (ii)
it is incurring debts beyond its ability to pay as such debts mature.
The Company's Board of Directors and management believe that at the time of
its issuance of the Outstanding Notes, the Company (i)(A) was neither insolvent
nor rendered insolvent thereby, (B) had sufficient capital to operate its
business effectively and (C) was incurring debts within its ability to pay as
the same mature or become due and (ii) had sufficient resources to satisfy any
probable money judgment against it in any pending action. In reaching the
foregoing conclusions, the Company has relied upon its analysis of internal cash
flow projections and estimated values of assets and liabilities of the Company.
There can be no assurance, however, that such analysis will prove to be correct
or that a court passing on such questions would reach the same conclusions.
ABSENCE OF PUBLIC MARKET
There is no existing public market for the Outstanding Notes. The Company
does not intend to apply for listing of the Exchange Notes offered hereby on any
national securities exchange or to seek approval for quotation on NASDAQ. There
can be no assurance as to the liquidity of any markets that may develop for the
Exchange Notes, the ability of holders of the Exchange Notes to sell their
Exchange Notes or the price at which holders would be able to sell their
Exchange Notes. Future trading prices of the Exchange Notes will depend on many
factors, including, among other things, prevailing interest rates, the Company's
operating results and the market for similar securities. The Initial Purchasers
have advised the Company that they currently intend to make a market in the
Exchange Notes offered hereby. However, the Initial Purchasers are not obligated
to do so and any market making may be discontinued at any time without notice.
IMPACT OF THE YEAR 2000
Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by the Year 2000.
The Year 2000 issue affects virtually all companies and organizations.
The Company intends to install new information systems so that its
computers will function properly with respect to dates in the Year 2000 and
thereafter. The Company presently believes that, with the installation of the
new information systems, the Year 2000 issue will not pose significant
operational problems. However, if such modifications are not made, or are not
timely completed, the Year 2000 issue could have a material adverse impact on
the operations of the Company.
The Company has not discussed the Year 2000 issue with its customers and
suppliers. There can be no assurance that the systems of these other companies
will be timely converted and the failure of the Company's significant suppliers
and customers to make necessary Year 2000 modifications could have a material
adverse impact on the Company's results and operations.
The Company is currently in negotiations with several information systems
providers with the view to selecting its new information systems. The Company
intends to obtain the systems through a "turn-key" transaction and finance the
transaction through a license agreement. The Company anticipates completing the
20
<PAGE> 26
Year 2000 project by April 30, 1999, which is prior to any impact of the Year
2000 on its operating systems. The Company estimates the cost of the project to
be approximately $2.5 million to $3.0 million.
The costs of the project and the date on which the Company believes it will
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events. However,
there can be no assurance that these estimates and the timetable will be
achieved and actual results could differ materially from those anticipated.
USE OF PROCEEDS
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Registration Rights Agreement
with respect to the Outstanding Notes. The Company will not receive any cash
proceeds from the issuance of the Exchange Notes offered hereby. In
consideration for issuing the Exchange Notes contemplated in this Prospectus,
the Company will receive Outstanding Notes in like principal amount, the form
and terms of which are substantially similar to the form and terms of the
Exchange Notes except as otherwise described herein. The Outstanding Notes
surrendered in exchange for Exchange Notes will be returned to the Company and
canceled and cannot be reissued. Accordingly, the issuance of the Exchange Notes
will not result in any increase or decrease in the indebtedness of the Company.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Outstanding Notes were sold by the Company on November 17, 1997 to the
Initial Purchasers pursuant to the Purchase Agreement. The Initial Purchasers
subsequently placed the Outstanding Notes with qualified institutional buyers in
reliance on Rule 144A under the Securities Act. As a condition of the purchase
of the Outstanding Notes by the Initial Purchasers, the Company entered into the
Registration Rights Agreement with the Initial Purchasers, which requires, among
other things, that the Company file with the Commission a registration statement
under the Securities Act with respect to an offer by the Company to the holders
of the Outstanding Notes to issue and deliver to such holders, in exchange for
Outstanding Notes, a like principal amount of Exchange Notes. The Company is
required to use its best efforts to cause the Registration Statement relating to
the Exchange Offer to be declared effective by the Commission under the
Securities Act and commence the Exchange Offer. The Exchange Notes are to be
issued without a restrictive legend and may be reoffered and resold by the
holder without restrictions or limitations under the Securities Act (other than
any such holder that is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act). A copy of the Registration Rights Agreement has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part.
The term "Holder" with respect to the Exchange Offer means any person in
whose name the Outstanding Notes are registered on the books of the Company or
any other person who has obtained a properly completed bond power from the
registered holder.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all
Outstanding Notes validly tendered and not withdrawn prior to 5:00 p.m., New
York City time, on the Expiration Date. On the Exchange Date, the Company will
issue $1,000 principal amount of Exchange Notes in exchange for $1,000 principal
amount of Outstanding Notes accepted in the Exchange Offer. Holders may tender
some or all of their Outstanding Notes pursuant to the Exchange Offer. However,
Outstanding Notes may be tendered only in integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Outstanding Notes except that (i) the Exchange Notes have been registered
under the Securities Act and hence will not bear legends restricting the
transfer thereof and (ii) the holders of the Exchange Notes will not be entitled
to certain rights under the Registration Rights Agreement. The Exchange Notes
will evidence the same debt as the Outstanding Notes and will be entitled the
benefits of the Indenture.
21
<PAGE> 27
As of the date of this Prospectus, $105,000,000 aggregate principal amount
of the Outstanding Notes was outstanding and registered in the name of Cede &
Co., as nominee for the Depository Trust Company. The Company has fixed the
close of business of March 13, 1998, as the record date for the Exchange Offer
for purposes of determining the persons to whom this Prospectus and the Letter
of Transmittal will be mailed initially.
The Company intends to conduct the Exchange Offer in accordance with the
applicable requirements of the Exchange Act and the rules and regulations of the
Commission thereunder, including Rule 14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered Outstanding
Notes when, as and if the Company has given oral or written notice thereof to
the Exchange Agent. The Exchange Agent will act as agent for the tendering
Holders for the purpose of receiving the Exchange Notes from the Company.
If any tendered Outstanding Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Outstanding Notes will be
returned, without expense, to the tendering Holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Outstanding Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Outstanding Notes pursuant to the Exchange Offer. The Company will pay all
charges and expenses, other than transfer taxes in certain circumstances, in
connection with the Exchange Offer. See "-- Fees and Expenses."
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest at a rate equal to 9 7/8% per annum
and will be payable semi-annually on May 15 and November 15 of each year
commencing May 15, 1998. Interest on each Exchange Note will accrue (A) from the
later of (i) the last interest payment date on which interest was paid on the
Outstanding Note surrendered in exchange therefor, or (ii) if the Outstanding
Note is surrendered for exchange on a date in a period which includes the record
date for an interest payment date to occur on or after the date of such exchange
and as to which interest will be paid, the date of such interest payment date or
(B) if no interest has been paid on the Outstanding Notes, from the Issue Date.
PROCEDURES FOR TENDERING
Only a Holder of Outstanding Notes may tender such Outstanding Notes in the
Exchange Offer. To tender in the Exchange Offer, a Holder must complete, sign
and date the Letter of Transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the Letter of Transmittal and mail or
otherwise deliver such Letter of Transmittal or such facsimile, together with
the Outstanding Notes and any other required documents, to the Exchange Agent
prior to 5:00 p.m., New York City time, on the Expiration Date. To be tendered
effectively, the Outstanding Notes, Letter of Transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under "Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration
Date. Delivery of the Outstanding Notes may be made by book-entry transfer in
accordance with the procedures described below. Confirmation of such book-entry
transfer must be received by the Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each Holder will make to the
Company the representations set forth below in the second paragraph under the
heading "-- Resale of Exchange Notes."
The tender by a Holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL
AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND
RISK OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS
USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL
22
<PAGE> 28
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE
AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES
SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS,
DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE
TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Outstanding Notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered Holder promptly and instruct such
registered Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Outstanding Notes, tendered pursuant thereto are tendered (i) by a
registered Holder who has not completed the box entitled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. In the event that signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, such
guarantee must be by a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule 17Ad-15 under the
Exchange Act (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Outstanding Notes listed therein, such Outstanding
Notes must be endorsed or accompanied by a properly completed bond power, signed
by such registered Holder as such registered Holder's name appears on such
Outstanding Notes with the signature thereon guaranteed by an Eligible
Institution.
If the Letter of Transmittal or any Outstanding Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by the
Company, evidence satisfactory to the Company of their authority to so act must
be submitted with the Letter of Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Exchange Notes at DTC (the "Book-Entry Transfer Facility") for the purpose
of facilitating the Exchange Offer, and subject to the establishment thereof,
any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Outstanding Notes by
causing such Book-Entry Transfer Facility to transfer such Outstanding Notes
into the Exchange Agent's account with respect to the Outstanding Notes in
accordance with the Book-Entry Transfer Facility's procedures for such transfer.
Although delivery of the Outstanding Notes may be effected through book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility,
an appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures; provided, however, that a
participant in DTC's book-entry system may, in accordance with DTC's Automated
Tender Offer Program procedures and in lieu of physical delivery to the Exchange
Agent of a Letter of Transmittal, electronically acknowledge its receipt of, and
agreement to be bound by, the terms of the Letter of Transmittal. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Outstanding Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Outstanding Notes not properly tendered or any Outstanding Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Outstanding Notes. The
Company's interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Outstanding
23
<PAGE> 29
Notes must be cured within such time as the Company shall determine. Although
the Company intends to notify Holders of defects or irregularities with respect
to tenders of Outstanding Notes, neither the Company, the Exchange Agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of Outstanding Notes will not be deemed to have been made until such
defects or irregularities have been cured or waived. Any Outstanding Notes
received by the Exchange Agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will be returned by
the Exchange Agent to the tendering Holders, unless otherwise provided in the
Letter of Transmittal, as soon as practicable following the Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Outstanding Notes and (i) whose
Outstanding Notes are not immediately available, (ii) who cannot deliver their
Outstanding Notes, the Letter of Transmittal or any other required documents to
the Exchange Agent or (iii) who cannot complete the procedures for book-entry
transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the certificate number(s)
of such Outstanding Notes and the principal amount of Outstanding Notes
tendered, stating that the tender is being made thereby and guaranteeing
that, within five Nasdaq Stock Market trading days after the Expiration
Date, the Letter of Transmittal (or facsimile thereof), together with the
certificate(s) representing the Outstanding Notes (or a confirmation of
book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility) and any other documents
required by the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Outstanding Notes in proper form for transfer (or a confirmation of
book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility) and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent
within five Nasdaq Stock Market trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Outstanding Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Outstanding Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date.
To withdraw a tender of Outstanding Notes in the Exchange Offer, a written
or facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must (i) specify the name of
the person having deposited the Outstanding Notes to be withdrawn (the
"Depositor"), (ii) identify the Outstanding Notes to be withdrawn (including the
certificate number(s) and principal amount of such Outstanding Notes, or, in the
case of Outstanding Notes transferred by book-entry transfer, the name and
number of the account at the Book-Entry Transfer Facility to be credited), (iii)
be signed by the Holder in the same manner as the original signature on the
Letter of Transmittal by which such Outstanding Notes were tendered (including
any required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee with respect to the Outstanding Notes register
the transfer of such Outstanding Notes into the name of the person withdrawing
the tender, (iv) specify the name in which any such Outstanding Notes are to be
registered, if different from that of the Depositor and (v) if applicable
because the Outstanding Notes have been tendered pursuant to book-entry
procedures, specify the name and number of the participant's account at DTC to
be credited, if different from that of the Depositor. All questions as to the
validity, form and eligibility (including time of receipt) of such notices will
be determined by the Company,
24
<PAGE> 30
whose determination shall be final and binding on all parties. Any Outstanding
Notes so withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the Outstanding Notes so withdrawn are validly retendered. Any
Outstanding Notes which have been tendered but which are not accepted for
exchange, will be returned to the Holder thereof without cost to such Holder as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Outstanding Notes may be retendered by
following one of the procedures described above under "Procedures for Tendering"
at any time prior to the Expiration Date.
EXCHANGE AGENT
Norwest Bank Minnesota, N.A. has been appointed as Exchange Agent for the
Exchange Offer. Questions and requests for assistance, requests for additional
copies of this Prospectus or of the Letter of Transmittal and requests for
Notice of Guaranteed Delivery should be directed to the Exchange Agent addressed
as follows:
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
By Hand: By Facsimile:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Operations Corporate Trust Operations
Northstar East, 12th Floor (612) 667-4927
608 2nd Avenue Confirm by telephone:
Minneapolis, MN 55402 (612) 667-9764
</TABLE>
FEES AND EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation is being made by mail; however,
additional solicitation may be made by telegraph, telephone, facsimile or in
person by officers and regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or others soliciting
acceptances of the Exchange Offer. The Company, however, will pay the Exchange
Agent reasonable and customary fees for its services and registration expenses,
including fees and expenses of the Trustee, filing fees, blue sky fees and
printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Outstanding Notes pursuant to the Exchange Offer. If, however,
certificates representing the Exchange Notes or the Outstanding Notes for the
principal amounts not tendered or accepted for exchange are to be delivered to,
or are to be issued in the name of, any person other than the person signing the
Letter of Transmittal, or if a transfer tax is imposed for any reason other than
the exchange of the Outstanding Notes pursuant to the Exchange Offer, then the
amount of any such transfer taxes (whether imposed on the registered Holder or
any other person) will be payable by the tendering Holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Outstanding Notes, which is face value, as reflected in the Company's accounting
records on the date of exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The expenses of the Exchange Offer will be
amortized over the term of the Exchange Notes.
25
<PAGE> 31
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in exchange for Outstanding Notes
may be offered for resale, resold and otherwise transferred by any holder of
such Exchange Notes (other than any such holder which is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such Exchange Notes are acquired in the ordinary
course of such holder's business and such holder does not intend to participate
and has no arrangement or understanding with any person to participate in the
distribution of such Exchange Notes. Any holder who tenders in the Exchange
Offer with the intention to participate, or for the purpose of participating, in
a distribution of the Exchange Notes may not rely on the position of the staff
of the Commission enunciated in Exxon Capital Holdings Corporation (available
May 13, 1988) or similar no-action letters, but rather must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. In addition, any such resale transaction
should be covered by an effective registration statement containing the selling
security holders information required by Item 507 of Regulation S-K of the
Securities Act. Each broker-dealer that receives Exchange Notes for its own
account in exchange for Outstanding Notes, where such Outstanding Notes were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. See "Plan of Distribution."
By tendering in the Exchange Offer, each Holder will represent to the
Company that, among other things, (i) any Exchange Notes to be received by it
will be acquired in the ordinary course of its business, (ii) at the time of the
commencement of the Exchange Offer it has no arrangement or understanding with
any person to participate in the distribution (within the meaning of Securities
Act) of the Exchange Notes in violation of the Securities Act, (iii) it is not
an "affiliate" (as defined in Rule 405 promulgated under the Securities Act) of
the Company, (iv) if such Holder is not a broker-dealer, it is not engaged in,
and does not intend to engage in, the distribution of Exchange Notes, and (v) if
such Holder is a broker-dealer (a "Participating Broker-Dealer") that will
receive Exchange Notes for its own account in exchange for Outstanding Notes
that were acquired as a result of market-making or other trading activities, it
will deliver a prospectus in connection with any resale of such Exchange Notes.
Further, by tendering in the Exchange Offer, each Holder that may be deemed an
"affiliate" (as defined under Rule 405 of the Securities Act) of the Company
will represent to the Company that such Holder understands and acknowledges that
the Exchange Notes may not be offered for resale, resold or otherwise
transferred by that Holder without registration under the Securities Act or an
exemption therefrom. The Company will agree to make available, during the period
required by the Securities Act, a prospectus meeting the requirements of the
Securities Act for use by Participating Broker-Dealers and other persons, if
any, with similar prospectus delivery requirements for use in connection with
any resale of Exchange Notes.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the Commission with respect to
resales of the Exchange Notes without compliance with the registration and
prospectus delivery requirements of the Securities Act.
SHELF REGISTRATION STATEMENT
If the Company is not permitted to consummate the Exchange Offer because
the Exchange Offer is not permitted by any applicable law or applicable
interpretation of the Commission or the staff of the Commission, the Company has
agreed to file with the Commission and use its best efforts to have declared
effective and keep continuously effective for up to three years a registration
statement that would allow resales of Outstanding Notes owned by such holders.
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Outstanding Notes are urged
to consult their financial and tax advisors in making their own decision on what
action to take.
26
<PAGE> 32
The Company may in the future seek to acquire untendered Outstanding Notes
in open market or privately negotiated transactions, through subsequent exchange
offers or otherwise. The Company, however, has no present plans to acquire any
Outstanding Notes that are not tendered in the Exchange Offer or to file a
registration statement to permit resales of any untendered Outstanding Notes.
THE RECAPITALIZATION AND STOCK PURCHASE
On November 12, 1997, the Company, FWT Acquisition and the Existing
Shareholders entered into, and consummated the transactions set forth in, the
Transaction Agreements. The Transaction Agreements contemplated, among other
things, two primary transactions. The first transaction contemplated by the
Transaction Agreements included (i) the incurrence by the Company of the Senior
Credit Facility, (ii) the redemption by the Company from the Existing
Shareholders of an aggregate of 235.86 shares of the Common Stock for aggregate
consideration of approximately $83.6 million, including related consulting,
legal and accounting costs of $1.2 million, (iii) the repayment of all the
outstanding funded indebtedness of the Company in an aggregate amount of
approximately $22.1 million, and (iv) the distribution of an immaterial amount
of selected assets to certain Existing Shareholders. The redemption price per
share is subject to an adjustment based upon the final determination of the
Company's working capital as determined as of the closing date. The second
transaction contemplated by the Transaction Agreements included the purchase by
FWT Acquisition of an aggregate of 108.91 shares of the Common Stock from
Existing Shareholders for aggregate consideration of approximately $36.0
million. As a result of the Transactions, FWT Acquisition holds approximately
80.0% of the issued and outstanding shares of the Common Stock, and the
Roll-over Shareholders hold in the aggregate approximately 20.0% of the issued
and outstanding shares of the 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, notes payable of approximately $2.5 million, and the
distribution of selected assets, were used to consummate the Recapitalization.
In order to repay the Senior Credit Facility, the Company issued $105.0 million
in the aggregate principal amount of Outstanding Notes in the Initial Offering.
27
<PAGE> 33
CAPITALIZATION
The following table sets forth the capitalization of the Company on a
historical basis as of October 31, 1997 and on a pro forma basis after giving
effect to the Transactions and the Initial Offering as if they had occurred on
October 31, 1997. This table should be read in conjunction with the "Selected
Historical Financial Data" and "Unaudited Pro Forma Financial Statements"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
OCTOBER 31, 1997
----------------------
ACTUAL PRO FORMA
-------- ----------
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Notes payable............................................... $20,468(1) $ 2,494(3)
Long-term debt (including current maturities):
Revolving Credit Facility(2).............................. -- --
Senior Subordinated Notes................................. -- 105,000
Other long-term debt...................................... 1,598 --
------- --------
Total notes payable and long-term debt............ 22,066 107,494
------- --------
Shareholders' equity (deficit):
Common stock.............................................. 4 4
Treasury stock, at cost, 235.86 shares.................... -- (83,602)(4)
Additional paid-in capital................................ 1 29,613(5)
Retained earnings......................................... 9,612 (2,380)
------- --------
Total shareholders' equity (deficit).............. 9,617 (56,365)
------- --------
Total capitalization.............................. $31,683 $ 51,129
======= ========
</TABLE>
- ---------------
(1) Notes payable consist of amounts owing under three notes payable to Bank One
Texas, N.A. in the original aggregate principal amount of $22.8 million and
one note payable to NationsBank of Texas, N.A. in the original principal
amount equal to $0.7 million.
(2) The Revolving Credit Facility will have no more than $25.0 million available
on a revolving basis. As of October 31, 1997, approximately $11.4 million
would have been available under the Revolving Credit Facility. See
"Description of the Revolving Credit Facility."
(3) Notes payable issued to certain Existing Shareholders in connection with the
redemption.
(4) Amount represents the aggregate redemption price paid to the Existing
Shareholders, including related consulting, legal and accounting costs of
$1.2 million, in connection with the Recapitalization.
(5) Represents the recording of a $40.0 million deferred tax asset net of a
$20.0 million valuation allowance in connection with the Stock Purchase. The
parties to the Transaction Agreements elected jointly to treat the
Transactions as an asset acquisition under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. As a result, a deferred tax asset
has been recorded related to future tax deductions for the net excess of the
tax bases of the assets and liabilities over the financial statement
carrying amounts with a corresponding credit to additional paid-in capital.
The Company anticipates future taxable income after debt service sufficient
to realize the net deferred tax asset. In addition, the amount includes an
adjustment to reclassify undistributed Subchapter S corporation earnings to
additional paid-in capital.
28
<PAGE> 34
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the "Pro Forma
Financial Statements") of the Company are based on the audited and unaudited
financial statements of the Company included elsewhere in this Prospectus, as
adjusted to illustrate the estimated effects of the Transactions, which are
described in more detail below, the changing of the Company's federal tax status
from a Subchapter S corporation to a Subchapter C corporation and the Initial
Offering.
Two transactions were consummated in November 1997, the Recapitalization
and the Stock Purchase. The first transaction, the Recapitalization, included
(i) the incurrence by the Company of the Senior Credit Facility, (ii) the
redemption by the Company from the Existing Shareholders of an aggregate of
235.86 shares of the Common Stock, (iii) the issuance of notes payable to
certain Existing Shareholders in connection with the redemption, (iv) the
distribution of selected assets to certain Existing Shareholders, and (v) the
repayment of certain notes payable and all outstanding long term debt of the
Company. The second transaction, the Stock Purchase, included the purchase by
FWT Acquisition of an aggregate of 108.91 shares of the Common Stock from
Existing Shareholders. As a result of the Transactions, FWT Acquisition holds
approximately 80.0% of the issued and outstanding shares of Common Stock.
The Pro Forma Financial Statements of the Company have been prepared to
give effect to the Transactions, the changing of the Company's federal tax
status from a Subchapter S corporation to a Subchapter C corporation and the
Initial Offering (and the application of the net proceeds therefrom) as though
such transactions had occurred as of October 31, 1997, for the balance sheet
data, and as of May 1, 1996, for the results of operations data. The pro forma
adjustments are based upon available information and certain assumptions that
the Company believes are reasonable. The Pro Forma Financial Statements should
be read in conjunction with the historical financial statements of the Company
included elsewhere herein.
The Pro Forma Financial Statements do not purport to be indicative of what
the Company's financial position or results of operations would have been had
the Transactions, the changing of the Company's federal tax status from a
Subchapter S corporation to a Subchapter C corporation and the Initial Offering
been completed as of the assumed dates and for the periods presented or that may
be obtained in the future.
29
<PAGE> 35
FWT, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED APRIL 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS PRO FORMA
ADJUSTMENTS FOR ADJUSTED FOR ADJUSTMENTS
THE TRANSACTIONS THE TRANSACTIONS FOR THE
THE AND CHANGE IN AND CHANGE IN INITIAL
COMPANY TAX STATUS TAX STATUS OFFERING TOTAL
------- ---------------- ---------------- ----------- -------
<S> <C> <C> <C> <C> <C>
Sales........................ $71,188 $ -- $ 71,188 $ -- $71,188
Cost of sales................ 49,249 -- 49,249 -- 49,249
------- -------- -------- -------- -------
Gross profit............... 21,939 -- 21,939 -- 21,939
Selling, administrative and
general expenses........... 8,353 (1,300)(1) 7,053 250(2) 7,303
------- -------- -------- -------- -------
Operating income........... 13,586 1,300 14,886 (250) 14,636
Interest income.............. 272 -- 272 -- 272
Interest expense............. (75) (11,813)(4) (11,983) (10,369)(5) (11,103)
(170)(14) (564)(3)
75(6) 11,813(7)
Other income................. 571 (446)(8) 125 -- 125
------- -------- -------- -------- -------
Income before income tax
provision............... 14,354 (11,054) 3,300 630 3,930
Income tax provision......... 316 938(9) 1,254 239(9) 1,493
------- -------- -------- -------- -------
Net income................. $14,038 $(11,992) $ 2,046 $ 391 $ 2,437
======= ======== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
30
<PAGE> 36
FWT, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR SIX MONTH PERIOD ENDED OCTOBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS
ADJUSTMENTS FOR ADJUSTED FOR PRO FORMA
THE TRANSACTIONS THE TRANSACTIONS ADJUSTMENTS
THE AND CHANGE IN AND CHANGE IN FOR THE
COMPANY TAX STATUS TAX STATUS INITIAL OFFERING TOTAL
------- ---------------- ---------------- ---------------- -------
<S> <C> <C> <C> <C> <C>
Sales............................. $37,350 $ -- $37,350 $ -- $37,350
Cost of sales..................... 26,652 -- 26,652 -- 26,652
------- ------- ------- ------- -------
Gross profit............ 10,698 -- 10,698 -- 10,698
Selling administrative and general
expenses........................ 5,389 -- 5,389 125(2) 5,514
------- ------- ------- ------- -------
Operating income........ 5,309 -- 5,309 (125) 5,184
Interest income................... 246 -- 246 -- 246
Interest expense.................. (403) (5,906)(4) (5,991) (5,184)(5) (5,551)
403(6) (282)(3)
(85)(14) 5,906(7)
Other income...................... 281 (4)(8) 277 -- 277
------- ------- ------- ------- -------
Income before income
taxes................. 5,433 (5,592) (159) 315 156
Income tax provision.............. 113 (173)(9) (60) 119(9) 59
------- ------- ------- ------- -------
Net income.............. $ 5,320 $(5,419) $ (99) $ 196 $ 97
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
31
<PAGE> 37
FWT, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR SIX MONTH PERIOD ENDED OCTOBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS PRO FORMA
ADJUSTMENTS FOR ADJUSTED FOR ADJUSTMENTS
THE TRANSACTIONS THE TRANSACTIONS FOR THE
THE AND CHANGE IN AND CHANGE IN INITIAL
COMPANY TAX STATUS TAX STATUS OFFERING TOTAL
------- ---------------- ---------------- ----------- -------
<S> <C> <C> <C> <C> <C>
Sales................................ $27,132 $ -- $27,132 $ -- $27,132
Cost of sales........................ 18,771 -- 18,771 -- 18,771
------- ------- ------- ------ -------
Gross profit.................... 8,361 -- 8,361 -- 8,361
Selling, administrative and general
expenses........................... 2,942 -- 2,942 125(2) 3,067
------- ------- ------- ------ -------
Operating income................ 5,419 -- 5,419 (125) 5,294
Interest income...................... 116 -- 116 -- 116
Interest expense..................... (14) (5,906)(4) (5,991) (5,184)(5) (5,551)
14(6) (282)(3)
(85)(14) 5,906(7)
Other income......................... 41 4(8) 45 -- 45
------- ------- ------- ------ -------
Income (loss) before income
taxes......................... 5,562 (5,973) (411) 315 (96)
Income tax provision (benefit)....... 125 (281)(9) (156) 119(9) (37)
------- ------- ------- ------ -------
Net income (loss)............... $ 5,437 $(5,692) $ (255) $ 196 $ (59)
======= ======= ======= ====== =======
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
32
<PAGE> 38
FWT, INC.
UNAUDITED PRO FORMA BALANCE SHEET
AS OF OCTOBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THE COMPANY
PRO FORMA AS PRO FORMA
ADJUSTMENTS FOR ADJUSTED FOR ADJUSTMENTS
THE TRANSACTIONS THE TRANSACTIONS FOR THE
THE AND CHANGE IN AND CHANGE IN INITIAL
COMPANY TAX STATUS TAX STATUS OFFERING TOTAL
-------- ---------------- ---------------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................... $10,284 $100,000(4) $ 4,971 $ 105,000(5) $ 4,332
(2,380)(10) (5,639)(12)
(80,358)(11) (100,000)(7)
(22,066)(6)
(509)(14)
Accounts receivable, less allowance for
doubtful accounts of $175................... 7,433 -- 7,433 -- 7,433
Inventories................................... 11,427 -- 11,427 -- 11,427
Prepaid expenses.............................. 2,341 -- 2,341 -- 2,341
Other assets.................................. 857 (625)(11) 107 -- 107
(125)(11)
------- -------- -------- --------- --------
Total current assets................... 32,342 (6,063) 26,279 (639) 25,640
------- -------- -------- --------- --------
Property, Plant, and Equipment:
Land and land improvements.................... 818 -- 818 -- 818
Buildings and building improvements........... 4,488 -- 4,488 -- 4,488
Machinery and equipment....................... 6,079 -- 6,079 -- 6,079
------- -------- -------- --------- --------
11,385 -- 11,385 -- 11,385
Less accumulated depreciation................. (2,889) -- (2,889) -- (2,889)
------- -------- -------- --------- --------
Net property, plant and equipment...... 8,496 -- 8,496 -- 8,496
Other noncurrent assets......................... -- 20,000(13) 22,889 5,639(12) 26,148
2,380(10) (2,380)(7)
509(14)
------- -------- -------- --------- --------
Total assets........................... $40,838 $ 16,826 $ 57,664 $ 2,620 $ 60,284
======= ======== ======== ========= ========
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities:
Current portion of long-term debt............. $ 188 $ (188)(6) $ -- $ -- $ --
Accounts payable.............................. 5,184 -- 5,184 -- 5,184
Accrued expenses and other liabilities........ 3,971 -- 3,971 -- 3,971
Notes payable................................. 20,468 (20,468)(6) 2,494 -- 2,494
2,494(11)
------- -------- -------- --------- --------
Total current liabilities.............. 29,811 (18,162) 11,649 -- 11,649
------- -------- -------- --------- --------
Long-term debt, less current portion............ 1,410 100,000(4) 100,000 105,000(5) 105,000
-- (1,410)(6) -- (100,000)(7) --
------- -------- -------- --------- --------
Total liabilities...................... 31,221 80,428 111,649 5,000 116,649
------- -------- -------- --------- --------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $10 par value; 1,000 shares
authorized; 372 shares issued............... 4 -- 4 -- 4
Treasury stock, at cost, 235.86 shares........ -- (83,602)(11) (83,602) -- (83,602)
Additional paid-in capital.................... 1 20,000(13) 29,613 -- 29,613
9,612(9)
Retained earnings............................. 9,612 (9,612)(9) -- (2,380)(7) (2,380)
------- -------- -------- --------- --------
Total shareholders' equity (deficit)... 9,617 (63,602) (53,985) (2,380) (56,365)
------- -------- -------- --------- --------
Total liabilities and shareholders' equity.... $40,838 $ 16,826 $ 57,664 $ 2,620 $ 60,284
======= ======== ======== ========= ========
</TABLE>
The accompanying notes are an integral part of this unaudited pro forma
financial statement.
33
<PAGE> 39
FWT, INC.
NOTES TO THE UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(1) Represents the reversal of a $1.3 million bonus paid in Fiscal Year 1997 to
certain Existing Shareholders of the Company, who transferred 100.0% of
their Common Stock in connection with the Transactions and whose employment
by the Company is not continuing.
(2) Represents an annual financial advisory fee of $0.25 million owed to Baker
Capital, an affiliate of FWT Acquisition, under the terms of the Financial
Advisory Agreement between the Company and Baker Capital. In addition,
Baker Capital can earn an additional fee of $0.25 million if the Company
achieves established EBITDA targets. No pro forma adjustment has been
reflected related to these additional fees as the Company's EBITDA on a pro
forma basis was below the established target.
(3) Represents recurring amortization of the deferred financing costs
associated with the Initial Offering over the life of the Notes.
(4) Represents the Senior Credit Facility and the related interest expense at a
rate of the greater of the 3 month LIBOR plus 6.0% and the ten-year
treasury rate plus 5.0% (subject to certain adjustments) and matures on
November 12, 2003.
(5) Represents the Notes and the related interest expense at a rate of 9.875%.
A one-half percent change in the interest rate of the Note would increase
or decrease interest expense by $0.525 million annually.
(6) Represents the $22.1 million repayment of all outstanding notes payable, of
which $20.0 million has been outstanding since July 23, 1997, and long term
debt of the Company and the related reduction of interest expense.
(7) Represents the repayment of the Senior Credit Facility with the proceeds
from the Initial Offering, the related reduction of interest expense and
for balance sheet purposes, the write-off of all deferred financing costs
associated with the Senior Credit Facility.
(8) Represents the elimination of the income and expenses related primarily to
farm assets distributed to certain Existing Shareholders in connection with
the redemption discussed in Note 11.
(9) Represents the provision for federal and state taxes assuming an effective
tax rate of 38.0% in connection with the Company changing its federal tax
status from a Subchapter S corporation to a Subchapter C corporation and
the tax effect of the pro forma adjustments. For balance sheet purposes, an
adjustment has been made to reclassify undistributed Subchapter S
corporation earnings to additional paid-in capital.
(10) Represents the capitalization of $2.4 million deferred financing costs
associated with the Senior Credit Facility. The deferred financing costs
associated with the Senior Credit Facility will be fully expensed at the
time of the Initial Offering. Therefore, the amortization of these costs
have not been considered in the Pro Forma Statements of Income as it
represents a non-recurring charge that will be included in the operations
of the Company within the next 12 months.
(11) Represents the redemption of an aggregate of 235.86 shares of the Common
Stock, at a total price of approximately $83.6 million including related
consulting, legal and accounting costs of $1.2 million, by the Company from
the Existing Shareholders. The total redemption price is detailed as
follows:
<TABLE>
<S> <C>
Cash to sellers............................................. $79.3
Notes payable to sellers.................................... 2.5
Assets distributed to sellers............................... .6
Consulting, legal and accounting costs...................... 1.2
-----
$83.6
=====
</TABLE>
The Company has recorded the redemption as a purchase of treasury stock.
(12) Represents the capitalization of approximately $5.6 million of deferred
financing costs associated with the Initial Offering, and includes a $1.0
million fee payable to Baker Capital in connection with the Initial
Offering.
(13) Represents the recording of a $40.0 million deferred tax asset net of a $20
million valuation allowance in connection with the Stock Purchase. The
parties to the Transaction Agreements elected jointly to treat the
Transactions as an asset acquisition under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended. As a result, a deferred tax
asset has been recorded related to future tax deductions for the net excess
of the tax bases of the assets and liabilities over the financial statement
carrying amounts with a corresponding credit to additional paid-in capital.
The Company anticipates future taxable income after debt service sufficient
to realize the net deferred tax asset. Any future change in the valuation
reserve will be reflected as a component of the Company's tax provision.
(14) Represents the capitalization of $.5 million of deferred financing costs
associated with the Revolving Credit Facility and the related amortization
of these costs over the life of the facility.
34
<PAGE> 40
SELECTED HISTORICAL FINANCIAL DATA
The selected historical income statement data for Fiscal Year 1995, Fiscal
Year 1996 and Fiscal Year 1997 and the summary historical balance sheet data for
Fiscal Year 1996 and Fiscal Year 1997 presented below were derived from the
historical financial statements of the Company audited by Arthur Andersen LLP,
independent public accountants, whose report appears elsewhere in this
Prospectus. The summary historical financial data as of and for Fiscal Year
1993, Fiscal Year 1994 and the six month periods ended October 31, 1996 and 1997
were derived from the Company's unaudited financial statements which, in the
opinion of management, reflect all adjustments (consisting of normal recurring
adjustments) necessary for the fair presentation of the financial condition and
results of operations as of and for such period. The information contained in
this table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and accompanying notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTH PERIOD
FISCAL YEAR ENDED APRIL 30, ENDED OCTOBER 31,
----------------------------------------------- -----------------
1993 1994 1995 1996 1997 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales.......................... $14,663 $20,233 $30,388 $42,701 $71,188 $27,132 $37,350
Cost of sales.................. 11,552 16,041 23,838 32,006 49,249 18,771 26,652
------- ------- ------- ------- ------- ------- -------
Gross profit................... 3,111 4,192 6,550 10,695 21,939 8,361 10,698
Selling, general and
administrative.............. 3,197 3,849 4,139 4,244 8,353 2,942 5,389
------- ------- ------- ------- ------- ------- -------
Operating income............... (86) 343 2,411 6,451 13,586 5,419 5,309
Interest income (expense),
net......................... 63 44 69 123 197 102 (157)
Other income(1)................ 17 (50) 3 512 571 41 281
------- ------- ------- ------- ------- ------- -------
Income before income tax
provision................... (6) 337 2,483 7,086 14,354 5,562 5,433
Income tax provision(2)........ -- -- 53 162 316 125 113
------- ------- ------- ------- ------- ------- -------
Net income(2).................. $ (6) $ 337 $ 2,430 $ 6,924 $14,038 $ 5,437 $ 5,320
======= ======= ======= ======= ======= ======= =======
OTHER FINANCIAL DATA:
EBITDA(3)...................... $ 253 $ 633 $ 2,827 $ 7,494 $14,937 $ 5,835 $ 6,248
Depreciation................... 248 275 299 375 508 259 412
Capital expenditures........... 449 988 1,324 1,198 4,341 1,086 664
Cash flows provided by
operating activities........ 141 259 1,422 4,846 5,783 1,993 7,369
Cash flows used in investing
activities.................. (374) (971) (1,262) (1,182) (4,323) (1,076) (466)
Cash flows provided by (used
in) financing activities.... $ (13) $ 675 $ (300) $(1,459) $(1,025) $ 505 $(1,102)
Ratio of earnings to fixed
charges(4).................. .4x 17.05x 56.18x 215.73x 192.39x 398.29x 14.48x
BALANCE SHEET DATA:
Working capital................ $ 3,443 $ 3,660 $ 5,278 $ 9,815 $18,509 $14,370 $ 2,531
Total assets................... 6,929 8,716 11,854 19,489 40,203 27,523 40,838
Long term debt, less current
maturities.................. -- 575 475 375 1,512 325 1,410
Shareholders' equity........... $ 5,845 $ 6,182 $ 8,412 $13,977 $25,297 $19,414 $ 9,617
</TABLE>
(Footnotes continued on following page)
35
<PAGE> 41
- ---------------
(1) Other income consists primarily of income related to farm operations and the
disposition of farm assets. These assets have been distributed in connection
with the Transactions.
(2) The historical financial statements do not include a provision for federal
taxes as the Company has elected to be taxed as a Subchapter S corporation.
A provision for federal taxes has been reflected in the pro forma
information to reflect the change in tax status of the Company from a
Subchapter S corporation to a Subchapter C corporation. The following table
presents historical net income on a pro forma basis adjusted for a federal
tax provision (benefit).
<TABLE>
<CAPTION>
SIX MONTH PERIOD
FISCAL YEAR ENDED APRIL 30, ENDED OCTOBER 31,
-------------------------------------------------- -----------------
1993 1994 1995 1996 1997 1996 1997
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
$(4) $222 $1,604 $4,570 $9,265 $3,588 $3,511
</TABLE>
(3) EBITDA consists of net income before interest expense, taxes, depreciation
and amortization. EBITDA is included because it is widely used as a measure
of a company's operating performance, but should not be construed as an
alternative either (i) to net income (determined in accordance with
generally accepted accounting principles) as a measure of profitability or
(ii) to cash flows from operating activities (determined in accordance with
generally accepted accounting principles). EBITDA does not take into account
the Company's debt service requirements and other commitments and,
accordingly, is not necessarily indicative of amounts that may be available
for discretionary use. In addition, as EBITDA may not be calculated in the
same manner by all companies and analysts, the EBITDA measures presented may
not be comparable to other similarly titled measures of other companies.
(4) The ratio of earnings to fixed charges on a pro forma basis is 1.35x for the
fiscal year ended April 30, 1997, and 1.03x and .98x for the six month
periods ended October 31, 1997 and 1996, respectively.
36
<PAGE> 42
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company as of and for Fiscal Year 1995, Fiscal Year 1996 and
Fiscal Year 1997 and for the six month periods ended October 31, 1996 and
October 31, 1997. The discussion should be read in conjunction with the
Financial Statements of the Company and the notes thereto included elsewhere in
this Prospectus. This Prospectus contains, in addition to historical
information, forward-looking statements that include risks and uncertainties.
The Company's actual results may differ materially from those anticipated in
these forward-looking statements.
OVERVIEW
The Company is a recognized name in the design, manufacture and marketing
of communications infrastructure products, including monopoles, towers,
Cell-Sites-on-Wheels ("COWS"), shelters and PowerMount(TM), used primarily in
the construction of wireless communications networks. The Company's product line
is used by customers in the cellular, PCS, enhanced ESMR, paging, radio and
television broadcasting and microwave industries. The Company's customers
include many of the larger domestic communications service providers, such as
AT&T Wireless, MCI, Nextel and Sprint Spectrum.
The following table summarizes FWT's historical sales by product line.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTH PERIOD ENDED
----------------------------------- --------------------------
APRIL 30, APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31,
1995 1996 1997 1996 1997
--------- --------- --------- ----------- -----------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Towers................................ $20,429 $17,862 $25,092 $10,114 $16,758
Monopoles............................. 2,377 5,852 28,080 8,982 10,255
Other(1).............................. 7,582 18,987 18,016 8,036 10,337
------- ------- ------- ------- -------
Total Sales................. $30,388 $42,701 $71,188 $27,132 $37,350
======= ======= ======= ======= =======
</TABLE>
- ---------------
(1) Includes Shelters, COWS, PowerMount(TM), Generators, Freight and Engineering
Services.
The Company's sales have grown from $14.7 million in Fiscal Year 1993 to
$71.2 million in Fiscal Year 1997, representing a CAGR of 48.4%. This growth has
been driven by external and internal factors. The primary external factor is the
growth of wireless communications networks in the U.S., which in turn has fueled
demand for the Company's products. In order to capitalize on this growth, the
Company has made a variety of strategic internal changes, including (i)
introducing a direct sales force; (ii) developing strategic relationships with
key suppliers; (iii) investing in automation; and (iv) increasing investment in
customer service. These internal and external trends are expected to continue to
benefit the Company in the future.
The Company's operations are characterized by a high degree of automation
in the design process and strategic outsourcing of non-core functions.
Management believes that these initiatives have led to decreases in purchasing
and manufacturing costs as a percentage of revenue and have limited investment
in plant and working capital.
The Company's principal raw materials are steel and zinc. Because price
increases in materials affect all competitors equally and because most contracts
have provisions for materials price increases, any increases in the cost of
goods sold resulting from raw material price increases have historically been
passed along to the customer. Furthermore, the Company's outsourcing contracts
have reduced its inventory risk by supplying a number of components on a
just-in-time basis.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship of each statement of income item to total sales and selected cash
flow data. The information for the six month periods is unaudited, but includes
all adjustments which management considers necessary for a fair presentation
thereof. The results
37
<PAGE> 43
of operations are not necessarily indicative of results for any future period.
The following data should be read in conjunction with the Financial Statements
and notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTH PERIOD ENDED
----------------------------------- --------------------------
APRIL 30, APRIL 30, APRIL 30, OCTOBER 31, OCTOBER 31,
1995 1996 1997 1996 1997
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Sales................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of Sales......................... 78.4 75.0 69.2 69.2 71.4
------- ------- ------- ------- -------
Gross Profit.......................... 21.6 25.0 30.8 30.8 28.6
Selling, General and Administrative... 13.6 10.0 11.7 10.8 14.4
------- ------- ------- ------- -------
Operating Income...................... 8.0 15.0 19.1 20.0 14.2
------- ------- ------- ------- -------
Earnings before State Taxes........... 8.2 16.6 20.2 20.5 14.5
Provision for State Taxes(1).......... 0.2 0.4 0.4 0.5 0.3
------- ------- ------- ------- -------
Net Income............................ 8.0% 16.2% 19.7% 20.0% 14.2%
Other Data:
EBITDA................................ 9.3% 17.6% 21.0% 21.5% 16.7%
OTHER FINANCIAL DATA: ($ IN THOUSANDS)
Cash flows provided by operating
activities.......................... $ 1,422 $ 4,846 $ 5,783 $ 1,933 $ 7,369
Cash flows used in investing
activities.......................... (1,262) (1,182) (4,323) (1,076) (466)
Cash flows provided by (used in)
financing activities................ $ (300) $(1,459) $(1,025) $ 505 $(1,102)
</TABLE>
- ---------------
(1) As an S corporation, the Company historically has not incurred federal
income taxes. Earnings for federal tax purposes have been taxed to the
individual owners as they are earned.
SIX MONTH PERIOD ENDED OCTOBER 31, 1997 COMPARED TO SIX-MONTH PERIOD ENDED
OCTOBER 31, 1996
Sales. Sales increased by $10.2 million to $37.4 million, an increase of
37.7%. The increase in sales was driven primarily by a $1.3 million or 14.2%
increase in sales of monopoles and a $6.6 million or 65.7% increase in sales of
towers. The Company's percentage increase in sales for the six-month period of
37.7% is below the Company's CAGR from 1993 to 1997 of 48.4%. The Company's
quarterly results fluctuate due to, among other reasons, the timing of shipments
to customers. The Company's revenue recognition policy recognizes revenue when
the earnings process is complete, which is generally at the time of product
shipment. In circumstances where shipments are delayed at the request of a
customer, revenue is recognized upon completion of the product and payment by
the customer. For the six-month period ended October 31, 1997, completed orders
not yet shipped and recognized as revenue increased $4.6 million over the
comparable period ended October 31, 1996. During the six-month period ended
October 31, 1997, the Company experienced an increase in manufacturing
activities to bring orders to completion, however, the timing of shipments,
which is largely outside the control of the Company, did not occur on several
completed orders due to the customer sites not being ready for delivery.
Cost of Sales. Cost of sales for the six month period ended October 31,
1997 increased $7.9 million to $26.7 million. Cost of sales as a percentage of
revenue increased to 71.4% as compared to 69.2% for the comparable period in
1996. The Company attributes the increase in cost of sales for the period to
inefficiencies, primarily resulting from the transition of previously
out-sourced monopole production to in-house production. The Company believes
this transition to in-house production will reduce its material handling cost in
future periods and provide better control over the production scheduling of
these tasks. In addition, the Company experienced pricing pressure during the
period due to increased competition in the market. The Company believes this
pricing pressure may continue in some markets and could have some deteriorating
effect on margins in future periods until full-capacity levels in the
manufacturing of monopoles and towers is reached.
38
<PAGE> 44
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the six month period ended October 31, 1997
increased by $2.5 million to $5.4 million. As a percentage of sales, selling,
general and administrative expenses increased to 14.4% as compared to 10.8% for
the comparable period in 1996. For the six month period ended on both October
31, 1997 and 1996, selling expenses were 21%, and general and administrative
expenses were 79% of total selling, general and administrative expense. Cost of
personnel for the six month period ended October 31, was $3.9 million in 1997
and $1.9 million in 1996. All other selling, general and administrative
expenses, including information systems support, was $1.5 million in 1997 and
$1.0 in 1996 for the six month period ended October 31. The increase reflects
the investment made by the Company to build the in-house direct sales force, to
enhance manufacturing information systems, and increase administrative
personnel. The Company believes the investment will enable it to gain market
share, improve customer service and response, and more closely monitor
production costs with better information reporting systems.
The Company also recognized charges of $.6 million that related to
incentive based bonus arrangements paid to certain members of management for the
six-month period, as compared to $0 for the same period in 1996.
FISCAL YEAR ENDED APRIL 30, 1997 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1996
Sales. Sales increased by $28.5 million to $71.2 million, an increase of
66.7%. The increase in sales was fueled by an increase in demand for PCS and
cellular cell sites among several of the Company's key customers. The addition
of a direct sales force resulted in increased sales to key customers.
Cost of Sales. Cost of sales increased by $17.2 million to $49.2 million.
Cost of sales as a percentage of revenue decreased from 75.0% in 1996 to 69.2%
in 1997 because of price increases of the Company's products combined with
purchasing economies of scale and volume-based manufacturing efficiencies.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by $4.1 million to $8.4 million. As a
percentage of sales, this represents an increase from 10.0% in 1996 to 11.7% in
1997. For the period ended April 30, 1997, selling expenses represented 21% and
general and administrative expenses represented 79% of total selling, general
and administrative expenses compared to 18% and 82% for the respective expense
categories in 1996. During this period, the Company significantly expanded its
direct sales force and increased its engineering and project management staff
and as a result, cost of personnel was $5.6 million in 1997 compared to $2.4
million in 1996. Additionally, bonuses in the amount of $1.3 million were paid
to certain Existing Shareholders in 1997 and are included in the cost of
personnel. All other selling, general and administrative expenses, including
information systems support, was $2.8 million in 1997 and $1.7 million in 1996.
FISCAL YEAR ENDED APRIL 30, 1996 COMPARED TO FISCAL YEAR ENDED APRIL 30, 1995
Sales. Sales increased by $12.3 million to $42.7 million, an increase of
40.5%. The sales increase was fueled by an increase in demand for cellular and
ESMR cell sites.
Cost of Sales. Cost of sales increased by $8.2 million to $32.0 million.
Cost of sales as a percentage of revenue decreased from 78.4% in 1995 to 75.0%
in 1996, due to purchasing economies of scale resulting from volume-based
contracts.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses remained relatively constant at $4.2 million compared to
$4.1 million in 1995. As a percentage of sales, however, this represented a
decrease from 13.6% to 10.0% as the Company leveraged off its master contracts
and increased volume without increasing its sales force. For the period ended
April 30, 1996, selling expenses were 18% and general and administrative
expenses were 82% of total selling, general and administrative expenses compared
to 13% and 87%, respectively, for 1995. Cost of personnel was $2.4 million for
1996 compared to $3.0 million in 1995. In addition, the Company decreased its
expenditures on advertising and trade shows in anticipation of a shift in the
Company's focus to direct sales.
39
<PAGE> 45
SEASONALITY AND QUARTERLY RESULTS OF OPERATIONS
The Company has experienced and expects to continue to experience
significant fluctuations in its quarterly results. Management believes this
quarterly fluctuation is due to the capital budgeting cycle of many of its
customers who often purchase a disproportionately higher share of the Company's
products at the end of such customer's fiscal year to reach their annual cell
site development goals. This typically falls in the fourth and first quarters of
the calendar year, which approximately corresponds to the third and fourth
quarters of FWT's Fiscal Year. In addition, the zoning approval process adds an
element of unpredictability to the Company's results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company has financed its operations through internally
generated funds and existing cash reserves. Other than the Distribution, the
Company has not historically distributed its earnings. The Company produced net
cash flow of $5.8 million for the six month period ended October 31, 1997 and
$1.4 million for the comparable period ended October 31, 1996. The net cash flow
for the six month period ended October 31, 1997 includes $7.4 million in cash
provided by operations and $0.5 million in cash used for investing activities.
The net cash used in financing activities for the six month period ended October
31, 1997 was $1.1 million. The $1.1 million primarily reflects the net of $20
million in borrowings used to finance a $21 million distribution to T.W. Moore
and Betty Moore. The loan was repaid in November 1997 in connection with the
Recapitalization.
The Company produced net cash flow of $.4 million for the year ended April
30, 1997, and $2.2 million for the year ended April 30, 1996. The net cash flow
for the year ended April 30, 1997, includes $5.8 million in cash from
operations, which was partially offset by a use of $4.3 million in investing
activities and a use of $1.0 million in financing activities. Included in the
$5.8 million in cash from operations is an increase of $7.4 million in
inventories. The increase in inventories primarily relates to the significant
growth in the business. In addition, this increase was a result of completed
orders not yet shipped and recognized as revenue under the terms of the
Company's revenue recognition policy. Historically, inventory obsolescence has
not been a significant cost. Management periodically reviews inventory
throughout the year to determine that its carrying value of inventory is valued
at the lower of cost or market.
The net cash flow for the year ended April 30, 1996, includes $4.8 million
in cash from operations and the use of $1.2 million and $1.5 million in cash
related to investing and financing activities, respectively. The Company
produced net cash flow of $(.1) for the year ended April 30, 1995, which
consisted of $1.4 million in cash from operations and the use of $1.3 million
and $.3 million in cash related to investing and financing activities,
respectively.
The Company determines its short term liquidity needs based upon its needs
over the next twelve months, and its long term liquidity needs based upon its
needs over periods in excess of twelve months. In connection with the
Transactions, the Company incurred indebtedness of $100.0 million under the
Senior Credit Facility and $2.5 million in notes payable to certain Existing
Shareholders. The Company has used substantially all of the net proceeds from
the Initial Offering to repay the Senior Credit Facility. The Company will be
required to repay the notes payable within the next twelve months, which could
affect short-term liquidity. In addition to the Notes, the Company entered into
the Revolving Credit Facility which, subject to borrowing base limitations and
the satisfaction of customary borrowing conditions, allows the Company to borrow
up to $25.0 million. As a result of the Transactions, 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 Company's
principal uses of liquidity are to meet debt service requirements, finance the
Company's capital expenditures and provide for working capital needs. As of
October 31, 1997, the Company would have had approximately $11.4 million of
availability under the Revolving Credit Facility. The Revolving Credit Facility
requires the Company to maintain, on the basis of the latest twelve months of
operations: (A) a ratio of consolidated EBITDA to consolidated interest expense
of no less than (i) 1.10:1 until October 30, 1998; (ii) 1.60:1 from November 1,
1998 until October 30, 1999; (iii) 1.80:1 from November 1, 1999 until October
30, 2000 and (iv) 1.90:1 from November 1, 2000 until October 30, 2001; (B) a
ratio of consolidated
40
<PAGE> 46
total debt to consolidated EBITDA of no more than (i) 10.85:1 until October 30,
1998; (ii) 6.25:1 from November 1, 1998 until October 30, 1999; (iii) 5.75:1
from November 1, 1999 until October 30, 2000 and (iv) 5.25:1 from November 1,
2000; until October 30, 2001; and (C) a minimum consolidated EBITDA of (i)
$10,000,000 until October 30, 1998; (ii) $18,200,000 from November 1, 1998 until
October 30, 1999; (iii) $19,800,000 from November 1, 1999 until October 30,
2000; and (iv) $20,200,000 from November 1, 2000 until October 30, 2001. The
Revolving Credit Facility also limits the Company to the following maximum
amount of consolidated capital expenditures: (i) $9,500,000 until October 30,
1998 and (ii) $4,800,000 for the periods November 1, 1998 to October 30, 1999,
November 1, 1998 to October 30, 1999, November 1, 1999 to October 30, 2000 and
November 1, 2000 to October 30, 2001, provided that any amount specified above
for any period can be increased by 50% of the excess, if any, of the amount
permitted for the preceding period over the actual amount of consolidated
capital expenditures for such previous period. Also, the Revolving Credit
Facility limits the indebtedness that the Company may incur. The permitted
indebtedness includes, but is not limited to (i) indebtedness incurred under the
Indenture and the Transactions, (ii) indebtedness incurred under the Revolving
Credit Facility, (iii) indebtedness incurred with respect to contingent
obligations in respect of customary indemnification and purchase price
adjustment obligations incurred in connection with sales of assets; and (iv)
indebtedness incurred in connection with capital leases or purchase money
indebtedness, as long as such indebtedness does not exceed $100,000. The Company
is presently in compliance with all financial ratio requirements and similar
limitations set forth in the Revolving Credit Facility.
The Company has a capital expenditure budget of approximately $4.5 million
for calendar year 1998, of which an estimated $3.1 million is expected to be
spent in Fiscal Year 1998. The Company has budgeted $1.9 million for
enhancements to production capacity and $1.8 million for manufacturing equipment
and additions to manufacturing buildings. Of the $3.7 million budgeted for these
items, the Company expects to spend $2.7 million in Fiscal Year 1998. The
additional capital expenditures in Fiscal Year 1998 are to be spent on site
development and miscellaneous office equipment. Moreover, the Company has leased
additional office space in Arlington, Texas for its administrative staff. The
Company plans to sell the property it owns in Ft. Worth, Texas and to
consolidate the manufacturing operations at that location into the operations at
the site in Kennedale, Texas. The Company expects the occupation of the office
space and the consolidation of manufacturing operations to occur in the fourth
quarter of Fiscal Year 1998. The Company expects annual capital expenditures on
a going forward basis of approximately $3.0 million.
The Company is currently in negotiations with several information systems
providers in order to select new information systems. The Company's intent is to
obtain the system as a "turn-key" transaction and to finance the transaction as
a license agreement. The selected provider will be expected to provide a
financing arrangement, which should allow a cash outflow over a three to four
year period with a minimum initial capital outlay. The Company believes it will
be able to find such a provider based upon the negotiations at this time.
Management believes that the estimated cost of the system change, depending on
the software selected, will be between $2.5 million and $3.0 million. The
Company continues to make enhancements to its existing information system to
assure that the Company's information systems continue to meet the Company's
internal needs and the needs of its customers. However, the cost of those
enhancements is not expected to be significant. The new information systems
licensing arrangement will also address existing systems that will be adversely
affected by the date change in the Year 2000.
As the Company's business grows, its equipment and working capital
requirements will also continue to increase. These funding requirements will be
met through a combination of cash from operations and funds drawn under the
Revolving Credit Facility. The Company believes that these sources will be
sufficient to meet short-term liquidity needs and to finance working capital and
capital expenditures for the next twelve months. There can be no assurance,
however, 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
41
<PAGE> 47
offset inflationary cost increases through increased operating efficiencies and
price increases to its customers, there can be no assurance that the Company
will be able to offset any future inflationary cost increases through these or
similar means.
RECENT DEVELOPMENTS
The Company expects to report total sales of $20.7 million for the quarter
ended January 31, 1998 as compared to total sales of $22.2 million for the same
period in 1997. The decrease in revenue for the three month period ended January
31, 1998 compared to the same period in 1997, is primarily attributed to a
decrease in demand for monopoles and monopole products. The Company believes the
decrease in demand for these products reflects the focus in the market on
heavier structures, such as towers, which are used in co-location and corridor
sites. 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 suppliers, 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. This information is unaudited and preliminary in
nature and is subject to internal analysis and procedures necessary to finalize
the Company's financial statements.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JANUARY 31,
--------------------
1998 1997
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Statement of Income
Sales..................................................... $20,691 $22,169
Cost of sales............................................. 14,692 15,337
Selling, general and administrative expenses.............. 2,874 3,237
------- -------
Operating income.................................. 3,125 3,595
Interest expense(2)....................................... (2,601) (30)
Other income.............................................. 170 154
------- -------
Income before provision for income taxes and
extraordinary item.............................. 694 3,719
Provision for income taxes................................ 255 99
------- -------
Income before extraordinary item.................. 439 3,620
Extraordinary item (net of taxes)(3)...................... (1,517) --
------- -------
Net income........................................ $(1,078) $ 3,620
======= =======
Other Data:
EBITDA(1)................................................. $ 3,560 $ 3,871
Depreciation.............................................. $ 265 $ 122
Ratio of earnings to fixed charges........................ 1.27 124.97
</TABLE>
- ---------------
(1) EBITDA consists of net income before interest expense, taxes, depreciation,
amortization and extraordinary items. EBITDA is included because it is
widely used as a measure of a company's operating performance, but should
not be construed as an alternative either (i) to net income (determined in
accordance with generally accepted accounting principles) as a measure of
profitability or (ii) to cash flows from operating activities (determined in
accordance with generally accepted accounting principles). EBITDA does not
take into account the Company's debt service requirements and other
commitments and, accordingly, is not necessarily indicative of amounts that
may be available for discretionary use. In addition, as EBITDA may not be
calculated in the same manner by all companies and analysts, the EBITDA
measures presented may not be comparable to other similarly titled measures
of other companies.
(2) Increase in expense relates to interest on the Outstanding Notes.
(3) Represents the write-off of all deferred financing costs associated with the
Senior Credit Facility. The Senior Credit Facility was paid with the
proceeds from the Initial Offering.
42
<PAGE> 48
BUSINESS
GENERAL
The Company is a recognized name in the design, manufacture and marketing
of wireless communications infrastructure products, including monopoles and
towers. The Company's product line is used by customers in the cellular, PCS,
ESMR, paging, radio and television broadcasting and microwave industries. The
Company's customers include many of the larger wireless service providers, such
as AT&T Wireless, MCI, Nextel and Sprint Spectrum. During Fiscal Year 1997,
sales to AT&T Wireless accounted for approximately 25.0% of the Company's net
revenues. Because all wireless service providers need infrastructure products,
the Company believes it is well-positioned to capitalize on the continued growth
of the wireless communications industry, regardless of which technologies or
service providers dominate the industry in the future.
The Company's sales have grown from $14.7 million in Fiscal Year 1993 to
$71.2 million in Fiscal Year 1997, representing a CAGR of 48.4%. For the 12
months ended April 30, 1997, the Company generated pro forma sales of $71.2
million, and pro forma EBITDA of $15.5 million.
PRODUCTS
The Company has grown from a small manufacturing shop into an industry
leader with three manufacturing facilities that provide a broad array of
infrastructure products for the telecommunications industry, including:
Monopoles. Monopoles are tapered, sleeve-fit or round flange-fit antenna
structures that serve as an alternative to towers, and are generally regarded as
more aesthetically pleasing and easier to install than towers.
Towers. Lattice towers are vertical structures most frequently used by
wireless and broadcast service providers to support antennas. They can be
self-supporting, typically three-legged structures, or supported by guy wires
attached to anchors in the ground.
COWS. COWS are mobile structures that combine an antenna support
structure, power supply and radio equipment enclosure. COWS are used when
temporary coverage is needed, often before a permanent site is built, for
special high usage events or for disaster recovery.
Shelters. Shelters are small, pre-fabricated buildings which are used to
house the electronic equipment required at cell sites. Shelters generally range
from 100 to 500 square feet and are typically made with an aluminum exterior.
PowerMount(TM). The PowerMount(TM) is a patented product that allows a
wireless service provider to install a fully sectored antenna array on an
electrical utility support structure, thereby taking advantage of an existing
site.
The following chart displays sales of the Company by product category.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED ($ IN THOUSANDS)
---------------------------------------------------
SALES BY PRODUCT CATEGORY APRIL 30, 1995 APRIL 30, 1996 APRIL 30, 1997
------------------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Towers....................................... $20,429 67.2% $17,862 41.8% $25,092 35.2%
Monopoles.................................... 2,377 7.8% 5,852 13.7% 28,080 39.5
Other(1)..................................... 7,582 25.0% 18,987 44.5% 18,016 25.3
------- ---- ------- ---- ------- -----
Total Sales........................ $30,388 100% $42,701 100% $71,188 100.0%
======= ==== ======= ==== ======= =====
</TABLE>
- ---------------
(1) Includes Shelters, COWS, PowerMount(TM), Generators, Freight and Engineering
Services.
COMPETITIVE STRENGTHS
The Company believes that its products and customer service distinguish it
as one of the leading designers and manufacturers of telecommunications
infrastructure products and that the Company's strong
43
<PAGE> 49
market position in its product segments and continued opportunities for growth
and profitability are attributable to the following competitive strengths:
- REPUTATION FOR CUSTOMER SERVICE AND ON-TIME DELIVERY. Management
believes that one of FWT's greatest competitive advantages is its strong
tradition of, and reputation for, customer service. The use of a direct
sales force plays a significant role in customer service. In addition,
over the past three years, the Company has invested in the implementation
of a CAD/CAM system which allows the Company to respond efficiently to
customers' requests and helps the Company to reduce delivery times. The
majority of the Company's customers are wireless service providers that
compete in an industry where time to market is critical. Because time to
market is critical, if the Company does not continue to provide on-time
delivery, the Company could lose customers. FWT believes it has a
significant competitive advantage in meeting these customers' needs by
reliably meeting their often aggressive time frames.
- REPUTATION FOR HIGH QUALITY PRODUCTS. The Company's design and
production processes allow the Company to achieve and maintain a
consistent product quality. Moreover, the Company maintains rigorous
quality control standards which helps to ensure accurate shipments to
customers.
- LOW COST STRUCTURE THROUGH STRATEGIC RELATIONSHIPS. The Company believes
it enjoys a position as a low cost provider. This position has resulted
from the formation of two key strategic relationships which management
believes will enable it to (i) reduce purchasing and manufacturing costs
as a percentage of total sales, (ii) focus on its core competencies in
product design and finishing, quality control, customer service and sales
and marketing, and (iii) limit its plant and working capital investments.
The first of these key strategic relationships allows FWT to take
delivery of steel on a just-in-time basis. The second relationship will
allow FWT to galvanize its monopoles at a third party-owned facility
adjacent to its present manufacturing facility located near Fort Worth,
Texas. Construction has begun on such facility and completion is expected
in the late spring or early summer of 1998. These strategic relationships
are important and, should they terminate, the Company's profits could
decline significantly.
- SOLID MARKET POSITIONS IN GROWTH INDUSTRY. The Company believes it is
currently the second largest participant in each of the monopole and
tower markets and, in recent years, it has significantly increased its
market share in each of these markets. Although the Company believes it
is well positioned to benefit from the expected growth in the wireless
communications industry because of its strong market positions, there are
other competitors in both the monopole and tower markets who could
increase their market share. This could reduce the benefit that the
Company might derive from industry growth.
- EXPERIENCED MANAGEMENT TEAM. Substantially all of the Company's
executive officers have spent considerable portions of their careers in
manufacturing. Moreover, Roy J. Moore and Carl R. Moore, who are
President and Vice President, respectively, of the Company, have played a
significant role in the Company's growth over the last five years.
Management's expertise and in depth knowledge of the Company's products
and customers are further complemented by the experience of the
principals at Baker, a private equity fund that focuses specifically on
telecommunications services, equipment and applications.
BUSINESS AND GROWTH STRATEGY
Management believes that the Company's growth will be driven by leveraging
its competitive strengths, and in particular its excellent reputation, into a
stronger market position, by (i) capitalizing on the growth of the wireless
communications industry, (ii) broadening its base of product offerings, (iii)
pursuing certain acquisitions and alliances on a forward integrated basis, and
(iv) expanding into international markets.
- CAPITALIZE ON GROWTH IN THE WIRELESS COMMUNICATION INDUSTRY. The Company
has grown rapidly over the past five years by taking advantage of the
growing demand for wireless communications services, and by positioning
itself as a reliable, customer focused provider of infrastructure
products. However, the Company must work to manage its growth so that it
can continue to satisfy its customers. The Company believes that there
are several industry trends which indicate an increase in demand for
44
<PAGE> 50
wireless communications infrastructure products. These include: (i) the
continued construction of cellular networks which is expected to grow as
providers make capacity enhancements and transition from analog to
digital; (ii) the widespread introduction of PCS; (iii) the launch of
HDTV; and (iv) the growth of WLL systems which is expected to increase,
particularly in emerging economies.
- BROADEN PRODUCT OFFERINGS. The Company has developed relationships with
numerous electrical utility companies through the introduction of its
PowerMount(TM) product, which provides a co-location opportunity within a
standard electrical transmissions structure. The Company plans to market
this product and other utility applications in the future and believes
these relationships will prove beneficial in entering these markets. In
addition, the introduction of HDTV will require towers of over one
thousand feet and are expected to sell for approximately $1.0 million
each. The Company believes it is well-positioned to take advantage of
each of these opportunities.
- PURSUE STRATEGIC ALLIANCES AND ACQUISITIONS. The Company plans to
evaluate selective opportunities that will enhance its position within
the cell site development process. The Company believes there are various
opportunities beyond providing infrastructure products used in the
construction of communication networks. These include site installation
services, tower ownership and management businesses. The Company believes
these closely related businesses could be integrated with its current
operations to increase the value the Company provides to its customer
base. From time to time, the Company engages in discussions or otherwise
evaluates opportunities that may lead to the acquisition by the Company
of one or more closely related businesses. The ability of the Company to
complete any such acquisitions is subject to limitations imposed by the
terms and conditions of the Revolving Credit Facility and the Indenture.
Moreover, Baker has informed the Company that it is in negotiations
relative to an investment in one or more businesses closely related to
that of the Company. It is possible that in the future Baker may engage
in discussions with the Company with a view to combining any business
acquired by Baker with that of the Company. Moreover, in an acquisition
currently under negotiation by Baker, it is contemplated that the Company
would enter into a mutually acceptable management services agreement with
the business that is the subject of such negotiations, pursuant to which
the Company would provide certain management services and receive a
management fee. The definitive terms and conditions of such management
services agreement have not been determined. The ability of the Company
to engage in any transaction with Baker or any of its affiliates is
limited by the terms and conditions of the Revolving Credit Facility and
the Indenture.
- EXPAND INTO INTERNATIONAL MARKETS. The Company believes there are
considerable opportunities to expand its geographical reach particularly
into Asia and Latin America. The trend towards global deregulation of
telecommunications markets provides substantial growth opportunities for
wireless infrastructure providers. The Company believes its strong
relationships with its customers, many of whom are already building
networks internationally, provides an advantage in competing for
infrastructure business in new international markets. In addition, the
Company believes there may be strategic opportunities for joint ventures
in foreign markets, and that by allying with local businesses the Company
can further position itself to take advantage of growth in international
markets. Although the growth of international markets provides the
Company with significant opportunities, cultural differences may provide
the Company with obstacles that may impede the Company's expansion into
international markets.
MANUFACTURING
The Company's operations are characterized by a high degree of automation
in the design process, which enables it to achieve a higher level of efficiency
in manufacturing than those competitors not having the same design process.
Management also believes that strategic alliances with key suppliers have led to
decreases in manufacturing costs. The typical delivery time for most of FWT's
products is six weeks.
Monopoles. FWT performs the initial phase of monopole manufacturing
pursuant to an agreement with Delta Steel. Flat sheet steel is initially
purchased by Delta Steel and stored at its facility. Delta Steel burns or cuts
the steel to produce the proper shape, and performs the braking operation to
bend the steel into two sections. Ownership of this work-in-process inventory is
then passed to FWT, which performs the seam
45
<PAGE> 51
welding operation and joins the two sections together to form the monopole.
Finishing operations are performed to customer specifications, including
attaching footholds and connectors, cable openings and base plate attachment.
Finished steel is currently shipped to Houston for galvanizing, but will be
galvanized at a site adjacent to the Company's Fort Worth facility which is
expected to be operational in early 1998.
Towers. Each tower is designed and manufactured to customer
specifications. Factors such as weight and technology of attachments, expected
wind load, deflection parameters and icing load are used as inputs to the design
process and affect manufacturing. Tower components, including legs, braces and
cross bars are manufactured as components for each individual tower order.
Sections are welded together and sent to a local facility for galvanizing.
Management believes the Company is at approximately 50.0% of tower manufacturing
capacity.
PowerMounts(TM). Plate steel is burned to form attachment plates which are
then welded to pipe steel sections. Steel antenna platforms developed by welding
various angle and tubular components are then consolidated with pipe sections
for shipment.
Shelters and COWS. Shelters are manufactured by welding together a steel
skid frame that serves as the base of the shelter. Aluminum walls and a roof are
then attached to the skid. The interior of the shelter is then finished with
paneling, electrical wires, alarms, heating, ventilation and air conditioning
and other accessories according to the customer's specifications. COWS are
shelters which have been augmented with a trailer frame, generator and
retractable antenna support structure.
CUSTOMERS
FWT sells its products to leading wireless service providers throughout the
U.S., and to a lesser extent, Canada and Mexico. In Fiscal Year 1997, the
Company's largest five customers collectively represented approximately 55.0% of
the Company's sales. The following table presents the customers of the Company
that represent over 10% of the Company's sales by Fiscal Year.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30,
----------------------------
1997 1996 1995
------ ------- -------
<S> <C> <C> <C>
AT&T Wireless............................................... 25.0% -- --
Northern Telecom............................................ -- 19.79% --
PCS Primeco................................................. -- 14.26% --
Palmer Wireless............................................. -- 10.65% --
Cellular One/Southwestern Bell.............................. -- -- 17.62%
Nextel Mid-Atlantic......................................... -- -- 17.24%
Sprint Cellular............................................. -- -- 11.57%
GTE Mobilnet................................................ -- -- 10.63%
</TABLE>
Due to fluctuations in the network construction schedules of different
service providers, the Company's largest customers vary considerably from
year-to-year.
The Company provides its customers with comprehensive design assistance and
support before, during and after delivery of its products. In addition, the
Company's customer service professionals are available to respond to order
tracking, design, installation and other questions.
The Company generally warrants its products for a period of one year,
although some warranties are extended for as long as twenty years. Once the
warranty expires, the customer typically employs local contractors to modify the
structure as needed. Historically, FWT's warranty expenses have not been
material.
46
<PAGE> 52
SALES AND MARKETING
The Company sells its products through a direct sales force who have
relationships with most of the major wireless service providers. The Company
believes that its direct sales force provides a strong competitive advantage in
the market, as most of FWT's competitors either do not have a sales force or
rely on third party representatives. This enables the Company to keep abreast of
new business opportunities while being able to respond quickly to the customer's
questions and needs. The Company's sales force is paid a base salary plus a
bonus based upon the Company reaching certain profit levels. As of January 14,
1998, the Company employed nine sales people.
The Company believes that many of its customers, or prospective customers,
have procedures by which they identify a limited number of suppliers to become
approved vendors for the construction of their infrastructure network. Customers
award master purchase agreements only to such approved vendors. The Company's
sales strategy focuses on signing agreements whereby FWT becomes a primary or
approved vendor. These agreements typically establish general terms and
conditions, as well as pricing for the Company's products. These agreements do
not generally guarantee a particular quantity of sales, but they allow Company
personnel easier access to these customers, thereby fostering relationships with
local personnel.
The Company estimates that for Fiscal Year 1997, approximately 70.0% of its
revenue came from sales under these master agreements. The Company believes
these agreements enhance the consistency and stability of the Company's revenue
stream.
FACILITIES
As of the end of Fiscal Year 1997, the Company owns the following two
manufacturing facilities: (i) the Loop 820 location, with 9,802 square feet of
office space and 58,675 square feet of covered production space on approximately
13 acres and (ii) the Kennedale location, with 7,000 square feet of office space
and 142,400 square feet of covered production space on approximately 56 acres.
In addition, the Company leases 500 square feet of office space and 22,120
square feet of covered production space at Delta Steel's manufacturing facility
located in the Fort Worth area. The Company believes, in light of the capital
expenditure budget, that these facilities provide adequate capacity for the
expected growth in the future.
CONTRACT WITH DELTA STEEL
FWT entered into a five-year agreement with Delta Steel that expires March
10, 2002. This cooperative production agreement provides that Delta Steel,
subject to certain exceptions, will be the exclusive supplier of the unwelded
steel components of FWT's monopoles, and gives FWT the right to schedule its
orders first on designated Delta Steel burning and press-braking equipment. In
addition, the agreement contains incentive pricing based on the volume of steel
FWT purchases. The agreement is renewable at the end of the initial five year
period.
COMPETITION
The markets in which the Company operates are highly competitive. The
Company's ability to compete in these markets depend to a large extent on its
ability to provide high quality, competitively priced products within a
customer's delivery time schedule. In these key areas, the Company believes that
its strong tradition of customer service combined with its sophisticated and
CAD/CAM system help to differentiate FWT from its competition.
There are a number of participants that compete in the Company's markets
including Andrew, EEI, PiRod, Summit, UNR Industries and Valmont Industries.
Management believes that the Company has a significant market position in each
of its product segments.
47
<PAGE> 53
BACKLOG
As of December 31, 1997, the Company had a sales backlog of approximately
$13.0 million of which approximately $5.2 million was finished goods backlog.
Although the sales backlog consists of firm orders for which products are yet to
be completed, these orders can be modified or terminated. However, when compared
to total contract volume, the amount of modifications and terminations has
historically not been material.
EMPLOYEES
As of January 14, 1998, the Company had approximately 413 full-time
employees, of which 323 work in manufacturing facilities and 90 work in
corporate or administrative functions. None of the Company's employees are
unionized, and the Company believes that its relationship with employees is
good.
PATENTS AND TRADEMARKS
FWT has an approved patent for the PowerMount(TM), a product that allows a
wireless service provider to install a full sectored antenna array on an
electrical utility tower. FWT has also secured a trademark on the name
PowerMount(TM).
ENVIRONMENTAL REGULATION
The Company is subject to various federal, state and local health, safety
and environmental laws and regulations. The Company believes that it is in
material compliance with existing applicable health, safety and environmental
laws and regulations and has all necessary permits and licenses.
LEGAL PROCEEDINGS
The Company is from time to time involved in ordinary litigation incidental
to the conduct of its business. Management believes that none of the Company's
pending litigation will have a material adverse effect on the Company's
business, financial condition or results of operations.
48
<PAGE> 54
INDUSTRY OVERVIEW
The monopole and tower segments of the communications infrastructure
industry have seven and six significant participants, respectively, who together
have a large market share position in their particular market segment. Builders
of wireless networks typically seek to purchase antenna support structures from
established manufacturers who can accurately produce large numbers of products
in a timely fashion. The Company believes these requirements often lead wireless
service providers to enter into master purchase agreements with a limited number
of communications infrastructure companies, including the Company.
The Company believes the following four trends are driving the
communications industry: (i) deregulation of global communications markets; (ii)
introduction of new competitors; (iii) the development of cost efficient and
capacity enhanced technology; and (iv) elasticity of demand for communications
products and services. These factors increase MOU, which is the main factor
driving wireless communications infrastructure spending because wireless service
providers plan their capital spending based on anticipated MOU. Emerging digital
wireless technologies are increasing capacity and quality and lowering the cost
per minute per subscriber. This lower cost enables service providers to lower
rates which makes wireless services more affordable to a broader consumer base.
This encourages increased MOU which, in turn, drives additional infrastructure
spending.
The demand for wireless communications services in the U.S. has grown
dramatically during the last seven years. According to the CTIA, as of June 30,
1997 there were approximately 48.7 million wireless subscribers in the U.S. In
addition, according to CTIA, the CAGR of cellular telephone subscribers was
approximately 41.1% from 1990 to 1997 and the CAGR of cell sites over this time
was 34.8%. Industry analysts expect this growth trend to continue in the future
based on (i) the widespread introduction of PCS into the market, (ii) capacity
enhancements of existing wireless communications networks, (iii) growing
acceptance of SMR/ESMR systems, (iv) increased focus on WLL systems and (v) the
introduction of HDTV.
INDUSTRY FACTORS
Co-location. One factor that will have a significant impact on the
wireless infrastructure business is the ability or inability of wireless service
providers to co-locate antenna on existing monopoles or towers. As a result of
local zoning restrictions and the cost savings realized from leasing space, PCS
and other wireless providers have a strong incentive to co-locate on existing
towers. Despite the appeal of co-location, it is not practical for all tower
sites. PCS is an inherently low power design, which means that coverage of any
given market requires more cell sites than traditional cellular. A standard PCS
cell provides coverage for a significantly smaller square mile region as
relative to a traditional cell. As a result of the differences in frequencies
and deflection requirements, PCS cells tend to require shorter antenna support
structure. In addition, structures older than two or three years often require
extensive modification or replacement in order to effect site sharing while
maintaining structural integrity. As a result, co-location does not always
account for a sufficient number of sites within a given market nor is it always
the most economical solution. Moreover, certain carriers limit their co-location
sites as a result of regulatory concerns; for example, major wireless service
providers limit their site co-location with any particular competitor to 15%.
Capacity/Coverage. In order to compete effectively, wireless service
providers constantly need to improve coverage and capacity in their respective
service areas. Improved coverage and capacity reduces blocked or dropped calls,
improves call quality and decreases the churn rates from unsatisfied
subscribers. Coverage and capacity additions, however, will differ for cellular
and PCS service providers. Existing cellular providers have established coverage
for an estimated 70.0% of the U.S. market. In contrast, as PCS service providers
build their networks for the higher frequency spectrum, they will require the
simultaneous construction of a coverage and capacity network. This deployment of
PCS networks will be further encouraged by PCS service providers' claims of
offering a better technology.
GROWTH IN DEMAND FOR WIRELESS SERVICES
Cellular. According to the U.S. Department of Commerce, as of December 31,
1996 there were 43.5 million cellular telephone subscribers in the U.S.,
representing a 29.0% growth rate over the prior year, and an
49
<PAGE> 55
overall penetration of 16.3%. In the future, demand for cellular services is
expected to grow as the costs for cellular phones and services continue to
decrease in response to competition in the cellular and other competing markets.
In addition, as the cellular market reacts to the advent of PCS by making the
transition from analog to digital, costs are expected to further decrease as the
additional capacity provided by the digital systems results in lower costs which
are passed on to the consumer. The market for wireless communications services,
in this regard, has proven to be fairly price elastic in the past, and decreased
prices are expected to result in increased MOU in the future.
PCS. PCS is an emerging digital wireless technology that offers a clearer
signal, fewer dropped signals and greater privacy than typical analog, cellular
systems. PCS can carry data and images as well as voice and is suitable for
computer-to-computer communication, paging, short messaging and fax. Currently,
industry experts estimate that there are approximately 305,000 PCS subscribers
in the U.S. Industry experts estimate that a considerable number of PCS cell
sites will be needed by the year 2000. While some of these cell sites may use an
existing structure, a large number of new structures will be required in the
context of the PCS introduction.
ESMR. As a result of advances in digital technology, some wireless service
providers have begun to design or modify networks that utilize SMR and ESMR
technologies. ESMR increases the capacity of radio networks allowing more
efficient use of allocated frequencies. These efficiencies and improvements in
switching technologies allow ESMR to compete with PCS and cellular. Due to
significantly lower licensing fees in some geographic areas, ESMR enjoys a
potential cost advantage over cellular or PCS. Currently, Nextel uses ESMR to
provide wireless telephone services in several large metropolitan areas in the
U.S. and may soon be joined by other carriers.
Wireless Local Loop. WLL systems are seen as an alternative to traditional
copper and fiber-optic based fixed services with the potential to be implemented
more quickly and at lower cost than wireline services. WLL systems provide
non-mobile telecommunications services to users by transmitting voice messages
over radio waves from the public switched network to the location of the fixed
telephone. The installation of WLL systems minimizes the need to obtain
right-of-ways and excavate existing roads and infrastructure or lay copper or
fiber cables in order to install or upgrade a local telephone system serving
non-mobile telephones.
HDTV. On April 3, 1997, the FCC allocated the broadcast spectrum and
mandated that the top ten markets are to start digital TV broadcasts by April
1999, promising radical improvements in television picture quality. Digital TV
broadcasting in the top 30 markets is mandated to be in place by April 1999; a
few stations, in Seattle, Washington, Raleigh, North Carolina and Washington, DC
have already begun HDTV broadcasts on a limited basis. Meeting the mandated
targets will require significant construction of the transmission
infrastructure. HDTV antennas require towers that are significantly higher than
most current towers, often over 1,000 feet.
International. The international marketplace is growing in importance with
respect to the future of the communications industry. Developing countries
realize that in order to compete effectively in the world economy they must have
an adequate communications infrastructure. In addition to the general cellular
build-out trends in industrialized countries throughout the world, many emerging
economies are introducing wireless systems as the primary communication
infrastructure, bypassing the entire wireline-based systems. The growing
international demand for wireless services, particularly for cellular networks
and WLL solutions should result in increased demand for infrastructure products
on an international basis.
Cellular communications are gaining mass market appeal on a global basis.
In 1986, there were cellular networks in 32 countries. By 1996, there were
networks in 140 countries. According to the U.S. Department of Commerce, as of
the end of 1996, there were approximately 139.7 million cellular subscribers in
the world, 68.9% of whom were located outside of the U.S. This growth has fueled
world investment in infrastructure.
In addition, WLL systems are becoming viable primary communications systems
in many emerging economies. WLL systems provide several competitive advantages
over wire line systems, including (i) quicker time-to-market, (ii) lower per
subscriber deployment and maintenance costs, and (iii) easy adaptability to a
variety of markets. WLL systems are ideal for countries with little or no wired
infrastructure due to their time and cost advantages, such as China, India,
Brazil, Russia, and Indonesia.
50
<PAGE> 56
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Roy J. Moore.............................. 35 Director, President and Chief
Executive Officer
Douglas A. Standley....................... 40 Chief Operations Officer and
President, Ft. Worth Division
William R. Estill......................... 49 Vice President of Finance
Carl R. Moore............................. 42 Vice President and Secretary
John C. Baker............................. 47 Director
Edward W. Scott........................... 35 Director
Lawrence A. Bettino....................... 37 Director
</TABLE>
ROY J. MOORE became a director and the Chief Executive Officer upon the
consummation of the Transactions on November 12, 1997. From the time Mr. Moore
joined the Company in 1991 until the consummation of the Transactions, Mr. Moore
served as Vice President of Marketing and Sales. Prior to joining the Company,
Mr. Moore was a Manager with the MAC Group, a general management consulting
firm. He worked on projects in the computer and communications industries with
companies such as AT&T, Southwestern Bell, Bell Atlantic, Pacific Telesis,
British Telecom and Apple Computer. Mr. Moore holds a Bachelor of Administration
degree in Accounting and Finance from Texas Christian University with honors,
and an MBA from the University of Virginia, where he also graduated with honors.
Mr. Moore, Carl R. Moore and Thomas F. Moore are brothers.
DOUGLAS A. STANDLEY joined the Company in November 1997 and, since that
time, has served as Chief Operations Officer and President of the Fort Worth
Division. For approximately one and a half years prior to joining the Company,
Mr. Standley was a director of Synergetics, an international management
consulting company which specialized in consulting with manufacturing companies.
Mr. Standley has been a business consultant for the past 19 years, specializing
in turnaround environments, business integration, production planning and
management and strategic implementation. Mr. Standley holds a bachelor's degree
in business management from the University of California at Fullerton and
professional certifications from the American Production and Inventory Control
Society, the American Society of Quality Control and the Deming Institute.
WILLIAM R. ESTILL joined the Company in January 1998 and, since that time,
has served as Vice President of Finance. From May 1996 to November 1997, Mr.
Estill served as Chief Financial Officer of Bearcom, Inc., a privately-held
distributor of two-way radios. From April 1985 to May 1996, Mr. Estill served as
Vice President, Chief Financial Officer, Secretary and Treasurer of Sport Supply
Company, Inc., a New York Stock Exchange company. Mr. Estill was also a member
of the board of directors of Sport Supply Group, Inc. Mr. Estill holds a
Bachelor of Business Administration degree in Accounting from the University of
Texas at Arlington and passed the CPA exam in 1983.
CARL R. MOORE joined the Company in 1973 and, since that time, has served
as Vice President, specializing in the design, manufacturing and installation of
towers, buildings and COWS. Mr. Moore became Secretary of the Company in
November 1997. Mr. Moore holds a Bachelor of Science degree in Civil Engineering
from the University of Texas at Arlington. Mr. Moore, Roy J. Moore and Thomas F.
Moore are brothers.
JOHN C. BAKER became a director of the Company upon the consummation of the
Transactions on November 12, 1997. In September 1995, Mr. Baker co-founded Baker
Capital Corp. ("Baker Capital"), a private investment management firm focused on
investments in communications equipment, services and applications companies.
Previously, Mr. Baker spent fifteen years as an investment professional with
Patricof & Co. Ventures, a multinational private equity firm. Mr. Baker
currently serves on the board of directors of FORE Systems (a communications
switch manufacturer and vendor), Intermedia Communications Inc. (a
51
<PAGE> 57
competitive local exchange company), Xpedite Systems (a fax messaging provider)
and Resource Bancshares Mortgage Group. Mr. Baker holds a Bachelor of Arts
degree from Harvard College and received an MBA from the Harvard Business
School.
EDWARD W. SCOTT became a director of the Company upon the consummation of
the Transactions on November 12, 1997. Since May 1996, Mr. Scott has been an
officer of Baker Capital Partners, LLC ("Baker Partners") which acts as the
general partner of Baker. In September 1995, Mr. Scott co-founded Baker Capital.
From 1991 until 1996, Mr. Scott was employed as an investment professional by
the Apollo Investment Fund, a large leveraged buyout and private equity firm.
Mr. Scott currently serves on the board of directors of Virtual Resources, Inc.,
a private company headquartered in Atlanta. Mr. Scott holds a Bachelor of Arts
degree from Columbia College and received an MBA from the Harvard Business
School.
LAWRENCE A. BETTINO became a director of the Company upon the consummation
of the Transactions on November 12, 1997. Since May 1996, Mr. Bettino has been
an officer of Baker Partners which acts as the general partner of Baker. In
September 1995, Mr. Bettino co-founded Baker Capital. From 1989 to 1996, Mr.
Bettino was a General Partner of Dillon Read Venture Capital. Mr. Bettino
currently serves on the board of directors of Virtual Resources, Inc., a private
company headquartered in Atlanta. Mr. Bettino holds a Bachelor of Science degree
from Renssalaer Polytechnic Institute and received an MBA from the Harvard
Business School.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation for
each of the last three Fiscal Years for the President and the four other most
highly compensated executive officers of the Company. No stock options are
outstanding.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION -----------------------------
---------------------------------- LONG-TERM
FISCAL OTHER ANNUAL INCENTIVE ALL OTHER
NAME AND POSITION YEAR SALARY BONUS COMPENSATION PLAN PAYOUTS COMPENSATION
- ----------------- ------ -------- -------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
T. W. Moore.................... 1997 $112,800 $650,000 -- -- --
President 1996 $112,800 -- -- -- --
1995 $112,800 -- -- -- --
Betty J. Moore................. 1997 $210,000 $650,000 -- -- --
Secretary/Treasurer 1996 $210,000 -- -- -- --
1995 $210,000 -- -- -- --
Thomas F. Moore................ 1997 $200,000 -- -- -- --
Vice President 1996 $166,826 $101,471 -- -- --
of Manufacturing(1) 1995 $150,240 $355,849 -- -- --
Carl R. Moore.................. 1997 $200,000 -- -- -- --
Vice President 1996 $166,826 $101,471 -- -- --
1995 $150,240 $355,849 -- -- --
Roy J. Moore................... 1997 $200,000 -- -- -- --
Vice President 1996 $150,154 $101,471 -- -- --
of Marketing 1995 $125,232 $356,374 -- -- --
and Sales
</TABLE>
- ---------------
(1) The Company and Thomas F. Moore have entered into a Voluntary Retirement
Agreement, pursuant to which Mr. Moore has agreed to resign from office as
an executive officer of the Company and voluntarily retire. See "Certain
Relationships and Related Transactions -- Voluntary Retirement Agreement."
EMPLOYMENT AGREEMENTS
In connection with the Transactions, the Company entered into employment
agreements (the "Employment Agreements") with Roy J. Moore, Carl R. Moore and
Thomas F. Moore (the "Roll-over Shareholders"). The terms of the Employment
Agreements are substantially similar. Each of the Employment Agreements
commenced on November 12, 1997. The Company and Thomas F. Moore have entered
into a
52
<PAGE> 58
Voluntary Retirement Agreement, pursuant to which Mr. Moore has agreed to resign
from office as an executive officer of the Company and voluntarily retire. See
"Certain Relationships and Related Transactions -- Voluntary Retirement
Agreement." The Employment Agreements provide for a term of employment that will
end on the third anniversary of the effective date of the Employment Agreements
(the "Employment Period"); provided that the Employment Period will
automatically terminate upon death, disability, for Cause (which is defined in
the Employment Agreements as, among other things, commission by the employee of
a felony or embezzlement or fraudulent conduct by the employee) or for Good
Reason (which is defined in the Employment Agreements as, among other things, a
change in the employee's title and a material reduction in the nature of the
employee's responsibilities). Under the Employment Agreements, each of the named
employees will receive (i) an annual base salary of $200,000, (ii) an annual
bonus based on the earnings and performance of the Company, and (iii) other
benefits as described in the Employment Agreements. Each of the Employment
Agreements provides for director or officer indemnification and insurance, and
contains a non-competition clause and a confidentiality provision.
The Company has entered into an employment agreement with Douglas A.
Standley (the "Standley Agreement") that commenced on November 14, 1997 and will
remain in effect until December 31, 2000. The Standley Agreement will terminate
before the above date upon death, disability, or Cause (which is defined in the
Standley Agreement as, among other things, commission by the employee of a
felony or embezzlement or fraudulent conduct by the employee). Under the
Standley Agreement, Mr. Standley will receive, among other things, an annual
base salary of $250,000 and an annual bonus based on the earnings and
performance of the Company. The Standley Agreement also provides for director or
officer indemnification and insurance, and contains a non-competition clause and
a confidentiality provision.
53
<PAGE> 59
PRINCIPAL SHAREHOLDERS
The outstanding equity securities of the Company consist of 136.14 shares
of Common Stock.
The following table sets forth certain information regarding the ownership
of the voting securities of the Company as of January 12, 1998. To the knowledge
of the Company, each of such shareholders has sole voting and investment power
as to the shares shown unless otherwise noted.
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------------------
NAME AND ADDRESS NUMBER OF SHARES PERCENTAGE OF CLASS
- ---------------- ---------------- -------------------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS:
FWT Acquisition Inc................................ 108.91(1) 80.00%
575 Madison Avenue, 10th Floor
New York, NY 10022
Thomas F. Moore.................................... 9.08 6.67%
1901 E. Loop 820 South
Fort Worth, TX 76112
Carl R. Moore...................................... 9.08 6.67%
1901 E. Loop 820 South
Fort Worth, TX 76112
Roy J. Moore....................................... 9.08 6.67%
1901 E. Loop 820 South
Fort Worth, TX 76112
</TABLE>
- ---------------
(1) FWT Acquisition, Inc. is a wholly-owned subsidiary of Baker. The general
partner of Baker, which is treated as the beneficial owner of the shares held by
Baker, is Baker Partners. The address of each of Baker and Baker Partners is 575
Madison Ave., 10th Floor, New York, New York 10022. Each of Messrs. Baker, Scott
and Bettino is a manager and an officer of Baker Partners.
54
<PAGE> 60
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTION AGREEMENTS
On November 12, 1997, the Company, FWT Acquisition and the Existing
Shareholders entered into, and consummated the transactions set forth in, the
Transaction Agreements. The Transaction Agreements contemplated, among other
things, two primary transactions. The first transaction contemplated by the
Transaction Agreements included the Recapitalization. The second transaction
contemplated by the Transaction Agreements included the Stock Purchase. As a
result of the Transactions, FWT Acquisition holds approximately 80.0% of the
issued and outstanding shares of the Common Stock, and the Roll-over
Shareholders hold in the aggregate approximately 20.0% of the issued and
outstanding shares of the Common Stock. See "The Recapitalization and Stock
Purchase."
The Transaction Agreements contain customary representations and warranties
and standard covenants. Such agreements provide that the Existing Shareholders
will indemnify FWT Acquisition for losses arising from any breach of a covenant,
representation or warranty made by the Existing Shareholders in the Transaction
Agreements. Under the Transaction Agreements, the Existing Shareholders will not
be required to indemnify FWT Acquisition until the amount of the claim or claims
for indemnification exceeds $1,000,000. Also, the Existing Shareholders will be
subject to a maximum potential indemnification liability of $75,000,000 or, in
the case of willful misconduct or fraud or the breach of certain representations
or warranties, a maximum potential indemnification liability of approximately
$116 million. The indemnification obligations of the Existing Shareholders with
respect to the inaccuracy of all representations or warranties, except certain
representations and warranties discussed below, shall continue through May 11,
1999. The Existing Shareholders' indemnification obligations for inaccuracies
involving tax-related representations or warranties shall continue until 30 days
after the expiration of the applicable statute of limitations. The Existing
Shareholders' indemnification obligations for representations and warranties
related to capitalization, outstanding securities of the Company, title to the
Company's real property and adequacy of the Company's assets shall continue
forever, subject to the expiration of any applicable statute of limitations.
FINANCIAL ADVISORY AGREEMENT
In connection with the Transactions, the Company entered into a ten-year
agreement with Baker Capital, pursuant to which Baker Capital provided financial
advisory services to the Company in connection with the Transactions. The
agreement commenced on November 12, 1997 and will terminate upon the earlier of
(i) November 12, 2007 or (ii) the date on which Baker Capital and its affiliates
cease to beneficially own directly or indirectly at least five percent of the
outstanding Common Stock of the Company or its successors. In payment for these
services the Company paid Baker Capital a fee of $1.0 million upon the closing
of the Transactions, and paid Baker Capital a fee of $1.0 million upon the
closing of the Initial Offering. In addition, Baker Capital will provide
oversight and monitoring services to the Company on an ongoing basis and will
receive a base fee of $250,000 per year commencing in 1998 with an additional
$250,000 for each year the Company meets a specified EBITDA target. The Company
has agreed to indemnify Baker Capital in respect of its services under the
Financial Advisory Agreement and to reimburse it for certain out-of-pocket
expenses.
EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS
In connection with the Transactions, the Company entered into employment
agreements (the "Employment Agreements") with Roy J. Moore, Carl R. Moore and
Thomas F. Moore (the "Roll-over Shareholders"). The terms of the Employment
Agreements are substantially similar. Each of the Employment Agreements
commenced on November 12, 1997. The Company and Thomas F. Moore have entered
into a Voluntary Retirement Agreement, pursuant to which Mr. Moore has agreed to
resign from office as an executive officer of the Company and voluntarily
retire. See "-- Voluntary Retirement Agreement." The Employment Agreements
provide for a term of employment that will end on the third anniversary of the
effective date of the Employment Agreements (the "Employment Period"); provided
that the Employment Period will automatically terminate upon death, disability,
for Cause (which is defined in the Employment Agreements as, among other things,
commission by the employee of a felony or embezzlement or fraudulent
55
<PAGE> 61
conduct by the employee), or for Good Reason (which is defined in the Employment
Agreements as, among other things, a change in the employee's title and a
material reduction in the nature of the employee's responsibilities). Under the
Employment Agreements, each of the named employees will receive (i) an annual
base salary of $200,000, (ii) an annual bonus based on the earnings and
performance of the Company, and (iii) other benefits as described in the
Employment Agreements. Each of the Employment Agreements provides for director
or officer indemnification and insurance, and contains a non-competition clause
and a confidentiality provision.
The Company has entered into an employment agreement with Douglas A.
Standley (the "Standley Agreement") that commenced on November 14, 1997 and will
remain in effect until December 31, 2000. The Standley Agreement will terminate
before the above date upon death, disability, or Cause (which is defined in the
Standley Agreement as, among other things, commission by the employee of a
felony or embezzlement or fraudulent conduct by the employee). Under the
Standley Agreement, Mr. Standley will receive, among other things, an annual
base salary of $250,000 and an annual bonus based on the earnings and
performance of the Company. The Standley Agreement also provides for director or
officer indemnification and insurance, and contains a non-competition clause and
a confidentiality provision.
THE DISTRIBUTION
The Company made a distribution in the amount of $21.0 million to T.W.
Moore and Betty Moore. The distribution was financed primarily by a loan from
Bank One, Texas, N.A., which was repaid in connection with the Recapitalization.
SHAREHOLDERS' AGREEMENT
In connection with the Transactions, the Company, FWT Acquisition, Baker
and the Roll-over Shareholders entered into a Shareholders Agreement which
provides for, among other things, agreements and restrictions regarding
issuances and transfers of Common Stock. This agreement commenced on November
12, 1997 and will continue until the earliest of (i) the date on which the
Roll-over Shareholders no longer hold any capital stock of the Company, (ii) the
date of closing of a public offering or private placement of equity securities
of the Company, the proceeds of which to the Company are not less than 20
million, (iii) the date on which the agreement is terminated by written
agreement of all the shareholders or (iv) the date on which the Company ceases
to exist. The agreements and restrictions include the following: (i) rights of
first refusal; (ii) preemptive rights; (iii) tag-along rights; (iv) pledge
restrictions; (v) transfer restrictions; and (vi) a carry-along provision in
favor of Baker. Further, during the Initial Period (which is defined in the
Shareholders' Agreement as so long as either Roy Moore is Chief Executive
Officer of the Company or Roy Moore, Carl Moore and Fred Moore collectively own
not less than five percent of the issued and outstanding shares of capital stock
of the Company) any transaction between the Company and FWT Acquisition and the
Roll-over Shareholders will require unanimous consent of the Company's board of
directors prior to consummation of such transaction.
REGISTRATION RIGHTS AGREEMENT
In connection with the Transactions, the Company, FWT Acquisition and the
Roll-over Shareholders entered into a Registration Rights Agreement. This
agreement provides for, among other things, piggy-back rights with customary
cut-backs.
STOCK APPRECIATION RIGHTS AGREEMENTS
The Company and each of Roy J. Moore and Douglas A. Standley have entered
into stock appreciation rights agreements (the "SAR Agreements"). Each of the
SAR Agreements provides for, among other things, the payment of an amount based
on a formula set forth in the SAR Agreement by the Company to both Mr. Moore and
Mr. Standley upon the occurrence of a Liquidity Event (which is defined in the
SAR Agreement as, among other things, the completion by the Company of an
initial public offering of common
56
<PAGE> 62
stock and a situation in which FWT Acquisition ceases to hold more than 50% of
the outstanding common stock of the Company).
VOLUNTARY RETIREMENT AGREEMENT
On February 27, 1998, Thomas F. Moore, who had served prior to that date as
the Vice President of Manufacturing of the Company, entered into a Voluntary
Retirement Agreement with the Company, in connection with which he agreed to
resign from office as an executive officer of the Company and voluntarily
retire. As part of its arrangements with Mr. Moore, the Company has agreed to
pay Mr. Moore $237,500 per year 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
such date.
57
<PAGE> 63
DESCRIPTION OF THE REVOLVING CREDIT FACILITY
The Company entered into a loan agreement with BT Commercial Corporation
(the "Agent"), which provides to the Company the Revolving Credit Facility from
November 12, 1997 through November 29, 2000. Subject to borrowing base
limitations and the satisfaction of customary borrowing conditions, the Company
expects to be able to borrow up to $25.0 million under the Revolving Credit
Facility. The terms of such Revolving Credit Facility are substantially as
follows:
(i) The Revolving Bank Facility enables the Company to obtain
revolving credit loans from time to time for working capital and general
corporate purposes in an aggregate amount outstanding not to exceed the
lesser of (x) $25.0 million and (y) the sum of 85% of the Company's
eligible accounts receivable, as defined, and 60% of the Company's eligible
inventory, as defined;
(ii) The revolving credit loans bear interest at a rate based upon the
lender's prime rate or the LIBOR-based rate. The term of any LIBOR-based
loan is, at the Company's option, either one, two, three or six months,
subject to certain requirements described in the Revolving Credit Facility.
The Company also paid fees in the amount of $400,000 upon the closing of
the Revolving Credit Facility and has agreed to pay an additional fee in
the amount of 1/2 of 1% per year based upon the amount of the daily average
unused commitments. The Revolving Credit Facility will terminate on the
third anniversary of the date of the consummation of the Initial Offering,
unless terminated sooner upon an Event of Default (which is defined in the
Revolving Credit Facility as, among other things, the failure of the
Company to make payments when due and a breach of warranty and certain
specified covenants by the Company), and all loans outstanding under the
Revolving Credit Facility will be payable on such date or such earlier date
as may be accelerated following the occurrence of any event of default; and
(iii) The Revolving Credit Facility ranks senior to the Notes and is
secured by a lien on substantially all of the Company's personal property,
including accounts receivable and inventory. The Revolving Credit Facility
contains various restrictive covenants and events of default customary for
transactions of this type. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
58
<PAGE> 64
DESCRIPTION OF EXCHANGE NOTES
The Outstanding Notes were, and the Exchange Notes will be, issued under
the Indenture. The terms of the Exchange Notes are identical in all material
respects to the Outstanding Notes, except that the Exchange Notes have been
registered under the Securities Act, and therefore, will not bear legends
restricting their transfer. The following summary of certain provisions of the
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Trust Indenture Act of 1939, as amended (the
"TIA"), and to all of the provisions of the Indenture, including the definitions
of certain terms therein and those terms made a part of the Indenture by
reference to the TIA as in effect on the date of the Indenture. A copy of the
Indenture may be obtained from the Company or the Initial Purchasers. The
definitions of certain capitalized terms used in the following summary are set
forth below under "-- Certain Definitions." For purposes of this section,
references to the "Company" include only the Company and not its Subsidiaries. A
copy of the Indenture can be obtained by contacting William R. Estill by mail at
1901 East Loop 820 South, Forth Worth, Texas 76112-7899, by telephone at (817)
457-3060 or by facsimile at (817) 429-6010.
The Outstanding Notes are, and the Exchange Notes will be, unsecured
obligations of the Company, ranking subordinate in right of payment to all
Senior Indebtedness of the Company, including all obligations of the Company
under the Revolving Credit Facility. As of October 31, 1997, on a pro forma
basis, the Company would have had no Senior Indebtedness outstanding and had
approximately $11.4 million of availability under the Revolving Credit Facility.
The Outstanding Notes have been, and the Exchange Notes will be, issued in
fully registered form only, without coupons, in denominations of $1,000 and
integral multiples thereof. Initially, the Trustee will act as Paying Agent and
Registrar for the Exchange Notes. The Notes may be presented for registration or
transfer and exchange at the offices of the Registrar, which initially will be
the Trustee's corporate trust office. The Company may change any Paying Agent
and Registrar without notice to holders of the Notes (the "Holders"). The
Company will pay principal (and premium, if any) on the Notes at the Trustee's
corporate office in New York, New York. At the Company's option, interest may be
paid at the Trustee's corporate trust office or by check mailed to the
registered address of Holders. Any Outstanding Notes that remain outstanding
after the completion of this Exchange Offer, together with the Exchange Notes
issued in connection with this Exchange Offer, will be treated as a single class
of securities under the Indenture.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $125 million (of
which $105 million was issued in the Initial Offering) and will mature on
November 15, 2007. Additional amounts may be issued in one or more series from
time to time, subject to the limitations set forth under "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness." Interest on
the Notes will accrue at the rate of 9 7/8% per annum and will be payable
semi-annually in cash on each May 15 and November 15 commencing on May 15, 1998,
to the persons who are registered Holders at the close of business on May 1 and
November 1 immediately preceding the applicable interest payment date. Interest
on the Exchange Notes will accrue (A) from the later of (i) the last interest
payment date on which interest was paid on the Outstanding Note surrendered in
exchange therefor, or (ii) if the Outstanding Note is surrendered for exchange
on a date in a period which includes the record date for an interest payment
date to occur on or after the date of such exchange and as to which interest
will be paid, the date of such interest payment date or (B) if no interest has
been paid on the Outstanding Notes, from the Issue Date.
The Notes will not be entitled to the benefit of any mandatory sinking
fund.
REDEMPTION
Optional Redemption. The Notes will be redeemable, at the Company's
option, in whole at any time or in part from time to time, on and after November
15, 2002, upon not less than 30 nor more than 60 days' notice, at the following
redemption prices (expressed as percentages of the principal amount thereof) if
59
<PAGE> 65
redeemed during the twelve-month period commencing on November 15 of the year
set forth below, plus, in each case, accrued and unpaid interest thereon, if
any, to the date of redemption (the "Redemption Date"):
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2002.............................................. 104.938%
2003.............................................. 103.292%
2004.............................................. 101.646%
2005 and thereafter............................... 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from
time to time, on or prior to November 15, 2000, the Company may, at its option,
use the net cash proceeds of one or more Public Equity Offerings (as defined
below) to redeem the Notes at a redemption price equal to 109.875% of the
principal amount thereof plus accrued and unpaid interest thereon, if any, to
the date of redemption; provided that at least 65% of the principal amount of
Notes originally issued remains outstanding immediately after any such
redemption. In order to effect the foregoing redemption with the proceeds of any
Public Equity Offering, the Company shall make such redemption not more than 120
days after the consummation of any such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company pursuant
to a registration statement filed with the Commission in accordance with the
Securities Act.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which such Notes are listed or, if such Exchange Notes are not then
listed on a national securities exchange, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate; provided, however, that
no Notes of a principal amount of $1,000 or less shall be redeemed in part;
provided, further, that if a partial redemption is made with the proceeds of a
Public Equity Offering, selection of the Notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata basis or on as nearly
a pro rata basis as is practicable (subject to DTC procedures), unless such
method is otherwise prohibited. Notice of redemption shall be mailed by
first-class mail at least 30 but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at its registered address. If any
Note is to be redeemed in part only, the notice of redemption that relates to
such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in a principal amount equal to the unredeemed portion
thereof will be issued in the name of the Holder thereof upon cancellation of
the original Note. On and after the redemption date, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the Paying Agent funds in satisfaction of the applicable
redemption price pursuant to the Indenture.
SUBORDINATION
The payment of all Obligations on the Notes is subordinated in right of
payment to the prior payment in full in cash or Cash Equivalents of all
Obligations on Senior Indebtedness. Upon any payment or distribution of assets
of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors or marshaling of assets
of the Company or in a bankruptcy, reorganization, insolvency, receivership or
other similar proceeding relating to the Company or its property, whether
voluntary or involuntary, all Obligations due or to become due upon all Senior
Indebtedness shall first be paid in full in cash or Cash Equivalents, or such
payment duly provided for before any payment or distribution of any kind or
character (other than any payment in the form of Permitted Junior Securities) is
made on account of any Obligations on the Notes, or for the acquisition of any
of the Notes for cash or property or otherwise. If any default occurs and is
continuing in the payment when due, whether at maturity, upon any redemption, by
declaration or otherwise, of any principal of, interest on, unpaid drawings for
letters of credit issued in respect of, or regularly accruing fees with respect
to, any Senior Indebtedness, no payment of any kind or character shall be made
by or on behalf of
60
<PAGE> 66
the Company or any other Person on its or their behalf with respect to any
Obligations on the Notes or to acquire any of the Notes for cash or property or
otherwise.
In addition, if any other event of default occurs and is continuing with
respect to any Designated Senior Indebtedness, as such event of default is
defined in the instrument creating or evidencing such Designated Senior
Indebtedness, permitting the holders of such Designated Senior Indebtedness then
outstanding to accelerate the maturity thereof and if the Representative for the
respective issue of Designated Senior Indebtedness gives written notice of the
event of default to the Trustee (a "Default Notice"), then, unless and until all
events of default have been cured or waived or have ceased to exist or the
Trustee receives notice from the Representative for the respective issue of
Designated Senior Indebtedness terminating the Blockage Period (as defined
below), during the 180 days after the delivery of such Default Notice (the
"Blockage Period"), neither the Company nor any other Person on its behalf shall
(x) make any payment of any kind or character with respect to any Obligations on
the Notes (other than any payment in the form of Permitted Junior Securities) or
(y) acquire any of the Notes for cash or property or otherwise. Notwithstanding
anything herein to the contrary, in no event will a Blockage Period extend
beyond 180 days from the date the payment on the Notes was due and only one such
Blockage Period may be commenced within any 360 consecutive days. No event of
default which existed or was continuing on the date of the commencement of any
Blockage Period with respect to the Designated Senior Indebtedness shall be, or
be made, the basis for commencement of a second Blockage Period by the
Representative of such Designated Senior Indebtedness whether or not within a
period of 360 consecutive days, unless such event of default shall have been
cured or waived for a period of not less than 90 consecutive days (it being
acknowledged that any subsequent action, or any breach of any financial
covenants for a period commencing after the date of commencement of such
Blockage Period that, in either case, would give rise to an event of default
pursuant to any provisions under which an event of default previously existed or
was continuing shall constitute a new event of default for this purpose).
By reason of such subordination, in the event of the insolvency of the
Company, creditors of the Company who are not holders of Senior Indebtedness,
including the Holders of the Notes, may recover less, ratably, than holders of
Senior Indebtedness.
As of October 31, 1997, on pro forma basis, the Company would have had no
Senior Indebtedness outstanding and had approximately $11.4 million of
availability under the Revolving Credit Facility.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control,
each Holder will have the right to require that the Company purchase all or a
portion of such Holder's Notes pursuant to the offer described below (the
"Change of Control Offer"), at a purchase price (the "Change of Control Purchase
Price") equal to 101% of the principal amount thereof plus accrued and unpaid
interest to the date of purchase.
Within 30 days following the date upon which the Change of Control
occurred, the Company must send, by first class mail, a notice to each Holder,
with a copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 45 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). Holders electing to have an Note purchased pursuant to a Change
of Control Offer will be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, to
the Paying Agent at the address specified in the notice prior to the close of
business on the third Business Day prior to the Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. A Change of Control Offer might constitute
an event of default under the terms of Senior Indebtedness, including the
Revolving Credit Facility. In addition, any instruments governing Senior
Indebtedness may prohibit the Company from purchasing any Notes prior to their
maturity (including pursuant to a Change of Control Offer). If on the purchase
date for the Change of Control Offer the Company does not have sufficient funds
to pay the Change of Control Purchase Price or is unable to obtain the consent
of the holders of such Senior Indebtedness or to repay such Senior Indebtedness,
an Event of Default would occur under the Indenture. In the event the Company is
required to purchase
61
<PAGE> 67
outstanding Notes pursuant to a Change of Control Offer, the Company expects
that it would seek third party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can be no
assurance that the Company would be able to obtain such financing. In addition,
one of the events that constitutes a Change of Control under the Indenture is a
sale, conveyance, transfer or lease of all or substantially all of the assets of
the Company. The Indenture is governed by New York law, and there is no
established quantitative definition under New York law of what constitutes
"substantially all" of the assets of a corporation. Accordingly, if the Company
were to engage in a transaction in which it disposed of less than all of the
assets of the Company, a question or interpretation could arise as to whether
such disposition was of "substantially all" of its assets and whether the
Company was required to make a Change of Control Offer. If the Company did not
make a Change of Control Offer after a disposition of assets and a court of law
later determined that the disposition was of "substantially all" of the
Company's assets, a Change of Control Offer would then be required. There can be
no assurance that the Company would have available funds sufficient to pay the
Change of Control Purchase Price to all Holders seeking to accept the Change of
Control Offer. If a court of law were to agree with the Company's decision not
to make a Change of Control Offer because the disposition was not of
"substantially all" of the Company's assets, the Holders would not be entitled
to a Change of Control Offer and would not be entitled to receive the Change of
Control Purchase Price.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to a Holder's right to redemption upon a Change of Control.
Restrictions in the Indenture described herein on the ability of the Company and
its Restricted Subsidiaries, if any, to incur additional Indebtedness, to grant
liens on its property, to make Restricted Payments and to make Asset Sales may
also make more difficult or discourage a takeover of the Company, whether
favored or opposed by the management of the Company. Moreover, any instrument
governing Senior Indebtedness of the Company (including the Revolving Credit
Agreement) may prohibit the Company from purchasing any Notes prior to their
maturity (including pursuant to a Change of Control Offer). Consummation of any
such transaction in certain circumstances may require redemption or repurchase
of the Notes, and there can be no assurance that the Company or the acquiring
party will have sufficient financial resources to effect such redemption or
repurchase or, if the Company is unable to obtain the consent of Holders of such
Senior Indebtedness, to repay such Senior Indebtedness. Such restrictions and
the restrictions on transactions with Affiliates may, in certain circumstances,
make more difficult or discourage any leveraged buyout of the Company or any of
its Subsidiaries by the management of the Company. While such restrictions cover
a wide variety of arrangements which have traditionally been used to effect
highly leveraged transactions, the Indenture may not afford the Holders of Notes
protection in all circumstances from the adverse aspects of a highly leveraged
transaction, reorganization, restructuring, merger or similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the Company and
repurchases all Notes validly tendered and not withdrawn under such Change of
Control Offer.
The Company will comply with the requirements of Rule 14e-1 under the Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of Notes
pursuant to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations conflict with the "Change of Control" provisions
of the Indenture, the Company shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached its obligations under
the "Change of Control" provisions of the Indenture by virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable,
contingently or otherwise, with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness) provided, however, that if no Default or
62
<PAGE> 68
Event of Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebtedness, the Company and any
Restricted Subsidiary that is a Guarantor may incur Indebtedness (including,
without limitation, Acquired Indebtedness) if on the date of the incurrence of
such Indebtedness, after giving effect to the incurrence thereof, the
Consolidated Fixed Charge Coverage Ratio of the Company is greater than 2.0 to
1.0; provided that any guarantee of Indebtedness permitted to be incurred
hereunder shall not be a separate incurrence of Indebtedness.
Limitation on Restricted Payments. The Company will not, and will not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
(a) declare or pay any dividend or make any distribution (other than dividends
or distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Capital Stock to holders of such Capital
Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of the Company or any warrants, rights or options to purchase or acquire
shares of any class of such Capital Stock, (c) make any principal payment on,
purchase, defease, redeem, prepay, decrease or otherwise acquire or retire for
value, prior to any scheduled final maturity, scheduled repayment or scheduled
sinking fund payment, any Indebtedness ("Subordinated Indebtedness") of the
Company that is subordinate or junior in right of payment to the Notes or (d)
make any Investment (other than Permitted Investments) (each of the foregoing
actions set forth in clauses (a), (b) (c) and (d) being referred to as a
"Restricted Payment"), if at the time of such Restricted Payment or immediately
after giving effect thereto, (i) a Default or an Event of Default shall have
occurred and be continuing or (ii) the Company is not able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness"
covenant or (iii) the aggregate amount of Restricted Payments (including such
proposed Restricted Payment) made subsequent to the Issue Date (the amount
expended for such purposes, if other than in cash, being the fair market value
of such property as determined in good faith by the Board of Directors of the
Company) shall exceed the sum of: (w) 50% (or 100% for the purpose of making a
Restricted Payment described in clause (d) above) of the cumulative Consolidated
Net Income (or if cumulative Consolidated Net Income shall be a loss, minus 100%
of such loss) of the Company earned subsequent to the Issue Date and on or prior
to the date the Restricted Payment occurs (the "Reference Date") (treating such
period as a single accounting period); plus (x) 100% of the aggregate net cash
proceeds received by the Company from any Person (other than a Subsidiary of the
Company) from the issuance and sale subsequent to the Issue Date and on or prior
to the Reference Date of Qualified Capital Stock of the Company or any options,
warrants or rights to purchase Qualified Capital Stock of the Company (other
than options, warrants or rights initially issued and sold together with
Disqualified Capital Stock or debt securities comprising a unit), together with
the aggregate cash received by the Company at the time of exercise of such
options, warrants or rights; plus (y) 100% of the aggregate net cash proceeds
received on or after the Issue Date by the Company from the issuance or sale
(other than to a Subsidiary of the Company) of convertible debt or convertible
Disqualified Capital Stock that has been converted into or exchanged for
Qualified Capital Stock of the Company, together with the aggregate cash
received by the Company at the time of such conversion or exchange; plus (z)
without duplication of any amounts included in clause (iii)(y) above, (1) 100%
of the aggregate net cash proceeds of any equity contribution received by the
Company from a holder of the Company's Capital Stock (excluding, in the case of
clauses (iii)(x) and (z), any net cash proceeds from a Public Equity Offering to
the extent used to redeem the Notes) and (2) to the extent not otherwise
included in the Company's Consolidated Net Income, an amount equal to the net
reduction in any investment made by the Company and its Restricted Subsidiaries
subsequent to the Issue Date in any Person resulting from (a) payments of
interest on debt, dividends, repayments of loans or advances, or other transfers
or distributions of Property, in each case to the Company or any Restricted
Subsidiary from any Person, and in an amount not to exceed the book value of
such investment previously made in such Person that were treated as Restricted
Payments, or (b) the designation of any Unrestricted Subsidiary as a Restricted
Subsidiary, in each case in an amount not to exceed the lesser of (x) the book
value of such Investment previously made in such Unrestricted Subsidiary that
were treated as Restricted Payments, and (y) the Fair Market Value of such
Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph do not prohibit: (1) the payment of any dividend within 60
days after the date of declaration of such dividend if the dividend would have
been permitted on the date of declaration; (2) if no Default or Event of Default
shall
63
<PAGE> 69
have occurred and be continuing, the acquisition of any shares of Capital Stock
of the Company, either (i) solely in exchange for shares of Qualified Capital
Stock of the Company or (ii) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company; (3) if no Default
or Event of Default shall have occurred and be continuing, the acquisition of
any Indebtedness of the Company that is subordinate or junior in right of
payment to the Notes either (i) solely in exchange for shares of Qualified
Capital Stock of the Company, or (ii) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of (A) shares of Qualified Capital Stock of the Company or (B)
Refinancing Indebtedness; and (4) so long as no Default or Event of Default
shall have occurred and be continuing, repurchases by the Company of Common
Stock of the Company from employees of the Company or any of its Subsidiaries or
their authorized representatives upon the death, disability or termination of
employment of such employees, in an aggregate amount not to exceed $250,000 in
any calendar year; (5) payments under Affiliated Transactions permitted by
paragraph (b)(v) of the covenant described in "Limitation on Transactions with
Affiliates" that would otherwise constitute Restricted Payments; (6) the
purchase of any Subordinated Indebtedness at a purchase price not greater than
101% or 100%, respectively, of the principal amount thereof in the event of a
"Change of Control Offer" or a "Net Proceeds Offer," respectively, in accordance
with provisions similar to those contained in the "-- Change of Control" and
"-- Limitation on Asset Sales" covenants, provided that, prior to any such
purchase of Subordinated Indebtedness, the Company has made the Change of
Control Offer or the Net Proceeds Offer, as the case may be, in accordance with
such covenants and has purchased all Notes validly tendered pursuant to such
offer and that no Default or Event of Default is in existence prior to or as a
result of such purchases, and (7) the payment of the Transaction Fee to Baker
Capital Corporation pursuant to the Recapitalization Agreement. In determining
the aggregate amount of Restricted Payments made subsequent to the Issue Date in
accordance with clause (iii) of the immediately preceding paragraph, amounts
expended pursuant to clauses (1) (if not already taken into consideration for
determining such amount upon the declaration thereof), (2) and (4) shall be
included in such calculation.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an officers' certificate stating that such Restricted
Payment complies with the Indenture and setting forth in reasonable detail the
basis upon which the required calculations were computed, which calculations may
be based upon the Company's latest available internal quarterly financial
statements.
Limitation on Asset Sales. The Company will not, and will not permit any
of its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the
Company or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors), (ii) at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale at the time of such disposition shall be in the form of cash or
Cash Equivalents (or the assumption of indebtedness and liabilities of the
Company or such Restricted Subsidiary and the release of the Company or such
Restricted Subsidiary from all liability thereon) or notes or marketable
securities that are converted into cash or Cash Equivalents within 180 days
after the date of such Asset Sale; and (iii) upon the consummation of an Asset
Sale, the Company shall apply, or cause such Restricted Subsidiary to apply, the
Net Cash Proceeds relating to such Asset Sale within 360 days of receipt thereof
either (A) to prepay any Senior Indebtedness and, in the case of any such
Indebtedness under any revolving credit facility, effect a permanent reduction
in the availability under such revolving credit facility, (B) to make an
investment in properties and assets that replace the properties and assets that
were the subject of such Asset Sale or in properties and assets that will be
used in the business of the Company and its Subsidiaries or in businesses
reasonably related thereto ("Replacement Assets"), or (C) a combination of
prepayment and investment permitted by the foregoing clauses (iii)(A) and
(iii)(B). Within 30 days after such 360 day period after an Asset Sale or such
earlier date, if any, as the Board of Directors of the Company or of such
Restricted Subsidiary determines not to apply the Net Cash Proceeds relating to
such Asset Sale as set forth in clauses (iii)(A), (iii)(B) and (iii)(C) of the
next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (iii)(A), (iii)(B)
and (iii)(C) of the next preceding sentence (the "Excess Proceeds") shall be
applied by the Company or such Restricted Subsidiary to make an offer to
64
<PAGE> 70
purchase (the "Net Proceeds Offer") Notes and Pari Passu Indebtedness, if
applicable, on a date (the "Net Proceeds Offer Payment Date") not less than 30
nor more than 45 days following the applicable Net Proceeds Offer Trigger Date,
from all Holders and from holders of Pari Passu Indebtedness, if applicable, on
a pro rata basis, that amount of Notes and Pari Passu Indebtedness, if
applicable, equal to the Excess Proceeds, with regard to the Notes, at a price
equal to 100% of the principal amount of the Notes to be purchased, plus accrued
and unpaid interest thereon, if any, to the date of purchase; provided, however,
that if at any time within one year of the date of the Asset Sale any non-cash
consideration received by the Company or any Restricted Subsidiary of the
Company, as the case may be, in connection with any Asset Sale is converted into
or sold or otherwise disposed of for cash (other than interest received with
respect to any such non-cash consideration), then such conversion or disposition
shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds
thereof shall be applied in accordance with this covenant. The Company may defer
the Net Proceeds Offer until there are aggregate unutilized Excess Proceeds
equal to or in excess of $10,000,000 resulting from one or more Asset Sales (at
which time, the entire unutilized Excess Proceeds, and not just the amount in
excess of $10,000,000, shall be applied as required pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "-- Merger, Consolidation
and Sale of Assets" and if the Company has not made a Change of Control Offer in
connection with any such transfer, the successor corporation shall be deemed to
have sold the properties and assets of the Company and its Restricted
Subsidiaries not so transferred for purposes of this covenant, and shall comply
with the provisions of this covenant with respect to such deemed sale as if it
were an Asset Sale. In addition, the fair market value of such properties and
assets of the Company or its Restricted Subsidiaries deemed to be sold shall be
deemed to be Net Cash Proceeds for purposes of this covenant.
Each Net Proceeds Offer will be mailed to the record Holders as shown on
the register of Holders within 25 days following the Net Proceeds Offer Trigger
Date, with a copy to the Trustee, and shall comply with the procedures set forth
in the Indenture. Upon receiving notice of the Net Proceeds Offer, Holders may
elect to tender their Notes in whole or in part in integral multiples of $1,000
in exchange for cash. A Net Proceeds Offer shall remain open for a period of 20
business days or such longer period as may be required by law. Any amounts not
utilized to repurchase Notes shall no longer constitute Net Cash Proceeds with
respect to such Asset Sale.
When the aggregate amount of Excess Proceeds equals or exceeds $10,000,000,
the Company shall make an offer to purchase, from all Holders of the Notes and
any then outstanding Pari Passu Indebtedness required to be repurchased or
repaid on a permanent basis in connection with an Asset Sale, an aggregate
principal amount of Notes and any such Pari Passu Indebtedness equal to such
Excess Proceeds as follows:
(i) (A) The Company shall make an offer to purchase (a "Net Proceeds
Offer") from all Holders of the Notes in accordance with the procedures set
forth in the Indenture the maximum principal amount (expressed as a
multiple of $1,000) of Notes that may be purchased out of an amount (the
"Payment Amount") equal to the product of such Excess Proceeds multiplied
by a fraction, the numerator of which is the outstanding principal amount
of the Notes and the denominator of which is the sum of the outstanding
principal amount of the Notes and such Pari Passu Indebtedness, if any
(subject to proration in the event such amount is less than the aggregate
Offered Price (as defined in clause (ii) below) of all Notes tendered), and
(B) to the extent required by any such Pari Passu Indebtedness and provided
there is a permanent reduction in the principal amount of such Pari Passu
Indebtedness, the Company shall make an offer to purchase such Pari Passu
Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu
Indebtedness Amount") equal to the excess of the Excess Proceeds over the
Payment Amount.
(ii) The offer price for the Notes shall be payable in cash in an
amount equal to 100% of the principal amount of the Notes tendered pursuant
to a Net Proceeds Offer, plus accrued and unpaid interest, if any, to the
date such Net Proceeds Offer is consummated (the "Offered Price"), in
accordance with the procedures set forth in the Indenture. To the extent
that the aggregate Offered Price of the Notes tendered pursuant to a Net
Proceeds Offer is less than the Payment Amount relating thereto or the
aggregate amount of the Pari Passu Indebtedness that is purchased or repaid
pursuant to the Pari
65
<PAGE> 71
Passu Offer is less than the Pari Passu Indebtedness Amount (such shortfall
constituting a "Net Proceeds Deficiency"), the Company may use such Net
Proceeds Deficiency, or a portion thereof, for general corporate purposes,
subject to the limitations of the "Limitation on Restricted Payments"
covenant.
(iii) If the aggregate Offered Price of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Payment Amount, Notes to be
purchased will be selected on a pro rata basis. Upon completion of such Net
Proceeds Offer and Pari Passu Offer, the amount of Excess Proceeds shall be
reset to zero.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary of the Company to (a) pay dividends or make
any other distributions on or in respect of its Capital Stock; (b) make loans or
advances or to pay any Indebtedness or other obligation owed to the Company or
any other Restricted Subsidiary of the Company; or (c) transfer any of its
property or assets to the Company or any other Restricted Subsidiary of the
Company, except for such encumbrances or restrictions existing under or by
reason of: (1) applicable law; (2) the Indenture; (3) Indebtedness existing on
the Issue Date; (4) the Revolving Credit Facility; (5) restrictions imposed by
Liens permitted by the Indenture; (6) restrictions imposed by an agreement for
the sale of Capital Stock or assets of a Restricted Subsidiary, provided that
such restrictions apply to the Capital Stock or Assets being sold; (7) customary
non-assignment provisions of any contract, any license, any lease governing a
leasehold interest or similar agreement of any Restricted Subsidiary of the
Company; (8) any instrument governing Acquired Indebtedness, which encumbrance
or restriction is not applicable to any Person, or the properties or assets of
any Person, other than the Person or the properties or assets of the Person so
acquired; or (9) an agreement governing Indebtedness incurred to Refinance the
Indebtedness issued, assumed or incurred pursuant to an agreement referred to in
clauses (2), (3), (4) or (8) above; provided, however, that the provisions
relating to such encumbrance or restriction contained in any such Indebtedness
are no less favorable taken as a whole to the Company in any material respect as
determined by the Board of Directors of the Company in their reasonable and good
faith judgment than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clauses (2), (3), (4) or (8).
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
not permit any of its Restricted Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly Owned Restricted Subsidiary of the
Company) or permit any Person (other than the Company or a Wholly Owned
Restricted Subsidiary of the Company) to own any Preferred Stock of any
Restricted Subsidiary of the Company.
Limitation on Liens. The Company will not, and will not cause or permit
any of its Restricted Subsidiaries to, directly or indirectly, create, incur,
assume or permit or suffer to exist any Liens of any kind against or upon any
property or assets of the Company or any of its Restricted Subsidiaries whether
owned on the Issue Date or acquired after the Issue Date, or any proceeds
therefrom, or assign or otherwise convey any right to receive income or profits
therefrom unless (i) in the case of Liens securing Indebtedness that is
expressly subordinate or junior in right of payment to the Notes, the Notes are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (ii) in all other cases, the Notes are equally and
ratably secured, except for (A) Liens existing as of the Issue Date to the
extent and in the manner such Liens are in effect on the Issue Date; (B) Liens
securing Senior Indebtedness; (C) Liens securing the Notes; (D) Liens of the
Company or a Wholly Owned Restricted Subsidiary of the Company on assets of any
66
<PAGE> 72
Subsidiary of the Company; (E) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under the Indenture and which has been incurred in accordance with the
provisions of the Indenture; provided, however, that such Liens (A) are not
materially less favorable to the Holders and are not materially more favorable
to the lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being Refinanced and (B) do not extend to or cover any property or
assets and improvements and attachments thereto and proceeds thereof of the
Company or any of its Subsidiaries not securing the Indebtedness so Refinanced;
and (F) Permitted Liens.
Merger, Consolidation and Sale of Assets. The Company will not, in a
single transaction or series of related transactions, consolidate or merge with
or into any Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary of the Company to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Company's assets (determined on a consolidated basis for the Company
and the Company's Restricted Subsidiaries) to any Person, unless: (i) either (1)
the Company shall be the surviving or continuing corporation or (2) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment, transfer,
lease, conveyance or other disposition the properties and assets of the Company
and of the Company's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (x) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and (y) shall expressly assume, by supplemental indenture (in form and
substance satisfactory to the Trustee), executed and delivered to the Trustee,
the due and punctual payment of the principal of, and premium, if any, and
interest on all of the Notes and the performance of every covenant of the Notes,
the Indenture and the Registration Rights Agreement on the part of the Company
to be performed or observed; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above (including
giving effect to any Indebtedness and Acquired Indebtedness incurred or
anticipated to be incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case may be, (1)
shall have a Consolidated Net Worth equal to or greater than the Consolidated
Net Worth of the Company immediately prior to such transaction and (2) shall be
able to incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the "-- Limitation on Incurrence of Additional
Indebtedness" covenant; (iii) immediately before and immediately after giving
effect to such transaction and the assumption contemplated by clause (i)(2)(y)
above (including, without limitation, giving effect to any Indebtedness and
Acquired Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and (iv) the Company or
the Surviving Entity shall have delivered to the Trustee an officers'
certificate and an opinion of counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other disposition and,
if a supplemental indenture is required in connection with such transaction,
such supplemental indenture comply with the applicable provisions of the
Indenture and that all conditions precedent in the Indenture relating to such
transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries of the Company, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
The Indenture provides that upon any consolidation, combination or merger
or any transfer of all or substantially all of the assets of the Company in
accordance with the foregoing, in which the Company is not the continuing
corporation, the successor Person formed by such consolidation or into which the
Company is merged or to which such conveyance, lease or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under the Indenture and the Notes with the same effect as if such
surviving entity had been named as such, and, except in the case of a lease, the
predecessor Person shall be released from all such obligations.
Each Subsidiary Guarantor (other than any Guarantor whose Guarantee (as
defined) is to be released in accordance with the terms of the Guarantee and the
Indenture in connection with any transaction complying
67
<PAGE> 73
with the provisions of "-- Limitation on Asset Sales") will not, and the Company
will not cause or permit any Subsidiary Guarantor to, consolidate with or merge
with or into any Person other than the Company or any other Subsidiary Guarantor
unless: (i) the entity formed by or surviving any such consolidation or merger
(if other than the Subsidiary Guarantor) or to which such sale, lease,
conveyance or other disposition shall have been made is a corporation organized
and existing under the laws of the United States or any State thereof or the
District of Columbia or the jurisdiction of incorporation of the Subsidiary
Guarantor; (ii) such entity assumes by supplemental indenture all of the
obligations of the Subsidiary Guarantor on the Guarantee; (iii) immediately
after giving effect to such transaction, no Default or Event of Default shall
have occurred and be continuing; and (iv) immediately after giving effect to
such transaction and the use of any net proceeds therefrom on a pro forma basis,
the Company could satisfy the provisions of subclause (2) of clause (ii) of the
first paragraph of this covenant. Any merger or consolidation of a Subsidiary
Guarantor with and into the Company (with the Company being the surviving
entity) or another Subsidiary Guarantor that is a Wholly Owned Restricted
Subsidiary of the Company need only comply with clause (iv) of the first
paragraph of this covenant.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate of the Company or such Restricted Subsidiary
(and, in the case of a transaction between the Company and a Restricted
Subsidiary that is not a Wholly Owned Restricted Subsidiary, fair to the
Company). All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan) involving aggregate
payments or other property with a fair market value in excess of $1,000,000
shall be approved by the Board of Directors of the Company or such Restricted
Subsidiary, as the case may be, such approval to be evidenced by a Board
Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary of the Company enters into an Affiliate Transaction (or a
series of related Affiliate Transactions related to a common plan) that involves
an aggregate fair market value of more than $5,000,000, the Company or such
Restricted Subsidiary, as the case may be, shall, prior to the consummation
thereof, obtain a favorable opinion as to the fairness of such transaction or
series of related transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary of the Company as determined in good faith by the Company's Board of
Directors or senior management; (ii) transactions exclusively between or among
the Company and any of its Wholly Owned Restricted Subsidiaries or exclusively
between or among such Wholly Owned Restricted Subsidiaries, provided such
transactions are not otherwise prohibited by the Indenture; (iii) any agreement
as in effect as of the Issue Date or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto) in any
replacement agreement thereto so long as any such amendment or replacement
agreement is not more disadvantageous to the Holders in any material respect
than the original agreement as in effect on the Issue Date; (iv) Restricted
Payments permitted by the Indenture; (v) advances, loans and relocation
allowances made to officers and employees of the Company in the ordinary course
of business, not to exceed $500,000 outstanding at any one time; and (vi)
payments made pursuant to the Financial Advisory Agreement, provided, however,
no Default or Event of Default shall have occurred and be continuing at the time
any such payment is made.
Additional Subsidiary Guarantees. If the Company or any of its Restricted
Subsidiaries transfers or causes to be transferred, in one transaction or a
series of related transactions, any property with a fair market value in excess
of $500,000 to any Restricted Subsidiary that is not a Guarantor, or if the
Company or any of its Restricted Subsidiaries shall organize, acquire or
otherwise invest in another Restricted Subsidiary having
68
<PAGE> 74
total assets with a book value in excess of $500,000, then such transferee or
acquired or other Restricted Subsidiary shall (i) execute and deliver to the
Trustee a supplemental indenture in form reasonably satisfactory to the Trustee
pursuant to which such Restricted Subsidiary shall unconditionally guarantee (a
"Guarantee") on a senior subordinated basis all of the Company's obligations
under the Notes and the Indenture on the terms set forth in the Indenture and
(ii) deliver to the Trustee an opinion of counsel that such supplemental
indenture has been duly authorized, executed and delivered by such Restricted
Subsidiary and constitutes a legal, valid, binding and enforceable obligation of
such Restricted Subsidiary. Thereafter, such Restricted Subsidiary shall be a
Guarantor for all purposes of the Indenture. The Obligations of a Guarantor
under its Guarantee will be subordinated to the prior payment in full of
Guarantor Senior Indebtedness of such Guarantor to substantially the same extent
as the Notes are subordinated to Senior Indebtedness.
Each Guarantor may consolidate with or merge into or sell its assets to the
Company or another Guarantor that is a Wholly Owned Restricted Subsidiary of the
Company without limitation, or with or into or to other Persons upon the terms
and conditions set forth in the Indenture. See "-- Merger, Consolidation and
Sale of Assets." In the event all of the Capital Stock of a Guarantor is sold by
the Company and/or by one or more of the Company's Restricted Subsidiaries or in
the event all or substantially all assets of a Guarantor are sold by the Company
and/or by one of the Company's Restricted Subsidiaries and (i) such sale
complies with the provisions set forth in "-- Limitation on Asset Sales" and
(ii) such Guarantor is released from all of its obligations under the Revolving
Credit Agreement, the Guarantor's Guarantee will be automatically and
unconditionally released. In addition, any Guarantor that is designated as an
Unrestricted Subsidiary in accordance with the terms of the Indenture will be
relieved of its obligations under its Guarantee.
Conduct of Business. The Company and its Restricted Subsidiaries will not
engage in any businesses the majority of the revenues of which are not derived
from the same or reasonably similar, ancillary or related to, or a reasonable
extension, development or expansion of, the businesses in which the Company is
engaged on the Issue Date.
Reports to Holders. The Indenture provides that the Company will deliver
to the Trustee within 15 days after the filing of the same with the Commission,
copies of the quarterly and annual reports and of the information, documents and
other reports, if any, which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. The Indenture further
provides that, notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide (without
exhibits) the Trustee and Holders with such annual reports and such information,
documents and other reports specified in Sections 13 and 15(d) of the Exchange
Act. The Company will also comply with the other provisions of TIA sec.314(a).
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on any Notes when the same becomes due
and payable and the default continues for a period of 30 days;
(ii) the failure to pay the principal or premium, if any, on any
Notes, when such principal becomes due and payable, at maturity, upon
redemption or otherwise (including the failure to make a payment to
purchase Notes tendered pursuant to a Change of Control Offer or a Net
Proceeds Offer);
(iii) a default in the observance or performance of any other covenant
or agreement contained in the Indenture which default continues for a
period of 30 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or
the Holders of at least 25% of the outstanding principal amount of the
Notes (except in the case of a default with respect to the "Merger,
Consolidation and Sale of Assets" covenant, which will constitute an Event
of Default with such notice requirement but without such passage of time
requirement);
69
<PAGE> 75
(iv) the failure to pay at final maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount
of any Indebtedness of the Company or any Restricted Subsidiary of the
Company, or the acceleration of the final stated maturity of any such
Indebtedness, if the aggregate principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness in
default for failure to pay principal at final maturity or which has been
accelerated, aggregates $3.5 million or more at any time;
(v) one or more judgments in an aggregate amount in excess of $3.5
million (exclusive of amounts covered by insurance as to which the insurer
has acknowledged coverage) shall have been rendered against the Company or
any of its Restricted Subsidiaries and such judgments remain undischarged,
unpaid, unstayed, unvacated or unbonded for a period of 60 days after such
judgment or judgments become final and non-appealable;
(vi) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries; or
(vii) any of the Guarantees ceases to be in force and effect or any of
the Guarantees is declared to be null and void and unenforceable or any of
the Guarantees is found to be invalid or any of the Guarantors denies its
liability under its Guarantee (other than by reason of release of a
Guarantor in accordance with the terms of the Indenture).
If an Event of Default (other than an Event of Default specified in clause
(vi) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of outstanding Notes
may declare the principal of and accrued interest on all the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration", and the
same shall become immediately due and payable. If an Event of Default specified
in clause (vi) above with respect to the Company occurs and is continuing, then
all unpaid principal of, and premium, if any, and accrued and unpaid interest on
all of the outstanding Notes, as a result of the occurrence of the Event of
Default, shall become and be immediately due and payable without any declaration
or other act on the part of the Trustee or any Holder. If, prior to the delivery
of any such "notice of acceleration" with respect to an Event of Default
specified in clause (iv) above, any such payment default or acceleration
relating to such other Indebtedness shall have been cured or rescinded or such
Indebtedness shall have been discharged, in each count within 30 days of such
default or acceleration, then such Event of Default specified in clause (iv)
shall be deemed cured for all purposes of the Indenture.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the Holders of a majority in aggregate principal amount of the Notes may rescind
and cancel such declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of an
Event of Default of the type described in clause (vi) of the description above
of Events of Default, the Trustee shall have received an officers' certificate
and an opinion of counsel that such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.
The Holders of a majority in aggregate principal amount of the Notes may
waive any existing Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of or interest on
any Notes.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture and under the TIA. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee is under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount
70
<PAGE> 76
of the then outstanding Notes have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee.
Under the Indenture, the Company is required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge of
any Default or Event of Default (provided that such officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations of the Guarantors discharged with respect to the
outstanding Notes ("Legal Defeasance"). Such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented by the outstanding Notes and the Company and the Guarantors shall be
discharged from all their obligations with respect to the Notes, the Guarantees
and the Indenture, except for (i) the rights of Holders to receive payments in
respect of the principal of, premium, if any, and interest on the Notes when
such payments are due, (ii) the Company's rights of optional redemption, (iii)
the Company's obligations with respect to the Notes concerning issuing temporary
Notes, registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (iv) the rights, powers, trust,
duties and immunities of the Trustee and the Company's obligations in connection
therewith and (v) the Legal Defeasance provisions of the Indenture. In addition,
the Company may, at its option and at any time, elect to have the obligations of
the Company and the Guarantors released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
reorganization and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in U.S. dollars, non-callable U.S. government obligations,
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on the Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be; (ii)
in the case of Legal Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Legal Defeasance had not occurred; (iii) in
the case of Covenant Defeasance, the Company shall have delivered to the Trustee
an opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders will not recognize income, gain or loss for federal
income tax purposes as a result of such Covenant Defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not occurred;
(iv) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the 91st
day after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under the
Indenture or any other material agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound; (vi) the Company shall have delivered to the Trustee an
officers' certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the Company or
with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; (vii) the Company shall have delivered to
the Trustee an officers' certificate and an
71
<PAGE> 77
opinion of counsel, each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have been complied
with; (viii) the Company shall have delivered to the Trustee an opinion of
counsel to the effect that after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and (ix) certain other customary conditions precedent are satisfied.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect as
to all outstanding Notes when (i) either (a) all the Notes theretofore
authenticated and delivered (except lost, stolen or destroyed Notes which have
been replaced or paid and Notes for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust) have been delivered to the
Trustee for cancellation or (b) all Notes not theretofore delivered to the
Trustee for cancellation have become due and payable or will become due and
payable within one year or are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name and at the expense of the Company, and the
Company has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for cancellation, for
principal of, premium, if any, and interest on the Notes to the date of deposit
together with irrevocable instructions from the Company directing the Trustee to
apply such funds to the payment thereof at maturity or redemption, as the case
may be; (ii) the Company has paid all other sums then due and payable under the
Indenture by the Company; and (iii) the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel stating that all conditions
precedent under the Indenture relating to the satisfaction and discharge of the
Indenture have been complied with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Guarantors, if any, and the Trustee,
without the consent of the Holders, may amend the Indenture for certain
specified purposes, including curing ambiguities, defects or inconsistencies so
long as any such change does not, in the opinion of the Trustee, adversely
affect the rights of any of the Holders in any material respect. In formulating
its opinion on such matters, the Trustee will be entitled to rely on such
evidence as it deems appropriate, including, without limitation, solely on an
opinion of counsel. Other modifications and amendments of the Indenture may be
made with the consent of the Holders of a majority in principal amount of the
then outstanding Notes issued under the Indenture, except that, without the
consent of each Holder affected thereby, no amendment may: (i) reduce the amount
of Notes whose Holders must consent to an amendment; (ii) reduce the rate of or
change or have the effect of changing the time for payment of interest,
including defaulted interest, on any Notes; (iii) reduce the principal of or
change or have the effect of changing the fixed maturity of any Notes, or change
the date on which any Notes may be subject to redemption or repurchase, or
reduce the redemption or repurchase price therefor; (iv) make any Notes payable
in money other than that stated in the Notes; (v) make any change in provisions
of the Indenture protecting the right of each Holder to receive payment of
principal of and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default; (vi) amend,
change or modify in any material respect the obligation of the Company to make
and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto following the consummation of such event; or (vii) release any Guarantor
from any of its obligations under its Guarantee or the Indenture otherwise than
in accordance with the terms of the Indenture.
GOVERNING LAW
The Indenture provides that it, the Notes and the Guarantees will be
governed by, and construed in accordance with, the laws of the State of New York
but without giving effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction would be required
thereby.
72
<PAGE> 78
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it by the Indenture, and use the same
degree of care and skill in its exercise as a prudent man would exercise or use
under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to obtain
payments of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. Subject to the TIA, the
Trustee will be permitted to engage in other transactions; provided that if the
Trustee acquires any conflicting interest as described in the TIA, it must
eliminate such conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of
the Company or at the time it merges or consolidates with the Company or any of
its Subsidiaries or assumed in connection with the acquisition of assets from
such Person and in each case not incurred by such Person in connection with, or
in anticipation or contemplation of, such Person becoming a Restricted
Subsidiary of the Company or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary of the Company in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or any Restricted
Subsidiary of the Company, or shall be merged with or into the Company or any
Restricted Subsidiary of the Company, or (b) the acquisition by the Company or
any Restricted Subsidiary of the Company of the assets of any Person (other than
a Restricted Subsidiary of the Company) which constitute all or substantially
all of the assets of such Person or comprises any division or line of business
of such Person or any other properties or assets of such Person other than in
the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Wholly Owned Restricted Subsidiary (or a
Wholly Owned Restricted Subsidiary of a Restricted Subsidiary) of the Company of
(a) any Capital Stock of any Restricted Subsidiary of the Company other than
directors' qualifying shares; or (b) any other property or assets of the Company
or any Restricted Subsidiary of the Company other than in the ordinary course of
business; provided, however, that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Company or its
Restricted Subsidiaries receive aggregate consideration of less than $500,000,
(ii) a disposition of Cash Equivalents, (iii) any Restricted Payment that is
permitted to be made, and is made, under the first paragraph of the covenant
described above under "Limitation on Restricted Payments", and (iv) the sale,
lease, conveyance, disposition or other transfer of all or substantially all of
the assets (including cash or Cash Equivalents) of the Company as permitted
under "Merger, Consolidation and Sale of Assets" and in compliance with the
Change of Control Covenant.
73
<PAGE> 79
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (ii) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" means (i) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any U.S. branch of a foreign bank having at the date of acquisition thereof
combined capital and surplus of not less than $250,000,000 and deposits in bank
accounts in the ordinary course of business; (v) repurchase obligations with a
term of not more than seven days for underlying securities of the types
described in clause (i) above entered into with any bank meeting the
qualifications specified in clause (iv) above; (vi) investments in money market
funds which invest substantially all their assets in securities of the types
described in clauses (i) through (v) above; and (vii) investments made by
Foreign Subsidiaries in local currencies in instruments issued by or with
entities of such jurisdiction having correlative attributes to the foregoing.
"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group"), together with any Affiliates thereof (whether
or not otherwise in compliance with the provisions of the Indenture), other than
a Wholly-Owned Restricted Subsidiary; (ii) the approval by the holders of
Capital Stock of the Company of any plan or proposal for the liquidation or
dissolution of the Company (whether or not otherwise in compliance with the
provisions of the Indenture); (iii) any Person or Group (other than the
Permitted Holders(s)) shall become the owner, directly or indirectly,
beneficially or of record, of shares representing more than 50% of the aggregate
ordinary voting power represented by the issued and outstanding Capital Stock of
the Company; or (iv) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Company's Board of Directors
(together with any new directors whose election or appointment by such board or
whose nomination for election by the stockholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Company's Board of Directors then in office.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
74
<PAGE> 80
"Consolidated EBITDA" means, with respect to any Person, for any period,
the sum (without duplication) of (i) Consolidated Net Income and (ii) to the
extent Consolidated Net Income has been reduced thereby, (A) all income taxes of
such Person and its Restricted Subsidiaries paid or accrued in accordance with
GAAP for such period (other than income taxes attributable to extraordinary,
unusual or nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business), (B) Consolidated Interest
Expense and (C) Consolidated Non-cash Charges less any non-cash items increasing
Consolidated Net Income for such period, all as determined on a consolidated
basis for such Person and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of Consolidated EBITDA of such Person during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
such Person for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (i) the incurrence or
repayment of any Indebtedness of such Person or any of its Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment not constituting a permanent repayment and/or
termination of a related commitment of Indebtedness in the ordinary course of
business for working capital purposes pursuant to revolving credit working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period and (ii) any Asset Sales or Asset Acquisitions (including,
without limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any Consolidated EBITDA (provided that such
Consolidated EBITDA shall be included only to the extent includable pursuant to
the definition of "Consolidated Net Income") attributable to the assets which
are the subject of the Asset Acquisition or Asset Sale during the Four Quarter
Period) occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to the Transaction Date,
as if such Asset Sale or Asset Acquisition (including the incurrence, assumption
or liability for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If such Person or any of its Restricted Subsidiaries
directly or indirectly guarantees Indebtedness of a third Person, the preceding
sentence shall give effect to the incurrence of such guaranteed Indebtedness as
if such Person or any Restricted Subsidiary of such Person had directly incurred
or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense, plus
(ii) the product of (x) the amount of all dividend payments on any series of
Preferred Stock of such Person (other than dividends paid in Qualified Capital
Stock or dividends, accrued or scheduled to be accrued on Qualified Capital
Stock), without duplication, paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is
75
<PAGE> 81
one and the denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person, expressed as a
decimal.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the sum of, without duplication: (i) the aggregate of the interest
expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount and amortization or write-off
deferred financing costs, (b) the net costs under Interest Swap Obligations, (c)
all capitalized interest and (d) the interest portion of any deferred payment
obligation; and (ii) the interest component of Capitalized Lease Obligations,
without duplication, paid, accrued and/or scheduled to be paid or accrued by
such Person and its Restricted Subsidiaries during such period as determined on
a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate net income (or loss) of such Person and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
from Asset Sales or reserves relating thereto, (b) after-tax items classified as
extraordinary or nonrecurring gains, (c) the net income (or net loss) of any
Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Restricted Subsidiary of the referent Person or is merged or
consolidated with the referent Person or any Restricted Subsidiary of the
referent Person, (d) the net income (but not loss) of any Restricted Subsidiary
of the referent Person to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is restricted
by a contract, operation of law or otherwise, (e) the net income of any Person,
other than a Restricted Subsidiary of the referent Person, except to the extent
of cash dividends or distributions paid to the referent Person or to a Wholly
Owned Restricted Subsidiary of the referent Person by such Person, (f) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of Consolidated Net Income accrued at
any time following the Issue Date, (g) income or loss attributable to
discontinued operations (including, without limitation, operations disposed of
during such period whether or not such operations were classified as
discontinued), and (h) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent Person's assets, any
earnings of the successor corporation prior to such consolidation, merger or
transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to any Person, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Restricted Subsidiaries reducing Consolidated Net Income of
such Person and its Restricted Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Designated Senior Indebtedness" means the Indebtedness under the Revolving
Credit Facility and any other Senior Indebtedness in an amount of more than $10
million that is designated Senior Indebtedness by the Company.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to the final
maturity date of the Notes.
76
<PAGE> 82
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value (in
excess of $100,000) shall be conclusively determined by the Board of Directors
of the Company acting in good faith and shall be evidenced by a Board Resolution
of the Board of Directors of the Company delivered to the Trustee.
"Financial Advisory Agreement" means the management agreement between the
Company and Baker Capital as in effect on the Issue Date.
"Foreign Subsidiary" means any Subsidiary of the Company (i) organized
under the laws of a jurisdiction other than the United States of America or any
State thereof or the District of Columbia and (ii) conducting substantially all
of its business outside of the United States of America.
"FWT Acquisition" means FWT Acquisition, Inc., a Delaware corporation.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States as of the date of determination; provided that
all calculations made for purposes of determining compliance with the provisions
of the Indenture shall use GAAP as in effect on the Issue Date.
"Guarantor" means each of the Company's Restricted Subsidiaries, if any,
that in the future executes a supplemental indenture in which such Restricted
Subsidiary agrees to be bound by the terms of the Indenture as a Guarantor;
provided that any Person constituting a Guarantor as described above shall cease
to constitute a Guarantor when its respective Guarantee is released in
accordance with the terms of the Indenture.
"Guarantor Senior Indebtedness" means, with respect to any Guarantor, the
principal of, premium, if any, and interest (including any interest accruing
subsequent to the filing of a petition of bankruptcy at the rate provided for in
the documentation with respect thereto, whether or not such interest is an
allowed claim under applicable law) on any Indebtedness of such Guarantor,
whether outstanding on the Issue Date or thereafter created, incurred or
assumed, unless, in the case of any particular Indebtedness, the instrument
creating or evidencing the same or pursuant to which the same is outstanding
expressly provides that such Indebtedness shall not be senior in right of
payment to such Guarantor's Guarantee. Without limiting the generality of the
foregoing, "Guarantor Senior Indebtedness" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, to the extent such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Guarantor. under the Revolving Credit
Facility, including, without limitation, obligations to pay principal and
interest, reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Guarantor Senior
Indebtedness" shall not include (i) any Indebtedness of the Guarantor to a
Subsidiary of the Guarantor or any Affiliate of the Company or any of such
Affiliate's Subsidiaries, (ii) Indebtedness to, or guaranteed on behalf of, any
shareholder, director, officer or employee of the Guarantor or any Subsidiary of
the Guarantor (including, without limitation, amounts owed for compensation),
(iii) Indebtedness to trade creditors and other amounts incurred in connection
with obtaining goods, materials or services, (iv) Indebtedness represented by
Disqualified Capital Stock, (v) any liability for federal, state, local or other
taxes owed or owing by the Guarantor, (vi) Indebtedness incurred in violation of
the Indenture provisions set forth under "Limitation on Incurrence of Additional
Indebtedness," (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Guarantor and
77
<PAGE> 83
(viii) any Indebtedness which is, by its express terms, subordinated in right of
payment to any other Indebtedness of the Guarantor.
"Indebtedness" means with respect to any Person, without duplication, (i)
all Obligations of such Person for borrowed money, (ii) all Obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments (but
excluding trade account payables and other accrued liabilities excluded from
clause (iv) hereof), (iii) all Capitalized Lease Obligations of such Person,
(iv) all Obligations of such Person issued or assumed as the deferred purchase
price of property, all conditional sale obligations and all Obligations under
any title retention agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business that are not
overdue by 90 days or more or are being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted), (v) all Obligations
for the reimbursement of any obligor on any letter of credit, banker's
acceptance or similar credit transaction, (vi) guarantees and other contingent
obligations in respect of Indebtedness referred to in clauses (i) through (v)
above and clause (viii) below (exclusive of endorsements of negotiable
instruments in the ordinary course of business), (vii) all Obligations of any
other Person of the type referred to in clauses (i) through (vi) which are
secured by any lien on any property or asset of such Person, the amount of such
Obligation being deemed to be the lesser of the fair market value of such
property or asset or the amount of the Obligation so secured, (viii) all
Obligations under currency agreements and interest swap agreements of such
Person and (ix) all Disqualified Capital Stock issued by such Person with the
amount of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation preference and
its maximum fixed repurchase price, but excluding accrued dividends, if any. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined in good faith by the
Board of Directors of the issuer of such Disqualified Capital Stock, which
determination shall be conclusive. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability of any guarantees at
such date; provided, further, that for purposes of calculating the amount of any
non-interest bearing or other discount security, such Indebtedness shall be
deemed to be the principal amount thereof that would be shown on the balance
sheet of the issuer dated such date prepared in accordance with GAAP but that
such security shall be deemed to have been incurred only on the date of the
original issuance thereof.
"Independent Financial Advisor" means a firm (i) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect financial interest in the Company and (ii) which, in the judgment of
the Board of Directors of the Company, is otherwise independent and qualified to
perform the task for which it is to be engaged.
"Initial Offering" means the offering and sale of the $105 million of
Outstanding Notes by the Initial Purchasers.
"Interest Swap Obligations" means the obligations of any Person pursuant to
any arrangement with any other Person, whereby, directly or indirectly, such
Person is entitled to receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a stated notional
amount in exchange for periodic payments made by such other Person calculated by
applying a fixed or a floating rate of interest on the same notional amount and
shall include, without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit (including
relating to accounts receivable) by the Company and its Restricted Subsidiaries
on commercially reasonable terms in
78
<PAGE> 84
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be, prepaid expenses and workers' compensation,
utility, lease and similar deposits in the ordinary course of business, and
negotiable instruments held for collection. For the purposes of the "Limitation
on Restricted Payments" covenant, (i) "Investment" shall include and be valued
at the fair market value of the net assets of any Restricted Subsidiary at the
time that such Restricted Subsidiary is designated an Unrestricted Subsidiary
and shall exclude the fair market value of the net assets of any Unrestricted
Subsidiary at the time that such Unrestricted Subsidiary is designated a
Restricted Subsidiary, (ii) in determining the amount of any Investment
involving a transfer of any property or assets other than cash, such property or
assets shall be valued at the fair market value at the time of such transfer,
and (iii) the amount of any Investment shall be the original cost of such
Investment plus the cost of all additional Investments by the Company or any of
its Restricted Subsidiaries, without any adjustments for increases or decreases
in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends or distributions, repayments or
repurchases in connection with such Investment or any other amounts received in
respect of such Investment; provided that no such payment of dividends or
distributions or receipt of any such other amounts shall reduce the amount of
any Investment if such payment of dividends or distributions or receipt of any
such amounts would be included in Consolidated Net Income. If the Company or any
Restricted Subsidiary of the Company sells or otherwise disposes of any Common
Stock of any direct or indirect Restricted Subsidiary of the Company such that,
after giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, 100% of the outstanding Common Stock of such Restricted
Subsidiary, the Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the fair market value of the Common
Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Outstanding Notes.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of its Restricted Subsidiaries from such Asset Sale net of
(a) out-of-pocket expenses and fees relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales
commissions), (b) taxes paid or payable after taking into account any reduction
in consolidated tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is required to be
repaid in connection with such Asset Sale and (d) appropriate amounts to be
provided by the Company or any Restricted Subsidiary, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any Restricted Subsidiary, as the case
may be, after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Pari Passu Indebtedness" means any Indebtedness of the Company or any
Guarantor ranking pari passu in right of payment with the Exchange Notes or the
Guarantee of such Guarantor, as applicable.
"Permitted Holder(s)" means FWT Acquisition, Baker Communications Fund
L.P., Baker Partners, LLC and Baker Capital Corp. (including existing
stockholders of each such entity on the Issue Date), Thomas W. Moore, Betty J.
Moore, Fred Moore, Carl R. Moore and Roy J. Moore, their successors and assigns
who are Affiliates of the Permitted Holders, members of their families and their
heirs or executors.
"Permitted Indebtedness" means, without duplication, each of the following:
(i) Indebtedness under the Outstanding Notes and the Guarantees
thereof, if any, and the Exchange Notes;
79
<PAGE> 85
(ii) Indebtedness incurred pursuant to the Revolving Credit Facility
in an aggregate principal amount at any time outstanding not to exceed the
greater of (A) $25 million in the aggregate or (B) the sum of (x) 85% of
the Company's eligible accounts receivable, as defined, and (y) 60% of the
Company's eligible inventory, as defined, reduced by any required permanent
repayments in connection with any asset sale (which are accompanied by a
corresponding permanent commitment reduction) thereunder;
(iii) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount of any
scheduled amortization payments or mandatory prepayments, in each case when
actually paid or permanent reductions thereon;
(iv) Interest Swap Obligations of the Company covering Indebtedness of
the Company or any of its Restricted Subsidiaries and Interest Swap
Obligations of any Restricted Subsidiary of the Company covering
Indebtedness of such Restricted Subsidiary; provided, however, that such
Interest Swap Obligations are entered into to protect the Company and its
Restricted Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with the Indenture to the extent the notional
principal amount of such Interest Swap Obligation does not exceed the
principal amount of the Indebtedness to which such Interest Swap Obligation
relates;
(v) Indebtedness under Currency Agreements; provided that in the case
of Currency Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and its
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary of the
Company to the Company or to a Wholly Owned Restricted Subsidiary of the
Company for so long as such Indebtedness is held by the Company or a Wholly
Owned Restricted Subsidiary of the Company, in each case subject to no Lien
held by a Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company; provided that if as of any date any Person other
than the Company or a Wholly Owned Restricted Subsidiary of the Company
owns or holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such Indebtedness shall be deemed to have been a separate
incurrence of Indebtedness by the issuer of such Indebtedness;
(vii) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary of the Company for so long as such Indebtedness is held by a
Wholly Owned Restricted Subsidiary of the Company, in each case subject to
no Lien; provided that (a) any Indebtedness of the Company to any Wholly
Owned Restricted Subsidiary of the Company is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations under the
Indenture and the Notes and (b) if as of any date any Person other than a
Wholly Owned Restricted Subsidiary of the Company owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness,
such Indebtedness shall be deemed to have been a separate incurrence of
Indebtedness by the Company;
(viii) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within two business days of incurrence;
(ix) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(x) Refinancing Indebtedness; and
(xi) additional Indebtedness of the Company and its Restricted
Subsidiaries in an aggregate principal amount not to exceed $15 million at
any one time outstanding.
"Permitted Investments" means (i) Investments by the Company or any
Restricted Subsidiary of the Company in any Person that is or will become
immediately after such Investment a Wholly Owned Restricted Subsidiary of the
Company or that will merge or consolidate into the Company or a Wholly Owned
Restricted
80
<PAGE> 86
Subsidiary of the Company, (ii) Investments in the Company by any Restricted
Subsidiary of the Company; provided that any Indebtedness evidencing such
Investment is unsecured and subordinated, pursuant to a written agreement, to
the Company's obligations under the Notes and the Indenture; (iii) investments
in cash and Cash Equivalents; (iv) loans and advances to employees and officers
of the Company and its Restricted Subsidiaries in the ordinary course of
business for bona fide business purposes not in excess of $500,000 at any one
time outstanding; (v) Currency Agreements and Interest Swap Obligations entered
into in the ordinary course of the Company's or its Restricted Subsidiaries'
businesses and otherwise in compliance with the Indenture; (vi) Investments in
Unrestricted Subsidiaries and less than Wholly Owned Subsidiaries not to exceed
$15 million at any one time outstanding, provided no Default or Event of Default
shall have occurred and be continuing at the time such Investment is made; (vii)
Investments in stock, obligations and securities received in settlement of debts
owing to the Company or any Restricted Subsidiary, received pursuant to any plan
of reorganization or similar arrangement upon the bankruptcy or insolvency of
such trade creditors or customers of the Company or a Restricted Subsidiary or
upon the foreclosure, perfection or enforcement of a Lien in favor of the
Company or any Restricted Subsidiary that arose in the ordinary course of
business of the Company or such Restricted Subsidiary; and (viii) Investments
made by the Company or its Restricted Subsidiaries as a result of consideration
received in connection with an Asset Sale made in compliance with the
"Limitation on Asset Sales" covenant.
"Permitted Liens" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
either (a) not delinquent or (b) contested in good faith by appropriate
proceedings and as to which the Company or its Restricted Subsidiaries
shall have set aside on its books such reserves as may be required pursuant
to GAAP;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations, including letters of credit issued in connection therewith
(exclusive of obligations for the payment of borrowed money);
(iv) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(v) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of its Restricted Subsidiaries;
(vi) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(vii) purchase money Liens to finance property or assets of the
Company or any Restricted Subsidiary of the Company acquired in the
ordinary course of business; provided, however, that (A) the related
purchase money Indebtedness shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the Company or
any Restricted Subsidiary of the Company other than the property and assets
so acquired and (B) the Lien securing such Indebtedness shall be created
within 90 days of such acquisition;
81
<PAGE> 87
(viii) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(ix) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(x) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of its Restricted Subsidiaries, including rights of offset and
set-off;
(xi) Liens securing Interest Swap Obligations which Interest Swap
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture;
(xii) Liens securing Indebtedness under Currency Agreements; and
(xiii) Liens securing Acquired Indebtedness incurred in accordance
with the "Limitation on Incurrence of Additional Indebtedness" covenant;
provided that (A) such Liens secured such Acquired Indebtedness at the time
of and prior to the incurrence of such Acquired Indebtedness by the Company
or a Restricted Subsidiary of the Company and were not granted in
connection with, or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary of the Company and
(B) such Liens do not extend to or cover any property or assets of the
Company or of any of its Restricted Subsidiaries other than the property or
assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or a Restricted
Subsidiary of the Company and are not materially more favorable to the
lienholders than those securing the Acquired Indebtedness prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary of the Company.
"Permitted Junior Securities" means any equity securities or subordinated
debt securities of the Company or any successor obligor with respect to the
Senior Indebtedness provided for by a plan of reorganization or readjustment
that, in the case of any such subordinated debt securities, are subordinated in
right of payment to all Senior Indebtedness that may at the time be outstanding
to substantially the same degree as, or to a greater extent than, the Notes are
so subordinated as provided in the Indenture.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Recapitalization" means the transaction contemplated by the
Recapitalization Agreement.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
the "Limitation on Incurrence of Additional Indebtedness" covenant (other than
pursuant to clause (ii), (iv), (v), (vi), (vii), (viii), (ix) or (xi) of the
definition of Permitted Indebtedness), in each case that does not (1) result in
an increase in the aggregate principal amount of Indebtedness of such Person as
of the date of such proposed Refinancing (plus the amount of any premium
required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of fees and expenses actually incurred by the
Company in connection with such Refinancing) or (2) create Indebtedness with (A)
a Weighted Average Life to Maturity that is less than the Weighted Average Life
to Maturity of the Indebtedness being Refinanced or (B) a final maturity earlier
than the final maturity of the Indebtedness being Refinanced; provided that (x)
if such Indebtedness being
82
<PAGE> 88
Refinanced is Indebtedness of the Company, then such Refinancing Indebtedness
shall be Indebtedness solely of the Company and (y) if such Indebtedness being
Refinanced is subordinate or junior to the Notes, then such Refinancing
Indebtedness shall be subordinate to the Notes at least to the same extent and
in the same manner as the Indebtedness being Refinanced.
"Restricted Subsidiary" of any Person means any Subsidiary of such Person
which at the time of determination is not an Unrestricted Subsidiary.
"Revolving Credit Facility" means the Revolving Credit Facility dated as of
November 12, 1997, between the Company, the lenders party thereto in their
capacities as lenders thereunder and BT Commercial Corporation, as agent,
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended (including any amendment and restatement thereof), supplemented
or otherwise modified from time to time, including any agreement or agreements
extending the maturity of, refinancing, replacing or otherwise restructuring
(including increasing the amount of available borrowings thereunder (provided
that such increase in borrowings is permitted by the "Limitation on Incurrence
of Additional Indebtedness" covenant above) or adding Restricted Subsidiaries of
the Company as additional borrowers or guarantors thereunder) all or any portion
of the Indebtedness under such agreement or agreements or any successor or
replacement agreement or agreements and whether by the same or any other agent,
lender or group of lenders.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such Property.
"Senior Indebtedness" means the principal of, premium, if any, and interest
(including any interest accruing subsequent to the filing of a petition of
bankruptcy at the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under applicable law) on any
Indebtedness of the Company, whether outstanding on the Issue Date or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Notes. Without limiting the generality
of the foregoing, "Senior Indebtedness" shall also include the principal of,
premium, if any, interest (including any interest accruing subsequent to the
filing of a petition of bankruptcy at the rate provided for in the documentation
with respect thereto, to the extent such interest is an allowed claim under
applicable law) on, and all other amounts owing in respect of, (x) all monetary
obligations of every nature of the Company under the Revolving Credit Facility,
including, without limitation, obligations to pay principal and interest,
reimbursement obligations under letters of credit, fees, expenses and
indemnities, (y) all Interest Swap Obligations and (z) all obligations under
Currency Agreements, in each case whether outstanding on the Issue Date or
thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall
not include (i) any Indebtedness of the Company to a Subsidiary of the Company
or any Affiliate of the Company or any of such Affiliate's Subsidiaries, (ii)
Indebtedness to, or guaranteed on behalf of, any shareholder, director, officer
or employee of the Company or any Subsidiary of the Company (including, without
limitation, amounts owed for compensation), (iii) Indebtedness to trade
creditors and other amounts incurred in connection with obtaining goods,
materials or services, (iv) Indebtedness represented by Disqualified Capital
Stock, (v) any liability for federal, state, local or other taxes owed or owing
by the Company, (vi) Indebtedness incurred in violation of the Indenture
provisions set forth under "Limitation on Incurrence of Additional
Indebtedness," (vii) Indebtedness which, when incurred and without respect to
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Company and (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Company.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(w)
of Regulation S-X under the Securities Act and the Exchange Act.
83
<PAGE> 89
"Subsidiary", with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (ii) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Unrestricted Subsidiary" of any Person means (i) any Subsidiary of such
Person that at the time of determination shall be or continue to be designated
an Unrestricted Subsidiary by the Board of Directors of such Person in the
manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The
Board of Directors may designate any Subsidiary (including any newly acquired or
newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary
owns any Capital Stock of, or owns or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided that (x) the Company certifies to the
Trustee that such designation complies with the "Limitation on Restricted
Payments" covenant and (y) each Subsidiary to be so designated and each of its
Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Company or any of its Restricted
Subsidiaries. The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, the Company is able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness" covenant and (y)
immediately before and immediately after giving effect to such designation, no
Default or Event of Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced to the Trustee by
promptly filing with the Trustee a copy of the Board Resolution giving effect to
such designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person means any Restricted
Subsidiary of such Person of which all the outstanding voting securities (other
than in the case of a foreign Restricted Subsidiary, directors' qualifying
shares or an immaterial amount of shares required to be owned by other Persons
pursuant to applicable law) are owned by such Person or any Wholly Owned
Restricted Subsidiary of such Person.
84
<PAGE> 90
BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the Exchange Notes initially
will be represented by one or more permanent Global Exchange Notes. The Global
Exchange Notes will be deposited on the Exchange Date with, or on behalf of, The
Depository Trust Company, New York, New York ("DTC") and registered in the name
of a nominee of DTC.
Notes (i) originally purchased by or transferred to "foreign purchasers" or
(ii) held by qualified institutional buyers who elect to take physical delivery
of their certificates instead of holding their interests through a Global
Exchange Note (and which are thus ineligible to trade through DTC) (collectively
referred to herein as the "Non-Global Purchasers") will be issued in registered
form (the "Certificated Security"). Upon the transfer of any Certificated
Security initially issued to a Non-Global Purchaser, such Certificated Security
will, unless the transferee requests otherwise or the Global Exchange Notes have
previously been exchanged in whole for Certificated Securities, be exchanged for
an interest in a Global Exchange Note.
The Global Exchange Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Exchange Notes, DTC or
its custodian will credit, on its internal system, the principal amount of
Exchange Notes of the individual beneficial interests represented by such Global
Exchange Notes to the respective accounts of persons who have accounts with such
depositary and (ii) ownership of beneficial interests in the Global Exchange
Notes will be shown on, and the transfer of such ownership will be effected only
through, records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants). Ownership of beneficial interests in the
Global Exchange Notes will be limited to persons who have accounts with DTC
("participants") or persons who hold interests through participants. Holders may
hold their interests in the Global Exchange Notes directly through DTC if they
are participants in such system, or indirectly through organizations which are
participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Exchange Notes, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the Exchange Notes represented by such Global Exchange
Notes for all purposes under the Indenture. No beneficial owner of an interest
in the Global Exchange Notes will be able to transfer that interest except in
accordance with DTC's procedures, in addition to those provided for under the
Indenture with respect to the Exchange Notes.
Payments of the principal of premium (if any) or interest on, the Global
Exchange Notes will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of the Company, the Trustee or any paying agent
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in the Global
Exchange Notes or for maintaining, supervising or reviewing any records relating
to such beneficial ownership interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium (if any) and interest on the Global Exchange Notes, will
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Exchange
Notes as shown on the records of DTC or its nominee. The Company also expects
that payments by participants to owners of beneficial interests in the Global
Exchange Notes held through such participants will be governed by standing
instructions and customary practice, as is now the case with securities held for
the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell Exchange Notes to
persons in states which require physical delivery of the Exchange Notes, or to
pledge such securities, such holder must transfer its interest in a Global
Exchange Note, in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Exchange Notes (including the presentation of Exchange
Notes for exchange as described below) only at the direction
85
<PAGE> 91
of one or more participants to whose account the DTC interests in the Global
Exchange Notes are credited and only in respect of such portion of the aggregate
principal amount of Exchange Notes as to which such participant or participants
has or have given such direction. However, if there is an Event of Default under
the Indenture, DTC will exchange the Global Exchange Notes for Certificated
Securities, which it will distribute to its participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). DTC was created to hold securities for its participants
and facilitate the clearance and settlement of securities transactions between
participants through electronic book-entry changes in accounts of its
participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly ("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Exchange Note among participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Exchange Note and a successor depositary
is not appointed by the Company within 90 days, Certificated Securities will be
issued in exchange for the Global Exchange Notes.
FEDERAL INCOME TAX CONSEQUENCES
THE DISCUSSION BELOW IS INTENDED TO BE A DESCRIPTION OF THE UNITED STATES
TAX CONSIDERATIONS MATERIAL TO AN INVESTMENT IN THE EXCHANGE NOTES. IT DOES NOT
TAKE INTO ACCOUNT THE INDIVIDUAL CIRCUMSTANCES OF ANY PARTICULAR INVESTOR AND
DOES NOT PURPORT TO DISCUSS ALL OF THE POSSIBLE TAX CONSEQUENCES OF THE
ACQUISITION, OWNERSHIP AND DISPOSITION OF THE EXCHANGE NOTES, AND IS NOT
INTENDED AS TAX ADVICE. THEREFORE, PROSPECTIVE INVESTORS ARE URGED TO CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES OF AN INVESTMENT IN
THE EXCHANGE NOTES, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX LAWS.
GENERAL
The following is a summary of the material United States federal income tax
consequences associated with the acquisition, ownership, and disposition of the
Exchange Notes. The following summary does not discuss all of the aspects of
federal income taxation that may be relevant to a prospective holder of the
Exchange Notes in light of its particular circumstances, or to certain types of
holders that are subject to special treatment under the federal income tax laws
(including persons who hold the Exchange Notes as part of a conversion, straddle
or hedge, dealers in securities, insurance companies, tax-exempt organizations,
financial institutions, broker-dealers and S corporations). Further, except as
specifically provided, this summary pertains only to holders that are citizens
or residents of the United States, corporations, partnerships, or other entities
created in or under the laws of the United States or any political subdivision
thereof, or estates or trusts the income of which is subject to United States
federal income taxation regardless of its source. A trust will be considered a
U.S. holder of an Exchange Note only if the trust is subject to the supervision
of a court within the United States and the control of a United States fiduciary
as described in Section 7701(a)(30) of the Internal Revenue Code of 1986 (the
"Code"). Under newly enacted legislation, the Secretary of the Treasury has the
authority to issue Regulations allowing certain trusts in existence on
86
<PAGE> 92
August 20, 1996 (other than a grantor trust within the meaning of subpart E of
part I of subchapter J of chapter 1 of the Internal Revenue Code of 1986) which
were as treated as United States persons before August 20, 1996, to elect to
continue to be treated as a United States person. However, such Regulations have
not yet been promulgated. In addition, this summary does not describe any tax
consequences under state, local, or foreign tax laws or other tax laws or estate
or gift tax considerations and is limited to holders who hold Exchange Notes as
"Capital Assets" (generally, property held for investment) within the meaning of
Section 1221 of the Code.
The legal conclusions expressed in this summary are based upon current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable Treasury regulations ("Regulations"), judicial authority and
administrative rulings and practice, all as in effect as of the date of this
Prospectus, and all of which are subject to change, either prospectively or
retroactively and have been prepared based on advice of tax counsel to the
Company. There can be no assurance that the Internal Revenue Service (the
"Service") will not take a contrary view, and no rulings from the Service have
been or will be sought with respect to any matter involving the tax aspects of
the purchase, ownership or exchange or other disposition of the Exchange Notes.
Legislative, judicial or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conclusions set forth
herein. Any such changes or interpretations may or may not be retroactive and
could affect the tax consequences to holders.
THE EXCHANGE OFFER
Pursuant to recently finalized Regulations, the exchange of Outstanding
Notes for Exchange Notes pursuant to the Exchange Offer will not constitute a
significant modification of the terms of the Outstanding Notes and, accordingly,
such exchange will be treated as a "non-event" for federal income tax purposes.
Therefore, such exchange will have no federal income tax consequences to holders
of the Outstanding Notes, the holding period of an Exchange Note would include
the holding period of the Outstanding Notes for which it was exchanged, and each
holder of Outstanding Notes would continue to be required to include interest on
the Outstanding Notes in its gross income in accordance with its method of
accounting for federal income tax purposes.
PAYMENT OF INTEREST
Interest on an Exchange Note generally will be includable in the income of
a holder as ordinary income at the time such interest is received or accrued, in
accordance with such holder's method of accounting for United States federal
income tax purposes.
The Outstanding Notes were issued on November 17, 1997 at par, and without
discount, in integral multiples of $1,000. The Company has determined that the
Outstanding Notes were not issued at an original issue discount. In making this
determination, the Company considered that upon a Change of Control, the Company
is required to offer to redeem all outstanding Exchange Notes for a price equal
to 101% of the principal amount thereof plus accrued interest to the date of
purchase. Under the Regulations, such Change of Control redemption requirements
will not affect the yield or maturity date of the Exchange Notes unless, based
on all the facts and circumstances as of the Issue Date, it was more likely than
not that a Change of Control giving rise to the redemption would occur. The
Company has not treated the Change of Control redemption provisions of the
Exchange Notes as affecting the determination of the amount of original issue
discount on the Outstanding Notes or the Exchange Notes.
OPTIONAL REDEMPTION
The Company, at its option, may redeem part or all of the Exchange Notes at
any time on or after November 15, 2002, at the redemption prices set forth
herein, plus accrued and unpaid interest to the date of redemption. 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 Exchange Notes
originally issued with the net cash proceeds of one or more public equity
offerings, at a redemption price equal to 109.875% of the aggregate principal
amount of the Exchange Notes to be redeemed plus accrued and unpaid interest to
the date of
87
<PAGE> 93
redemption; provided, however, that, after giving effect to any such redemption,
at least 65% of the aggregate principal amount of the Exchange Notes originally
issued remain outstanding. The Regulations provide that, for purposes of
calculating yield and maturity, an issuer will be treated as exercising any such
option if its exercise would lower the yield of the debt instrument. A
redemption of Exchange Notes at the optional redemption prices, however, would
increase the effective yield of the debt instrument as calculated from the Issue
Date. The Company does not currently intend to exercise such options with
respect to the Exchange Notes and, in accordance with the Regulations, as of the
Issue Date, the optional redemption provisions will not be taken into account in
calculating the yield to maturity of the Exchange Notes.
MARKET DISCOUNT
If a holder purchases an Exchange Note for less than the stated redemption
price at maturity (the "Exchange Note Issue Price") (the sum of all payments on
the Exchange Note other than qualified stated interest), the difference is
considered "market discount," unless such difference is "de minimis," (i.e., the
discount is less than one-fourth of one percent of the Exchange Note Issue Price
multiplied by the number of complete years to maturity (after the holder
acquires the Exchange Note)). Under the market discount rules, any gain realized
by the holder on a taxable disposition of an Exchange Note having "market
discount," as well as on any partial principal payment made with respect to such
Exchange Note, will be treated as ordinary income to the extent of the then
"accrued market discount" of the Exchange Note. An overview of the rules
concerning the calculation of "accrued market discount" is set forth in the
paragraph immediately below. In addition, a holder of such Exchange Note may be
required to defer the deduction of all or a portion of the interest expense on
any indebtedness incurred or continued to purchase or carry an Exchange Note.
Any market discount will accrue ratably from the date of acquisition to the
maturity date of the Exchange Note, unless the holder elects, irrevocably, to
accrue market discount on a constant interest rate method. The constant interest
rate method generally accrues interest at times and in amounts equivalent to the
result which would have occurred had the market discount been original issue
discount computed from the holder's acquisition of the Exchange Note through the
maturity date. The election to accrue market discount on a constant interest
rate method is irrevocable but may be made separately as to each Exchange Note
held by the holder. Accrual of market discount will not cause the accrued
amounts to be included currently in a holder's taxable income, in the absence of
a disposition of, or principal payment on the Exchange Note. However, a holder
of an Exchange Note may elect to include market discount in income currently as
it accrues on either a ratable or constant interest rate method. In such event,
interest expense relating to the acquisition of an Exchange Note which would
otherwise be deferred would be currently deductible to the extent otherwise
permitted by the Code. The election to include market discount in income
currently, once made, applies to all market discount obligations acquired by
such holder on or after the first day of the first taxable year to which the
election applies, and may not be revoked without the consent of the Service.
Accrued market discount which is included in a holder's gross income will
increase the adjusted tax basis of the Exchange Note in the hands of the holder.
AMORTIZABLE BOND PREMIUM
If a subsequent holder acquires an Exchange Note for an amount which is
greater than the amount payable at maturity, such holder will be considered to
have purchased such Exchange Note with "amortizable bond premium" equal to the
amount of such excess. The holder may elect to amortize the premium, using a
constant yield method employing six-month compounding, over the period from the
acquisition date to the maturity date of the Exchange Note. The "amount payable
at maturity" will be determined as of an earlier call date, using the call price
payable on such earlier date, if the combination of such earlier date and call
price will produce a smaller amortizable bond premium than would result from
using the scheduled maturity date and its amount payable. If an earlier call
date is used and the Exchange Note is not called, the Exchange Note will be
treated as having matured on such earlier call date and then as having been
reissued on such date for the amount so payable. Amortized amounts may be offset
only against interest payments due under the Exchange Note and will reduce the
holder's adjusted tax basis in the Exchange Note to the extent so used.
88
<PAGE> 94
Once made, an election to amortize and offset interest on bonds, such as
the Exchange Notes, will apply to all bonds in respect of which the election was
made that were owned by the taxpayer on the first day of the taxable year to
which the election relates and to all bonds of such class or classes
subsequently acquired by such taxpayer. Such election may only be revoked with
the consent of the Service. If a holder of an Exchange Note does not elect to
amortize the premium, the premium will decrease the gain or increase the loss
which would otherwise be recognized upon disposition of the Exchange Note.
SALE, EXCHANGE, OR RETIREMENT OF NOTES
Upon the sale, exchange or retirement (including redemption) of an Exchange
Note, other than the exchange of an Outstanding Note for an Exchange Note, a
holder of an Exchange Note generally will recognize gain or loss in an amount
equal to the difference between the amount of cash and the fair market value of
any property received on the sale, exchange or retirement of the Exchange Note
(other than in respect of accrued and unpaid interest on the Exchange Note,
which such amounts are treated as ordinary interest income) and such holder's
adjusted tax basis in the Exchange Note. If a holder holds the Exchange Note as
a capital asset, such gain or loss will be capital gain or loss, except to the
extent of any accrued market discount, and will be long-term capital gain or
loss if the Exchange Note has a holding period of more than one year at the time
of sale, exchange or retirement (and may be subject to lower tax rates
applicable to capital gains depending on the holder's status and the length of
the holding period of the Exchange Note).
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to interest
payments on the Exchange Notes made to holders other than certain exempt
recipients (such as corporations) and to proceeds realized by such holders on
dispositions of Exchange Notes. A 31% backup withholding tax will apply to such
amounts only if the holder (i) fails to furnish its social security or other
taxpayer identification number ("TIN") within a reasonable time after request
therefor, (ii) furnishes an incorrect TIN, (iii) fails to report properly
interest or dividend income, or (iv) fails, under certain circumstances, to
provide a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that it is not subject to backup withholding.
Any amount withheld from a payment to a holder under the backup withholding
rules is allowable as a refund or as a credit against such holder's federal
income tax liability, provided that the required information is furnished to the
Service. Holders of Exchange Notes should consult their tax advisors as to their
qualification for exemption from backup withholding and the procedure for
obtaining such an exemption.
Once made, an election to amortize and offset interest on bonds, such as
the Exchange Notes, will apply to all bonds in respect of which the election was
made that were owned by the taxpayer on the first day of the taxable year to
which the election relates and to all bonds of such class or classes
subsequently acquired by such taxpayer. Such election may only be revoked with
the consent of the Service.
PLAN OF DISTRIBUTION
Each broker-dealer that received Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
Prospectus in connection with any resale of such Exchange Notes. The Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Outstanding Notes where such Outstanding Notes were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 60 days after the date of this Prospectus, it will make
this Prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with such resale. In addition, until June 11, 1998, all
dealers effecting transactions in the Exchange Notes may be required to deliver
a Prospectus.
The Company will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market
89
<PAGE> 95
prices prevailing at the time of resale, at prices related to such prevailing
market prices or negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Notes. Any broker-dealer that resells Exchange
Notes that were received by it for its own account pursuant to the Exchange
Offer and any broker or dealer that participates in a distribution of such
Exchange Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of Exchange Securities and any
commission or concessions received by any such person may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
Prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The Company has agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the Holders of the Outstanding Notes)
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the Exchange Notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act. Any
Outstanding Notes not exchanged in the Exchange Offer for Exchange Notes will
remain subject to certain transfer restrictions.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements included in this Prospectus have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto, and is included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
LEGAL MATTERS
Certain legal matters regarding the validity of the Exchange Notes offered
hereby will be passed upon for the Company by Akin, Gump, Strauss, Hauer & Feld,
L.L.P., Dallas, Texas.
90
<PAGE> 96
FWT, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Report of Independent Public Accountants.................... F-2
Balance Sheets.............................................. F-3
Statements of Income........................................ F-4
Statements of Shareholders' Equity.......................... F-5
Statements of Cash Flows.................................... F-6
Notes to Financial Statements............................... F-7 to F-13
</TABLE>
F-1
<PAGE> 97
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
FWT, Inc.:
We have audited the accompanying balance sheets of FWT, Inc., a Texas
corporation (the "Company"), as of April 30, 1997 and 1996, and the related
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended April 30, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of FWT, Inc. as of April 30,
1997 and 1996, and the results of its operations and its cash flows for each of
the three years in the period ended April 30, 1997, in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Dallas, Texas,
October 1, 1997 (except with respect to the
matters discussed in Note 7, as to which
the date is February 27, 1998)
F-2
<PAGE> 98
FWT, INC.
BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
----------------- -----------
1997 1996 1997
------- ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,483 $ 4,048 $10,284
Accounts receivable, less allowance for doubtful accounts
of $75,
$14, and $175, respectively............................ 17,560 9,511 7,433
Inventories............................................... 8,357 963 11,427
Prepaid expenses.......................................... 984 122 2,341
Other assets.............................................. 519 308 857
------- ------- -------
Total current assets.............................. 31,903 14,952 32,342
------- ------- -------
Property, Plant, And Equipment:
Land and land improvements................................ 867 789 818
Buildings and building improvements....................... 4,467 2,327 4,488
Machinery and equipment................................... 5,463 3,800 6,079
------- ------- -------
10,797 6,916 11,385
Less accumulated depreciation............................. (2,497) (2,379) (2,889)
Net property, plant, and equipment................ 8,300 4,537 8,496
------- ------- -------
Total assets................................................ $40,203 $19,489 $40,838
======= ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......................... $ 188 $ 100 $ 188
Accounts payable.......................................... 10,195 3,573 5,184
Accrued expenses and other liabilities.................... 2,543 1,464 3,971
Notes payable............................................. 468 -- 20,468
------- ------- -------
Total current liabilities......................... 13,394 5,137 29,811
------- ------- -------
Long-Term Debt, less current portion........................ 1,512 375 1,410
------- ------- -------
Total liabilities................................. 14,906 5,512 31,221
------- ------- -------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $10 par value; 1,000 shares authorized; 372
shares issued and outstanding.......................... 4 4 4
Additional paid-in capital................................ 1 1 1
Retained earnings......................................... 25,292 13,972 9,612
------- ------- -------
Total shareholders' equity........................ 25,297 13,977 9,617
------- ------- -------
Total liabilities and shareholders' equity.................. $40,203 $19,489 $40,838
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 99
FWT, INC.
STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH PERIOD
YEAR ENDED APRIL 30, ENDED OCTOBER 31,
----------------------------- ------------------
1997 1996 1995 1997 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales.................................... $71,188 $42,701 $30,388 $37,350 $27,132
Cost of sales............................ 49,249 32,006 23,838 26,652 18,771
------- ------- ------- ------- -------
Gross profit............................. 21,939 10,695 6,550 10,698 8,361
Selling, administrative and general
expenses............................... 8,353 4,244 4,139 5,389 2,942
------- ------- ------- ------- -------
Operating income....................... 13,586 6,451 2,411 5,309 5,419
Interest income.......................... 272 156 114 246 116
Interest expense......................... (75) (33) (45) (403) (14)
Other income............................. 571 512 3 281 41
------- ------- ------- ------- -------
Income before state tax provision...... 14,354 7,086 2,483 5,433 5,562
State tax provision...................... 316 162 53 113 125
------- ------- ------- ------- -------
Net income............................. $14,038 $ 6,924 $ 2,430 $ 5,320 $ 5,437
======= ======= ======= ======= =======
Pro Forma Information:
Pro Forma adjustment for federal tax
provision........................... 4,773 2,354 826 1,809 1,849
------- ------- ------- ------- -------
Pro Forma net income................... $ 9,265 $ 4,570 $ 1,604 $ 3,511 $ 3,588
======= ======= ======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 100
FWT, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARES ISSUED)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
SHARES COMMON PAID-IN RETAINED SHAREHOLDERS'
ISSUED STOCK CAPITAL EARNINGS EQUITY
------ ------ ---------- -------- -------------
<S> <C> <C> <C> <C> <C>
Balance, April 30, 1994................ 372 $4 $1 $ 6,177 $ 6,182
Net income........................... -- -- -- 2,430 2,430
Distributions........................ -- -- -- (200) (200)
--- -- -- -------- --------
Balance, April 30, 1995................ 372 4 1 8,407 8,412
Net income........................... -- -- -- 6,924 6,924
Distributions........................ -- -- -- (1,359) (1,359)
--- -- -- -------- --------
Balance, April 30, 1996................ 372 4 1 13,972 13,977
Net income........................... -- -- -- 14,038 14,038
Distributions........................ -- -- -- (2,718) (2,718)
--- -- -- -------- --------
Balance, April 30, 1997................ 372 4 1 25,292 25,297
Net income (unaudited)............... -- -- -- 5,320 5,320
Distributions (unaudited)............ -- -- -- (21,000) (21,000)
--- -- -- -------- --------
Balance, October 31, 1997
(unaudited).......................... 372 $4 $1 $ 9,612 $ 9,617
=== == == ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 101
FWT, INC.
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTH
PERIOD ENDED
YEAR ENDED APRIL 30, OCTOBER 31,
----------------------------- ------------------
1997 1996 1995 1997 1996
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash Flows From Operating Activities:
Net income........................... $14,038 $ 6,924 $ 2,430 $ 5,320 $ 5,437
Adjustments to reconcile net earnings to
net cash provided by operating
activities
Depreciation......................... 508 375 299 412 259
Net loss (gain) on sale of property
and equipment...................... 52 (21) (20) (142) (15)
Adjustments to working capital accounts
Accounts receivable.................. (8,049) (4,205) (2,286) 10,127 (1,101)
Inventories.......................... (7,394) (311) (325) (3,070) (3,773)
Prepaid expenses..................... (862) (116) 284 (1,357) (824)
Other assets......................... (211) 31 32 (338) (82)
Accounts payable..................... 6,622 1,480 898 (5,011) 1,548
Accrued expenses and other
liabilities........................ 1,079.. 689 110 1,428 544
------- ------- ------- ------- -------
Net cash provided by operating
activities.................... 5,783 4,846 1,422 7,369 1,993
------- ------- ------- ------- -------
Cash Flows From Investing Activities:
Expenditures for property and
equipment.......................... (4,341) (1,198) (1,324) (664) (1,086)
Proceeds from sale of property and
equipment.......................... 18 16 62 198 10
------- ------- ------- ------- -------
Net cash used in investing
activities.................... (4,323) (1,182) (1,262) (466) (1,076)
------- ------- ------- ------- -------
Cash Flows From Financing Activities:
Proceeds from notes payable.......... 468 -- -- 20,000 555
Proceeds from long-term debt
issued............................. 1,325 -- -- -- --
Payments of long-term debt, including
current maturities................. (100) (100) (100) (102) (50)
Distributions paid................... (2,718) (1,359) (200) (21,000) --
------- ------- ------- ------- -------
Net cash used in financing
activities.................... (1,025) (1,459) (300) (1,102) 505
------- ------- ------- ------- -------
Net Increase (Decrease) In Cash And Cash
Equivalents............................. 435 2,205 (140) 5,801 1,422
------- ------- ------- ------- -------
Cash And Cash Equivalents, beginning of
period.................................. 4,048 1,843 1,983 4,483 4,048
------- ------- ------- ------- -------
Cash And Cash Equivalents, end of
period.................................. $ 4,483 $ 4,048 $ 1,843 $10,284 $ 5,470
======= ======= ======= ======= =======
Supplemental Cash Flow Information:
Cash paid during the period for
Interest............................. $ 73 $ 31 $ 43 $ 279 14
Taxes................................ 23 1 -- 24 --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 102
FWT, INC.
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997, 1996, AND 1995, AND OCTOBER 31, 1997 (UNAUDITED) AND OCTOBER 31,
1996 (UNAUDITED)
1. NATURE OF OPERATIONS:
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
infrastructures 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.
The Company's products are sold directly to customers throughout the United
States and in some international markets. The Company sold towers and shelters
to AT&T Wireless for use in both the PCS and cellular markets that provided
approximately 25 percent of its 1997 sales. Three other customers each comprised
approximately 6 percent of 1997 sales. In fiscal years 1996 and 1995, the
Company had three and four customers, respectively, which represented sales over
ten percent. These customers accounted for approximately 20 percent, 14 percent,
and 11 percent of 1996 sales and approximately 18 percent, 17 percent, 12
percent, and 11 percent of 1995 sales. International sales accounted for less
than five percent of sales in each of the years presented in the accompanying
statements of income.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Cash Equivalents
The Company considers all highly liquid short-term investments purchased
with original maturities of three months or less to be cash equivalents. The
cost of such short-term investments approximates fair value.
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 April 30, 1997 and 1996, included the following (in
thousands):
<TABLE>
<CAPTION>
APRIL 30,
----------------
1997 1996
------ ------
<S> <C> <C>
Finished goods.............................................. $6,408 $ 482
Work-in-process and raw materials........................... 1,949 481
------ ------
Total inventories................................. $8,357 $ 963
====== ======
</TABLE>
Property, Plant and Equipment
Property and equipment are carried at cost. Expenditures for maintenance
and repairs are charged directly against income; major renewals and betterments
are capitalized. When properties are retired or otherwise disposed of, the
original cost and accumulated depreciation are removed from the respective
accounts and the gain or loss resulting from the disposal is reflected in
income.
The Company provides for depreciation of plant and equipment over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings & Building Improvements........................... 5 to 40 years
Machinery and Equipment..................................... 3 to 10 years
Office Furniture and Equipment.............................. 5 to 10 years
Computer Equipment and Software............................. 3 to 5 years
</TABLE>
F-7
<PAGE> 103
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Depreciation is provided on the straight-line method for financial
reporting purposes. Depreciation expense was $507,622, $374,859, and $299,105
for 1997, 1996, and 1995, respectively.
Other Assets
Other assets consist primarily of farm-related assets. Farm assets as of
April 30, 1997 and 1996, were $518,947 and $162,782, respectively.
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 request of a customer, revenue is recognized upon
completion of the product and payment by the customer.
Other Income
Other income consists primarily of gains recognized in the disposition of
farm assets. Total farm-related income (expense) was $445,907, $306,112, and
$(68,071) for the years ended April 30, 1997, 1996, and 1995, respectively.
Federal Income Taxes
Effective May 1, 1987, the Company elected to be taxed as a Subchapter S
corporation. A Subchapter S corporation is not taxed on its net income but,
instead, the Company's shareholders are taxed on their proportionate share of
the Company's taxable income. Therefore, no provision for federal income tax is
included in the accompanying historical financial statements. A pro forma charge
for federal income taxes is supplementally disclosed on the statements of
income. Annual distributions are made to shareholders to fund, among other
things, federal taxes related to income of the Company.
The Company has made an election under Section 444 of the Internal Revenue
Code to retain a fiscal year which ends on April 30 of each year. As a result of
this election, the Company is required to pay an amount which will be held by
the IRS to offset timing differences in the payment of estimated taxes by the
Company's shareholders as a result of the fiscal year election. The amount of
this required payment is calculated annually and is either increased by the
Company making additional payments, or decreased by the IRS refunding amounts
previously paid. As of April 30, 1997 and 1996, the required payments were
$729,160 and $94,864 and are reflected in prepaid expenses in the accompanying
balance sheets. Should the Company discontinue its election to retain its fiscal
year, the entire amount of the required payment (if any at that time) would be
refunded.
State Income Taxes
The Company is subject to state income taxes in various states that do not
recognize Subchapter S corporations. A provision for state income taxes is
included in the accompanying statements of income.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities as of the date of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-8
<PAGE> 104
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Interim Period Financial Statements
The accompanying interim period financial statements as of October 31,
1997, and for the each of the six month periods ended October 31, 1997 and 1996,
are unaudited, but in the opinion of management, reflect all adjustments
necessary for a fair presentation of the results for the interim period
presented. The results for the interim period are not necessarily indicative of
the results to be obtained for the full fiscal year.
Reclassifications
Certain prior year amounts have been reclassified to conform with the
current period presentations.
3. BENEFIT PLANS:
Profit Sharing Plan
The Company has a profit sharing plan which covers substantially all
employees of the Company who have at least six months of service and are age 20
or older. The Company makes discretionary contributions at the option of the
Company's board of directors. Discretionary contributions charged to expense
related to the profit sharing plan were $314,000, $250,000 and $299,000, in
1997, 1996 and 1995, respectively. In accordance with the profit sharing plan
provisions, the Company absorbs all costs associated with the administration of
the profit sharing plan.
Pension Plan
The Company's pension plan is a non-contributory defined benefit plan. The
defined benefit plan covers all employees of the Company who have completed six
months of service and have attained the age of 20. Plan assets consist of
overnight bank repurchase agreements. These repurchase agreements are supported
by United States Government Treasury Securities. Historically, the Company has
made annual contributions to the benefit pension plan equal to the maximum
amount that can be deducted for federal income tax purposes.
Net periodic pension costs related to the defined benefit pension plan for
the years ended April 30, 1997 and 1996 (actuarial data for 1995 is not
available) consisted of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Service cost of current period.............................. $ 60,559 $ 61,305
Interest on projected benefit obligation.................... 162,688 154,485
Actual return on plan assets................................ (68,769) (72,684)
Net amortization and deferral............................... (65,820) (50,886)
-------- --------
Net periodic pension cost......................... $ 88,658 $ 92,220
======== ========
</TABLE>
F-9
<PAGE> 105
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The following table sets forth the funded status, the assumptions used to
calculate the funded status and the amounts recognized in FWT's balance sheets.
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits........................................... $2,560,287 $2,162,968
Non-vested benefits....................................... -- 26,917
---------- ----------
Accumulated benefit obligation......................... $2,560,287 $2,189,885
========== ==========
Pension liability:
Plan assets at fair value................................. 2,342,251 2,018,973
Projected benefit obligation.............................. 2,560,287 2,278,841
---------- ----------
Projected benefit obligation in excess of plan assets..... (218,036) (259,868)
Unrecognized net actuarial loss........................... -- 14,619
Initial unrecognized net asset being recognized over 17
years.................................................. 23,434 219,666
Adjustment to recognize additional minimum liability...... -- (145,324)
---------- ----------
Pension liability included in accrued expenses and other
liabilities............................................... $ (194,602) $ (170,907)
========== ==========
Major assumptions:
Assumed discount rate..................................... 7.5% 7.5%
Rate of increase in compensation levels................... -- 4.0%
Expected long-term rate of return on plan assets.......... 7.5% 7.5%
</TABLE>
The pension plan was terminated as of April 30, 1997, resulting in a plan
curtailment. The 1997 information above reflects a loss of $330,000 as a result
of the curtailment of the plan. The Company expects to settle the plan in early
calendar 1998, either by making lump sum distributions to participants or
purchasing nonparticipating annuity contracts to cover vested benefits.
4. NOTES PAYABLE AND LONG-TERM DEBT:
Notes payable and long-term debt of the Company as of April 30, 1997 and
1996, and October 31, 1997, consisted of the following:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
-------------------- -----------
1997 1996 1997
-------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
Notes Payable
Unsecured note payable to a bank, maximum borrowing of
$1,500,000, bearing interest at Adjusted LIBOR, as
defined; principal due at maturity with monthly interest
payments; matures January 1, 1998. ...................... $468,000 $ -- $ 468,000
Note payable to a bank, bearing interest at the bank's
certificate of deposit rate plus one percent; principal
due at maturity with monthly interest payments; matures
July 23, 1998; secured by certain assets of the
shareholders of the Company. The note has various
financial covenants related to debt and equity, and cash
flow ratios.............................................. -- -- 20,000,000
-------- -------- -----------
Notes payable.................................. $468,000 $ -- $20,468,000
======== ======== ===========
</TABLE>
F-10
<PAGE> 106
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In July 1997, the Company entered into a note payable for $20,000,000. The
Company subsequently distributed all proceeds related to this note payable to
certain shareholders of the Company.
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
---------------------- -----------
1997 1996 1997
---------- -------- -----------
(UNAUDITED)
-----------
<S> <C> <C> <C>
Long-Term Debt
Note payable to a bank, bearing interest at 6%, payable
in quarterly installments of $25,000; matures December
31, 2000; secured by all Company receivables. The note
has various financial covenants related to debt and
equity, and cash flow ratios. .......................... $ 375,000 $475,000 $ 325,000
Unsecured note payable to a bank, bearing interest at
Adjusted LIBOR, as defined; payable in monthly
installments of $7,361; matures April 1, 2000. ......... 1,325,000 -- 1,273,473
---------- -------- ----------
Less -- Current portion....................... 188,332 100,000 188,332
---------- -------- ----------
Long-term, less current portion............... $1,511,668 $375,000 $1,410,141
========== ======== ==========
</TABLE>
Principal maturities of long-term debt outstanding as of April 30, 1997,
are as follows:
<TABLE>
<CAPTION>
APRIL 30,
---------
<S> <C>
1998.......................................... $ 188,332
1999.......................................... 188,332
2000.......................................... 1,248,336
2001.......................................... 75,000
Thereafter.................................... --
----------
$1,700,000
==========
</TABLE>
The majority of the Company's notes payable and long-term debt bear
interest at variable rates which re-price frequently and, therefore, their
carrying amounts approximate their fair values. The carrying amount of the note
payable bearing interest at a fixed rate approximates its fair value. The fair
value of this note has been estimated using a discounted cash flow calculation
that applies an estimated interest rate which would currently be available to
the Company for a similar note. The Company has also entered into an agreement
with a bank to borrow up to $2,200,000 at an interest rate of Adjusted LIBOR, as
defined, due on or before February 1, 1998. The Company has yet to borrow under
this credit facility and does not anticipate any future borrowings under this
credit facility due to restrictive covenants of the Senior Subordinated Notes
discussed in Note 7.
F-11
<PAGE> 107
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
5. COMMITMENTS AND CONTINGENCIES:
Leases
In February, the Company entered into a five-year renewable lease agreement
with a third party pole vendor to lease manufacturing and warehouse space. Rent
expense under this lease in 1997 was approximately $46,300. Future minimum
payments under the lease are as follows:
<TABLE>
<CAPTION>
APRIL 30,
---------
<S> <C>
1998........................................... $185,004
1999........................................... 185,004
2000........................................... 185,004
2001........................................... 185,004
2002........................................... 138,753
Thereafter..................................... --
--------
$878,769
========
</TABLE>
As part of this lease agreement, the Company agreed to purchase any
remaining steel plate inventory held by the lessor for FWT's exclusive use. The
steel will be provided at cost, as defined in the lease agreement, plus $.01 per
pound.
Employment Agreements
As of April 30, 1997, the Company maintains employment agreements with
several employees. Each agreement is typically for a five-year period and
terminates at the option of the employee or for termination of employment for
just cause, as defined in the agreement. Total annual compensation under these
employment agreements is approximately $500,000.
Legal
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 and
operations of the Company.
License Agreement
During fiscal year 1997, the Company signed a license agreement with a
customer which grants that customer "Most Favored Customer" status with respect
to all terms and conditions (including price) relating to one of the Company's
patented products. Under the agreement, the customer also has the right to have
the product produced by another manufacturer in exchange for a license fee to
the Company. To date no license fees have been paid or are payable to the
Company. In addition, the licensing agreement restricts the transferability of
the patent related to this product. The agreement may be terminated by the
Company in the event the licensee fails to pay the license fee or defaults under
the terms of the agreement.
6. RELATED-PARTY TRANSACTIONS:
The Company occasionally pays expenses on behalf of certain shareholders
and officers. These amounts are recorded as a receivable from the shareholder or
officer until they are repaid. Additionally, certain shareholders and officers
have advanced the Company funds in the normal course of business. These amounts
are recorded as a payable to the shareholder or officer until they are repaid.
The net receivable (payable) related to these transactions were $14,983,
($35,453), and ($28,044) for the years ended April 30, 1997, 1996, and 1995,
respectively.
F-12
<PAGE> 108
FWT, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Bonuses to related parties are paid on a discretionary basis and are
recorded in the accompanying statements of income as follows:
<TABLE>
<CAPTION>
APRIL 30, OCTOBER 31,
------------------------------------ -----------
1997 1996 1995 1997
---------- -------- ---------- -----------
(UNAUDITED)
--------
<S> <C> <C> <C> <C>
Related party bonuses.............. $1,300,000 $304,414 $1,068,072 $608,829
</TABLE>
7. SUBSEQUENT EVENTS:
On September 26, 1997, the Company's majority shareholders signed a letter
of intent to sell their shares in the Company. In November 1997, the Company
used borrowings from a $105 million 9 7/8% Senior Subordinated Notes offering to
repay existing indebtedness and to effect a stock redemption. The Company also
entered into a $25 million revolving credit facility, subject to borrowing base
limitations, which is secured by substantially all of the assets of the Company.
Concurrent with this transaction, FWT Acquisition, an affiliate of Baker
Capital, purchased 80% of the remaining ownership for approximately $36 million.
For financial reporting purposes, this recapitalization will be accounted for as
an acquisition of treasury stock. No amounts were outstanding under the
revolving credit facility as of February 27, 1998.
Subsequent to October 31, 1997, the Company and two executives of the
Company entered into stock appreciation rights agreements (the "SAR
Agreements"). These SAR Agreements provide for, among other things, the payment
of an amount based on a formula set forth in the SAR Agreements by the Company
to the executives upon the occurrence of a Liquidity Event (which is defined in
the SAR Agreements as, among other things, the completion by the Company of an
initial public offering of common stock and a situation in which FWT Acquisition
ceases to hold more than 50% of the outstanding common stock of the Company).
Any value earned under the SAR Agreements will be accounted for as compensation
expense by the Company. In addition to the SAR Agreements the Company entered
into three year employment agreements with certain executive officers.
On February 27, 1998, an executive officer and shareholder of the Company,
entered into a Voluntary Retirement Agreement with the Company, in connection
with which he agreed to resign from office as an executive officer of the
Company and voluntarily retire. As part of this arrangement, the Company has
agreed to pay the executive officer and shareholder $237,500 per year 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 such date. This agreement will
result in a fourth quarter charge to operations.
F-13
<PAGE> 109
======================================================
NO DEALER, SALESPERSON, OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL,
OR THE SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 14
Use of Proceeds....................... 21
The Exchange Offer.................... 21
The Recapitalization and Stock
Purchase............................ 27
Capitalization........................ 28
Unaudited Pro Forma Financial
Statements.......................... 29
Selected Historical Financial Data.... 35
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 37
Recent Developments................... 42
Business.............................. 43
Industry Overview..................... 49
Management............................ 51
Principal Shareholders................ 54
Certain Relationships and Related
Transactions........................ 55
Description of the Revolving Credit
Facility............................ 58
Description of Exchange Notes......... 59
Book-Entry; Delivery and Form......... 85
Federal Income Tax Consequences....... 86
Plan of Distribution.................. 89
Independent Public Accountants........ 90
Legal Matters......................... 90
Index to Financial Statements......... F-1
</TABLE>
======================================================
======================================================
---------------------------------------
PROSPECTUS
---------------------------------------
[FWT COLOR LOGO]
[FWT LOGO]
FWT, INC.
$105,000,000
9 7/8% SENIOR SUBORDINATED NOTES
DUE 2007
FOR
$105,000,000
9 7/8% SENIOR SUBORDINATED NOTES
DUE 2007
MARCH 13, 1998
======================================================
<PAGE> 110
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is empowered by Art. 2.02-1 of the Texas Business Corporation
Act, subject to the procedures and limitations stated therein, to indemnify any
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 or officer against
judgments, penalties (including excise and similar taxes), fines, settlements
and reasonable expenses (including court costs and attorneys' fees) actually
incurred by the person in connection with the proceeding. The Company is
required by Art. 2.02-1 to indemnify a director or officer against reasonable
expenses (including court costs and attorneys' fees) incurred by him in
connection with a proceeding in which he is a named defendant or respondent
because he is or was a director or officer if he has been wholly successful, on
the merits or otherwise, in the defense of the proceeding. The statute provides
that indemnification pursuant to its provisions is not exclusive of other rights
of indemnification to which a person may be entitled under any bylaw, agreement,
vote of shareholders or disinterested directors, or otherwise. The articles and
bylaws of the Company do not provide for indemnification by the Company of its
directors and officers. The Company has obtained an insurance policy providing
for indemnification of officers and directors of the Company and certain other
persons against liabilities and expenses incurred by any of them in certain
stated proceedings and under certain stated conditions.
Section 9 of the Employment Agreements of Thomas F. Moore, Carl R. Moore,
Roy J. Moore, Douglas A. Standley and William F. Sales requires the Company to
indemnify each of them to the fullest extent permitted by applicable law and
requires the Company to maintain reasonable and customary directors' and
officers' liability insurance coverage with a reputable and creditworthy carrier
in an amount equal to at least $10 million per occurrence.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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 -- Articles of Incorporation of the Company, as amended.*
3.2 -- Bylaws of the Company.*
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. * All Schedules and Exhibits to the Stock
Purchase and Redemption Agreement, except for Exhibits A
& B, are filed herewith. Exhibit A has been filed
previously as Exhibit 10.10 and Exhibit B has been filed
previously as Exhibit 4.3.
</TABLE>
II-1
<PAGE> 111
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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.* All Addendums
to the Cooperative Production Agreement are filed
herewith.
10.4 -- Transportation Contract dated March 26, 1997 between the
Company and Delta Steel, Inc.* Exhibit A to the
Transportation Contract is filed herewith.
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.* Exhibit A to
the Lease Agreement is filed herewith.
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.* All Schedules to the Credit Agreement are
filed herewith. Exhibit C to Exhibit VI to the Credit
Agreement is filed herewith.
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.
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.
</TABLE>
II-2
<PAGE> 112
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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.
99.1 -- Letter of Transmittal.
</TABLE>
- ---------------
* Previously filed.
(b) Financial Statement Schedules
None. All Schedules are omitted because the required information is not
present in amounts sufficient to require submission of the Schedule or because
the information required is included in the financial statements or notes
thereto.
ITEM 22. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with
II-3
<PAGE> 113
the securities being registered, the Company will, unless, in the opinion of its
counsel, the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the Prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE> 114
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 2 to registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Dallas, State of
Texas, on this 11th day of March, 1998.
FWT, INC.
By: /s/ ROY J. MOORE
----------------------------------
Roy J. Moore,
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ ROY J. MOORE Director, President and March 11, 1998
- ----------------------------------------------------- Chief Executive Officer
Roy J. Moore
* Chief Operations Officer and March 11, 1998
- ----------------------------------------------------- President, Fort Worth
Douglas A. Standley Division
* Vice President of Finance March 11, 1998
- ----------------------------------------------------- (signing in the capacity
William R. Estill of principal financial
officer and principal
accounting officer)
* Director March 11, 1998
- -----------------------------------------------------
John C. Baker
* Director March 11, 1998
- -----------------------------------------------------
Edward W. Scott
* Director March 11, 1998
- -----------------------------------------------------
Lawrence A. Bettino
/s/ ROY J. MOORE* March 11, 1998
- -----------------------------------------------------
Roy J. Moore,
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 115
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
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 -- Articles of Incorporation of the Company, as amended.*
3.2 -- Bylaws of the Company.*
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. * All Schedules and Exhibits to the Stock
Purchase and Redemption Agreement, except for Exhibits A
& B, are filed herewith. Exhibit A has been filed
previously as Exhibit 10.10 and Exhibit B has been filed
previously as Exhibit 4.3.
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.* All Addendums
to the Cooperative Production Agreement are filed
herewith.
10.4 -- Transportation Contract dated March 26, 1997 between the
Company and Delta Steel, Inc.* Exhibit A to the
Transportation Contract is filed herewith.
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.* Exhibit A to
the Lease Agreement is filed herewith.
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.*
</TABLE>
<PAGE> 116
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.11 -- Credit Agreement dated November 12, 1997 by and among the
Company, Bankers Trust Company and BT Commercial
Corporation.* All Schedules to the Credit Agreement are
filed herewith. Exhibit C to Exhibit VI to the Credit
Agreement is filed herewith.
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.
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.
99.1 -- Letter of Transmittal.
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
SCHEDULE 1.2 (to EXHIBIT 10.1)
FUNDED DEBT
1. As of November 10, 1997, the Company owed Bank One Texas, N.A.
$21,889,414.78, plus interest of $3,296.18 per day for each day thereafter.
2. As of November 7, 1997, the Company owed NationsBank of Texas, N.A.
$327,145.82, plus interest of $54.1667 per day for each day thereafter.
<PAGE> 2
SCHEDULE 1.9 (to EXHIBIT 10.1)
RESIGNATIONS
Person Positions
- ------ ---------
T.W. Moore President and Director
Betty Moore Secretary, Treasurer and Director
Roy J. Moore Vice President
Thomas F. Moore Vice President
Carl Moore Vice President
No severance payments are due as of result of the resignations.
<PAGE> 3
SCHEDULE 2.8 (to EXHIBIT 10.1)
EXCLUDED ASSETS
(1) Dallas Cowboy bonds and Dallas Cowboy ticket rights
(2) KENNEDALE PROPERTY
Being two tracts of land out of the David Strickland Survey Abstract
No. 1378, Kennedale, Tarrant County, Texas as conveyed to Brown and
Blakney, Inc. by deeds recorded in Volume 5457, page 760 (Tracts I and
II) and Volume 4737, page 3 (Tracts 1 and 2) of the Deed Records of
Tarrant County, Texas and Tracts A and B being more particularly
described as follows:
TRACT 1:
BEGINNING at a found Texas Department of Transportation concrete
monument (THD MON.) in northeast right-of-way of the Mansfield Highway
(US 287) as conveyed to the State of Texas by deed recorded in Volume
11409, page 2348 of the Deed Records of Tarrant County, Texas and
being in the northwest right-of-way of a tract conveyed to Texas
Electric Service Company by deeds recorded in Volume 2342, page 453
and Volume 3954, page 412 of the Deed Records of Tarrant County, said
point being N 47 degrees 41' E, 41.5 ft. from a found 5/8 inch iron pin
at the original south corner of the said Tract I;
THENCE with the following courses along the said Mansfield Highway
right-of-way, N 42 degrees 43' W, 113.2 ft. to a found THD MON; N
39 degrees 10' W, 100.1 ft. to found THD MON; N 42 degrees 01' W, 365.4
ft. to a found THD MON in the southeast right-of-way of Gilman Road
as conveyed to the City of Kennedale by deed recorded in Volume 6274,
page 732 of the Deed Records of Tarrant County;
THENCE with the following courses along the southeast and south
right-of-way the said Gilman Road, N 47 degrees 50' E, 142.3 ft. to a
set 5/8 inch iron pin; N 89 degrees 41' E, 864.0 ft. to a set 5/8 inch
iron pin in the northwest line of the said Texas Electric tract;
THENCE S 47 degrees 41' W, with the northwest line of the said Texas
Electric tract 791.0 ft. to the place of beginning and containing 6.19
acres of land.
TRACT 2:
BEGINNING at a found THD MON in northeast right-of-way of the said
Mansfield Highway as conveyed to the State of Texas by deed recorded
in Volume 11409, page 2353 of the Deed Records of Tarrant County and
being in
- 1 -
<PAGE> 4
the southeast line of the said Texas Electric tract said point being N
47 degrees 41' E, 43.5 ft. from a found 5/8 inch iron pin at the
original west corner of the said Tract II;
THENCE N 47 degrees 41' E, with the southeast line o the said Texas
Electric tract, 881.0 ft. to a set 5/8 inch iron pin in the south
right-of-way for the said Gilman Road and being on a curve from which
the center of said curve bears N 12 degrees 56' W, 237.1 ft.;
THENCE northeasterly with said curve through a central angle of
23 degrees 39' for a distance of 97.8 ft. to a set 5/8 inch iron pin at
the end of said curve;
THENCE N 53 degrees 25' E, 2.8 ft. to a set 5/8 inch iron pin;
THENCE S 37 degrees 59' E, at 673.9 ft. a found 5/8 inch iron pin in
all 757.7 ft. to the approximate center of Village Creek;
THENCE with the approximate center of Village Creek, S 77 degrees 32'
W, 394.0 ft.; S 64 degrees 56' W, 331.1 ft. and S 62 degrees 13' W.
151.9 ft.;
THENCE S 89 degrees 21' W, at 89.3 ft. a set 5/8 inch iron pin, in all
183.0 ft. to a found THD MON in the northeast right-of-way of the said
Mansfield Highway;
THENCE with the following courses along the said Highway right-of-way,
N 42 degrees 04' W, 80.7 ft. to a found THD MON; N 15 degrees 33' W,
44.7 ft. to a found THD MON; N 41 degrees 55' W, 99.9 ft. to a found
THD MON; and N 45 degrees 21' W, 112.1 ft. to the place of beginning
and containing 12.45 acres of land.
(3) ERATH COUNTY PROPERTY
TRACT 1:
All that certain 75.15 acre tract of land, more or less, out of Block
9 of the Benjamin Bromley Survey, A-108, in Erath County, Texas, being
all of that certain 75.15 acre tract of land conveyed by Leland L.
Carr et ux, Alma E. Carr to Wolfe Pecanlands, Inc. by deed dated June
17, 1976 and recorded in Volume 538, page 164 of the Deed Records of
Erath County, Texas and described as follows:
BEGINNING at an iron rod found in place at a fence corner post at the
SEC of Block 9 and the SWC of Block 8 of the Benjamin Bromley Survey,
being the SWC of a 71.6 acre tract described in deed from Mrs. Eunice
Leach et al to C. A. Butler, dated September 7, 1942 and recorded in
Volume 272, page 186 of the Deed Records of Erath County, Texas, being
the SEC of the Wolfe
- 2 -
<PAGE> 5
Pecanlands, Inc. 75.15 acre tract described in deed mentioned above,
for the SEC of this tract;
THENCE S. 59 degrees 25' W. along a fence line along the south line of
Block 9, 1734.7' to an iron rod found in place at a fence corner post
in the east line of a County Road, being the SWC of said 75.15 acre
tract, for the SWC of this tract;
THENCE in a northerly direction along the west line of said 75.15 acre
tract and the east line of said County Road as follows: N. 28 degrees
51' W., 530.6', N. 16 degrees 03' W., 58.7', N. 02 degrees 58' W.,
452.1', N. 16 degrees 55' W., 121.1', N. 26 degrees 33' W., 97.9' and
N. 30 degrees 39' W., 890.6' to an iron rod set at a fence corner post
at the NWC of said 75.15 acre tract, for the NWC of this tract;
THENCE N. 59 degrees 40' E. along a fence line, 1467.2' to an iron rod
set at the NEC of Block 9 and the NWC of Block 8, being the NEC of
said 75.15 acre tract and the NWC of said 71.6 acre tract, for the NEC
of this tract;
THENCE S. 30 degrees 23' E. along a fence line, 2087.2' to the place of
beginning.
TRACT 2:
All that certain 61.73 acre tract of land, more or less, out of Block
5 and Block 10 of the Benjamin Bromley Survey, A-108, in Erath County,
Texas, being part of that certain 64.85 acre tract of land conveyed by
Leland L. Carr, et ux, Alma E. Carr to Wolfe Pecanlands, Inc. by deed
dated June 17, 1976 and recorded in Volume 538, page 164 of the Deed
Records of Erath County, Texas and described as follows:
BEGINNING at an iron rod found in place at a fence corner post at the
SWC of Block 5 and the SEC of Block 4 of the Benjamin Bromley Survey,
being the SWC of the Wolfe Pecanlands, Inc. 64.85 acre tract described
in deed mentioned above, for the SWC of this tract;
THENCE N. 30 degrees 35' W. along a fence line, 761.4' to an iron bolt
found in place at a fence corner post at the SEC of a 50 acre tract of
land described in a Contract of Sale and Purchase from the Veterans
Land Board of the State of Texas to John R. Nelson, dated January 22,
1968 and recorded in Volume 426, page 423 of the Deed Records of Erath
County, Texas, for a west corner of said 64.85 acre tract;
THENCE N. 30 degrees 39' W. along a fence line along the east line of
said 50 acre tract, 1295.8' to an iron rod found in place in a gravel
drive, being the NWC of said 64.85 acre tract, for the NWC of this
tract;
- 3 -
<PAGE> 6
THENCE N. 60 degrees 10' E. along the south line of a County Road,
1331.9' to an iron rod set at the intersection of the west line of
another County Road, being the NEC of said 64.85 acre tract, for the
NEC of this tract;
THENCE S. 30 degrees 31' E. along a fence line along the east line of
said second County Road and east line of said 64.85 acre tract,
1107.85' to an iron rod set for a corner of this tract;
THENCE S. 59 degrees 29' W., 131.62' to an iron rod set for a corner of
this tract;
THENCE S. 08 degrees 41' E., 867.56' to an iron rod set for a corner of
this tract;
THENCE N. 80 degrees 53' E., 125.0' to an iron rod set for a corner of
this tract;
THENCE N. 08 degrees 41' W. 575.0' to an iron rod set for a corner of
this tract;
THENCE N. 59 degrees 29' E., 124.03' to an iron rod set in the east
line of said 64.85 acre tract, being in the west line of said County
Road, for a corner of this tract;
THENCE S. 30 degrees 31' E. along the west line of said County Road,
801.77' to an iron rod set at the SEC of said 64.85 acre tract, for
the SEC of this tract;
THENCE S. 60 degrees 38' W. along a fence line, 597.6' to an iron rod
set at a fence corner post at a SWC of said 64.85 acre tract, for a
corner of this tract;
THENCE N. 07 degrees 43' W. along a fence line, 190.3' to an iron rod
found in place at a fence corner post at an inner corner of said 64.85
acre tract, for an inner corner of this tract;
THENCE S. 59 degrees 21' W. along a fence line along the south line of
Block 5, 554.20' to an iron rod set at the SEC of a 5000 square foot
tract, for a corner of this tract;
THENCE N. 30 degrees 35' W. 100.0' to an iron rod set for an inner
corner of this tract;
THENCE S. 60 degrees 10' W. 50.0' to an iron rod set for an inner
corner of this tract;
THENCE S. 30 degrees 35' E., 100.72' to an iron rod set at the SWC of
said 5000 square foot tract, for a corner of this tract;
THENCE S. 59 degrees 21' W., 200.0' to the place of beginning.
- 4 -
<PAGE> 7
TRACT 3:
3.30 acres out of the Abstract 108 of the Benjamin Bromely Survey,
Erath County, Texas being that property more particularly described in
Vol. 650, Page 386 of the Deed Records, Erath County, Texas, LESS AND
EXCEPT that portion deeded in Vol. 668, Page 351 of the Deed Records,
Erath County, Texas.
(4) Promissory note dated April 15, 1997 executed by LAB Land & Cattle,
Inc. in the original principal sum of four hundred fifteen thousand
nine hundred sixty dollars ($415,960) payable to FWT, Inc.
(5) All interest of FWT, Inc. in all oil, gas and other minerals and in
all precious metals in, under and that may be produced from the
following described property in Parker County, Texas, together with
all rights of ingress and egress for the purpose of mining, exploring
and developing such property for or with respect to such oil, gas,
minerals and precious metals:
TRACT 1
THENCE North 89 deg. 39 min. East 1226.22 feet to a Set Stone for a
corner in the EBL of the David Harry Survey;
THENCE South 0 deg. 05 min. West 194.4 feet to an iron rod for a
corner in a road said point being the S. W. corner of the David Harry
Survey;
THENCE South 89 deg. 08 min. East 2080.0 feet to an iron rod for a
corner in a road said point being the most easterly N. E. corner of
the Thomas Hamilton Survey;
THENCE South 22 deg. 22 min. East 83.33 feet to a pipe for a corner
said point being the N. E. corner of the G. W. Hill Survey;
THENCE South 69 deg. 49 min. West with an old fence line and with the
NBL of the Hill Survey 1373.22 feet to an iron road for a corner said
point being the N. W. corner of the G. W. Hill Survey;
THENCE South 20 deg. 45 min. East with the WBL of the Hill Survey and
with an old fence line 1463.46 feet to the place of beginning and
containing 200.76 acres of land more or less.
TRACT 2:
Field Notes of a survey of a 5.52 acre tract of land being a part of
the Thos. Hamilton Survey, Abstract 561, Parker Co., Texas and being
more fully described by metes and bounds as follows:
- 5 -
<PAGE> 8
BEGINNING at an iron pipe for corner, said point being the NBL of the
Green Wood Survey, Abstract 1601, and also being North 68 deg., 47
min. East 253.71 feet from the NW corner of the Green Wood Survey,
64.93 feet to an iron pipe for corner;
THENCE South 68 deg. 47 min. West, and with the NBL of the
above-mentioned Green Wood Survey, 64.93 feet to an iron pipe for
corner;
THENCE North 0 deg., 33 min. West 3977.01 feet to an iron pipe for
corner in the SBL of a County Road;
THENCE South 75 deg., 37 min. East, and with the SBL of the
above-mentioned County Road, 62.87 feet to an iron pipe for corner;
THENCE South 0 deg. 33 min. West 3937.89 feet to the place of
BEGINNING and containing 5.52 acres of land, more or less.
TRACT 3:
Field Notes of a survey of a 5.52 acre tract of land being a part of
the Thos. Hamilton Survey, Abstract 561, Parker Co., Texas and being
more fully described by metes and bounds as follows:
BEGINNING at an iron pipe for corner, said point being the NBL of the
Green Wood Survey, Abstract 1601, and also being North 68 deg., 47
min. East 253.71 feet from the NW corner of the Green Wood Survey;
THENCE North 0 deg., 33 min. West 3937.89 feet to an iron pipe for
corner, said point being in the SBL of a County Road;
THENCE South 75 deg., 37 min. East, and with the above-mentioned SBL
of a County Road, 63.4 feet to a concrete monument for corner;
THENCE South 0 deg., 33 min. East 3898.39 feet to a concrete monument
for corner, said point being in the NBL of the Green Wood Survey;
THENCE South 68 deg., 47 min. West, with said WBL of the Green Wood
Survey, 65.58 feet to the place of BEGINNING and containing 5.52 acres
of land, more or less.
(6) Membership in the Petroleum Club, Fort Worth, Texas.
(7) Ford Tractor (Model EA4540) - Vehicle Identification No. 1D55148.
(8) Rhino 72" Bush Hog (Vehicle Identification No. 12411).
(9) Rhino 15' Bush Hog.
(10) Motor Grader - 130G (Vehicle Identification No. 74V1348).
- 6 -
<PAGE> 9
(11) CAT 955L Loader (Vehicle Identification No. 85J5191).
(12) CAT D3B Dozer (Vehicle Identification No. 23Y01417).
(13) CAT 416 Back Hoe (Vehicle Identification No. 5P001643).
(14) RayCo Compactor Steel Wheel Roller (Vehicle Identification No.
T04219D114807).
(15) Bomag Compactor (RomcoTrax) Model BW213PD.
(16) Bomag Compactor (Vehicle Identification No. 101400150175).
(17) Unit 55 - 14' White Trailer (licensed, no title).
(18) Unit 260 - 21' Black Trailer (titled) TR 180800.
(19) Unit 264 - 18' Gooseneck Trailer (titled) TR 18000.
(20) Unit 147 - 30' Gooseneck Tandem Trailer (Vehicle Identification No.
1T9DF43H5CD035116).
(21) Unit 194 - 14' Trailer (licensed, no title).
(22) Unit 255 - 1995 1.5 ton F-Super Duty Diesel Ford Truck with flatbed
(Vehicle Identification No. 1FDLF47F3SEA68727).
(23) All furniture, furnishings, accessories, pictures and the television
and refrigerator in the office of T.W. Moore.
(24) All furniture, furnishings, accessories and pictures and the
television and the refrigerator in the office of T.W. Moore.
(25) Kentucky Central Life Insurance Company Policy No. VPB100961 on the
life of Thomas W. Moore.
- 7 -
<PAGE> 10
SCHEDULE 4.5 (to EXHIBIT 10.1)
CONSENTS
The Loan Agreement dated December 15, 1993 between NationsBank of
Texas, N.A. and FWT, Inc. prohibits any transfer of control or ownership of
FWT, Inc. without the prior written consent of NationsBank of Texas, N.A.
<PAGE> 11
SCHEDULE 4.11 (to EXHIBIT 10.1)
SHAREHOLDERS
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ---- ----------------
<S> <C>
T. W. Moore 93.93
Betty J. Moore 93.93
Thomas Frederick Moore 61.38
Carl R. Moore 61.38
Roy J. Moore 61.38
------
372.00
</TABLE>
<PAGE> 12
SCHEDULE 4.15 (to EXHIBIT 10.1)
SUBSIDIARIES OR JOINT VENTURES
(1) Letter of Understanding and Agreement For A Joint Venture
Development/Marketing Arrangement between FWT, Inc. and PAL Cellular
Group, Inc.
(2) Cooperative Production Agreement dated March 10, 1997 between FWT,
Inc. and Delta Steel, Inc.
<PAGE> 13
SCHEDULE 4.16 (to EXHIBIT 10.1)
OFFICES OF COMPANY
(1) 1901 East Loop 820 South, Fort Worth, Texas
(2) 5720 Interstate 20 East, Kennedale, Texas
<PAGE> 14
SCHEDULE 4.17 (to EXHIBIT 10.1)
AUDITED FINANCIAL STATEMENTS
[see attached]
<PAGE> 15
SCHEDULE 4.18 (to EXHIBIT 10.1)
INTERIM FINANCIAL STATEMENTS
[see attached}
<PAGE> 16
FWT, INC.
BALANCE SHEETS
(In Thousands, Except Share Information)
<TABLE>
<CAPTION>
April 30, August 31,
---------------------- --------
1997 1996 1997
-------- -------- --------
(Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,483 $ 4,048 $ 10,182
Accounts receivable, less allowance for doubtful
accounts of $75, $14, and $175, respectively 17,560 9,511 9,026
Inventories 8,357 963 9,785
Prepaid expenses 984 122 2,553
Other assets 519 308 496
-------- -------- --------
Total current assets 31,903 14,952 32,042
PROPERTY, PLANT, AND EQUIPMENT:
Land and land improvements 867 789 867
Buildings and building improvements 4,467 2,327 4,487
Machinery and equipment 5,463 3,800 5,867
-------- -------- --------
10,797 6,916 11,221
Less- Accumulated depreciation (2,497) (2,379) (2,753)
Total property, plant and equipment 8,300 4,537 8,468
-------- -------- --------
Total assets $ 40,203 $ 19,489 $ 40,510
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 188 $ 100 $ 188
Accounts payable 10,195 3,573 6,008
Accrued expenses and other liabilities 2,543 1,464 3,401
Notes payable 468 -- 20,468
-------- -------- --------
Total current liabilities 13,394 5,137 30,065
-------- -------- --------
LONG-TERM DEBT, less current portion 1,512 375 1,450
-------- -------- --------
Total liabilities 14,906 5,512 31,515
-------- -------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $10 par value; 1,000 share authorized;
372 shares issued and outstanding 4 4 4
Additional paid-in capital 1 1 1
Retained earnings 25,292 13,972 8,990
-------- -------- --------
Total stockholders' equity 25,297 13,977 8,995
-------- -------- --------
Total liabilities and stockholders' equity $ 40,203 $ 19,489 $ 40,510
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 17
FWT, INC.
STATEMENTS OF INCOME
(In Thousands)
<TABLE>
<CAPTION>
Year Ended April 30, August 31,
------------------------------------ ----------
1997 1996 1995 1997
-------- -------- -------- ----------
(Unaudited)
<S> <C> <C> <C> <C>
SALES $ 71,188 $ 42,701 $ 30,388 $ 25,863
COST OF SALES 49,249 32,006 23,838 17,850
-------- -------- -------- --------
GROSS PROFIT 21,939 10,695 6,550 8,013
SELLING EXPENSES 1,632 781 556 890
ADMINISTRATIVE AND GENERAL EXPENSES 6,721 3,463 3,583 2,995
-------- -------- -------- --------
OPERATING INCOME 13,586 6,451 2,411 4,128
INTEREST INCOME 272 156 114 146
INTEREST EXPENSE (75) (33) (45) (66)
OTHER INCOME 571 512 3 100
-------- -------- -------- --------
NET INCOME BEFORE
STATE TAX PROVISION 14,354 7,086 2,483 4,308
STATE TAX PROVISION 316 162 53 110
-------- -------- -------- --------
NET INCOME $ 14,038 $ 6,924 $ 2,430 $ 4,198
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 18
FWT, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands, Except Share Information)
<TABLE>
<CAPTION>
Additional Total
Shares Common Paid-In Retained Stockholders'
Issued Stock Capital Earnings Equity
------ ------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, April 30, 1994 372 $ 4 $ 1 $ 6,177 $ 6,182
Net income -- -- -- 2,430 2,430
Distributions -- -- -- (200) (200)
--- -------- -------- -------- --------
BALANCE, April 30, 1995 372 4 1 8,407 8,412
Net income -- -- -- 6,924 6,924
Distributions -- -- -- (1,359) (1,359)
--- -------- -------- -------- --------
BALANCE, April 30, 1996 372 4 1 13,972 13,977
Net income -- -- -- 14,038 14,038
Distributions -- -- -- (2,718) (2,718
--- -------- -------- -------- --------
BALANCE, April 30, 1997 372 4 1 25,292 25,297
Net income (unaudited) -- -- -- 4,198 4,198
Distributions (unaudited) -- -- -- (20,500) (20,500)
--- -------- -------- -------- --------
BALANCE, August 31, 1997 (unaudited) 372 $ 4 $ 1 $ 8,990 $ 8,995
=== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 19
FWT, INC.
STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
Year Ended April 30, August 31,
-------------------------------- ----------
1997 1996 1995 1997
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 14,038 $ 6,924 $ 2,430 $ 4,198
Adjustments to reconcile net earnings
to net cash provided by operating activities-
Depreciation 508 375 299 273
Net loss (gain) on sale of property and equipment 52 (21) (20) (25)
Adjustments to working capital accounts-
Accounts receivable (8,049) (4,205) (2,286) 8,534
Inventories (7,394) (311) (325) (1,428)
Prepaid expenses (862) (116) 284 (1,569)
Other assets (211) 31 32 23
Accounts payable 6,622 1,480 898 (4,187)
Accrued expenses and other liabilities 1,079 689 110 858
-------- -------- -------- --------
Net cash provided by operating
activities 5,783 4,846 1,422 6,677
-------- -------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (4,341) (1,198) (1,324) (455)
Proceeds from sale of property and equipment 18 16 62 39
-------- -------- -------- --------
Net cash used in investing activities (4,323) (1,182) (1,262) (416)
-------- -------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 468 -- -- 20,000
Proceeds from long-term debt issued 1,325 -- -- --
Payments of long-term debt, including current
maturities (100) (100) (100) (62)
Distributions paid (2,718) (1,359) (200) (20,500)
-------- -------- -------- --------
Net cash used in
financing activities (1,025) (1,459) (300) (562)
-------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 435 2,205 (140) 5,699
CASH AND CASH EQUIVALENTS, beginning of year 4,048 1,843 1,983 4,483
-------- -------- -------- --------
CASH AND CASH EQUIVALENTS, end of year $ 4,483 $ 4,048 $ 1,843 $ 10,182
======== ======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the year for-
Interest $ 73 $ 31 $ 43 $ 66
Taxes 23 1 -- 24
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE> 20
SCHEDULE 4.19 (to EXHIBIT 10.1)
ACCOUNTING
None except as required by Arthur Andersen & Co. in connection with the
preparation of Audited Financial Statements and the Interim Financial
Statements.
<PAGE> 21
SCHEDULE 4.20 (to EXHIBIT 10.1)
ABSENCE OF CERTAIN CHANGES
None
<PAGE> 22
SCHEDULE 4.21 (to EXHIBIT 10.1)
MANAGEMENT LETTERS
None
<PAGE> 23
SCHEDULE 4.22 (to EXHIBIT 10.1)
BANK ACCOUNTS
<TABLE>
<CAPTION>
Type Account Authorized
Account Account No. Signers
- ------- ------- ------- ----------
<S> <C> <C> <C>
Fort Worth Tower Company, Inc. Demand 1180161000 T. W. Moore
Bank One, Fort Worth Downtown Deposit Betty Moore
P. O. Box 2050 Fred Moore
Fort Worth, Texas 76113-2050 Carl Moore
Roy Moore
FWT, Inc. Payroll Account Demand 1823422868 T. W. Moore
Bank One, Fort Worth Downtown Deposit Betty Moore
P. O. Box 2050 Fred Moore
Fort Worth, Texas 76113-2050 Carl Moore
Roy Moore
FWT, Inc. Expansion Account Demand 1823422876 T. W. Moore
Bank One, Fort Worth Downtown Deposit Betty Moore
P. O. Box 2050 Fred Moore
Fort Worth, Texas 76113-2050 Carl Moore
Roy Moore
FWT, Inc. Demand 163-040684-3 T. W. Moore
NationsBank of Texas, N.A. Deposit Betty Moore
Commercial Banking - Fort Worth Fred Moore
P. O. Box 830040 Carl Moore
Dallas, Texas 75283-0040 Roy Moore
FWT, Inc. Money 820703 T. W. Moore
NationsBank of Texas Market Funds Betty Moore
TX1-492-63-05 Fred Moore
901 Main Street, 63rd Floor Carl Moore
Dallas, Texas 75202-3714 Roy Moore
</TABLE>
<PAGE> 24
SCHEDULE 4.23 (to EXHIBIT 10.1)
ACCOUNTS RECEIVABLE
By letter dated October 28, 1997, PrimeCo Personal Communications
notified FWT, Inc. of certain claims against FWT, Inc.
<PAGE> 25
SCHEDULE 4.26 (to EXHIBIT 10.1)
REAL PROPERTY
FORT WORTH PLANT AND OFFICE
TRACT 1
A portion of Block 1, Block 2, and Block 3, Rosedale Industrial Tract, to the
City of Fort Worth, Tarrant County, Texas according to Plat recorded on Page 48
of volume 388-7 in the Tarrant County Deed Records and being more particularly
described as follows:
BEGINNING at a Texas Electric Service Company concrete monument and being at
the most easterly corner of said Block 3;
THENCE N 23 degrees 29' W along the East line of said Block 3 a distance of
351.1 feet to a bolt at the Northeast corner of said Block 3;
THENCE N 74 degrees 47' W a distance of 374.6 feet to a bolt;
THENCE S 89 degrees 06' 15" W a distance of 293.68 feet to a bolt in the East
right-of-way line of Interstate Highway No. 820;
THENCE S 7 degrees 12' W along the East right-of-way line of said Interstate
Highway No. 820 a distance of 223.02 feet to a bolt;
THENCE S 0 degrees 18' E along the East right-of-way line of said Interstate
Highway No. 820 a distance of 323.39 feet to an iron rod at the Northwest
corner of a 4.004 acre tract as recorded on page 775 of Volume 4605 in the
Tarrant County Deed Records;
THENCE N 89 degrees 41' E along the North line of said 4.004 acre tract a
distance of 116.8 feet to a bolt;
THENCE N 60 degrees 30' E along the North line of said 4.004 acre tract a
distance of 157.9 feet to a bolt;
THENCE S 86 degrees 43' E along the North line of said 4.004 acre tract a
distance of 200.45 feet to a bolt;
THENCE S 49 degrees 50' E along the North line of said 4.004 acre tract a
distance of 193.48 feet to a bolt at the Northeast corner of said 4.004 acre
tract;
THENCE N. 49 degrees 33' E a distance of 287.89 feet to place of beginning,
containing 8.387 acres or 365,330 square feet of land, more or less, and being
the same property described in the Deed dated May 22, 1974 from Lincoln
Industrial Corporation to
1
<PAGE> 26
Tommy Moore, Inc. recorded in Volume 5651, page 869, Deed Records, Tarrant
County, Texas.
TRACT 2
A tract of land out of the J.A. Creary Survey, Abstract 269, Tarrant County,
Texas, being a portion of Parcel No. 1 of that certain conveyance to Texas
Electric Service Company recorded in Volume 1209, page 107, Deed Records,
Tarrant County, Texas, and being more particularly described by metes and
bounds as follows:
BEGINNING at a steel rod at the Northwest corner of said Parcel No. 1, said
point of beginning being in the North line of said J.A. Creary Survey and 43.9
feet North 89 degrees 30 minutes West from the Southeast corner of said Lot 26,
Block J, Lakeview Addition to the Town of Handley, now a part of the City of
Fort Worth, Tarrant County, Texas, according to the plat thereof recorded in
Volume 310, page 8, Deed Records, Tarrant County, Texas;
THENCE with the West line of said Parcel No. 1, South 74 degrees 45 minutes
East 260.5 feet to a point;
THENCE North 0 degrees 30 minutes East 66.3 feet to a point in the North line
of said Parcel 1 and the North line of said J.A. Creary Survey, said point
being the Southwest corner of Lot 14, Block K of said Lakeview Addition;
THENCE with the North line of said Parcel No. 1, the North line of said J.A.
Creary Survey, and the South line of said Lakeview Addition, North 89 degrees
30 minutes West 251.9 feet to the place of beginning.
TRACT 3
Lots 9, 10, 11, 12 and 13, Block H., the South 1/2 of Lots 9 and 22, all of
Lots 10, 11, 12, 13, 23, 24, 25 and 26, Block J, and the Alley between lots
vacated by Ordinance 4282, Lakeview Addition to the Town of Handley, now a part
of the City of Fort Worth, Tarrant County, Texas.
TRACT 4
The South one-half ( 1/2) of Lot 10, all of Lots 11, 12, 13 and 14, Block K,
and the West 6 feet of an alley parallel to the East lines of Lots 11, 12, 13
and 14, and the South one-half ( 1/2) of Lot 10, all in the Lakeview Addition
to the town of Handley, now a part of the City of Fort Worth, Tarrant County,
Texas, according to plat thereof recorded in Volume 310, page 8, Deed Records,
Tarrant County, Texas.
TRACT 5
A tract or parcel of land out of the J.A. Creary Survey, Abstract 269, Tarrant
County, Texas, being a portion of Parcel No. 1 of that certain conveyance to
Texas Electric Service Company
2
<PAGE> 27
recorded in Volume 1209, page 107, Deed Records, Tarrant County, Texas, and
being more particularly described by metes and bounds as follows:
BEGINNING at the Southwest corner of Lot 14, Block K of the Lakeview Addition
to the Town of Handley, now a part of the City of Fort Worth, Tarrant County,
Texas, according to the plat recorded in Volume 310, page 8, Deed Records,
Tarrant County, Texas, said point of beginning being in the North line of said
J.A. Creary Survey and located 888 feet South 89 degrees 30 minutes East of the
Northwest corner of the said J.A. Creary Survey, said point of beginning also
being in the North line of said Parcel No. 1 and located 251.9 feet South 89
degrees 30 minutes East of its Northwest corner.
THENCE with the North line of said J.A. Creary Survey and the North line of
said Parcel No. 1, South 89 degrees 30 minutes East 156.0 feet to a point in
the center of an alley, said point being 6 feet South 89 degrees 30 minutes
East of the Southeast corner of Lot 14, Block K of the Lakeview Addition;
THENCE South 0 degrees 30 minutes West 200.4 feet to a point in the West line
of said Parcel No. 1;
THENCE with the said West line North 22 degrees 45 minutes West 114.5 feet, and
North 74 degrees 45 minutes West 114.5 feet to a point at the Southeast corner
of a 0.192 acre tract conveyed by Texas Electric Service Company, a
corporation, to E.D. Lewis, by a deed dated August 25, 1969;
THENCE with the East line of said 0.192 acre tract North 0 degrees 30 minutes
East 66.3 feet to the place of beginning.
KENNEDALE
TRACT 1
BEING a tract of land out of the David Strickland Survey, Abstract No. 1376, in
the City of Kennedale, Tarrant County, Texas and being a portion of the tracts
described in Volume 3529, page 27, Volume 2024, page 411, and Volume 3007, page
551, of the Deed Records of Tarrant County, Texas, and being more particularly
described as follows:
BEGINNING at a 1/2" iron pin set at the intersection of the northerly line of
Gilman Road, as shown on the plat recorded in Volume 6274, page 732 of the Deed
Records of Tarrant County, Texas, and the northeasterly line of U. S. Business
Highway No. 287;
THENCE North 41 degrees 47 minutes 00 seconds West with the northeasterly line
of said Highway No. 287, 264.40 feet to a 1/2" iron pin set at the
southwesterly corner of a 1 acre tract;
THENCE North 48 degrees 13 minutes 00 seconds East with the southeast line of
said 1 acre tract, 207.40 feet to a 1/2" iron pin set at its easterly corner;
THENCE North 41 degrees 47 minutes 00 seconds West with the northeast line of
said 1 acre tract, 210.00 feet to a 1/2" iron pin set at its northerly corner;
3
<PAGE> 28
THENCE South 48 degrees 13 minutes 00 seconds West with the northwest line of
said 1 acre tract, 207.40 feet to a 1/2" iron pin set at its westerly corner,
being in the northeast line of said Highway No. 287;
THENCE North 41 degrees 47 minutes 00 seconds West with the northeast line of
said Highway No. 287, 477.21 feet to a 1/2" iron pin found in the east line of
a 1 acre tract owned by Sara Adams;
THENCE North 48 degrees 13 minutes 00 seconds East with the east line of said
Adams tract, 128.53 feet to a 1/2" iron pin set;
THENCE North 00 degrees 15 minutes 16 seconds east 310.39 feet to a 1/2" iron
pin found in the east line of a Majestic Liquor Store tract;
THENCE North 22 degrees 02 minutes 25 seconds West with the east line of said
Majestic Liquor Store tract, 243.97 feet to a 1/2" iron pin found in the
southerly line of Interstate Highway No. 20;
THENCE North 45 degrees 11 minutes 00 seconds East with the southerly line of
Interstate Highway No. 20, 133.54 feet to a monument found, being the beginning
of a curve to the right, having a radius of 1,782.86 feet, whose chord bears
North 49 degrees 12 minutes 00 seconds East, 249.76 feet;
THENCE along said curve and southerly line of Interstate Highway No. 20,
through a central angle of 08 degrees 02 minutes 00 seconds, an arc distance of
249.97 feet to a 1/2" iron pin set at the southwest corner of a tract of land
owned by Holly Outdoor, Inc.;
THENCE South 89 degrees 33 minutes 00 seconds East with the south line of said
Holly Outdoor, Inc. tract, 290.03 feet to a 1/2" iron pin found at its
southeast corner;
THENCE North 00 degrees 52 minutes 25 seconds East with the east line of said
Holly Outdoor, Inc., tract, and the east line of a tract of land owned by
Milton B. Broyles, 180.10 feet to a monument found in the southerly line of
said Interstate Highway No. 20, and being the beginning of a curve to the right
having a radius of 1,782.86 feet, whose chord bears North 70 degrees 41 minutes
48 seconds east, 400.87 feet;
THENCE along said curve and southerly line of Interstate Highway No. 28,
through a central angle of 12 degrees 54 minutes 36 seconds, an arc distance of
401.72 feet to a 1/2" iron pin set;
THENCE North 89 degrees 44 minutes 00 seconds East with the southerly line of
said Interstate Highway No. 20, 552.43 feet to a 1/2" iron pin set at the
northwest corner of a tract of land conveyed to J. Correl Adams, as recorded in
Volume 3286, page 109, of the Deed Records of Tarrant County, Texas;
THENCE South 00 degrees 19 minutes 00 seconds East with the west line of said
Adams tract, 379.30 feet to a 1/2" iron pin set at its southwest corner;
4
<PAGE> 29
THENCE North 89 degrees 44 minutes 00 seconds East with the south line of said
Adams tract, 120.00 feet to a 1/2" iron pin set at its southeast corner;
THENCE North 00 degrees 19 minutes 00 seconds West with the east line of said
Adams tract, 379.30 feet to a 1/2" iron pin set at its northeast corner, and
being in the southerly line of Interstate Highway No. 20;
THENCE North 89 degrees 44 minutes 00 seconds east with the southerly line of
said Interstate Highway No. 20, 117.37 feet to a 5/8" iron pin found for the
northeast corner of this tract;
THENCE South 00 degrees 19 minutes 00 seconds east at 409.40 feet pass a 5/8"
iron pin found, at 459.40 feet pass a 1/2" iron pin set and in all 1,747.87
feet to a 1/2" iron pin set in the northwesterly line of a 75 foot Texas
Electric Service Company (T.E.S.Co.) tract;
THENCE South 47 degrees 57 minutes 19 seconds West with the northwesterly line
of said T.E.S.Co. tract, 23.60 land to a 1/2" iron pin set in the north line of
said Gilman Road;
THENCE South 89 degrees 58 minutes 00 seconds West with the north line of said
Gilman Road, 954.49 feet to a 1/2" iron pin set, and South 47 degrees 56
minutes 44 seconds West 207.31 feet to the POINT OF BEGINNING, and containing
59.4886 acres of land.
TRACT 2
BEING situated in Tarrant County, Texas, and being a tract of land in the David
Strickland survey, Abstract No. 1376, and being a portion of that certain tract
of land conveyed to Orlaf Atchison by deed recorded in Volume 3007, page 551,
Deed Records of Tarrant County, Texas and being the same tract of land conveyed
to J. Garrell Adams recorded in Volume 3286, page 109, Deed Records of Tarrant
County, Texas, and being more particularly described as follows:
COMMENCING at the intersection of the most Easterly West line of said Atchison
tract with the South Right of Way line of Interstate Highway 20, said point
being on a curve to the right in said South Right of Way line whose center
bears South 26 degrees 03 minutes 33 seconds East 1782.86 feet;
THENCE Northeasterly along said curve in said South Right of Way line of
Highway 402.6 feet to the point of intersection of said South Right of Way line
of highway with the North line of said Atchison 21.13 acre tract;
THENCE 88 degrees 51 minutes East with said South Right of Way line of highway
and with said North line of Atchison tract 525.9 feet;
THENCE North 89 degrees 46 minutes East with said South Right of Way line of
highway and with said North line of Atchison tract 25.9 feet to an iron rod,
the POINT OF BEGINNING of the tract herein described; said point being the
Northwest corner of said J. Garrell Adams tract;
5
<PAGE> 30
THENCE North 89 degrees 46 minutes East with said South Right of Way line of
highway and with said North line of Atchison tract 120.0 feet to an iron rod
for corner, said point being the Northeast corner of said J. Garrell Adams
tract;
THENCE South 00 degrees 14 minutes East 379.3 feet to an iron rod for corner,
said point being the Southeast corner of said J. Garrell Adams tract;
THENCE South 89 degrees 46 minutes West parallel with said South Right of Way
line of highway 120.0 feet to an iron rod for corner, said point being the
Southwest corner of said J. Garrell Adams tract;
THENCE North 00 degrees 14 minutes West 379.3 feet to the POINT OF BEGINNING.
SAVE AND EXCEPT FROM TRACT 1 AND/OR TRACT 2:
A portion of Lot 1-R, Block 1, FWT, Inc. addition, an addition to the City of
Kennedale, Tarrant County, Texas, according to Plat recorded in Plat Cabinet A,
Slide 3398, Plat Records, Tarrant County, Texas, and an Unplatted tract of land
situated in the David Strickland Survey, Abst. No. 1376, City of Kennedale,
Tarrant County, Texas, being more particularly described by metes and bounds as
follows:
Beginning at a 1/2" iron set in the north line of Gilman Road, said point being
South 89 degrees 57 minutes 37 seconds West, 131.21 feet from the southwest
corner of said Lot 1-R;
THENCE North 00 degrees 19 minutes 00 seconds West, 300.00 feet to a 1/2" iron
set;
THENCE North 89 degrees 57 minutes 37 seconds East 871.21 feet to a 1/2" iron
set;
THENCE South 00 degrees 19 minutes 00 seconds East, 300.00 feet to a 1/2" iron
set in the north Line of said Gilman road;
THENCE South 89 degrees 57 minutes 37 seconds West, along the north line of
said Gilman Road, 871.21 feet to the POINT OF BEGINNING and containing 6.000
acres of land.
Fifty (50) Foot Wide Vehicular Access
Easement No. 1
A fifty (50) foot wide vehicular access situated in the David Strickland
Survey, Abst. No. 1376, City of Kennedale, Tarrant County, Texas, said fifty
(50) foot wide vehicular access being more particularly described as follows:
Beginning at a 1/2" iron found in the north line of Gilman Road, said point
being South 89 degrees 57 minutes 37 seconds West, 131.21 feet from the
southwest corner of Lot 1-R, Block 1, FWT, Inc. Addition, an addition to the
City of Kennedale, Tarrant County, Texas, according to Plat recorded in Plat
Cabinet A, Slide 3398, Plat Records, Tarrant County, Texas;
6
<PAGE> 31
THENCE South 89 degrees 57 minutes 37 seconds West, along the north line of
said Gilman Road, 25.00 feet;
THENCE North 00 degrees 19 minutes 00 seconds West, 300.00 feet;
THENCE North 89 degrees 57 minutes 37 seconds East, at 25 feet passing a 1/2"
iron found and continuing in all, 50.00 feet;
THENCE South 00 degrees 19 minutes 00 seconds East, 300.00 feet to a point in
the north line of said Gilman Road;
THENCE South 89 degrees 57 minutes 37 seconds West, along the north line of
said Gilman Road, 25.00 feet to the POINT OF BEGINNING and containing 0.344
acre of land.
A Fifty (50) Foot Wide Vehicular Access
Easement No. 2
A fifty (50) foot wide vehicular access across a portion of Lot 1-R, Block 1,
FWT, Inc. Addition, an addition to the City of Kennedale, Tarrant County,
Texas, according to Plat recorded in Plat Cabinet A, Slide 3398, Plat Records,
Tarrant County, Texas, said fifty (50) foot wide vehicular access being more
particularly described, as follows:
BEGINNING at a 1/2" iron found in the north line of Gilman road, said point
being North 89 degrees 57 minutes 37 seconds East, 740.00 feet from the
southwest corner of said Lot 1-R;
THENCE North 00 degrees 19 minutes 00 seconds West, 300.00 feet to a 1/2" iron
found;
THENCE North 89 degrees 57 minutes 37 seconds East, 50.00 feet to a point in
the east line of said Lot 1-R;
THENCE South 00 degrees 19 minutes 00 seconds East, along the east line of said
Lot 1-R, a distance of 284.21 feet to a 1/2" iron found;
THENCE South 47 degrees 57 minutes 19 seconds West, 23.60 feet to a point in
the north line of said Gilman Road;
THENCE South 89 degrees 57 minutes 37 seconds West, along the north line of
said Gilman Road 32.39 feet to the POINT OF BEGINNING and containing 0.341 acre
of land.
TRACT 3:
A tract of land out of the David Strickland Survey, Abstract No. 1376, Tarrant
County, Texas, and being a portion of that certain tract of approximately 160
acres conveyed by Walter A. Williams, and wife, Nettie Williams to Raymond
Rufus Swiney and wife, Polly Leodia Swiney by deed recorded in Volume 1563,
page 434, Deed Records, Tarrant County, Texas, and being more particularly
described by metes and bounds as follows:
7
<PAGE> 32
BEGINNING at an iron pin the Northerly R.O.W. line of U. S. Highway No. 287
(Mansfield Highway) said pin being N. 41 degrees 47 minutes W. 915.70 feet from
a concrete monument marked "TESCO FL," at the intersection of said North R.O.W.
line with the North line of a Texas Electric Service Company 3.48 acre tract
recorded in Volume 2342, page 453, Deed Records, Tarrant County, Texas;
THENCE N. 41 degrees 17 minutes W. along said Northerly R.O.W. line 210.0 feet
to an iron pin for corner;
THENCE N. 48 degrees 13 minutes E. 207.43 feet to an iron pin for corner;
THENCE S. 41 degrees 47 minutes E. 210.0 feet to an iron pin for corner;
THENCE S. 48 degrees 13 minutes W. 207.43 feet to the POINT OF BEGINNING and
containing 1.0 acre of land and being the same tract of land described in
Volume 3605, page 288, Deed Records, Tarrant County, Texas.
DELTA STEEL LEASE
Lease Agreement dated February 18, 1997 between Delta Steel, Inc. and FWT, Inc.
covering a portion of the warehouse building and improvements, machinery and
equipment located at 9217 South Freeway, Fort Worth, Texas.
8
<PAGE> 33
SCHEDULE 4.28(c) (to EXHIBIT 10.1)
STORAGE TANKS
The underground storage tanks which are or have been located on the
Real Property are described or referred to in the Environmental Assessment
Report prepared for Baker Capital Corporation prepared by Entrix, Inc., Dallas,
Texas (Project No. 271201).
<PAGE> 34
SCHEDULE 4.29 (to EXHIBIT 10.1)
EQUIPMENT
LIST OF FORK LIFTS AND YARD EQUIPMENT
<TABLE>
<CAPTION>
Depm
Date Original Schedule
Make Model Serial # Purchased Cost Ref
- ------------------------------------------------------------------------------------------------------------
FORKLIFTS
<S> <C> <C> <C> <C> <C>
Caterpillar V80C 3151367 03/01/84 2,000.00 10027
Caterpillar V225B 70Y00429 12/17/84 28,102.50 10048
Caterpillar V140 13V00972 02/23/90 11,018.75 10063
Caterpillar V140 13V00951 08/02/91 10,500.00 10077
Caterpillar V150 13V01883 03/03/92 19,376.75 10081
Caterpillar V80D 41X391 12/08/93 13,899.75 10104
Caterpillar V300D 24V147 03/16/94 22,500.00 10110
Clark C500Y130D Y1015-100-2790 10/20/94 8,081.25 10125
Toyota 3FGH15 3FGH15-10243 03/21/95 3,771.25 10138
Clark C50 529586LPG1263 06/05/95 3,180.00 10170
Toyota 3FG20 3FG20-23825 09/27/95 7,577.50 10155
Caterpillar T25 22Y01835 09/27/95 2,165.00 10156
Toyota T15 3FG15-10882 11/20/95 2,500.00 10158
Caterpillar V100F 6LG00262 12/12/95 14,546.25 10165
Caterpillar V100F 6LG00212 12/12/95 14,546.25 10166
Caterpillar V80D 41X02150 01/29/96 6,500.00 10171
Caterpillar V110 13V01686 08/21/96 9,742.50 11007
Caterpillar V150 13V01708 10/04/96 12,000.00 11001
Pettibone RT622 3930-903-0899 02/18/97 23,397.02 11002
Toyota 3FG20 013FG20 03/25/97 5,000.00 11006
Pettibone 204G 5286 04/14/97 204,725.00 11008
Clark GCX20 GX230-0040-8730 04/16/97 4,250.00 11003
Clark GCX20 GX230-0042-8730 04/16/97 4,250.00 11004
Clark GCX20 GX230-0080-8730 04/16/97 4,250.00 11005
EQUIPMENT LEASED
Caterpillar DP115 4DP00051 05/15/97 93,651.41
YARD EQUIPMENT
Yard Mule 6D9040 08/05/97 15,696.25
Used to move trailers on yard (not licensed or titled)
</TABLE>
<PAGE> 35
SCHEDULE 4.30 (to EXHIBIT 10.1)
VEHICLE LIST
NOVEMBER 4, 1997
FWT, INC.
<TABLE>
<CAPTION>
UNIT NO. YEAR/MAKE I.D. NUMBER LICENSE NO. EXP. DATE
======== =================================== =================== =========== ===========
<S> <C> <C> <C> <C>
107 1978 International DA227HHA21391 2DC445 March-98
129 1974 White Ford Truck
(with 20' Flat Bed) N76FVT08512 EG9285 March-98
149 1977 International Dump Truck D0522GCA21175 6796WY March-98
203 1978 Trailmobile Van 014A897693 Y72008 March-98
214 1989 Maroon Ford Flat Bed 1FDJF37MXKNB85933 5301UR August-98
220 1991 Chevrolet Pickup 1GCEC14ZOME172792 3895YX June-98
222 1984 Fort Pickup (3/4) 1FTHX2616EKA41918 DM4078 January-98
226 1992 Ford - F450 Utility 2FLDF47M3NCA92647 BV1396 March-98
227 1981 Lufkin Semi-Trailer 1L01B4020B1059152 Y02339 March-98
229 1992 Ford - Utility Bed Truck 2FDLF47M2NCA98469 CU6350 March-98
230 1978 International Truck Tractor DF22HHA26617 VJ4957 March-98
238 1994 Chevrolet Pickup (3/4) 1GCFC24K1RE138221 HG6090 December-97
239 1994 Ford Pickup (3/4) 1FTHF25H2RLB52496 KZ4021 July-98
240 1982 Mack Truck 1M2N179Y4CA076285 2DF485 March-98
244 1982 Ford Crane Truck 1FDXR90W9CVA01194 MB7671 March-98
247 1995 Ford Pickup 1FDLF47F2SEA26775 MV6877 March-98
248 1995 Ford Super Duty Diesel 1FDLF47F0SEA49567 PB5720 March-98
249 1989 Ford Pickup 1FTHF25Y4KNB72534 PZ4585 July-98
250 1995 Ford Pickup 2FTHF25H8SCA46926 PG1629 April-98
253 1995 Ford F-Super Duty Diesel (with
Flat Bed) 1FDLF47F1SEA68757 RX2309 March-98
254 1996 Chevrolet Suburban 3GNEC16R5TG116861 TD3399 February-98
256 1989 Transcraft (Token Trailer) 1D1TTE48208K1031956 Z13889 March-98
257 1983 Transcraft (Token Trailer) 1D1TTE209D1018980 Z13888 March-98
</TABLE>
<PAGE> 36
<TABLE>
<CAPTION>
UNIT NO. YEAR/MAKE I.D. NUMBER LICENSE NO. EXP. DATE
======== =================================== =================== =========== ===========
<S> <C> <C> <C> <C>
263 1996 Red Ford F-250 Pickup
(3/4 Ton) 1FTHF25H9TLA58395 UG8733 July-98
265 1968 Chevrolet Water Truck CE538S173252 VJ0197 March-98
(Purchased 8/20/96)
266 1996 Shopmade (Red) 30' TR181583 94VNRH September-98
Gooseneck Trailer
267 1996 Black Chevrolet Tahoe
(4-wheel drive) 1GNEK13RXTJ426767 UG5466 October-97
270 1979 Aztec - 50' Drop Deck Trailer 3818 Y71182 March-98
271 1983 International (Trash Truck) 1HTAA950DHA10515 VJ1690 March-98
272 1987 Suzuki (2-dr) JS4JC51VH4121296 PWB08F November-98
273 1986 Mack 1M2N179Y1GA004997 2DD004 March-98
274 1997 Chevrolet Pickup 2GCEK19R8V1185658 WN3746 January-98
275 1991 Lufkin Flatbed Trailer 1L01B4823M1092296 Z10885 March-98
277 1987 (1/2 Ton) Dodge Pickup 187GN14M2HS422581 DM0610 February-98
278 1986 Lufkin/Van Trailer 1L01A4820G1071249 Y71881 March-98
279 1986 Lufkin/Van Trailer 1L01A4820G1069503 Y71883 March-98
280 1986 Lufkin/Van Trailer 1L01A4827G1070454 Y71882 March-98
281 1986 Lufkin/Van Trailer 1L01A4829G1070455 Y71884 March-98
</TABLE>
VEHICLE LIST
APPORTIONED - MARCH 31, 1998
FWT, INC.
<TABLE>
<CAPTION>
WEIGHT
UNIT NO. YEAR/MAKE I.D. NUMBER (EMPTY) EXP. DATE
======== =================================== =================== =========== ===========
<S> <C> <C> <C> <C>
TRUCKS:
181 1984 Freightliner 1FUEYDYB2EP236569 15,600 R38218
182 1984 Freightliner 1FUEYDYB2EP236572 16,000 R38219
223 1992 Freightliner 1FUPAZYB4NP483912 17,100 R38220
224 1992 Freightliner 1FUPAZYB6NP483913 17,200 R38221
251 1995 Freightliner 1FUPBSEB7SL554824 16,900 R38222
</TABLE>
<PAGE> 37
<TABLE>
<CAPTION>
UNIT NO. YEAR/MAKE I.D. NUMBER WEIGHT (EMPTY) LICENSE NO.
======== ======================== =================== ============== ===========
<S> <C> <C> <C> <C>
252 1995 Freightliner 1FUPBSEB92L554825 16,800 R38223
TRAILERS:
72 1966 Fruehauf FWF480006 8,000 24R929
87 1973 Hobbs FHR414701 9,500 24R930
115 1971 Dorsey 91655 10,200 24R931
116 1971 Dorsey 91643 9,500 24R932
138 1981 Fontaine 1A11402C4B1534445 11,000 24R933
164 1983 Fontaine 1422C4D1537487 12,500 24R934
165 1979 Hobbs FHV346546 8,800 24R935
166 1983 Fontaine TR171078 10,000 24R936
167 1983 Fontaine 1422C2D1537486 12,500 24R937
211 1976 Fontaine 27544 13,500 24R938
232 1986 Fruehauf 1H5P04526GM027801 12,400 24R939
233 1986 Fruehauf 1H5P04528GM027802 12,400 24R940
234 1989 Lufkin 1L01B4824K1085144 10,700 24R941
243 1988 Fontaine 13N245308J1543092 14,500 24R942
268 1991 Fontaine 13N148309M1552465 11,600 26R389
269 1991 Fontaine 13N148305M1552544 11,800 26R390
</TABLE>
<PAGE> 38
SCHEDULE 4.31 (to EXHIBIT 10.1)
CAPITAL EXPENDITURE BUDGET
<TABLE>
<CAPTION>
FY '98 FY '99 - FY '02
EXPANSION MAINTENANCE
OFFICE: ---------- ---------------
<S> <C> <C>
Computer Equipment $ 450,000
Office purchase/finish out 2,225,000
Office furniture & equipment 400,000
----------
Subtotal: $3,075,000 $ 500,000
FACTORY:
Saw $ 80,000
Gravel 200,000
Roto-Drill 250,000
Burning Table 200,000
Overhead Cranes/Rails (2) 120,000
Seam Welders 750,000
Arm-Bender 250,000
Threading Machine 75,000
MRP System* 2,000,000
----------
Subtotal: $3,960,000 $2,200,000
ENGINEERING:
SST/Guyed Automation $ 365,000
Pole Design Automation 185,000
Eng./Quote Integration 235,000
PowerMount Automation 70,000
----------
Subtotal: $ 855,000 $ 300,000
---------- ----------
TOTAL: $7,890,000 $3,000,000
========== ==========
</TABLE>
*Based on $800,000 MRP system and capitalizing $1.2 million in consulting.
Note: FWT, Inc. may pursue a sale/leaseback on the building.
<PAGE> 39
SCHEDULE 4.32 (to EXHIBIT 10.1)
MATERIAL CONTRACTS
(1) General Supply Contract between FWT, Inc. and AT&T Wireless Services,
Inc.
(2) Master Purchase Agreement between FWT, Inc. and Alltel Communications,
Inc.
(3) Product Purchase Agreement dated December 1, 1996 between GTE Mobilnet
Service Corp. and FWT, Inc.
(4) Master Purchase Agreement between Nextel Communications, Inc. and FWT,
Inc.
(5) Master Purchase Agreement for Equipment and Services between Sprint
Spectrum, L.P. and FWT, Inc.
(6) Subcontract Agreement for services between Columbia Spectrum
Management, L.P. and FWT, Inc.
(7) Sales Agreement between American Industrial Precast Products, Inc. and
FWT, Inc.
(8) Product Supply Agreement dated October 23, 1996 between Tri-Gas, Inc.
and FWT, Inc.
(9) Cooperative Production Agreement dated March 10, 1997 between Delta
Steel, Inc. and FWT, Inc.
(10) Sale and Purchase Agreement between FWT, Inc. and Allgon Industries,
Inc.
(11) Transportation Contract dated March 26, 1997 between Delta Steel, Inc.
and FWT, Inc.
(12) Agreement between Cox Communications PCS, L.P. and FWT, Inc.
(13) Agreement dated January 3, 1997 between FWT, Inc. and Cox California
PCS, Inc.
(14) Agreement dated April 11, 1996 between FWT, Inc. and Black & Veatch
Construction, Inc., a Kansas corporation.
(15) License Agreement by and among PrimeCo. Personal Communications, L.P.,
a Delaware limited partnership, Texas Utilities Electric Company and
FWT, Inc.
(16) Network Equipment Purchase Agreement dated January 1, 1996 by and
among FWT, Inc., PrimeCo. Personal Communications, L.P., a Delaware
limited partnership, TOMCOM, L.P., a Delaware limited partnership, WMC
Partners, L.P. and Cellco Partnership, a Delaware general partnership.
(17) Agreement between MCI and FWT, Inc. relating to long distance service.
(18) Agreement between Southwestern Bell and FWT, Inc. relating to a T-1.
<PAGE> 40
(19) Agreement between U. S. West Business Resources, Inc. and FWT, Inc.
(not executed).
(20) Promissory note dated December 15, 1993 in the original amount of
$700,000 payable to NationsBank of Texas, N.A.
(21) Loan Agreement dated December 15, 1993 between NationsBank of Texas,
N.A. and FWT, Inc.
(22) Security Agreement dated December 15, 1993 between NationsBank of
Texas, N.A. and FWT, Inc. covering accounts, accounts receivable,
contract rights, notes, instruments and chattel paper.
(23) Financing Statement No. 248140 filed in the office of the Secretary of
State of Texas on December 31, 1993.
(24) Negative Pledge Agreement dated December 15, 1993 between NationsBank
of Texas, N.A. and FWT, Inc.
(25) Letter loan agreement dated October 1, 1996 between FWT, Inc. and Bank
One, Texas, N.A., as amended.
(26) Negative Pledge Agreement dated October 1, 1996 between FWT, Inc. and
Bank One Texas, N.A.
(27) Promissory note dated July 1, 1997 in the original amount of
$1,500,000 payable to Bank One, Texas, N.A.
(28) Promissory note dated April 25, 1997 in the original amount of
$2,200,000 payable to Bank One, Texas, N.A. (loan for planned office
building; no advances made to FWT, Inc.).
(29) Promissory note dated April 1, 1997 in the original amount of
$1,325,000 payable to Bank One, Texas, N.A.
(30) Promissory note dated July 23, 1997 in the original amount of
$20,000,000 payable to Bank One, Texas, N.A.
(31) Employment Agreement dated December 4, 1996 between FWT, Inc. and Bob
Kramm.
(32) Employment Agreement dated April 1, 1996 between FWT, Inc. and Bill
Sales.
(33) Employment Agreement dated August 1, 1996 between FWT, Inc. and Dodie
Deaton.
(34) Employment Agreement dated August 19, 1996 between FWT, Inc. and Allen
Swofford.
(35) Employment Agreement dated September 1, 1996 between FWT, Inc. and
Martin L. de la Rosa.
2
<PAGE> 41
(36) Employment Agreement dated September 1, 1996 between FWT, Inc. and
Thomas Don Morris.
(37) Employment Agreement dated May 21, 1996 between FWT, Inc. and Dean
Barkman.
(38) Employment Agreement dated October 20, 1997 between FWT, Inc. and
Matvey Zeltser.
(39) Sales Representative Agreement between Wei Sheng Investment and
Development Co., Ltd. and FWT, Inc.
(40) Letter dated February 14, 1997 to Uma S. Atluri.
(41) Lease Agreement dated February 18, 1997 between Delta Steel, Inc. and
FWT, Inc. covering property located at 9217 South Freeway, Fort Worth,
Texas.
(42) Tower Site Lease Agreement between FWT, Inc. and Nextel of Texas, Inc.
(43) Tower Site Lease Agreement dated January 13, 1997 between FWT, Inc.
and Sprint Spectrum, L.P., a Delaware limited partnership.
(44) Standard Antenna Site Lease Agreement between FWT, Inc. and RAM Mobile
Data USA Limited Partnership.
(45) Storage Lease dated January 1, 1995 between FWT, Inc. and MCI
Telecommunications Corporation, a Delaware corporation.
(46) Lease Agreement between FWT, Inc. and Reynolds Outdoor, Inc. relating
to the lease by FWT, Inc. of a sign.
(47) Lease Agreement between Milton B. Broyles Estate and Ruby Ann Broyles,
as lessors, and Patrick Media Group of Dallas, Inc., as lessee.
(48) Lease and Rental Agreement between FWT, Inc. and Darr Equipment Co.
relating to the lease of one (1) Caterpillar DP115 (Serial Number
4DP00051).
3
<PAGE> 42
SCHEDULE 4.35 (to EXHIBIT 10.1)
INTELLECTUAL PROPERTY
(1) Antenna Support For Power Transmission Tower - Patent No. 5,649,402,
issued July 22, 1997. Continuation Patent Application of Patent No.
5,649,402 - Serial No. 08/877,717 filed June 23, 1997.
The following reflect the status of the foreign counterparts to United
States Patent No. 5,649,402 issued July 22, 1997:
CANADA
The Canadian counterpart was filed on March 27, 1996 and was assigned
Patent File No. 2,172,743. The application was laid open on March 2,
1997. The first maintenance fee is due on March 27, 1998. A Request
for Substantive Examination is due by March 27, 2003. The application
is pending.
MALAYSIA
The Malaysian counterpart was filed on August 22, 1996 and was
assigned Application No. PI 9603450. A Request for Substantive
Examination is due by August 22, 1998; however, Lee Ong & Kandiah,
FWT, Inc.'s foreign associate, has been instructed to file a Request
for Modified Substantive Examination based on the issued United States
patent.
PCT INTERNATIONAL
The PCT International Request designating all regions and countries
(except the United States) was filed on August 20, 1996 and was
assigned International Application No. PCT/US96/13733. A Demand for
International Preliminary Examination was filed on March 31, 1997. A
favorable International Preliminary Examination Report was mailed on
May 21, 1997. The deadline for entering the National Phase is March
1, 1998; however, FWT, Inc. has entered the National Phase early in
Brazil and South Korea (see below).
BRAZIL
The Brazilian National Phase application was filed on August 1, 1997
and assigned a filing date of August 20, 1996 and Deposit No.
PCT/US96/13733.
SOUTH KOREA
The South Korean National Phase application was filed on August 1,
1997 and was assigned patent Application No. 705250 in 1997. A
Request for Examination is due by August 19, 2001.
(2) POWERMOUNT trademark - Registration No. 2,088,202.
(3) SMARTROC trademark - Registration No. 1,944,176.
<PAGE> 43
(4) Co-owner of Patent Application filed February 28, 1994, Serial No.
08/202,444 (assigned to FWT, Inc. by Roy J. Moore).
(5) Co-owner of Patent Application filed January 31, 1995, Serial No.
08/381,504 (assigned to FWT, Inc. by Roy J. Moore).
(6) License Agreement by and among PrimeCo Personal Communications, L.P.,
a Delaware limited partnership, Texas Utilities Electric Company, a
Texas corporation, and FWT, Inc.
<PAGE> 44
SCHEDULE 4.36(b) (to EXHIBIT 10.1)
REGISTRATIONS
(1) Antenna Support For Power Transmission Tower - Patent No. 5,649,402,
issued July 22, 1997. Continuation Patent Application of Patent No.
5,649,402 - Serial No. 08/877,717 filed June 23, 1997.
The following reflect the status of the foreign counterparts to United
States Patent No. 5,649,402 issued July 22, 1997:
CANADA
The Canadian counterpart was filed on March 27, 1996 and was assigned
Patent File No. 2,172,743. The application was laid open on March 2,
1997. The first maintenance fee is due on March 27, 1998. A Request
for Substantive Examination is due by March 27, 2003. The application
is pending.
MALAYSIA
The Malaysian counterpart was filed on August 22, 1996 and was
assigned Application No. PI 9603450. A Request for Substantive
Examination is due by August 22, 1998; however, Lee Ong & Kandiah,
FWT, Inc.'s foreign associate, has been instructed to file a Request
for Modified Substantive Examination based on the issued United States
patent.
PCT INTERNATIONAL
The PCT International Request designating all regions and countries
(except the United States) was filed on August 20, 1996 and was
assigned International Application No. PCT/US96/13733. A Demand for
International Preliminary Examination was filed on March 31, 1997. A
favorable International Preliminary Examination Report was mailed on
May 21, 1997. The deadline for entering the National Phase is March
1, 1998; however, FWT, Inc. has entered the National Phase early in
Brazil and South Korea (see below).
BRAZIL
The Brazilian National Phase application was filed on August 1, 1997
and assigned a filing date of August 20, 1996 and Deposit No.
PCT/US96/13733.
SOUTH KOREA
The South Korean National Phase application was filed on August 1,
1997 and was assigned patent Application No. 705250 in 1997. A
Request for Examination is due by August 19, 2001.
(2) Co-owner of Patent Application filed February 28, 1994, Serial No.
08/202,444 (assigned to FWT, Inc. by Roy J. Moore).
(3) Co-owner of Patent Application filed January 31, 1995, Serial No.
08/381,504 (assigned to FWT, Inc. by Roy J. Moore).
<PAGE> 45
(4) POWERMOUNT trademark - Registration No. 2,088,202.
(5) SMARTROC trademark - Registration No. 1,944,176.
<PAGE> 46
SCHEDULE 4.37 (to EXHIBIT 10.1)
COMPUTER SOFTWARE LICENSES
(1) PJF Pole Automated Telecom Monopole Design and Analysis Software ("PJF
Pole) under Software License Agreement between Paul J. Ford and
Company, an Ohio corporation, and FWT, Inc.
(2) PJF Caisson (monopole foundation design).
<PAGE> 47
SCHEDULE 4.40 (to EXHIBIT 10.1)
PERMITTED LIENS
(1) Security interest in favor of NationsBank of Texas, N.A. covering
accounts, accounts receivables and contract rights.
(2) Security interest or financing statement relating to the Lease and
Rental Agreement between FWT, Inc. and Darr Equipment Co. relating to
the lease of one (1) Caterpillar DP 115 (Serial No. 4DP00051).
(3) Liens imposed by mandatory provisions of law such as materialmen's,
mechanic's, warehousemen's, journeyman's and carrier's liens arising
in the ordinary course of business securing obligations or
indebtedness whose payment is not yet due unless the same are being
contested in good faith and for which adequate reserves have been
provided.
(4) Defects in title which do not secure the payment of money or other
obligations and otherwise have no material adverse effect on the value
or operation of the property encumbered thereby and for the purposes
of this Agreement, a minor defect in title shall include easements,
rights-of-way, servitudes, permits for pipelines, streets, alleys,
highways, telephone lines, power lines, railways and other easements
and rights-of-way, on, over or in respect of any of the properties of
FWT, Inc.
(5) Liens for Taxes or assessments not yet due or not yet delinquent, or,
if delinquent, that are not being contested in good faith in the
normal course of business by appropriate action.
(6) All applicable laws, rules and orders of governmental authorities
having jurisdiction of the affairs of FWT, Inc.
(7) Landlord liens on property of FWT, Inc.
<PAGE> 48
SCHEDULE 4.42 (to EXHIBIT 10.1)
LITIGATION AND CLAIMS
(1) FWT, Inc. V. MCCommications; Cause No. 96-169559-97, Tarrant County
District Court (case has settled; final settlement documents have not
been filed)
(2) Aubrey Earl Rogers, Inc. V. John Doe, individually and FWT, Inc.
d/b/a Fort Worth Tower; Cause No. 153-169617-97, Tarrant County
District Court
(3) Al L. Vreeland, as personal representative of the Estate of Mark
McKarns, Deceased v. C & S Construction Company, Contel Cellular,
Inc., et al. v Fort Worth Tower Company; Civil Action No. CV-97-302,
In the Circuit Court of Tuscaloosa County, Alabama
<PAGE> 49
SCHEDULE 4.43 (to EXHIBIT 10.1)
LITIGATION HISTORY
None
<PAGE> 50
SCHEDULE 4.46 (to EXHIBIT 10.1)
INVESTIGATIONS
NONE
<PAGE> 51
SCHEDULE 4.47 (to EXHIBIT 10.1)
INSURANCE POLICIES
(1) Workers' Compensation Policy No. 37-49-20
issued by Connecticut Indemnity Company
May 1, 1997/1998
(2) Manufacturers Output Policy Policy No. CK09102956
issued by St. Paul Mercury Insurance Company
May 1, 1997/1998
(3) Commercial General Liability Policy No. CK09102956
issued by St. Paul Mercury Insurance Company
May 1, 1997/1997
(4) Commercial Umbrella Policy No. CK09102956
issued by St. Paul Mercury Insurance Company
May 1, 1997/1998
(5) Commercial Automobile Policy No. CK09102956-01
issued by St. Paul Mercury Insurance Company
May 1, 1997/1998
(6) Employee Benefits Liability Policy No. CK09102956-02
issued by St. Paul Fire and Marine Insurance Company
May 1, 1997/1998
(7) Boiler & Machinery Policy No. 3XN 006743-01
issued by American Manufacturers Mutual Insurance Company
May 1, 1997/1998
(8) Foreign Liability Policy No. CK09102956-03
issued by St. Paul Fire and Marine Insurance Company
November 7, 1997 - May 1, 1998
(9) Professional Liability Policy No. PL 509906-01
issued by Design Professionals Insurance Company
November 7, 1997/1999
<PAGE> 52
SCHEDULE 4.49 (to EXHIBIT 10.1)
PRODUCT WARRANTIES
The following are the terms and conditions of the standard warranty of
FWT, Inc. as set forth in its standard form of quotation:
(1) All products manufactured and purchased from FWT, Inc. carry with them
a one-year guarantee against defective materials or faulty
workmanship.
(2) Tower painting and light bulb replacement for towers and buildings are
considered to be a part of normal maintenance and is not included
within this guarantee.
(3) Other products sold by FWT, Inc. but are not of their manufacture,
will be guaranteed only to the extent of the manufacturer's guarantee.
(4) FWT, Inc. shall not under any circumstances be liable to third persons
for any claims or damages including direct, special, indirect or
consequential damages for any reason. The buyer agrees to indemnify
and to hold FWT, Inc. harmless for, of and from any loss, claims,
damages, expenses and attorney's fees, including but not limited to
any fines, penalties and laws, rules and regulations in connection
with the performance of this sale.
(5) FWT, Inc. will assume no responsibility for the adequacy of any
product if material is used and which is not totally supplied and
installed by FWT, Inc.
(6) All guarantees are void on drawings made by others, whether by a
professional engineer, sealed or not, that are not rechecked and
approved by FWT, Inc. designated engineers, and therefore FWT, Inc.
assumes no liability for the adequacy of the drawings or the design.
(7) FWT, Inc. reserves the right to change or modify the design and the
construction of any product manufactured by FWT, Inc. and to
substitute material equal to or superior to that original specified.
(8) The guarantee expressly stated herein is in lieu of any other
guarantees, expressed or implied, including any implied guarantee of
merchantability or fitness for a particular purpose.
(9) This guarantee shall remain in force so long as customer furnishes
FWT, Inc. with an annual inspection report confirming that normal
maintenance has been performed on the product including but not
limited to tightening of bolts, tensioning of guy wires and touch-up
of galvanizing.
<PAGE> 53
SCHEDULE 4.50 (to EXHIBIT 10.1)
TAXES
FWT, Inc.
Schedule of Tax Returns Filed
During the period
May 1, 1994 to October 31, 1997
<TABLE>
<CAPTION>
FEDERAL INCOME TAX RETURNS Return Period
---------------
<S> <C> <C>
US Income Tax Return for an S Corporation Form 1120S FYE 4-30-96
US Income Tax Return for an S Corporation Form 1120S FYE 4-30-95
US Income Tax Return for an S Corporation Form 1120S FYE 4-30-94
Required Payment or Refund Under Sec 7519 Form 8752 FYE 4-30-97
Required Payment or Refund Under Sec 7519 Form 8752 FYE 4-30-96
Required Payment or Refund Under Sec 7519 Form 8752 FYE 4-30-94
Quarterly Federal Excise Tax Return Form 720 For each quarter ended
6-30-94 through 9-30-97
Privilege
TEXAS CORPORATION FRANCHISE TAX REPORT Period
---------------
Texas Corporation Franchise Tax Report 1-01-96 to 12-31-96
Texas Corporation Franchise Tax Report 1-01-95 to 12-31-95
Texas Corporation Franchise Tax Report 1-01-94 to 12-31-94
Return
STATE CORPORATION TAX RETURNS Period
---------------
Louisiana Corporation Income Tax/Franchise Tax Return Form ICFT-620 FYE 4-30-94
Montana Corporation License Tax Return Form CLT-4 FYE 4-30-94
New Jersey Corporation Business Tax Return Form CBT-100 FYE 4-30-94
South Carolina Income Tax Return Form SC1120-S FYE 4-30-94
South Carolina Withholding Tax on Income of
Non Resident Shareholders Form SC1120S-WH FYE 4-30-94
Virginia Corporation Income Tax Return Form 500 FYE 4-30-94
West Virginia Business Franchise Tax Return Form WV/BFT-120 FYE 4-30-94
West Virginia S Corporation Return Form WV/CNT-112S FYE 4-30-94
</TABLE>
Page 1 of 4
<PAGE> 54
FWT, Inc.
Schedule of Tax Returns Filed
During the period
May 1, 1994 to October 31, 1997
<TABLE>
<CAPTION>
<S> <C> <C>
West Virginia Corporation License Tax Return Form WV/Char-2 Period Ended 6-30-98
West Virginia Corporation License Tax Return Form WV/Char-2 Period Ended 6-30-97
West Virginia Corporation License Tax Return Form WV/Char-2 Period Ended 6-30-96
Maryland Personal Property Return 12/31/95
Maryland Personal Property Return 12/31/94
Maryland Personal Property Return 12/31/93
FEDERAL PAYROLL TAX RETURNS
Employers Quarterly Tax Return Form 941
For each quarter ended 6-30-94 through 9-30-97
Transmitter Report and Summary of Magnetic Media Form 6559 Year ended 12-31-96
Transmittal of Wage and Tax Statements Form W-3 Year ended 12-31-95
Transmittal of Wage and Tax Statements Form W-3 Year ended 12-31-94
Annual Summary and Transmittal of US Information Returns Form 1096 Year ended 12-31-96
Annual Summary and Transmittal of US Information Returns Form 1096 Year ended 12-31-95
Annual Summary and Transmittal of US Information Returns Form 1096 Year ended 12-31-94
STATE PAYROLL TAX RETURNS
Texas Employers Quarterly Report Form C-3
For each quarter ended 6-30-94 through 9-30-97
Arizona Payment of Arizona Income Tax Withheld Form A1-WP For each quarter ended 6-30-96 through 9-30-97
Arizona Annual Withholding Tax Return Form A-1R Year ended 12-31-96
Ohio Employers Payment of Income Tax Withheld Form IT-501 For each quarter ended 12-31-96 through 9-30-97
Ohio Employers Annual Reconciliation of Income Tax Withheld Form IT-941 Year ended 12-31-96
Ohio Transmittal of Wage and Tax Statements Form IT-3 Year ended 12-31-96
Michigan Combined Return for Michigan Taxes Form C-3200 For each quarter ended 3-31-97 through 9-30-97
Michigan Annual Return for Sales, Use and Withholding Taxes Form C-2304 Year ended 12-31-96
Arizona Unemployment Tax and Wage Report Form UC-018 For each quarter ended 6-30-96 through 9-30-97
Tennessee Department of Economic Security Premium Report Form DES 2205 For each quarter ended 12-31-95 through 9-30-97
</TABLE>
Page 2 of 4
<PAGE> 55
FWT, Inc.
Schedule of Tax Returns Filed
During the period
May 1, 1994 to October 31, 1997
STATE SALES TAX RETURNS
<TABLE>
<S> <C>
Alabama Consumers Use Tax Return For each month ended 5-31-94 through 9-30-97
Alabama City and County Consumers Use Tax Return For each month ended 5-31-94 through 9-30-97
Arkansas Excise Tax Reports For each month ended 5-31-94 through 9-30-97
Arizona Transaction Privilege, Use and Severance Tax For each month ended 5-31-94 through 9-30-97
Florida Sales and Use Tax Return For each month ended 5-31-94 through 9-30-97
Georgia Sales and Use Tax Report For each month ended 5-31-94 through 9-30-97
Kentucky Sales and Use Tax Return For each month ended 5-31-94 through 9-30-97
Louisiana Sales Tax Return For each month ended 5-31-94 through 9-30-97
Mississippi Sales Tax Return For each month ended 5-31-94 through 9-30-97
North Carolina Sales and Use Tax Report For each month ended 5-31-94 through 9-30-97
Pennsylvania Sales, Use and Hotel Occupancy Tax For each month ended 5-31-94 through 9-30-97
Texas Sales and Use Tax Return For each month ended 5-31-94 through 9-30-97
Virginia Out-of-State Dealers Use Tax Return For each month ended 5-31-94 through 9-30-97
New Jersey Sales and Use Tax Return For each quarter ended 6-30-94 through 9-30-97
South Carolina Sales and Local Option Sales Tax Return For each quarter ended 6-30-94 through 9-30-97
West Virginia Use Tax Return For each quarter ended 6-30-94 through 9-30-97
Connecticut Sales and Use Tax Return For each quarter ended 6-30-94 through 12-31-95
Connecticut Sales and Use Tax Return For the year ended 12-31-96
Kansas State and Local Retail Sales Tax Return For each year ended 12-31-96, 12-31-95 and 12-31-94
Minnesota State and City Sales and Use Tax Return For each year ended 12-31-96, 12-31-95 and 12-31-94
Nebraska and City Sales and Use Tax Return For each year ended 12-31-96, 12-31-95 and 12-31-94
North Dakota State Sales and Use Tax Return For each year ended 12-31-96, 12-31-95 and 12-31-94
Washington Combined Excise Tax Return For each year ended 12-31-96, 12-31-95 and 12-31-94
Various Alabama local sales tax returns Occasionally when required
Various Louisiana local sales tax returns Occasionally when required
</TABLE>
Page 3 of 4
<PAGE> 56
FWT, Inc.
Schedule of Tax Returns Filed
During the period
May 1, 1994 to October 31, 1997
STATE FUEL TAX AND/OR MOTOR CARRIER REPORTS
<TABLE>
<S> <C>
State Fuel Tax Reports, Motor Carrier Reports, Cab Cards, For each quarter ended 6-30-94 (through 12-31-96
and/or decals for the following states (as required): (as required). The filing requirement for most states
Alabama, Arizona, Arkansas, California, Colorado, Connecticut were consolidated into a combined report when the
Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, states began participation in IFTA. The date each
Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, state began participation in IFTA is shown on the
Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, attached listing.
New Mexico, New Jersey, New York, North Carolina, North Dakota,
Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina,
South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West
Virginia, Wisconsin, Wyoming
Arizona - Motor Carrier Report For each quarter ended 3-31-97 through 9-30-97
Idaho - Motor Carrier Report For each quarter ended 3-31-97 through 9-30-97
Kentucky - Weight Distance Tax Form For each quarter ended 3-31-97 through 9-30-97
New Mexico - Weight Distance Return & Cab Cards For each quarter ended 3-31-97 through 9-30-97
New York - Decals For each quarter ended 3-31-97 through 9-30-97
Oregon - Motor Carrier Mileage & Plates For each quarter ended 3-31-97 through 9-30-97
Texas - IFTA Report For each quarter ended 3-31-97 through 9-30-97
FWT, INC. DEFINED BENEFIT PLAN AND TRUST
Annual Return / Report of Employee Benefit Plan Form 5500 Year ended 4-30-96
Return / Report of Employee Benefit Plan Form 5500-CR Year ended 4-30-95
Return / Report of Employee Benefit Plan Form 5500-CR Year ended 4-30-94
FWT, INC. EMPLOYEES PROFIT SHARING PLAN AND TRUST
Annual Return / Report of Employee Benefit Plan Form 5500 Year ended 4-30-96
Return / Report of Employee Benefit Plan Form 5500-CR Year ended 4-30-95
Return / Report of Employee Benefit Plan Form 5500-CR Year ended 4-30-94
</TABLE>
Page 4 of 4
<PAGE> 57
IFTA PARTICIPATING STATES AND CANADIAN PROVINCES
AS OF JULY 1, 1995
<TABLE>
<S> <C>
Alberta Nebraska
Arizona Nevada
Arkansas New Mexico
Colorado North Carolina
Florida North Dakota
Idaho Ohio
Illinois Oklahoma
Indiana Oregon
Iowa Saskatchewan
Kansas South Dakota
Louisiana Tennessee
Manitoba Texas
Minnesota Utah
Mississippi Washington
Missouri Wisconsin
Montana Wyoming
</TABLE>
<PAGE> 58
IFTA JURISDICTIONS
IFTA PARTICIPATING JURISDICTIONS
AS OF DECEMBER, 1995
<TABLE>
<S> <C>
Alberta Nebraska
Arizona Nevada
Arkansas New Mexico
Colorado North Carolina
Florida North Dakota
Idaho Ohio
Illinois Oklahoma
Indiana Oregon
Iowa Saskatchewan
Kansas South Dakota
Louisiana Tennessee
Manitoba Texas
Minnesota Utah
Mississippi Washington
Missouri Wisconsin
Montana Wyoming
</TABLE>
IFTA JURISDICTIONS
IMPLEMENTING IN 1996
<TABLE>
<CAPTION>
Month Jurisdiction
----- ------------
<S> <C>
January Alabama
January British Columbia
January California
January Connecticut
January Georgia
January Maryland
January Massachusetts
January Michigan
January New Brunswick
January Newfoundland
January New York
January Nova Scotia
January Pennsylvania
January Prince Edward Island
January Quebec
January South Carolina
January Virginia
January West Virginia
July Delaware
July Kentucky
July Rhode Island
</TABLE>
<PAGE> 59
SCHEDULE 4.51 (to EXHIBIT 10.1)
TAX EXCEPTIONS
Certain state tax returns or reports relating to taxes which are not material in
amount.
<PAGE> 60
SCHEDULE 4.52 (to EXHIBIT 10.1)
DIRECTORS, OFFICERS AND KEY EMPLOYEES
Directors
- ---------
T.W. Moore
Betty Moore
Officers
- --------
Name Title
---- -----
T.W. Moore President
Betty Moore Secretary/Treasurer
Thomas F. Moore Vice President of Manufacturing
Carl R. Moore Vice President
Roy J. Moore Vice President of Marketing and Sales
Martin De La Rosa Vice President of Engineering
Key Employees
- -------------
William F. Sales
Martin De La Rosa
Ronald C. Sipes
Dean S. Barkman
Gene A. Swofford
John M. Wrigley
Dirk J. Tillery
Daniel P. Sales
Daniel W. Sikkenga
Betty J. Smith
Lori Mowan
Jerry Zavitkovski
<PAGE> 61
SCHEDULE 4.53 (to EXHIBIT 10.1)
EMPLOYEES
<TABLE>
<CAPTION>
Actual
Compensation Current
Fiscal Year Ended Annual
Employee Name Position 4-30-97 Compensation
- ------------- -------- ------- ---------------
<S> <C> <C> <C>
William F. Sales Director of Sales $ 128,541.50 $ 134,532.00
& Operations
Martin L. De La Rosa Vice President 106,833.32 $ 108,000.00
of Engineering
Ronald C. Sipes Director of 84,936.33 $ 110,000.00
Financial Accounting
Dean S. Barkman Monopole Product Manager 73,166.66 $ 70,000.00
Gene A. Swofford Manager, Project 43,641.32 $ 66,625.00
Management
John M. Wrigley Sales, Southeast Region 373,170.98 $ 62,000.00
plus commission
Dirk J. Tillery Sales, Southern Region 132,810.57 $ 58,000.00
plus commission
Daniel P. Sales Sales - Northeast Region 218,818.49 $ 63,500.00
plus commission
Daniel W. Sikkenga Sales - Midwest Region 88,647.51 $ 62,000.00
plus commission
Betty J. Smith Sales - Western Region 113,260.99 $ 67,000.00
plus commission
Lori Mowan Sales - Rocky Mountain 10,439.07 $ 50,000.00
plus commission
Jerry Zavitkovski Director - International
Marketing and Sales 0.00 $ 75,000.00
Region plus commission
</TABLE>
<PAGE> 62
SCHEDULE 4.56 (to EXHIBIT 10.1)
EMPLOYEE BENEFIT PLANS
<TABLE>
<S> <C> <C>
(1) FWT, Inc. Profit Sharing Plan
Total contribution made for year ended
April 30, 1997. $ 313,936.04
(2) FWT, Inc. Defined Benefit Pension Plan
Total contribution made for year ended
April 30, 1997. $ 331,935.00
(3) FWT, Inc. Group Health Plan with Anthem
Health & Life Insurance Company
Total premiums and FWT, Inc's. share of claims
paid for year ended October 31, 1997 through
September 30, 1997. $ 489,230.25
</TABLE>
<PAGE> 63
SCHEDULE 4.58 (to EXHIBIT 10.1)
DISTRIBUTORS
Wei Sheng Investment and Development Co., Ltd.
(sales representative in Taiwan)
<PAGE> 64
SCHEDULE 4.59 (to EXHIBIT 10.1)
SUPPLIERS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
NAME TOTAL AMOUNT PERCENT OF ALL SUPPLIERS
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
<S> <C> <C>
Thomas & Betts Corp. $17,790,784.80 14.6193%
- ------------------------------------------------------------------------------
Structural Metals, Inc. 8,507,443.28 6.9909%
- ------------------------------------------------------------------------------
Texas Galvanizing, Inc. 7,048,032.71 5.7916%
- ------------------------------------------------------------------------------
All-Pro Fasteners, Inc. 5,674,973.15 4.6633%
- ------------------------------------------------------------------------------
Delta Steel, Inc. 5,257,140.42 4.3200%
- ------------------------------------------------------------------------------
Hewitt-Lucas Body Co. 4,435,015.59 3.6444%
- ------------------------------------------------------------------------------
Perlow Steel 4,331,323.39 3.5592%
- ------------------------------------------------------------------------------
Production Metals, Inc. 3,692,225.00 3.0340%
- ------------------------------------------------------------------------------
Paul J. Ford & Co. 2,573,910.62 2.1151%
- ------------------------------------------------------------------------------
National Strand Products 2,572,769.57 2.1141%
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
</TABLE>
<PAGE> 65
SCHEDULE 4.60 (to EXHIBIT 10.1)
CUSTOMERS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Customer Name Sales - Fiscal Year Ended % of Total Sales For
4/30/97 Fiscal Year Ended 4/30/97
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
AT&T Wireless Services, Inc. $16,334,412 25.4%
- -------------------------------------------------------------------------------------------------
PrimeCo Personal Communications 4,370,209 6.8%
- -------------------------------------------------------------------------------------------------
GTE Mobilenet Services 4,068,531 6.3%
- -------------------------------------------------------------------------------------------------
Nextel Communications 3,956,679 6.2%
- -------------------------------------------------------------------------------------------------
MFS Network Technologies, Inc. 2,647,359 4.1%
- -------------------------------------------------------------------------------------------------
BellSouth Personal Communications 2,387,353 3.7%
- -------------------------------------------------------------------------------------------------
Southwestern Bell Mobile Systems 2,339,441 3.6%
- -------------------------------------------------------------------------------------------------
Western PCS I Corp. 2,168,916 3.4%
- -------------------------------------------------------------------------------------------------
Bechtel National Inc. 2,062,631 3.2%
- -------------------------------------------------------------------------------------------------
Dial Call/Nextel Communications 1,991,280 3.1%
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 66
SCHEDULE 4.67 (to EXHIBIT 10.1)
RELATED PARTY ACCOUNTS
<TABLE>
<CAPTION>
Payment From Amount Payment For
- ------------ ------ -----------
<S> <C> <C>
T.W. and Betty Moore $47,694.00 Monopole purchased by T.W.
and Betty Moore
38,705.29 Various payments made by FWT
for the personal benefit of T.W. and
Betty Moore
(66,106.89) Amounts due to T.W. and Betty
Moore for FWT expenses paid
personally by Moores
-----------
$20,292.40 Total Amount Paid to FWT
Betty Moore 448.00 Reimbursement of airline tickets
charged on FWT credit card in (for
Roy J. Moore) error
</TABLE>
<PAGE> 67
EXHIBIT C (to EXHIBIT 10.1)
---------
ESCROW AGREEMENT
<PAGE> 68
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "AGREEMENT") is made and entered into as
of November 12, 1997 (the "CLOSING DATE") by and among FWT Acquisition, Inc., a
Delaware corporation ("PURCHASER"), the persons listed on the signature pages
hereto (collectively, the "SELLERS," and individually, a "SELLER"), and U.S.
Trust Company of Texas, N.A., as escrow agent ("ESCROW AGENT"). Purchaser,
Sellers, and Escrow Agent are sometimes collectively referred to as the
"PARTIES," and individually referred to as a "PARTY."
PRELIMINARY STATEMENTS
A. Each of Purchaser, Sellers and FWT, Inc., a corporation (the
"COMPANY") is a party to that certain Stock Purchase and Redemption Agreement
dated of even date herewith among Sellers and Purchaser and certain other
parties (the "PURCHASE AGREEMENT").
B. The Purchase Agreement provides for, among other things, the execution
and delivery of this Agreement to establish a certain escrow account (the
"ESCROW ACCOUNT") and to place into such Escrow Account the Aggregate Escrow
Amount (the "ESCROW").
C. Capitalized terms used in this Agreement, but not otherwise defined,
shall have the respective meanings ascribed to them in the Purchase Agreement.
NOW, THEREFORE, for good, valid and binding consideration, the receipt
and sufficiency of which are hereby acknowledged, the Parties hereto, intending
to be legally bound hereby, now agree as follows:
ARTICLE 1.
APPOINTMENT OF ESCROW AGENT;
ESTABLISHMENT OF ESCROW; INVESTMENT
1.1 Appointment of Escrow Agent; Limited Responsibilities. Each
of Purchaser and Sellers hereby appoints, and Escrow Agent hereby accepts such
appointment and agrees to act as escrow agent and to hold, safeguard, and
disburse the Escrow Assets (as defined below) pursuant to the terms and
conditions hereof. This Agreement expressly sets forth all the duties of
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this Agreement against Escrow Agent.
Escrow Agent shall not be bound by the provisions of any agreement among the
other Parties hereto except this Agreement.
1.2 Deposit of Escrow Assets and Documents. Concurrent with the
execution of this Agreement, the Company has deposited with Escrow Agent (a) an
aggregate amount in cash equal to $6,998,477.45 in immediately available funds
(as was determined in accordance with the Purchase Agreement and (b) a copy of
the Purchase Agreement and all of the Closing Documents.
<PAGE> 69
1.3 Purpose of Escrow. The Escrow Account established hereby is
established by the Company to secure the obligation of the Company to pay all
or a portion of the Escrow Assets to the Sellers upon a partial or complete
termination of Escrow Account, subject to all of the various obligations of the
Shareholders (or any of them) and the Company to the Purchaser under the
Purchase Agreement and each and every one of the Closing Documents contemplated
thereby (the "ESCROW OBLIGATIONS").
1.4 Investment of Escrow Assets. The Assets held in Escrow (the
"ESCROW ASSETS") shall be invested from time to time, to the extent possible,
in United States Treasury bills having a remaining maturity of 90 days or less
and repurchase obligations secured by such United States Treasury Bills, with
any remainder being deposited and maintained in a money market deposit account
with Escrow Agent, until disbursement of the entire Escrow Assets in accordance
with the terms hereof. Escrow Agent is authorized to liquidate in accordance
with its customary procedures any portion of the Escrow Assets consisting of
investments to provide for disbursements required to be made under this
Agreement.
ARTICLE 2.
CLAIMS; TERMINATION OF ACCOUNTS
2.1 Disbursements for Claims.
(a) Claim Procedure. From time to time during the term
hereof, Purchaser may give notice (a "NOTICE") to Sellers and Escrow Agent
specifying in reasonable detail the nature and dollar amount of any claim
related to any Escrow Obligation, including but not limited to any matters
related to purchase price, representations/warranties and indemnifications
(collectively, a "CLAIM") Purchaser may have. If Sellers give notice to
Purchaser and Escrow Agent disputing any Claim (a "COUNTER NOTICE") within ten
(10) days following receipt by Escrow Agent of the Notice regarding such Claim,
such Claim shall be resolved as provided in Section 2.1(b). If no Counter
Notice is received by Escrow Agent within such ten (10) day period, then the
dollar amount of damages claimed by Purchaser as set forth in its Notice shall
be deemed established for purposes of this Escrow Agreement and, at the end of
such ten (10) day period, Escrow Agent shall pay to Purchaser the dollar amount
claimed in the Notice.
(b) Resolution of a Claim Dispute. If a Counter Notice
is given with respect to a Claim, Escrow Agent shall make a disbursement only
in accordance with (i) written instructions of both Purchaser and Sellers, or
(ii) a final determination of the Arbitrator in accordance with the provisions
of Article VIII of the Purchase Agreement.
(c) Disbursement Upon Partial Termination. On the date
of the eighteenth (18th) month anniversary of the Closing Date, Escrow Agent
shall distribute to Sellers in the percentages set forth on Schedule I the
excess, if any, of (i) the then amount of the Escrow Account over (ii) the
aggregate dollar amount of Claims, if any (as shown in the Notices of such
Claims) outstanding on such date; provided, however, if any Notice specifies in
reasonable detail the nature of a Claim with respect to which Purchaser is in
good faith unable to specify the amount of Damages, then the entire balance
remaining in the Escrow Account shall be retained by Escrow Agent. If any
amount is retained in the Escrow Account for pending Claims, then
<PAGE> 70
Escrow Agent shall retain such amount until it receives joint written
instructions of Purchaser and Sellers or a final determination of the
Arbitrator in accordance with the provisions of Article VIII of the Purchase
Agreement.
(d) Termination of Account. Upon payment of all moneys
in the Escrow Account, the Escrow Account shall be deemed closed, and this
Agreement shall be deemed terminated.
(e) Solely for the purpose of and in connection with
determining when any notice, request, instruction, or consent required or
permitted to be given by Sellers pursuant to this Agreement shall be valid and
enforceable, any notice, request, instruction, or consent which is executed by
two or more Sellers shall be deemed to be a notice, request, instruction, or
consent validly given and enforceable against all Sellers. Escrow Agent shall
be entitled to rely upon any notice, request, instruction, or consent executed
in accordance with this section unless and until written notice (conforming to
the requirements of this Section) to the contrary is delivered to Escrow Agent.
ARTICLE 3.
DUTIES OF ESCROW AGENT
3.1 Degree of Care. Escrow Agent shall not be under any duty to
give the Escrow Assets held by it hereunder any greater degree of care than it
gives its own similar property and shall not be required to invest any funds
held hereunder except as directed in this Agreement. Uninvested funds held
hereunder shall not earn or accrue interest.
3.2 Liability; Indemnification of Escrow Agent. Escrow Agent
shall not be liable, except for its own gross negligence or willful misconduct
and, except with respect to claims based upon such gross negligence or willful
misconduct that are successfully asserted against Escrow Agent. Sellers on the
one hand and Purchaser on the other hand shall jointly and severally indemnify
and hold harmless Escrow Agent (and any successor Escrow Agent) from and
against any and all losses, liabilities, claims, actions, damages and expenses,
including reasonable attorneys' fees and disbursements, arising out of and in
connection with this Agreement. Without limiting the foregoing, Escrow Agent
shall in no event be liable in connection with its investment or reinvestment
of any cash held by it hereunder in good faith, in accordance with the terms
hereof, including, any liability for any delays (not resulting from its gross
negligence or willful misconduct) in the investment or reinvestment of the
Escrow Assets, or any loss of interest incident to any such delays. This
Section shall survive notwithstanding any termination of this Agreement or the
resignation of Escrow Agent.
3.3 Reliance by Escrow Agent. Escrow Agent shall be entitled to
rely upon any order, judgment, certification, demand, notice, instrument or
other writing delivered to it hereunder without being required to determine the
authenticity or the correctness of any fact stated therein or the propriety or
validity of the service thereof. Escrow Agent may act in reliance upon any
instrument or signature believed by it to be genuine and may assume that the
person purporting to give receipt or advice or make any statement or execute
any document in connection with the provisions hereof has been duly authorized
to do so. Escrow Agent may
<PAGE> 71
conclusively presume that the undersigned representative of any Party hereto
which is an entity other than a natural person has full power and authority to
instruct Escrow Agent on behalf of that Party unless written notice to the
contrary is delivered to Escrow Agent.
3.4 Advice of Counsel. Escrow Agent may act pursuant to the
advice of counsel with respect to any matter relating to this Agreement and
shall not be liable for any action taken or omitted by it in good faith in
accordance with such advice.
3.5 Subject to Taxes and Regulations. Escrow Agent does not have
any interest in the Escrow Fund deposited hereunder but is serving as escrow
holder only and having only possession thereof. Any disbursements of income
from this Escrow Account shall be subject to withholding regulations then in
force with respect to United States taxes. Each Seller and Purchaser will
provide Escrow Agent with appropriate Internal Revenue Service Forms W-9 for
tax identification number certification. The Parties hereto agree that for
federal income tax reporting purposes, each Party will treat the Escrow Account
as follows: (i) prior to the termination of the Escrow Account, Company shall
be treated as the owner of the Escrow Assets and any income attributable to the
Escrow Assets, and (ii) upon the termination of the Escrow Account, any portion
of the Escrow Assets paid over to the Sellers shall be treated as a contingent
portion of the Final Aggregate Purchase Price received by Sellers as of the
date of such termination.
3.6 No Representation. Escrow Agent makes no representation as to
the validity, value, genuineness, or the collectability of any security or
other document or instrument held by or delivered to it.
3.7 No Advice. Escrow Agent shall not be called upon to advise
any Party as to the wisdom in selling or retaining or taking or refraining from
any action with respect to any securities or other property deposited
hereunder.
3.8 Resignation of Escrow Agent. Escrow Agent (and any successor
Escrow Agent) may at any time resign as such by delivering the Escrow Assets to
any successor Escrow Agent jointly designated in writing by Sellers on the one
hand and Purchaser on the other hand, or to any court of competent
jurisdiction, whereupon Escrow Agent shall be discharged of and from any and
all further obligations arising from or in connection with this Agreement. The
resignation of Escrow Agent will take effect on the earlier of (a) the
appointment of a successor (including a court of competent jurisdiction) or (b)
the day which is 30 days after the date of delivery of its written notice of
resignation to the other Parties hereto. If at the effective time of Escrow
Agent's resignation it has not received a designation of a successor Escrow
Agent, Escrow Agent's sole responsibility after that time shall be to retain
and safeguard the Escrow Assets until receipt of a designation of successor
Escrow Agent or a joint written disposition instruction by Sellers on the one
hand and Purchaser on the other hand or a final non-appealable order of a court
of competent jurisdiction.
3.9 Compensation of Escrow Agent. Sellers on the one hand and
Purchaser on the other hand shall pay Escrow Agent compensation (as payment in
full) for the services to be rendered by Escrow Agent hereunder as set forth on
Schedule II hereto and agree to reimburse
<PAGE> 72
Escrow Agent for all reasonable expenses, disbursements, and advances incurred
or made by Escrow Agent in performance of its duties hereunder (including
reasonable fees, expenses, and disbursements of its counsel). Any such
compensation and reimbursement to which Escrow Agent is entitled shall be borne
fifty percent (50%) by Purchaser and fifty percent (50%) by Sellers.
ARTICLE 4.
MISCELLANEOUS
4.1 Severability. If any provision of this Agreement as applied
to any part or to any circumstance shall be held invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions of this Agreement and the application of such provision to any other
part or to any other circumstance shall not be affected or impaired thereby.
4.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the successors and
permitted assigns of the Parties.
4.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which when taken together shall constitute the same agreement.
4.4 Headings. The captions and headings used in this Agreement
are inserted for convenience only and shall not be deemed to constitute part of
this Agreement or to affect the construction or interpretation hereof.
4.5 Waiver. Any of the terms or conditions of this Agreement may
be waived in writing at any time by the Party which is entitled to the benefits
thereof. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of such provision at any time in the future or a
waiver of any other provision hereof. The rights and remedies of the Parties
are cumulative and not alternative.
4.6 No Third-Party Beneficiaries. Nothing in this Agreement shall
create or confer upon any Person, other than the Parties or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities, except as expressly provided herein.
4.7 Notices. Unless otherwise provided herein, any notice,
request, instruction, consent or other document required or permitted to be
given pursuant to this Agreement shall be in writing and delivered personally,
by facsimile or by a nationally recognized overnight courier service to the
address or location listed on Schedule I for each Party, or at such other
address or location for a Party as shall be specified in writing by that Party.
Any notice, request, instruction, consent or other document delivered as
provided herein shall be deemed effectively given on the day after the dispatch
of such notice.
<PAGE> 73
4.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas applicable to
agreements made and to be performed wholly within such jurisdiction.
4.9 Exclusive Jurisdiction and Consent to Service of Process. The
Parties agree that any action arising out of or relating to this Agreement or
the transactions contemplated hereby shall be instituted in a federal or state
court sitting in Dallas County, Texas, which shall be the exclusive venue of
any such action. Each Party waives any objection which such Party may now or
hereafter have to the laying of venue of any such action, and irrevocably
submits to the jurisdiction of any such court in any such action. Nothing
contained herein shall be deemed to affect the right of any Party to serve
process in any manner permitted by Law.
4.10 Interpretation.
(a) References. Unless specifically stated otherwise,
references to articles, sections and schedules refer to articles, sections
schedules in this Agreement. References to "includes" and "including" mean
"includes without limitation" and "including without limitation." Wherever
from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and plural, and pronouns stated
in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter gender.
(b) No Reliance. Each Party is a sophisticated legal
entity that was advised by experienced counsel, and to the extent it deemed
necessary, other advisors in connection with this Agreement. Accordingly, each
Party hereby acknowledges that it has not relied and will not rely in respect
of this Agreement or the transactions contemplated hereby upon any document or
written or oral information previously furnished to or discovered by it or its
representatives, other than this Agreement and the documents and instruments
delivered at the Closing (as defined in the Purchase Agreement).
(c) Drafting. No provision of this Agreement shall be
interpreted in favor of, or against, any Party by reason of the extent to which
such Party or its counsel participated in the drafting thereof or by reason of
the extent to which any such provision is inconsistent with any prior draft
thereof.
4.11 Entire Agreement. This Agreement constitutes the sole
understanding of the Parties with respect to the matters contemplated hereby
and supersede and render null and void all prior agreements and understandings,
written and oral, between the Parties with respect to such matters. No Party
shall be liable or bound to the other Parties in any manner by any promises,
conditions, representations, warranties or covenants except as specifically set
forth herein.
4.12 Amendment. Except as otherwise specifically provided for in
this Agreement, no amendment, modification or alteration of the terms or
provisions of this Agreement, including any schedules or exhibits, shall be
binding unless the same shall be in writing and duly executed by the Party
against whom such amendment, modification or alteration is sought to be
enforced.
<PAGE> 74
4.13 Assignment. This Agreement may not be assigned by any Party
without the prior written consent of the non-assigning Parties.
[SIGNATURES ON THE NEXT PAGE]
<PAGE> 75
IN WITNESS WHEREOF, each Party has executed, or caused to be executed,
this Agreement as of the Closing Date.
THE SELLERS: By: /s/ T. W. MOORE
-----------------------------------------
T. W. Moore
-----------------------------------------
By: /s/ BETTY MOORE
-----------------------------------------
Betty Moore
-----------------------------------------
By: /s/ ROY J. MOORE
-----------------------------------------
Roy J. Moore
-----------------------------------------
By: /s/ THOMAS F. "FRED" MOORE
-----------------------------------------
Thomas F. "Fred Moore
-----------------------------------------
By: /s/ CARL R. MOORE
-----------------------------------------
Carl R. Moore
-----------------------------------------
PURCHASER: FWT ACQUISITION, INC.
By: /s/ LAWRENCE A. BETTINO
-----------------------------------------
Lawrence A. Bettino
-----------------------------------------
Vice President
-----------------------------------------
ESCROW AGENT: U.S. TRUST COMPANY OF TEXAS, N.A.
By: /s/ JOHN C. STOHLMANN
-----------------------------------------
John C. Stohlmann
-----------------------------------------
Vice President
-----------------------------------------
<PAGE> 76
SCHEDULE I (to Exhibit C to Exhibit 10.1)
Sellers' Disbursement Amounts; Addresses for Notices
Sellers Distribution Percentage
T.W. Moore 25.25%
3508 Orchid Court
Arlington, TX 76016
Betty J. Moore 25.25%
3508 Orchid Court
Arlington, TX 76016
Roy J. Moore 16.5%
3508 Orchid Court
Arlington, TX 76016
Carl R. Moore 16.5%
4104 Flower Garden
Arlington, TX 76016
Thomas F. Moore 16.5%
5820 Bay Club Drive
Arlington, TX 76013
PURCHASER
FWT ACQUISITION, INC.
575 Madison Avenue, 10th Floor
New York, NY 10022
ESCROW AGENT
U.S. TRUST COMPANY OF TEXAS, N.A.
2001 Ross Avenue
Suite 2700
Dallas, TX 75201-2936
Attn: John Stohlmann
(214) 754-1254
<PAGE> 77
SCHEDULE II (to Exhibit C to Exhibit 10.1)
ESCROW AGENT FEES
$3,500 per year or portion thereof
Wire Transfer Instructions:
Chase NYC
021000021
Credit UST-NY
9201073195
Credit FWT Acquisition Escrow
76510102
Attn: John Stohlmann
<PAGE> 78
EXHIBIT D (to EXHIBIT 10.1)
---------
FORM OF PURCHASER'S LEGAL OPINION
56
<PAGE> 79
[AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P. LETTERHEAD]
November 12, 1997
The Shareholders of FWT, Inc.
Listed on Schedule I Hereto
1901 East Loop 820 South
Fort Worth, Texas 76112-7899
Re: Stock Purchase and Redemption of the Common Stock of FWT, Inc.
Ladies and Gentlemen:
We are acting as counsel to FWT Acquisition, Inc., a Delaware
corporation (the "PURCHASER"), in connection with that certain Stock Purchase
and Redemption Agreement dated as of the date hereof (the "PURCHASE AGREEMENT")
by and among the Purchaser, FWT, Inc., a Texas corporation (the "COMPANY"),
T.W. Moore, Betty Moore, Carl Moore, Thomas F. "Fred" Moore and Roy J. Moore
(collectively, the "SHAREHOLDERS"). This opinion is delivered at the request of
the Purchaser pursuant to Section 1.7(a) of the Purchase Agreement. All
capitalized terms used herein, but not otherwise defined, shall have the
meanings ascribed in the Purchase Agreement.
I. Documents Examined.
In connection with this opinion, we have examined executed originals or
copies of executed originals of each of the following documents (collectively,
the "TRANSACTION DOCUMENTS"):
1. The Purchase Agreement;
2. The Escrow Agreement dated as of the date hereof among the
Purchaser, the Shareholders, and U.S. Trust Company of Texas, N.A.;
3. The Shareholders' Agreement dated as of the date hereof among Roy
J. Moore, Thomas F. "Fred" Moore, Carl J. Moore (collectively, the "ROLLOVER
SHAREHOLDERS"), the Purchaser, the Company, and for certain limited purposes,
Baker Communications Fund, L.P.; and
<PAGE> 80
The Shareholders of FWT, Inc.
November 12, 1997
Page 2
4. The Registration Rights Agreement dated as of the date hereof
among the Company, the Rollover Shareholders, and the Purchaser.
In addition, we have examined the following documents (collectively, the
"DUE DILIGENCE DOCUMENTS"):
1. The Certificate of Incorporation of the Purchaser, certified by
the Secretary of State of the State of Delaware as of November 5, 1997, and
certified as true and correct by the Secretary of the Purchaser as of the date
hereof (the "CERTIFICATE OF INCORPORATION");
2. The Bylaws of the Purchaser, certified as true and correct by the
Secretary of the Purchaser as of the date hereof (the "BYLAWS");
3. The minute book and stock records of the Purchaser, each
certified as true and correct by the Secretary of the Purchaser as of the date
hereof;
4. The certificate of good standing from the Secretary of State of
the State of Delaware fisted on Schedule II attached hereto, a copy of which is
attached hereto as part of Schedule II; and
5. The various certificates and other closing documents delivered in
connection with the closing of the transactions contemplated by the
Transactions Documents, including the certificate delivered to us by the
Purchaser in contemplation of this opinion letter.
We have made no special investigation or review of any laws, rules,
regulations, judgments, decrees, franchises, certificates, licenses, permits,
writs, orders, decisions, or the like, other than a review of (i) public
records as specifically fisted herein, (ii) the laws, rules, and regulations of
the State of Texas, (iii) the Delaware General Corporation Law, and (iv) the
federal laws, rules, and regulations of the United States of America. For
purposes of this opinion, the term "INCLUDED LAWS" shall mean the items
described in clauses (ii), (iii) and (iv) of the preceding sentence that are,
in our experience, normally applicable to transactions of the type contemplated
by the Transaction Documents. The term "INCLUDED LAWS" specifically excludes
laws, statutes, judicial and administrative decisions, and the rules and
regulations (i) of any counties, cities, towns, municipalities, and special
political subdivisions and any agencies thereof and (ii) relating to securities
issues, environmental issues, land use issues, taxes, and intellectual property
rights. We have made no investigation or review of any matters relating to the
Purchaser other than as expressly listed above.
<PAGE> 81
The Shareholders of FWT, Inc.
November 12, 1997
Page 3
II. Certain Basic Assumptions
1. We have assumed (i) the genuineness of all signatures, (ii) the
authenticity of all documents submitted to us as originals, (iii) the
conformity to authentic original documents of all documents submitted to us as
certified, conformed, or photostatic copies, (iv) the authenticity of the
originals of all such certified, conformed, or photostatic copies, and (v) the
legal capacity of all individual signatories to such documents.
2. We have assumed that no fraud, dishonesty, forgery, coercion,
duress, or breach of fiduciary duty exists or will exist with respect to any of
the matters relevant to our opinions.
3. As to questions of fact relevant to this letter, we have, without
independent investigation, relied upon (i) representations made to us by the
Purchaser and (ii) the representations contained in the Transaction Documents
and the Due Diligence Documents, all of which we assume to be true.
4. We have assumed (i) the due execution and delivery of the
Transaction Documents by all parties thereto other than the Purchaser, (ii) the
due authorization of the Transaction Documents by all parties other than the
Purchaser and any natural persons, (iii) that each party other than the
Purchaser and any natural persons has the requisite power and authority to
enter into the Transaction Documents and to consummate the transactions
contemplated thereby, (iv) the absence of any requirement of consent, approval,
or authorization by any governmental authority or any other person with regard
to all parties other than the Purchaser, (v) that the Transaction Documents
constitute legal, valid, and binding obligations of all parties thereto other
than the Purchaser, enforceable against such parties in accordance with their
respective terms, and (vi) that all parties other than the Purchaser will, in
exercising any remedies under or in connection with the Transaction Documents,
comply with all requirements of applicable law at such time regarding the
exercise of such remedies.
III. Opinions.
Based upon the foregoing and the other assumptions, limitations,
qualifications and exceptions contained elsewhere in this opinion letter, we
are of the opinion that:
1. As of the date listed in Schedule H, the Purchaser was a
corporation validly existing, and was in good standing under the laws of the
State of Delaware.
2. The Purchaser possesses the corporate power and authority to
execute, deliver, and perform its obligations under the Transaction Documents.
3. The Purchaser's execution, delivery and performance of the
Transaction Documents will not, directly or indirectly, breach or violate (i)
any provision of the Certificate of Incorporation or the Bylaws, (ii) any
resolution of the board of directors, of any committee of the board of
directors, or of the shareholder of the Purchaser, (iii) any agreement to which
the Purchaser is a party and is known
<PAGE> 82
The Shareholders of FWT, Inc.
November 12, 1997
Page 4
to us, and (iv) any writ, order, or decision of any court or governmental
instrumentality which is binding on the Purchaser and known to us.
4. The Purchaser's execution, delivery and performance of the
Transaction Documents will not violate any Included Laws to which the Purchaser
is, or its assets are, subject or bound.
5. The Purchaser has duly authorized, executed, and delivered each
of the Transaction Documents, and each of the Transaction Documents constitutes
a legal, valid, and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms.
IV. Additional Assumptions Limitations, Qualifications, and Exceptio .
In addition to the matters set forth above, the foregoing opinions are
subject to the following additional assumptions, limitations, qualifications,
and exceptions:
A. This opinion is subject to the qualifications that the
enforceability of the Transaction Documents may be limited by and subject to
(i) applicable bankruptcy, insolvency, reorganization, fraudulent transfer or
conveyance, moratorium, or other similar laws affecting creditors' rights, (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), commercial reasonableness, and
conscionability, (iii) the power of the courts to award damages in lieu of
equitable remedies, (iv) the qualification that certain provisions of the
Transaction Documents may not be enforceable in whole or in part under the laws
of the State of Texas or the United States, as more particularly discussed in
Section IV, Paragraph B. below, but the inclusion of such provisions does not
affect the validity of the Transaction Documents taken as a whole, and the
Transaction Documents contain adequate provisions for enforcing the rights
contemplated therein and for the practical realization of the rights and
benefits afforded thereby (subject to the other assumptions, limitations,
qualifications, and exceptions set forth in this opinion letter), except for
the economic consequences of any judicial, administrative, or other delay or
procedure which may be imposed by applicable federal and state law, rules,
regulations, and court decisions and by constitutional requirements in and of
the State of Texas or the United States, and (v) the qualification that any
right to indemnification and contribution contained in the Transaction
Documents may be limited by United States Federal or state laws or the policies
underlying such laws;
B. We express no opinion as to the enforceability of any provisions
contained in the Transaction Documents purporting to (i) relate to delay or
failure by Buyer to exercise any right or remedy not operating as a waiver
thereof (H) restrict or waive access to legal or equitable remedies or defenses
(including, but not limited to, proper jurisdiction and venue, forum non
conveniens, and service of process) or the right to collect damages (including,
but not limited to, actual, consequential, special, indirect, incidental, and
punitive damages), (iii) waive the benefits of any statute of limitation or any
applicable bankruptcy, insolvency, or usury law or waive any rights under any
applicable statutes or rules hereafter enacted or promulgated, (iv) prohibit
oral amendments to or waivers of provisions of the Transaction Documents or
otherwise limit the effect of a course of dealing between the parties thereto,
(v) provide for specific performance, (vi) provide for severability or
enforcement of any
<PAGE> 83
The Shareholders of FWT, Inc.
November 12, 1997
Page 5
agreement or instrument if a material portion thereof is held to be invalid,
illegal or unenforceable, or (vii) provide that a document should be construed
as jointly drafted;
C. We express no opinion as to the enforceability of the covenants
contained in Article VI of the Purchase Agreement;
D. We express no opinion regarding the attachment, enforceability,
perfection, or priority of any Liens or purported Liens under the Escrow
Agreement;
E. We have assumed that issues regarding execution, delivery, and
related matters with respect to the Transactions Documents by the Purchaser who
is not a resident of the State of Texas and who did not execute and deliver the
Transactions Documents in the State of Texas will be governed exclusively by
the laws of the State of Texas. We note that we do not believe that such
assumptions are true and we further note that we express no opinion as to what
law would govern such issues;
F. We express no opinion as to whether a court, in accordance with
any applicable law or precedent, would grant any remedy, the granting of which
is discretionary with such court;
G. We have assumed that each Party will at all times strictly comply
with the covenants set forth in the Transaction Documents;
H. We express no opinion as to (i) the compliance of the
transactions contemplated by the Transaction Documents with any regulations or
governmental requirements applicable to the parties other than the Purchaser,
(R) the financial ability of any party to meet their respective obligations
under the Transaction Documents, (iii) matters relating to local, state,
federal, or foreign taxes, and (iv) the conformity of the Transaction Documents
to any letter of intent or any other document;
I. We express no opinion as to any consents of or filings with any
Texas or United States of America federal governmental authority which are
required to be obtained or made after the Closing; and
J. When used in this opinion, the phrases "KNOWN TO US," "TO OUR
KNOWLEDGE," and similar phrases (i) do not include constructive knowledge or
inquiry knowledge, and are limited to the actual current consciousness of
attorneys in our Dallas office who have rendered substantive attention to the
negotiation of the Transaction Documents and the preparation of this opinion
and (ii) do not require or imply (A) any examination of this firm's, such
lawyer's or any other person's or entity's files, (B) that any inquiry be made
of the client, any lawyer (other than the lawyers described above), or any
other person or entity, or (C) any review or examination of any agreements,
documents, certificates, instruments or other papers (including, but not
limited to, the exhibits and schedules to the Transaction Documents and the Due
Diligence Documents, and the various papers referred to in or contemplated by
the Transaction Documents, the Due Diligence Documents, and the respective
exhibits and schedules thereto) other than the Transaction Documents and the
Due Diligence Documents.
<PAGE> 84
The Shareholders of FACT, Inc.
November 12, 1997
Page 6
This law firm is a registered limited liability partnership organized
under the laws of the State of Texas. The partners resident in our Dallas,
Texas office (or sole shareholders of partners that are professional
corporations) are members of the State Bar of Texas. We express no opinion as
to the laws of any jurisdiction other than the Included Laws. This opinion is
limited to the matters expressly stated herein and no opinions are to be
inferred or may be implied beyond the opinions expressly set forth herein.
This opinion is as of the date hereof, and we undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein, whether based on a change in the law, a change in any fact relating to
the Purchaser or any other person or entity, or any other circumstance. This
opinion is provided to the Shareholders pursuant to the Purchase Agreement and,
without our prior written consent, this opinion may not be relied upon or
quoted in whole or in part or otherwise referred to in any report or document
or furnished to any person or entity other than the Shareholders or their
successors and permitted assigns. In addition, the "Agent" and the "Lenders"
as defined in that certain (i) Senior Secured Credit Agreement, dated as of the
date hereof, by and among the Company, the lenders named on the signature pages
thereto, and Bankers Trust Company, as agent for the lenders and (ii) Credit
Agreement, dated as of the date hereof, by and among the Company, the financial
institutions listed on the signature pages thereto, and BT Commercial
Corporation, as agent for the lenders, may rely hereon as if they were
addressees hereof.
Very truly yours,
/s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE> 85
SCHEDULE I (to Exhibit D to Exhibit 10.1)
Shareholders of FWT, Inc.
-------------------------
T.W. Moore
Betty Moore
Carl Moore
Thomas F. "Fred" Moore
Roy J. Moore
<PAGE> 86
SCHEDULE II (to Exhibit D to Exhibit 10.1)
List and Copy of the Certificate for the Purchaser
--------------------------------------------------
1. DELAWARE
Date of Certificate: November 5, 1997
Type of Certificate: Certificate of Good Standing
<PAGE> 87
PAGE 1
STATE OF DELAWARE
OFFICE OF THE SECRETARY OF STATE
------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE
OF DELAWARE, DO HEREBY CERTIFY "FWT ACQUISITION, INC." IS DULY
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE AND IS IN
GOOD STANDING AND HAS A LEGAL CORPORATE EXISTENCE SO FAR AS THE
RECORDS OF THIS OFFICE SHOW, AS OF THE FIFTH DAY OF NOVEMBER,
A.D. 1997.
AND I DO HEREBY FURTHER CERTIFY THAT THE FRANCHISE
TAXES HAVE NOT BEEN ASSESSED TO DATE.
/s/ EDWARD J. FREEL
-----------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION:
[SEAL] 8740765
2816972 8300 DATE:
971375850 11-05-97
<PAGE> 88
EXHIBIT E (to EXHIBIT 10.1)
FORM OF SHAREHOLDERS LEGAL OPINION
57
<PAGE> 89
[HAYNES AND BOONE, LLP LETTERHEAD]
November 12, 1997
FWT Acquisition, Inc.
c/o Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, New York 10022
Re: Stock Purchase and Redemption Agreement dated as of November 12, 1997
by and among FWT Acquisition, Inc., FWT, Inc., T.W. Moore, Betty Moore,
Carl Moore, Thomas F. "Fred" Moore and Roy J. Moore (the "Agreement")
Ladies and Gentlemen:
We have acted as counsel to T.W. Moore, Betty Moore, Carl More, Thomas F.
"Fred" Moore and Roy J. Moore (individually, a "Shareholder" and collectively,
the "Shareholders") in connection with the Agreement which provides for (a) the
redemption of shares of common stock, $10 par value per share ("Common Stock"),
by the Company from each of the Shareholders, all on the terms and conditions
set forth in the Agreement and (b) the purchase of shares of Common Stock by FWT
Acquisition, Inc., a Delaware corporation ("Purchaser"), from each of the
Shareholders. This opinion letter is being delivered to you at the
Shareholders' request pursuant to Section 1.8(a) of the Agreement. Unless
otherwise defined or expressed herein or the context otherwise requires, each
term used herein with its initial letter capitalized has the meaning given to
that term in the Agreement.
In rendering the opinions expressed herein, we have examined originals, or
copies of originals certified or otherwise authenticated to our satisfaction,
of the Agreement, the Shareholders' Agreement, the Escrow Agreement, the
Registration Rights Agreement, the Employment Agreements and the Promissory
Notes (collectively, the "Closing Documents") and such other agreements,
documents, certificates and other papers and evidence as we have deemed
relevant and necessary as a basis therefor. We have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
the conformity with the original documents of any copies thereof submitted to
us and the capacity of all natural persons.
As to various facts material to the opinions expressed herein, we have
relied upon certificates of and other communications with public officials and
officers of the Company, and we have not made any independent investigation as
to the accuracy of the information obtained thereby. We have assumed, without
investigation or verification, that none of that information contains any
untrue statement of a material fact or omits to state a fact necessary to make
the statements made therein not misleading.
Based upon the foregoing, and subject to the exceptions, limitations and
qualifications hereinafter stated, we are of the following opinions:
<PAGE> 90
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas.
2. The Company possesses the corporate power and authority to execute,
deliver and perform the Closing Documents to which the Company is a party.
3. The Company possesses the corporate power and authority to own or
lease its assets. To our knowledge, the Company possesses the corporate power
and authority to carry on its business as known to us.
4. The Company's execution, delivery and performance of the Agreement
and the Escrow Agreement will not, directly or indirectly, breach or violate
(i) any provision of the Articles of Incorporation or the bylaws of the
Company, (ii) any resolution of the Board of Directors, any committee of the
Board of Directors or the shareholders of the Company, (iii) or result in a
Lien on any of the assets of the Company pursuant to any material contract or
agreement of the Company known to us, or (iv) any writ, order, or decision of
any court or governmental instrumentality which is binding on the Company and
known to us.
5. The Company's execution, delivery and performance of the Agreement
and the Escrow Agreement will not violate any Texas or United States federal
law, statute, regulation or rule to which the Company is, or its assets are,
subject or bound.
6. The Company is authorized to issue 1,000 shares of Common Stock, of
which, after giving effect to the transactions contemplated by the Agreement,
136.1418 shares will be issued and outstanding. All of the outstanding shares
of Common Stock will be duly authorized and validly issued and will not be
issued in breach or violation of any Applicable Law or statutory or contractual
preemptive rights.
7. Except as contemplated by the Agreement, the Employment Agreements
and the Stock Appreciation Rights Agreement, there are no subscriptions,
options, warrants, rights (including "phantom" or similar stock rights),
convertible securities or other agreements or commitments (contingent or
otherwise) that have been issued, granted or adopted by the Company pursuant to
which the Company is required to issue any shares of Common Stock or any
securities convertible into or exchangeable for Common Stock.
8. Each Shareholder has executed and delivered the Closing Documents to
which such Shareholder is a party, and each of such Closing Documents
constitutes a valid, legal and binding obligation of each such Shareholder,
enforceable against such Shareholder in accordance with its terms, subject to
any law Affecting Creditors' Rights and the enforceability of such Closing
Document against the other parties to such document.
9. Each Shareholders' execution, delivery and performance of the Closing
Documents will not, directly or indirectly, breach or violate any material
contract or agreement or any writ, order, or decision of any court or
governmental instrumentality which, in each case, is binding on such
Shareholder and know to us.
<PAGE> 91
[HAYNES AND BOONE, LLP LETTERHEAD]
10. Each Shareholders' execution, delivery and performance of the Closing
Documents will not violate any Texas or United States federal law, statute,
regulation or rule to which such Shareholder is subject or bound.
The opinions expressed herein are subject to the following exceptions,
limitations and qualifications:
(1) The opinions expressed herein are limited to the laws and regulations
of the State of Texas and the laws and regulations of the United States of
America that are applicable to transactions of the type contemplated by the
Closing Documents, and we assume no responsibility as to the applicability or
the effect of any other laws or regulations. No opinion is expressed herein
with respect to any laws, ordinances or regulations of any county, city or
other political subdivision of the State of Texas.
(2) The opinions expressed in paragraph 1 regarding the Company is
rendered solely on the basis of a certificate issued by the Secretary of State
of Texas.
(3) For purposes of this opinion letter, we have assumed that the
Agreement and the Closing Documents are the valid, binding and enforceable
obligations of the Company.
(4) The opinions expressed herein are limited to the matters specifically
addressed, and no opinion is implied or may be inferred beyond the matters so
specifically addressed.
(5) The opinions expressed herein are rendered as of the date of this
opinion letter, and we undertake no obligation to advise you of, or to
supplement any of our opinions because of, any changes or developments in fact
or law that may hereafter come to our attention.
(6) With respect to the enforceability of the Agreement and the Closing
Documents, we have assumed without expressing any opinion that the company will
be solvent after giving effect to the redemption of the Common Stock
contemplated in the Agreement as is required pursuant to Article 2.88 of the
Texas Business Corporation Act.
(7) The opinions expressed herein are solely for your benefit in
connection with the transactions contemplated by the Closing Documents and may
not be relied upon by any other person without our prior written consent. No
part of this opinion letter may be used, circulated, quoted or otherwise
referred to in any document or report, or provided to or used by any person
other than you, without our prior written consent.
Respectfully submitted,
/s/ HAYNES AND BOONE, L.L.P.
<PAGE> 92
EXHIBIT F (to EXHIBIT 10.1)
FORM OF COMPANY'S LEGAL OPINIONS
<PAGE> 93
[GARDERE & WYNNE, L.L.P. LETTERHEAD]
November 12, 1997
FWT Acquisition, Inc.
c/o Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, New York 10022
Re: Stock Purchase and Redemption Agreement, dated as of
November 12, 1997, by and among FWT Acquisition, Inc.,
FWT, Inc., T.W. Moore, Betty Moore, Carl Moore,
Thomas F. "Fred" Moore and Roy J. Moore (the "Agreement")
Ladies and Gentlemen:
We have acted as counsel to FWT, Inc., a Texas corporation (the "Company"),
in connection with the Agreement, which provides for (a) the redemption of
shares of Common Stock, $10.00 par value per share, of the Company ("Common
Stock") by the Company from each of T.W. Moore, Betty Moore, Carl Moore, Thomas
F. "Fred" Moore and Roy J. Moore (collectively, the "Shareholders") and (b) the
purchase of shares of Common Stock by FWT Acquisition, Inc., a Delaware
corporation ("Purchaser") from each of the "Shareholders"), all on the terms and
conditions set forth in the Agreement. This opinion letter is being delivered to
you at the Company's request pursuant to Section 1.8(a) of the Agreement. Unless
otherwise defined or expressed herein or the context otherwise requires, each
term used herein with its initial letter capitalized has the meaning given to
that term in the Agreement.
In rendering the opinions expressed herein, we have examined originals, or
copies of originals certified or otherwise authenticated to our satisfaction, of
the Agreement and the Escrow Agreement and such other agreements, documents,
certificates and other papers and evidence as we have deemed relevant and
necessary as a basis therefor. We have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity with the original documents of any copies thereof submitted to us and
the capacity of all natural persons.
As to various facts material to the opinions expressed herein, we have
relied upon certificates of and other communications with public officials and
officers of the Company, and we have not made any independent investigation as
to the accuracy of the information obtained thereby.
Based upon the foregoing, and subject to the exceptions, limitations and
qualifications hereinafter stated, we are of the following opinions:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas.
2. The Company is a corporation duly qualified to transact business as a
foreign corporation and is in good standing in the State of Louisiana.
<PAGE> 94
FWT Acquisition, Inc.
November 12, 1997
Page 2
3. The Company possesses the corporate power and authority to execute,
deliver and perform the Agreement and the Escrow Agreement.
4. The Company has duly authorized, executed and delivered the Agreement
and the Escrow Agreement and the Agreement and the Escrow Agreement each
constitute a valid, legal and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to any Law Affecting
Creditors' Rights and the enforceability of the Agreement or the Escrow
Agreement against the other parties to the Agreement or the Escrow Agreement.
5. The Company's execution, delivery and performance of the Agreement and
the Escrow Agreement will not directly or indirectly breach or violate any
provision of the Articles of Incorporation or the Bylaws of the Company.
The opinions expressed herein are subject to the following exceptions,
limitations and qualifications:
A. The opinions expressed herein are limited to the laws and regulations
of the State of Texas and the laws and regulations of the United States of
America that are applicable to the transactions of the type contemplated in the
Agreement and the Escrow Agreement, and we assume no responsibility as to the
applicability or the effect of any other laws or regulations. No opinion is
expressed herein with respect to any laws, ordinances or regulations of any
county, city or other political subdivision of the State of Texas.
B. The opinion expressed in Paragraph 1 regarding the good standing of the
Company is rendered solely on the basis of a certificate issued by the
Comptroller of Public Accounts of the State of Texas. The opinions expressed in
Paragraph 2 regarding the qualification to transact business as a foreign
corporation and good standing in such foreign jurisdictions is rendered solely
on the basis of certificates issued by public officials in such foreign
jurisdictions.
C. The opinions expressed herein are limited to the matters specifically
addressed, and no opinion is implied or may be inferred beyond the matters so
specifically addressed.
D. The opinions expressed herein are rendered as of the date of this
opinion letter, and we undertake no obligation to advise you of, or to
supplement any of our opinions because of, any changes or developments in fact
or law that may hereafter come to our attention.
E. The opinions expressed herein are solely for your benefit in connection
with the transactions contemplated by the Agreement and may not be relied upon
by any other Person without our prior written consent. No part of this opinion
letter may be used, circulated, quoted or otherwise referred to in any document
or report, or provided to or used by any person other than you, without our
prior written consent.
<PAGE> 95
FWT Acquisition, Inc.
November 12, 1997
Page 3
F. The validity, binding effect or enforceability against the Company of
the indemnification provisions of the Agreement and the Escrow Agreement may be
subject to or limited by public policy relating to federal or state securities
law~.
G. We have assumed, without expressing any opinion, that the Company will
be solvent after giving effect to the redemption of the Common Stock described
in the Agreement and the Company will have sufficient surplus to consummate the
redemption of the Common Stock described in the Agreement, both as are required
pursuant to Article 2.38 of the Texas Business Corporation Act. Further, we
understand that with respect to the solvency of the Company after giving effect
to the redemption of the Common Stock described in the Agreement, the Company
and you will be relying solely on the opinion of Houlihan, Lokey, Howard &
Zukin.
Respectfully submitted,
GARDERE & WYNNE, L.L.P.
By: /s/ WILLIAM D. YOUNG
--------------------------------------
William D. Young, Partner
<PAGE> 96
EXHIBIT G (to EXHIBIT 10.1)
FORM OF TAX NOTES
<PAGE> 97
SUBORDINATED PROMISSORY NOTE
(Section 338(h)(10))
$245,000 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises
to pay to Betty Moore, an individual resident of Arlington, Texas ("PAYEE"),
in lawful money of the United States of America, the principal sum of Two
Hundred Forty-five Thousand and 00/100 dollars ($245,000.00), together with
interest as provided herein.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of that certain Stock Purchase and
Redemption Agreement dated as of November 12, 1997 (as such may be amended from
time to time, the "AGREEMENT"), and is subject to the terms and conditions of
the Agreement, which are, by this reference, incorporated herein and made a
part hereof. Capitalized terms used in this Note without definition shall have
the respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this
Note shall be due and payable, together with any accrued and unpaid interest to
date, on April 10, 1998. Interest on the unpaid principal balance of this Note
shall be due and payable monthly commencing December 15, 1997 and continuing on
the same day of each month thereafter until maturity. Interest shall accrue on
the unpaid principal balance of this Note at the Prime Rate (but in no event in
excess of the maximum nonusurious interest rate permitted by applicable law)
and shall be calculated on the basis of a year of 365 days and charged for the
actual number of days elapsed. "PRIME RATE" shall mean the rate that Bankers
Trust Company, New York, New York announces from time to time as its prime
lending rate in the United States for dollar denominated loans, as in effect
from time to time. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged by any lending institution
to any customer. Lending institutions may make loans at rates of interest at,
above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and
interest on this Note shall be made by certified check at Fort Worth, Texas, or
at such other place in the United States of America as Payee shall designate to
Maker in writing or by wire transfer of immediately available funds to an
account designated by Payee in writing. If any payment of principal or interest
on this Note is due on a day which is not a Business Day, such payment shall be
due on the next succeeding Business Day, and such extension of time shall be
taken into account in calculating the amount of interest payable under this
Note. "Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of Texas.
<PAGE> 98
Section 1.3 Prepayment. Maker may, without premium or penalty,
at any time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated
to the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in forward order of maturity.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more
of the following events with respect to Maker shall constitute an event of
default hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for 15 days after
Payee notifies Maker thereof in writing; provided, however, that the exercise
by Maker in good faith of its right of set-off pursuant to Section 1.4 above,
whether or not ultimately determined to be justified, shall not constitute an
Event of Default.
(b) If, pursuant to or within the meaning of the United
States Bankruptcy Code or any other federal or state law relating to insolvency
or relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee,
receiver, assignee, liquidator or similar official; (iv) make an assignment for
the benefit of its creditors; or (v) admit in writing its inability to pay its
debts as they become due.
(c) If a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 120 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing
within 5 days after the occurrence of any Event of Default of which Maker
acquires knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare
the entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in connection with Payee's exercise
of any or all of its rights and remedies upon the occurrence of an Event of
Default under this Note, including, without limitation, reasonable attorneys'
fees.
2
<PAGE> 99
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other
provision to the contrary in this Note, Maker covenants and agrees, and Payee
by accepting this Note covenants and agrees, that the principal of and interest
on the indebtedness now or hereafter evidenced by this Note are subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full in cash of all existing and future Senior
Indebtedness, and that the subordination provisions set forth in this Article
are for the benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other
obligations under (1) that certain Credit Agreement, dated as of November 12,
1997, among Maker, BT Commercial Corporation, as agent, and the lenders as
parties thereto, as such may be amended, modified, restated or refinanced from
time to time, with the same or different agent and lenders and (2) that certain
Senior Secured Credit Agreement, dated as of November 12, 1997, among Maker,
Bankers Trust Company, as administrative agent, and lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time,
with the same or different administrative agent and lenders (subject to clause
(ii) below) specifically excluding from each of the foregoing (ii) indebtedness
and other obligations that are, by their express terms, subordinated in right
of payment to any other indebtedness of the Company. By way of example and not
in limitation of the foregoing, "Senior Indebtedness" shall not include "the
Notes" as such term is defined in the Preliminary Offering Memorandum dated
October 31, 1997, relating to a proposed offering of Senior Subordinated Notes
of Maker under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the
subordination provision set forth in this Article are, and are intended to be,
an inducement and consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created before or after the issuance of
this Note, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness, and such holder of Senior Indebtedness shall be deemed
conclusively to have relied upon such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness, and
such holder is made an obligee hereunder and may enforce directly such
subordination provisions.
Section 3.2 Liquidation; Dissolution; Bankruptcy. Upon any
payment or distribution (whether in cash, property, debt, equity or other
securities, a combination thereof or otherwise) to creditors or equity holders
of Maker in a voluntary or involuntary liquidation or dissolution of Maker,
whether total or partial, or in bankruptcy, reorganization, insolvency,
receivership, dissolution, assignment for the benefit of creditors, marshaling
of assets or similar proceeding relating to Maker or its property:
(a) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due or to become due on or in
respect of all Senior Indebtedness before Payee shall be entitled to receive
any Security Payment (as defined in Section 3.3(a)); and
3
<PAGE> 100
(b) until all Senior Indebtedness is paid in full in
cash, any Security Payment to which Payee would be entitled but for this
Article shall be made to holders of Senior Indebtedness, as their interests may
appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and
payable, whether at the stated maturity thereof or by acceleration or
otherwise, such Senior Indebtedness shall first be irrevocably and indefeasibly
paid in full in cash, or the immediate payment thereof duly provided for in
cash, before Maker or any Person acting on behalf of Maker shall directly or
indirectly pay, prepay, redeem, retire, repurchase or otherwise acquire for
value or make any other prepayment, payment or distribution (whether in cash,
property, securities or a combination thereof or otherwise) on account of the
principal of (or premium, if any) or interest on, this Note (each, a "Security
Payment").
(b) No Security Payment shall be made if, at the time of
such Security Payment, Maker and Payee have received notice from a holder of
Senior Indebtedness that there exists a default in payment of all or any
portion of any principal of (and premium, if any) and interest and fees,
expenses, costs and other obligations on Senior Indebtedness, and such default
shall not have been cured or waived in writing or the benefits of this sentence
waived in writing by or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of
default (other than a default referred to in subsection (b) of this Section
3.3) with respect to any Senior Indebtedness having a principal amount (or
binding commitment to lend principal) in excess of $15,000,000 ("SPECIFIED
SENIOR INDEBTEDNESS"), as such event of default is defined therein or in the
instrument under which such Specified Senior Indebtedness is outstanding,
permitting the holders of such Specified Senior Indebtedness to accelerate the
maturity thereof under the terms of such Specified Senior Indebtedness, and
upon written notice of such event of default given by the to Payee, with a copy
to Maker, then, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no Security Payment shall be made;
provided, that if the holders of the Specified Senior Indebtedness to which the
default relates have not declared such Specified Senior Indebtedness to be
immediately due and payable within 179 days after the occurrence of such
default (or have declared such Specified Senior Indebtedness to be immediately
due and payable and within such period have rescinded such, declaration of
acceleration), then, subject to the provisions of Section 3.2 and 3.3(a), Maker
shall pay all past due scheduled payments and shall resume making any and all
unpaid scheduled Security Payments. Any period during which any Security
Payment is prohibited pursuant to the immediately preceding sentence is
referred to in this Article as a "PAYMENT BLOCKAGE PERIOD." Notwithstanding any
other provisions of this Article or any other provision of this Note, in no
event shall a payment blockage period under this Article extend beyond 179 days
from the date on which such payment blockage period commenced. Not more than
one payment blockage period may be commenced within any consecutive 365-day
period with respect to this Note. For all purposes of this Article, no event of
default that existed or was continuing on the date of the commencement of any
payment blockage period with respect to the Specified Senior Indebtedness
initiating such payment blockage period shall be, or be made, the basis for the
4
<PAGE> 101
commencement of a second payment blockage period by the holder or holders of
such Specified Senior Indebtedness at any time after the 365-day period
referred to in the previous sentence unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and
payable before its stated maturity, then, and in such event, the holders of
Senior Indebtedness outstanding at the time this Note so becomes due and
payable shall be entitled to receive payment in full in cash of all amounts due
or to become due on or in respect of such Senior Indebtedness (whether or not a
default has occurred thereunder or such Senior Indebtedness is, or has been
declared to be, due and payable prior to the date on which it otherwise would
have become due and payable) before Payee shall be entitled to receive any
Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing
contained in this Article or elsewhere in this Note shall prevent Maker or any
person acting on behalf of Maker, at any time except as otherwise provided in
Section 3.2 from making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event
that any Security Payment is made to Payee that, because of this Article,
should not have been so made or may not be paid over to Payee, such Security
Payment shall be held by Payee for the benefit of, and shall forthwith be paid
over or delivered to, the holders of the Senior Indebtedness remaining unpaid
or their representatives, as their interests may appear, to the extent
necessary to irrevocably and indefeasibly pay such Senior Indebtedness in full
in cash in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify
Payee of any facts known to Maker that would cause a Security Payment to
violate this Article, but failure to give such notice shall not affect the
subordination provided in this Article of this Note to Senior Indebtedness.
Without limiting the foregoing, if payment of this Note is accelerated because
of an event of default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is
irrevocably and indefeasibly paid in full in cash and until this Note is paid
in full, Payee shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to Payee have been applied to the
payment of Senior Indebtedness. A distribution made under this Article to
holders of Senior Indebtedness which otherwise would have been made to Payee is
not, as between Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative
rights of Payee and holders of Senior Indebtedness. Nothing in this Note shall:
(a) impair, as between Maker and Payee, the obligation of
Maker, which is absolute and unconditional, to pay the principal of
and interest on this Note in accordance with their terms;
5
<PAGE> 102
(b) affect the relative rights of Payee and creditors of
Maker other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies
upon a default or, subject to the rights of holders of Senior
Indebtedness to receive prepayment, payments and distributions
otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or
interest on this Note on the due date or upon the acceleration thereof, the
failure is still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No
right of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any
settlement or compromise of any Senior Indebtedness, (e) the unenforceability
of any of the Senior Indebtedness or (f) the failure of any holder of Senior
Indebtedness to pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The
provisions of this Article shall not be amended, waived or modified in a
manner that would adversely affect the rights of the holders of any Senior
Indebtedness, and no such amendment, waiver or modification shall become
effective, unless the holders of such Senior Indebtedness shall have consented
in writing (in accordance with the provisions of the agreement governing such
Senior Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this
Note shall be cumulative and not alternative. No waiver by Payee of any right
or remedy under this Note shall be effective unless in a writing signed by
Payee. Neither the failure nor any delay in exercising any right, power or
privilege under this Note will operate as a waiver of such right, power or
privilege and no single or partial exercise of any such right, power or
privilege by Payee will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right of Payee
arising out of this Note can be discharged by Payee, in whole or in part, by a
waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
Maker will be deemed to be a waiver of any obligation of Maker or of the right
of Payee to take further action without notice or demand as
6
<PAGE> 103
provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
Section 4.2 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received only on the day of actual receipt
unless mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed to a Party at its address set forth below (or to such other
address to which such Party has notified the other Parties in accordance with
this section to send such claims, consents, designations, notices, waivers, and
other communications), in which case such claims, consents, designations,
notices, waivers, or other communications shall be deemed to have been received
three Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee:
-------------------------
-------------------------
-------------------------
-------------------------
Section 4.3 Severability. If any provision in this Note is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Note will remain in full force and effect. Any provision of
this Note held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS
OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and
its successors and assigns. This Note shall not be assigned or transferred by
Payee without the express prior written consent of Maker, except by will to
legatees or, in default thereof, by operation of law to heirs.
Section 4.6 Section Headings, Construction. The headings of
Sections in this Note are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Note unless otherwise
specified.
7
<PAGE> 104
Section 4.7 Gender and Number. All words used in this Note will
be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the words ""hereof" and "hereunder" and
similar references refer to this Note in its entirety and not to any specific
section or subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding
anything herein to the contrary, this Note shall be non-negotiable and shall
not be assignable by the parties hereto. Any attempted negotiation or
assignment of this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether
now existing or hereafter arising and whether written or oral, are expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of the maturity of this Note or otherwise, shall the amount paid, or agreed to
be paid, to Payee for the use, forbearance or detention of the money to be
loaned hereunder or otherwise, exceed the maximum amount permissible under
applicable law. If from any circumstances whatsoever fulfillment of any
provision of this Note or of any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
holder of this Note shall ever receive anything of value as interest or deemed
interest by applicable law under this Note or any other document evidencing,
securing or pertaining to the indebtedness evidenced hereby or otherwise an
amount that would exceed the highest lawful rate, such amount that would be
excessive interest shall be applied to the reduction of the principal amount
owing under this Note or on account of any other indebtedness of Maker to the
holder hereof relating to this Note, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal of this Note and
such other indebtedness, such excess shall be refunded to Maker. In determining
whether or not the interest paid or payable with respect to any indebtedness of
Maker to the holder hereof, under any specific contingency, exceeds the highest
lawful rate, Maker and the holder hereof shall, to the maximum extent permitted
by applicable law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 105
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
--------------------------------------
Lawrence A. Bettino, Vice President
<PAGE> 106
SUBORDINATED PROMISSORY NOTE
(Section 338(h)(10))
$245,000 November 12,1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises
to pay to T. W. Moore, an individual resident of Ft. Worth, Texas ("PAYEE"),
in lawful money of the United States of America, the principal sum of Two
Hundred Forty-five Thousand and 00/100 dollars ($245,000.00), together with
interest as provided herein.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of that certain Stock Purchase and
Redemption Agreement dated as of November 12, 1997 (as such may be amended from
time to time, the "AGREEMENT"), and is subject to the terms and conditions of
the Agreement, which are, by this reference, incorporated herein and made a
part hereof. Capitalized terms used in this Note without definition shall have
the respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this
Note shall be due and payable, together with any accrued and unpaid interest to
date, on April 10, 1998. Interest on the unpaid principal balance of this Note
shall be due and payable monthly commencing December 15, 1997 and continuing on
the same day of each month thereafter until maturity. Interest shall accrue on
the unpaid principal balance of this Note at the Prime Rate (but in no event in
excess of the maximum nonusurious interest rate permitted by applicable law)
and shall be calculated on the basis of a year of 365 days and charged for the
actual number of days elapsed. "PRIME RATE" shall mean the rate that Bankers
Trust Company, New York, New York announces from time to time as its prime
lending rate in the United States for dollar denominated loans, as in effect
from time to time. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged by any lending institution
to any customer. Lending institutions may make loans at rates of interest at,
above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and
interest on this Note shall be made by certified check at Fort Worth, Texas, or
at such other place in the United States of America as Payee shall designate to
Maker in writing or by wire transfer of immediately available funds to an
account designated by Payee in writing. If any payment of principal or interest
on this Note is due on a day which is not a Business Day, such payment shall be
due on the next succeeding Business Day, and such extension of time shall be
taken into account in calculating the amount of interest payable under this
Note. "Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of Texas.
<PAGE> 107
Section 1.3 Prepayment. Maker may, without premium or penalty,
at any time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated
to the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in forward order of maturity.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more
of the following events with respect to Maker shall constitute an event of
default hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for 15 days after
Payee notifies Maker thereof in writing; provided, however, that the exercise
by Maker in good faith of its right of set-off pursuant to Section 1.4 above,
whether or not ultimately determined to be justified, shall not constitute an
Event of Default.
(b) If, pursuant to or within the meaning of the United
States Bankruptcy Code or any other federal or state law relating to insolvency
or relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee,
receiver, assignee, liquidator or similar official; (iv) make an assignment for
the benefit of its creditors; or (v) admit in writing its inability to pay its
debts as they become due.
(c) If a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 120 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing
within 5 days after the occurrence of any Event of Default of which Maker
acquires knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare
the entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in connection with Payee's exercise
of any or all of its rights and remedies upon the occurrence of an Event of
Default under this Note, including, without limitation, reasonable attorneys'
fees.
2
<PAGE> 108
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other
provision to the contrary in this Note, Maker covenants and agrees, and Payee
by accepting this Note covenants and agrees, that the principal of and interest
on the indebtedness now or hereafter evidenced by this Note are subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full in cash of all existing and future Senior
Indebtedness, and that the subordination provisions set forth in this Article
are for the benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other
obligations under (1) that certain Credit Agreement, dated as of November 12,
1997, among Maker, BT Commercial Corporation, as agent, and the lenders as
parties thereto, as such may be amended, modified, restated or refinanced from
time to time, with the same or different agent and lenders and (2) that certain
Senior Secured Credit Agreement, dated as of November 12, 1997, among Maker,
Bankers Trust Company, as administrative agent, and lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time,
with the same or different administrative agent and lenders (subject to clause
(ii) below) specifically excluding from each of the foregoing (ii) indebtedness
and other obligations that are, by their express terms, subordinated in right
of payment to any other indebtedness of the Company. By way of example and not
in limitation of the foregoing, "Senior Indebtedness" shall not include "the
Notes" as such term is defined in the Preliminary Offering Memorandum dated
October 31, 1997, relating to a proposed offering of Senior Subordinated Notes
of Maker under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the
subordination provision set forth in this Article are, and are intended to be,
an inducement and consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created before or after the issuance of
this Note, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness, and such holder of Senior Indebtedness shall be deemed
conclusively to have relied upon such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness, and
such holder is made an obligee hereunder and may enforce directly such
subordination provisions.
Section 3.2 Liquidation; Dissolution; Bankruptcy. Upon any
payment or distribution (whether in cash, property, debt, equity or other
securities, a combination thereof or otherwise) to creditors or equity holders
of Maker in a voluntary or involuntary liquidation or dissolution of Maker,
whether total or partial, or in bankruptcy, reorganization, insolvency,
receivership, dissolution, assignment for the benefit of creditors, marshaling
of assets or similar proceeding relating to Maker or its property:
(a) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due or to become due on or in
respect of all Senior Indebtedness before Payee shall be entitled to receive
any Security Payment (as defined in Section 3.3(a)); and
3
<PAGE> 109
(b) until all Senior Indebtedness is paid in full in
cash, any Security Payment to which Payee would be entitled but for this
Article shall be made to holders of Senior Indebtedness, as their interests may
appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and
payable, whether at the stated maturity thereof or by acceleration or
otherwise, such Senior Indebtedness shall first be irrevocably and indefeasibly
paid in full in cash, or the immediate payment thereof duly provided for in
cash, before Maker or any Person acting on behalf of Maker shall directly or
indirectly pay, prepay, redeem, retire, repurchase or otherwise acquire for
value or make any other prepayment, payment or distribution (whether in cash,
property, securities or a combination thereof or otherwise) on account of the
principal of (or premium, if any) or interest on, this Note (each, a "Security
Payment").
(b) No Security Payment shall be made if, at the time of
such Security Payment, Maker and Payee have received notice from a holder of
Senior Indebtedness that there exists a default in payment of all or any
portion of any principal of (and premium, if any) and interest and fees,
expenses, costs and other obligations on Senior Indebtedness, and such default
shall not have been cured or waived in writing or the benefits of this sentence
waived in writing by or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of
default (other than a default referred to in subsection (b) of this Section
3.3) with respect to any Senior Indebtedness having a principal amount (or
binding commitment to tend principal) in excess of $15,000,000 ("SPECIFIED
SENIOR INDEBTEDNESS"), as such event of default is defined therein or in the
instrument under which such Specified Senior Indebtedness is outstanding,
permitting the holders of such Specified Senior Indebtedness to accelerate the
maturity thereof under the terms of such Specified Senior Indebtedness, and
upon written notice of such event of default given by the to Payee, with a copy
to Maker, then, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no Security Payment shall be made;
provided, that if the holders of the Specified Senior Indebtedness to which the
default relates have not declared such Specified Senior Indebtedness to be
immediately due and payable within 179 days after the occurrence of such
default (or have declared such Specified Senior Indebtedness to be immediately
due and payable and within such period have rescinded such declaration of
acceleration), then, subject to the provisions of Section 3.2 and 3.3(a), Maker
shall pay all past due scheduled payments and shall resume making any and all
unpaid scheduled Security Payments. Any period during which any Security
Payment is prohibited pursuant to the immediately preceding sentence is
referred to in this Article as a "PAYMENT BLOCKAGE PERIOD." Notwithstanding any
other provisions of this Article or any other provision of this Note, in no
event shall a payment blockage period under this Article extend beyond 179 days
from the date on which such payment blockage period commenced. Not more than
one payment blockage period may be commenced within any consecutive 365-day
period with respect to this Note. For all purposes of this Article, no event of
default that existed or was continuing on the date of the commencement of any
payment blockage period with respect to the Specified Senior Indebtedness
initiating such payment blockage period shall be, or be made, the basis for the
4
<PAGE> 110
commencement of a second payment blockage period by the holder or holders of
such Specified Senior Indebtedness at any time after the 365-day period
referred to in the previous sentence unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and
payable before its stated maturity, then, and in such event, the holders of
Senior Indebtedness outstanding at the time this Note so becomes due and
payable shall be entitled to receive payment in full in cash of all amounts due
or to become due on or in respect of such Senior Indebtedness (whether or not a
default has occurred thereunder or such Senior Indebtedness is, or has been
declared to be, due and payable prior to the date on which it otherwise would
have become due and payable) before Payee shall be entitled to receive any
Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing
contained in this Article or elsewhere in this Note shall prevent Maker or any
person acting on behalf of Maker, at any time except as otherwise provided in
Section 3.2 from making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event
that any Security Payment is made to Payee that, because of this Article,
should not have been so made or may not be paid over to Payee, such Security
Payment shall be held by Payee for the benefit of, and shall forthwith be paid
over or delivered to, the holders of the Senior Indebtedness remaining unpaid
or their representatives, as their interests may appear, to the extent
necessary to irrevocably and indefeasibly pay such Senior Indebtedness in full
in cash in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify
Payee of any facts known to Maker that would cause a Security Payment to
violate this Article, but failure to give such notice shall not affect the
subordination provided in this Article of this Note to Senior Indebtedness.
Without limiting the foregoing, if payment of this Note is accelerated because
of an event of default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is
irrevocably and indefeasibly paid in full in cash and until this Note is paid
in full, Payee shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to Payee have been applied to the
payment of Senior Indebtedness. A distribution made under this Article to
holders of Senior Indebtedness which otherwise would have been made to Payee is
not, as between Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative
rights of Payee and holders of Senior Indebtedness. Nothing in this Note shall:
(a) impair, as between Maker and Payee, the obligation of
Maker, which is absolute and unconditional, to pay the principal of
and interest on this Note in accordance with their terms;
5
<PAGE> 111
(b) affect the relative rights of Payee and creditors of
Maker other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies
upon a default or, subject to the rights of holders of Senior
Indebtedness to receive prepayment, payments and distributions
otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or
interest on this Note on the due date or upon the acceleration thereof, the
failure is still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No
right of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any
settlement or compromise of any Senior Indebtedness, (e) the unenforceability
of any of the Senior Indebtedness or (f) the failure of any holder of Senior
Indebtedness to pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The
provisions of this Article shall not be amended, waived or modified in a
manner that would adversely affect the rights of the holders of any Senior
Indebtedness, and no such amendment, waiver or modification shall become
effective, unless the holders of such Senior Indebtedness shall have consented
in writing (in accordance with the provisions of the agreement governing such
Senior Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this
Note shall be cumulative and not alternative. No waiver by Payee of any right
or remedy under this Note shall be effective unless in a writing signed by
Payee. Neither the failure nor any delay in exercising any right, power or
privilege under this Note will operate as a waiver of such right, power or
privilege and no single or partial exercise of any such right, power or
privilege by Payee will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right of Payee
arising out of this Note can be discharged by Payee, in whole or in part, by a
waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
Maker will be deemed to be a waiver of any obligation of Maker or of the right
of Payee to take further action without notice or demand as
6
<PAGE> 112
provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
Section 4.2 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received only on the day of actual receipt
unless mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed to a Party at its address set forth below (or to such
other address to which such Party has notified the other Parties in accordance
with this section to send such claims, consents, designations, notices,
waivers, and other communications), in which case such claims, consents,
designations, notices, waivers, or other communications shall be deemed to have
been received three Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee:
-------------------------
-------------------------
-------------------------
Section 4.3 Severability. If any provision in this Note is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Note will remain in full force and effect. Any provision of
this Note held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS
OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and
its successors and assigns. This Note shall not be assigned or transferred by
Payee without the express prior written consent of Maker, except by will to
legatees or, in default thereof, by operation of law to heirs.
Section 4.6 Section Headings. Construction. The headings of
Sections in this Note are provided for convenience only and will not affect its
construction or interpretation. All
7
<PAGE> 113
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Note unless otherwise specified.
Section 4.7 Gender and Number. All words used in this Note will
be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the words "hereof" and "hereunder" and
similar references refer to this Note in its entirety and not to any specific
section or subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding
anything herein to the contrary, this Note shall be non-negotiable and shall
not be assignable by the parties hereto. Any attempted negotiation or
assignment of this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether
now existing or hereafter arising and whether written or oral, are expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of the maturity of this Note or otherwise, shall the amount paid, or agreed to
be paid, to Payee for the use, forbearance or detention of the money to be
loaned hereunder or otherwise, exceed the maximum amount permissible under
applicable law. If from any circumstances whatsoever fulfillment of any
provision of this Note or of any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
holder of this Note shall ever receive anything of value as interest or deemed
interest by applicable law under this Note or any other document evidencing,
securing or pertaining to the indebtedness evidenced hereby or otherwise an
amount that would exceed the highest lawful rate, such amount that would be
excessive interest shall be applied to the reduction of the principal amount
owing under this Note or on account of any other indebtedness of Maker to the
holder hereof relating to this Note, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal of this Note and
such other indebtedness, such excess shall be refunded to Maker. In determining
whether or not the interest paid or payable with respect to any indebtedness of
Maker to the holder hereof, under any specific contingency, exceeds the highest
lawful rate, Maker and the holder hereof shall, to the maximum extent permitted
by applicable law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 114
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
--------------------------------------
Lawrence A. Bettino, Vice President
<PAGE> 115
SUBORDINATED PROMISSORY NOTE
(Section 338(h)(10))
$364,166.67 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises
to pay to Roy J. Moore, an individual resident of Arlington, Texas ("PAYEE"),
in lawful money of the United States of America, the principal sum of Three
Hundred Sixty-four Thousand One Hundred Sixty-six dollars and 67/100
($364,166.67), together with interest as provided herein.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of that certain Stock Purchase and
Redemption Agreement dated as of November 12, 1997 (as such may be amended from
time to time, the "AGREEMENT"), and is subject to the terms and conditions of
the Agreement, which are, by this reference, incorporated herein and made a
part hereof. Capitalized terms used in this Note without definition shall have
the respective meanings set forth in the Agreement.
ARTICLE 1.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this
Note shall be due and payable, together with any accrued and unpaid interest to
date, on April 10, 1998. Interest on the unpaid principal balance of this Note
shall be due and payable monthly commencing December 15, 1997 and continuing on
the same day of each month thereafter until maturity. Interest shall accrue on
the unpaid principal balance of this Note at the Prime Rate (but in no event in
excess of the maximum nonusurious interest rate permitted by applicable law)
and shall be calculated on the basis of a year of 365 days and charged for the
actual number of days elapsed. "PRIME RATE" shall mean the rate that Bankers
Trust Company, New York, New York announces from time to time as its prime
lending rate in the United States for dollar denominated loans, as in effect
from time to time. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually-charged by any lending institution
to any customer. Lending institutions may make loans at rates of interest at,
above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and
interest on this Note shall be made by certified check at Fort Worth, Texas, or
at such other place in the United States of America as Payee shall designate to
Maker in writing or by wire transfer of immediately available funds to an
account designated by Payee in writing. If any payment of principal or interest
on this Note is due on a day which is not a Business Day, such payment shall be
due on the next succeeding Business Day, and such extension of time shall be
taken into account in calculating the amount of interest payable under this
Note. "Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of Texas.
<PAGE> 116
Section 1.3 Prepayment. Maker may, without premium or penalty,
at any time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated
to the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in forward order of maturity.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more
of the following events with respect to Maker shall constitute an event of
default hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for 15 days after
Payee notifies Maker thereof in writing; provided, however, that the exercise
by Maker in good faith of its right of set-off pursuant to Section 1.4 above,
whether or not ultimately determined to be justified, shall not constitute an
Event of Default.
(b) If, pursuant to or within the meaning of the United
States Bankruptcy Code or any other federal or state law relating to insolvency
or relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee,
receiver, assignee, liquidator or similar official; (iv) make an assignment for
the benefit of its creditors; or (v) admit in writing its inability to pay its
debts as they become due.
(c) If a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 120 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing
within 5 days after the occurrence of any Event of Default of which Maker
acquires knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare
the entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in connection with Payee's exercise
of any or all of its rights and remedies upon the occurrence of an Event of
Default under this Note, including, without limitation, reasonable attorneys'
fees.
2
<PAGE> 117
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other
provision to the contrary in this Note, Maker covenants and agrees, and Payee
by accepting this Note covenants and agrees, that the principal of and interest
on the indebtedness now or hereafter evidenced by this Note are subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full in cash of all existing and future Senior
Indebtedness, and that the subordination provisions set forth in this Article
are for the benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other
obligations under (1) that certain Credit Agreement, dated as of November 12,
1997, among Maker, BT Commercial Corporation, as agent, and the lenders as
parties thereto, as such may be amended, modified, restated or refinanced from
time to time, with the same or different agent and lenders and (2) that certain
Senior Secured Credit Agreement, dated as of November 12, 1997, among Maker,
Bankers Trust Company, as administrative agent, and lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time,
with the same or different administrative agent and lenders (subject to clause
(ii) below) specifically excluding from each of the foregoing (ii) indebtedness
and other obligations that are, by their express terms, subordinated in right
of payment to any other indebtedness of the Company. By way of example and not
in limitation of the foregoing, "Senior Indebtedness" shall not include "the
Notes" as such term is defined in the Preliminary Offering Memorandum dated
October 31, 1997, relating to a proposed offering of Senior Subordinated Notes
of Maker under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the
subordination provision set forth in this Article are, and are intended to be,
an inducement and consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created before or after the issuance of
this Note, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness, and such holder of Senior Indebtedness shall be deemed
conclusively to have relied upon such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness, and
such holder is made an obligee hereunder and may enforce directly such
subordination provisions.
Section 3.2 Liquidation; Dissolution; Bankruptcy. Upon any
payment or distribution (whether in cash, property, debt, equity or other
securities, a combination thereof or otherwise) to creditors or equity holders
of Maker in a voluntary or involuntary liquidation or dissolution of Maker,
whether total or partial, or in bankruptcy, reorganization, insolvency,
receivership, dissolution, assignment for the benefit of creditors, marshaling
of assets or similar proceeding relating to Maker or its property:
(a) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due or to become due on or in
respect of all Senior Indebtedness before Payee shall be entitled to receive
any Security Payment (as defined in Section 3.3(a)); and
3
<PAGE> 118
(b) until all Senior Indebtedness is paid in full in
cash, any Security Payment to which Payee would be entitled but for this
Article shall be made to holders of Senior Indebtedness, as their interests may
appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and
payable, whether at the stated maturity thereof or by acceleration or
otherwise, such Senior Indebtedness shall first be irrevocably and indefeasibly
paid in full in cash, or the immediate payment thereof duly provided for in
cash, before Maker or any Person acting on behalf of Maker shall directly or
indirectly pay, prepay, redeem, retire, repurchase or otherwise acquire for
value or make any other prepayment, payment or distribution (whether in cash,
property, securities or a combination thereof or otherwise) on account of the
principal of (or premium, if any) or interest on, this Note (each, a "Security
Payment").
(b) No Security Payment shall be made if, at the time of
such Security Payment, Maker and Payee have received notice from a holder of
Senior Indebtedness that there exists a default in payment of all or any
portion of any principal of (and premium, if any) and interest and fees,
expenses, costs and other obligations on Senior Indebtedness, and such default
shall not have been cured or waived in writing or the benefits of this sentence
waived in writing by or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of
default (other than a default referred to in subsection (b) of this Section
3.3) with respect to any Senior Indebtedness having a principal amount (or
binding commitment to lend principal) in excess of $15,000,000 ("SPECIFIED
SENIOR INDEBTEDNESS"), as such event of default is defined therein or in the
instrument under which such Specified Senior Indebtedness is outstanding,
permitting the holders of such Specified Senior Indebtedness to accelerate the
maturity thereof under the terms of such Specified Senior Indebtedness, and
upon written notice of such event of default given by the to Payee, with a copy
to Maker, then, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no Security Payment shall be made;
provided, that if the holders of the Specified Senior Indebtedness to which the
default relates have not declared such Specified Senior Indebtedness to be
immediately due and payable within 179 days after the occurrence of such
default (or have declared such Specified Senior Indebtedness to be immediately
due and payable and within such period have rescinded such declaration of
acceleration), then, subject to the provisions of Section 3.2 and 3.3(a), Maker
shall pay all past due scheduled payments and shall resume making any and all
unpaid scheduled Security Payments. Any period during which any Security
Payment is prohibited pursuant to the immediately preceding sentence is
referred to in this Article as a "PAYMENT BLOCKAGE PERIOD." Notwithstanding any
other provisions of this Article or any other provision of this Note, in no
event shall a payment blockage period under this Article extend beyond 179 days
from the date on which such payment blockage period commenced. Not more than
one payment blockage period may be commenced within any consecutive 365-day
period with respect to this Note. For all purposes of this Article, no event of
default that existed or was continuing on the date of the commencement of any
payment blockage period with respect to the Specified Senior Indebtedness
initiating such payment blockage period shall be, or be made, the basis for the
4
<PAGE> 119
commencement of a second payment blockage period by the holder or holders of
such Specified Senior Indebtedness at any time after the 365-day period
referred to in the previous sentence unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and
payable before its stated maturity, then, and in such event, the holders of
Senior Indebtedness outstanding at the time this Note so becomes due and
payable shall be entitled to receive payment in full in cash of all amounts due
or to become due on or in respect of such Senior Indebtedness (whether or not a
default has occurred thereunder or such Senior Indebtedness is, or has been
declared to be, due and payable prior to the date on which it otherwise would
have become due and payable) before Payee shall be entitled to receive any
Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing
contained in this Article or elsewhere in this Note shall prevent Maker or any
person acting on behalf of Maker, at any time except as otherwise provided in
Section 3.2 from making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event
that any Security Payment is made to Payee that, because of this Article,
should not have been so made or may not be paid over to Payee, such Security
Payment shall be held by Payee for the benefit of, and shall forthwith be paid
over or delivered to, the holders of the Senior Indebtedness remaining unpaid
or their representatives, as their interests may appear, to the extent
necessary to irrevocably and indefeasibly pay such Senior Indebtedness in full
in cash in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify
Payee of any facts known to Maker that would cause a Security Payment to
violate this Article, but failure to give such notice shall not affect the
subordination provided in this Article of this Note to Senior Indebtedness.
Without limiting the foregoing, if payment of this Note is accelerated because
of an event of default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is
irrevocably and indefeasibly paid in full in cash and until this Note is paid
in full, Payee shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to Payee have been applied to the
payment of Senior Indebtedness. A distribution made under this Article to
holders of Senior Indebtedness which otherwise would have been made to Payee is
not, as between Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative
rights of Payee and holders of Senior Indebtedness. Nothing in this Note shall:
(a) impair, as between Maker and Payee, the obligation of
Maker, which is absolute and unconditional, to pay the principal of
and interest on this Note in accordance with their terms;
5
<PAGE> 120
(b) affect the relative rights of Payee and creditors of
Maker other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies
upon a default or, subject to the rights of holders of Senior
Indebtedness to receive prepayment, payments and distributions
otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or
interest on this Note on the due date or upon the acceleration thereof, the
failure is still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No
right of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any
settlement or compromise of any Senior Indebtedness, (e) the unenforceability
of any of the Senior Indebtedness or (f) the failure of any holder of Senior
Indebtedness to pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The
provisions of this Article shall not be amended, waived or modified in a
manner that would adversely affect the rights of the holders of any Senior
Indebtedness, and no such amendment, waiver or modification shall become
effective, unless the holders of such Senior Indebtedness shall have consented
in writing (in accordance with the provisions of the agreement governing such
Senior Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this
Note shall be cumulative and not alternative. No waiver by Payee of any right
or remedy under this Note shall be effective unless in a writing signed by
Payee. Neither the failure nor any delay in exercising any right, power or
privilege under this Note will operate as a waiver of such right, power or
privilege and no single or partial exercise of any such right, power or
privilege by Payee will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right of Payee
arising out of this Note can be discharged by Payee, in whole or in part, by a
waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
Maker will be deemed to be a waiver of any obligation of Maker or of the right
of Payee to take further action without notice or demand as
6
<PAGE> 121
provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
Section 4.2 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received only on the day of actual receipt
unless mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed to a Party at its address set forth below (or to such
other address to which such Party has notified the other Parties in accordance
with this section to send such claims, consents, designations, notices,
waivers, and other communications), in which case such claims, consents,
designations, notices, waivers, or other communications shall be deemed to have
been received three Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee: Roy J. Moore
Orchid Court
Arlington, Texas 76016
Section 4.3 Severability. If any provision in this Note is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Note will remain in full force and effect. Any provision of
this Note held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS
OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and
its successors and assigns. This Note shall not be assigned or transferred by
Payee without the express prior written consent of Maker, except by will to
legatees or, in default thereof, by operation of law to heirs.
Section 4.6 Section Headings, Construction. The headings of
Sections in this Note are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Note unless otherwise
specified.
7
<PAGE> 122
Section 4.7 Gender and Number. All words used in this Note will
be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the words "hereof" and "hereunder" and
similar references refer to this Note in its entirety and not to any specific
section or subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding
anything herein to the contrary, this Note shall be non-negotiable and shall
not be assignable by the parties hereto. Any attempted negotiation or
assignment of this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee,
whether now existing or hereafter arising and whether written or oral, are
expressly limited so that in no contingency or event whatsoever, whether by
acceleration of the maturity of this Note or otherwise, shall the amount paid,
or agreed to be paid, to Payee for the use, forbearance or detention of the
money to be loaned hereunder or otherwise, exceed the maximum amount permissible
under applicable law. If from any circumstances whatsoever fulfillment of any
provision of this Note or of any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
holder of this Note shall ever receive anything of value as interest or deemed
interest by applicable law under this Note or any other document evidencing,
securing or pertaining to the indebtedness evidenced hereby or otherwise an
amount that would exceed the highest lawful rate, such amount that would be
excessive interest shall be applied to the reduction of the principal amount
owing under this Note or on account of any other indebtedness of Maker to the
holder hereof relating to this Note, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal of this Note and
such other indebtedness, such excess shall be refunded to Maker. In determining
whether or not the interest paid, or payable with respect to any indebtedness of
Maker to the holder hereof, under any specific contingency, exceeds the highest
lawful rate, Maker and the holder hereof shall, to the maximum extent permitted
by applicable law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 123
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
--------------------------------------
Lawrence A. Bettino, Vice President
<PAGE> 124
SUBORDINATED PROMISSORY NOTE
(Section 338(h)(10))
$364,166.67 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises
to pay to Carl R. Moore, an individual resident of Arlington, Texas ("PAYEE"),
in lawful money of the United States of America, the principal sum of Three
Hundred Sixty-four Thousand One Hundred Sixty-six dollars and 67/100
($364,166.67), together with interest as provided herein.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of that certain Stock Purchase and
Redemption Agreement dated as of November 12, 1997 (as such may be amended from
time to time, the "AGREEMENT"), and is subject to the terms and conditions of
the Agreement, which are, by this reference, incorporated herein and made a
part hereof. Capitalized terms used in this Note without definition shall have
the respective meanings set forth in the Agreement.
ARTICLE 1.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this
Note shall be due and payable, together with any accrued and unpaid interest to
date, on April 10, 1998. Interest on the unpaid principal balance of this Note
shall be due and payable monthly commencing December 15, 1997 and continuing on
the same day of each month thereafter until maturity. Interest shall accrue on
the unpaid principal balance of this Note at the Prime Rate (but in no event in
excess of the maximum nonusurious interest rate permitted by applicable law)
and shall be calculated on the basis of a year of 365 days and charged for the
actual number of days elapsed. "PRIME RATE" shall mean the rate that Bankers
Trust Company, New York, New York announces from time to time as its prime
lending rate in the United States for dollar denominated loans, as in effect
from time to time. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged by any lending institution
to any customer. Lending institutions may make loans at rates of interest at,
above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and
interest on this Note shall be made by certified check at Fort Worth, Texas, or
at such other place in the United States of America as Payee shall designate to
Maker in writing or by wire transfer of immediately available funds to an
account designated by Payee in writing. If any payment of principal or interest
on this Note is due on a day which is not a Business Day, such payment shall be
due on the next succeeding Business Day, and such extension of time shall be
taken into account in calculating the amount of interest payable under this
Note. "Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of Texas.
<PAGE> 125
Section 1.3 Prepayment. Maker may, without premium or penalty,
at any time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated
to the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in forward order of maturity.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more
of the following events with respect to Maker shall constitute an event of
default hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for 15 days after
Payee notifies Maker thereof in writing; provided, however, that the exercise
by Maker in good faith of its right of set-off pursuant to Section 1.4 above,
whether or not ultimately determined to be justified, shall not constitute an
Event of Default.
(b) If, pursuant to or within the meaning of the United
States Bankruptcy Code or any other federal or state law relating to insolvency
or relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee,
receiver, assignee, liquidator or similar official; (iv) make an assignment for
the benefit of its creditors; or (v) admit in writing its inability to pay its
debts as they become due.
(c) If a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 120 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing
within 5 days after the occurrence of any Event of Default of which Maker
acquires knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare
the entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in connection with Payee's exercise
of any or all of its rights and remedies upon the occurrence of an Event of
Default under this Note, including, without limitation, reasonable attorneys'
fees.
2
<PAGE> 126
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other
provision to the contrary in this Note, Maker covenants and agrees, and Payee
by accepting this Note covenants and agrees, that the principal of and interest
on the indebtedness now or hereafter evidenced by this Note are subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full in cash of all existing and future Senior
Indebtedness, and that the subordination provisions set forth in this Article
are for the benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other
obligations under (1) that certain Credit Agreement, dated as of November 12,
1997, among Maker, BT Commercial Corporation, as agent, and the lenders as
parties thereto, as such may be amended, modified, restated or refinanced from
time to time, with the same or different agent and lenders and (2) that certain
Senior Secured Credit Agreement, dated as of November 12, 1997, among Maker,
Bankers Trust Company, as administrative agent, and lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time,
with the same or different administrative agent and lenders (subject to clause
(ii) below) specifically excluding from each of the foregoing (ii) indebtedness
and other obligations that are, by their express terms, subordinated in right
of payment to any other indebtedness of the Company. By way of example and not
in limitation of the foregoing, "Senior Indebtedness" shall not include "the
Notes" as such term is defined in the Preliminary Offering Memorandum dated
October 31, 1997, relating to a proposed offering of Senior Subordinated Notes
of Maker under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note..
Payee by accepting this Note acknowledges and agrees that the
subordination provision set forth in this Article are, and are intended to be,
an inducement and consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created before or after the issuance of
this Note, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness, and such holder of Senior Indebtedness shall be deemed
conclusively to have relied upon such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness, and
such holder is made an obligee hereunder and may enforce directly such
subordination provisions.
Section 3.2 Liquidation; Dissolution: Bankruptcy. Upon any
payment or distribution (whether in cash, property, debt, equity or other
securities, a combination thereof or otherwise) to creditors or equity holders
of Maker in a voluntary or involuntary liquidation or dissolution of Maker,
whether total or partial, or in bankruptcy, reorganization, insolvency,
receivership, dissolution, assignment for the benefit of creditors, marshaling
of assets or similar proceeding relating to Maker or its property:
(a) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due or to become due on or in
respect of all Senior Indebtedness before Payee shall be entitled to receive
any Security Payment (as defined in Section 3.3(a)); and
3
<PAGE> 127
(b) until all Senior Indebtedness is paid in full in
cash, any Security Payment to which Payee would be entitled but for this
Article shall be made to holders of Senior Indebtedness, as their interests may
appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and
payable, whether at the stated maturity thereof or by acceleration or
otherwise, such Senior Indebtedness shall first be irrevocably and indefeasibly
paid in full in cash, or the immediate payment thereof duly provided for in
cash, before Maker or any Person acting on behalf of Maker shall directly or
indirectly pay, prepay, redeem, retire, repurchase or otherwise acquire for
value or make any other prepayment, payment or distribution (whether in cash,
property, securities or a combination thereof or otherwise) on account of the
principal of (or premium, if any) or interest on, this Note (each, a "Security
Payment").
(b) No Security Payment shall be made if, at the time of
such Security Payment, Maker and Payee have received notice from a holder of
Senior Indebtedness that there exists a default in payment of all or any
portion of any principal of (and premium, if any) and interest and fees,
expenses, costs and other obligations on Senior Indebtedness, and such default
shall not have been cured or waived in writing or the benefits of this sentence
waived in writing by or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of
default (other than a default referred to in subsection (b) of this Section
3.3) with respect to any Senior Indebtedness having a principal amount (or
binding commitment to lend principal) in excess of $15,000,000 ("SPECIFIED
SENIOR INDEBTEDNESS"), as such event of default is defined therein or in the
instrument under which such Specified Senior Indebtedness is outstanding,
permitting the holders of such Specified Senior Indebtedness to accelerate the
maturity thereof under the terms of such Specified Senior Indebtedness, and
upon written notice of such event of default given by the to Payee, with a copy
to Maker, then, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no Security Payment shall be made;
provided, that if the holders of the Specified Senior Indebtedness to which the
default relates have not declared such Specified Senior Indebtedness to be
immediately due and payable within 179 days after the occurrence of such
default (or have declared such Specified Senior Indebtedness to be immediately
due and payable and within such period have rescinded such declaration of
acceleration), then, subject to the provisions of Section 3.2 and 3.3(a), Maker
shall pay all past due scheduled payments and shall resume making any and all
unpaid scheduled Security Payments. Any period during which any Security
Payment is prohibited pursuant to the immediately preceding sentence is
referred to in this Article as a "PAYMENT BLOCKAGE PERIOD." Notwithstanding any
other provisions of this Article or any other provision of this Note, in no
event shall a payment blockage period under this Article extend beyond 179 days
from the date on which such payment blockage period commenced. Not more than
one payment blockage period may be commenced within any consecutive 365-day
period with respect to this Note. For all purposes of this Article, no event of
default that existed or was continuing on the date of the commencement of any
payment blockage period with respect to the Specified Senior Indebtedness
initiating such payment blockage period shall be, or be made, the basis for the
4
<PAGE> 128
commencement of a second payment blockage period by the holder or holders of
such Specified Senior Indebtedness at any time after the 365-day period
referred to in the previous sentence unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and
payable before its stated maturity, then, and in such event, the holders of
Senior Indebtedness outstanding at the time this Note so becomes due and
payable shall be entitled to receive payment in full in cash of all amounts due
or to become due on or in respect of such Senior Indebtedness (whether or not a
default has occurred thereunder or such Senior Indebtedness is, or has been
declared to be, due and payable prior to the date on which it otherwise would
have become due and payable) before Payee shall be entitled to receive any
Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing
contained in this Article or elsewhere in this Note shall prevent Maker or any
person acting on behalf of Maker, at any time except as otherwise provided in
Section 3.2 from making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event
that any Security Payment is made to Payee that, because of this Article,
should not have been so made or may not be paid over to Payee, such Security
Payment shall be held by Payee for the benefit of, and shall forthwith be paid
over or delivered to, the holders of the Senior Indebtedness remaining unpaid
or their representatives, as their interests may appear, to the extent
necessary to irrevocably and indefeasibly pay such Senior Indebtedness in full
in cash in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify
Payee of any facts known to Maker that would cause a Security Payment to
violate this Article, but failure to give such notice shall not affect the
subordination provided in this Article of this Note to Senior Indebtedness.
Without limiting the foregoing, if payment of this Note is accelerated because
of an event of default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is
irrevocably and indefeasibly paid in full in cash and until this Note is paid
in full, Payee shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to Payee have been applied to the
payment of Senior Indebtedness. A distribution made under this Article to
holders of Senior Indebtedness which otherwise would have been made to Payee is
not, as between Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative
rights of Payee and holders of Senior Indebtedness. Nothing in this Note shall:
(a) impair, as between Maker and Payee, the obligation of
Maker, which is absolute and unconditional, to pay the principal of
and interest on this Note in accordance with their terms;
5
<PAGE> 129
(b) affect the relative rights of Payee and creditors of
Maker other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies
upon a default or, subject to the rights of holders of Senior
Indebtedness to receive prepayment, payments and distributions
otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or
interest on this Note on the due date or upon the acceleration thereof, the
failure is still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No
right of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any
settlement or compromise of any Senior Indebtedness, (e) the unenforceability
of any of the Senior Indebtedness or (f) the failure of any holder of Senior
Indebtedness to pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The
provisions of this Article shall not be amended, waived or modified in a
manner that would adversely affect the rights of the holders of any Senior
Indebtedness, and no such amendment, waiver or modification shall become
effective, unless the holders of such Senior Indebtedness shall have consented
in writing (in accordance with the provisions of the agreement governing such
Senior Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this
Note shall be cumulative and not alternative. No waiver by Payee of any right
or remedy under this Note shall be effective unless in a writing signed by
Payee. Neither the failure nor any delay in exercising any right, power or
privilege under this Note will operate as a waiver of such right, power or
privilege and no single or partial exercise of any such right, power or
privilege by Payee will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right of Payee
arising out of this Note can be discharged by Payee, in whole or in part, by a
waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
Maker will be deemed to be a waiver of any obligation of Maker or of the right
of Payee to take further action without notice or demand as
6
<PAGE> 130
provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
Section 4.2 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received only on the day of actual receipt
unless mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed to a Party at its address set forth below (or to such
other address to which such Party has notified the other Parties in accordance
with this section to send such claims, consents, designations, notices,
waivers, and other communications), in which case such claims, consents,
designations, notices, waivers, or other communications shall be deemed to have
been received three Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee: Carl R. Moore
Flower Garden
Arlington, Texas 76016
Section 4.3 Severability. If any provision in this Note is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Note will remain in full force and effect. Any provision of
this Note held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS
OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and
its successors and assigns. This Note shall not be assigned or transferred by
Payee without the express prior written consent of Maker, except by will to
legatees or, in default thereof, by operation of law to heirs.
Section 4.6 Section Headings, Construction. The headings of
Sections in this Note are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Note unless otherwise
specified.
7
<PAGE> 131
Section 4.7 Gender and Number. All words used in this Note will
be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the words "hereof" and "hereunder" and
similar references refer to this Note in its entirety and not to any specific
section or subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding
anything herein to the contrary, this Note shall be non-negotiable and shall
not be assignable by the parties hereto. Any attempted negotiation or
assignment of this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether
now existing or hereafter arising and whether written or oral, are expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of the maturity of this Note or otherwise, shall the amount paid, or agreed to
be paid, to Payee for the use, forbearance or detention of the money to be
loaned hereunder or otherwise, exceed the maximum amount permissible under
applicable law. If from any circumstances whatsoever fulfillment of any
provision of this Note or of any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
holder of this Note shall ever receive anything of value as interest or deemed
interest by applicable law under this Note or any other document evidencing,
securing or pertaining to the indebtedness evidenced hereby or otherwise an
amount that would exceed the highest lawful rate, such amount that would be
excessive interest shall be applied to the reduction of the principal amount
owing under this Note or on account of any other indebtedness of Maker to the
holder hereof relating to this Note, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal of this Note and
such other indebtedness, such excess shall be refunded to Maker. In determining
whether or not the interest paid or payable with respect to any indebtedness of
Maker to the holder hereof, under any specific contingency, exceeds the highest
lawful rate, Maker and the holder hereof shall, to the maximum extent permitted
by applicable law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 132
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
--------------------------------------
Lawrence A. Bettino, Vice President
<PAGE> 133
SUBORDINATED PROMISSORY NOTE
(Section 338(h)(10))
$364,166.67 November 12,1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises
to pay to Thomas F. "Fred" Moore, an individual resident of Arlington, Texas
("PAYEE"), in lawful money of the United States of America, the principal sum of
Three Hundred Sixty-four Thousand One Hundred Sixty-six dollars and 67/100
dollars ($364,166.67), together with interest as provided herein.
This Note has been executed and delivered pursuant to and in
accordance with the terms and conditions of that certain Stock Purchase and
Redemption Agreement dated as of November 12, 1997 (as such may be amended from
time to time, the "AGREEMENT"), and is subject to the terms and conditions of
the Agreement, which are, by this reference, incorporated herein and made a
part hereof Capitalized terms used in this Note without definition shall have
the respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this
Note shall be due and payable, together with any accrued and unpaid interest to
date, on April 10, 1998. Interest on the unpaid principal balance of this Note
shall be due and payable monthly commencing December 15, 1997 and continuing on
the same day of each month thereafter until maturity. Interest shall accrue on
the unpaid principal balance of this Note at the Prime Rate (but in no event in
excess of the maximum nonusurious interest rate permitted by applicable law)
and shall be calculated on the basis of a year of 365 days and charged for the
actual number of days elapsed. "PRIME RATE" shall mean the rate that Bankers
Trust Company, New York, New York announces from time to time as its prime
lending rate in the United States for dollar denominated loans, as in effect
from time to time. The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged by any lending institution
to any customer. Lending institutions may make loans at rates of interest at,
above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and
interest on this Note shall be made by certified check at Fort Worth, Texas, or
at such other place in the United States of America as Payee shall designate to
Maker in writing or by wire transfer of immediately available funds to an
account designated by Payee in writing. If any payment of principal or interest
on this Note is due on a day which is not a Business Day, such payment shall be
due on the next succeeding Business Day, and such extension of time shall be
taken into account in calculating the amount of interest payable under this
Note. "Business Day" means any day other than a Saturday, Sunday or legal
holiday in the State of Texas.
<PAGE> 134
Section 1.3 Prepayment. Maker may, without premium or penalty,
at any time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated
to the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in forward order of maturity.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more
of the following events with respect to Maker shall constitute an event of
default hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of
principal or interest on this Note and such failure continues for 15 days after
Payee notifies Maker thereof in writing; provided, however, that the exercise
by Maker in good faith of its right of set-off pursuant to Section 1.4 above,
whether or not ultimately determined to be justified, shall not constitute an
Event of Default.
(b) If, pursuant to or within the meaning of the United
States Bankruptcy Code or any other federal or state law relating to insolvency
or relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee,
receiver, assignee, liquidator or similar official; (iv) make an assignment for
the benefit of its creditors; or (v) admit in writing its inability to pay its
debts as they become due.
(c) If a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 120 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing
within 5 days after the occurrence of any Event of Default of which Maker
acquires knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare
the entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in connection with Payee's exercise
of any or all of its rights and remedies upon the occurrence of an Event of
Default under this Note, including, without limitation, reasonable attorneys'
fees.
2
<PAGE> 135
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other
provision to the contrary in this Note, Maker covenants and agrees, and Payee
by accepting this Note covenants and agrees, that the principal of and interest
on the indebtedness now or hereafter evidenced by this Note are subordinated in
right of payment, to the extent and in the manner provided in this Article, to
the prior payment in full in cash of all existing and future Senior
Indebtedness, and that the subordination provisions set forth in this Article
are for the benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other
obligations under (1) that certain Credit Agreement, dated as of November 12,
1997, among Maker, BT Commercial Corporation, as agent, and the lenders as
parties thereto, as such may be amended, modified, restated or refinanced from
time to time, with the same or different agent and lenders and (2) that certain
Senior Secured Credit Agreement, dated as of November 12, 1997, among Maker,
Bankers Trust Company, as administrative agent, and lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time,
with the same or different administrative agent and lenders (subject to clause
(ii) below) specifically excluding from each of the foregoing (ii) indebtedness
and other obligations that are, by their express terms, subordinated in right
of payment to any other indebtedness of the Company. By way of example and not
in limitation of the foregoing, "Senior Indebtedness" shall not include "the
Notes" as such term is defined in the Preliminary Offering Memorandum dated
October 31, 1997, relating to a proposed offering of Senior Subordinated Notes
of Maker under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the
subordination provision set forth in this Article are, and are intended to be,
an inducement and consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created before or after the issuance of
this Note, to acquire and continue to hold, or to continue to hold, such Senior
Indebtedness, and such holder of Senior Indebtedness shall be deemed
conclusively to have relied upon such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness, and
such holder is made an obligee hereunder and may enforce directly such
subordination provisions.
Section 3.2 Liquidation; Dissolution; Bankruptcy. Upon any
payment or distribution (whether in cash, property, debt, equity or other
securities, a combination thereof or otherwise) to creditors or equity holders
of Maker in a voluntary or involuntary liquidation or dissolution of Maker,
whether total or partial, or in bankruptcy, reorganization, insolvency,
receivership, dissolution, assignment for the benefit of creditors, marshaling
of assets or similar proceeding relating to Maker or its property:
(a) holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due or to become due on or in
respect of all Senior Indebtedness before Payee shall be entitled to receive
any Security Payment (as defined in Section 3.3(a)); and
3
<PAGE> 136
(b) until all Senior Indebtedness is paid in full in
cash, any Security Payment to which Payee would be entitled but for this
Article shall be made to holders of Senior Indebtedness, as their interests may
appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and
payable, whether at the stated maturity thereof or by acceleration or
otherwise, such Senior Indebtedness shall first be irrevocably and indefeasibly
paid in full in cash, or the immediate payment thereof duly provided for in
cash, before Maker or any Person acting on behalf of Maker shall directly or
indirectly pay, prepay, redeem, retire, repurchase or otherwise acquire for
value or make any other prepayment, payment or distribution (whether in cash,
property, securities or a combination thereof or otherwise) on account of the
principal of (or premium, if any) or interest on, this Note (each, a "Security
Payment").
(b) No Security Payment shall be made if, at the time of
such Security Payment, Maker and Payee have received notice from a holder of
Senior Indebtedness that there exists a default in payment of all or any
portion of any principal of (and premium, if any) and interest and fees,
expenses, costs and other obligations on Senior Indebtedness, and such default
shall not have been cured or waived in writing or the benefits of this sentence
waived in writing by or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of
default (other than a default referred to in subsection (b) of this Section
3.3) with respect to any Senior Indebtedness having a principal amount (or
binding commitment to lend principal) in excess of $15,000,000 ("SPECIFIED
SENIOR INDEBTEDNESS"), as such event of default is defined therein or in the
instrument under which such Specified Senior Indebtedness is outstanding,
permitting the holders of such Specified Senior Indebtedness to accelerate the
maturity thereof under the terms of such Specified Senior Indebtedness, and
upon written notice of such event of default given by the to Payee, with a copy
to Maker, then, unless and until such event of default shall have been cured or
waived or shall have ceased to exist, no Security Payment shall be made;
provided, that if the holders of the Specified Senior Indebtedness to which the
default relates have not declared such Specified Senior Indebtedness to be
immediately due and payable within 179 days after the occurrence of such
default (or have declared such Specified Senior Indebtedness to be immediately
due and payable and within such period have rescinded such, declaration of
acceleration), then, subject to the provisions of Section 3.2 and 3.3(a), Maker
shall pay all past due scheduled payments and shall resume making any and all
unpaid scheduled Security Payments. Any period during which any Security
Payment is prohibited pursuant to the immediately preceding sentence is
referred to in this Article as a "PAYMENT BLOCKAGE PERIOD." Notwithstanding any
other provisions of this Article or any other provision of this Note, in no
event shall a payment blockage period under this Article extend beyond 179 days
from the date on which such payment blockage period commenced. Not more than
one payment blockage period may be commenced within any consecutive 365-day
period with respect to this Note. For all purposes of this Article, no event of
default that existed or was continuing on the date of the commencement of any
payment blockage period with respect to the Specified Senior Indebtedness
initiating such payment blockage period shall be, or be made, the basis for the
4
<PAGE> 137
commencement of a second payment blockage period by the holder or holders of
such Specified Senior Indebtedness at any time after the 365-day period
referred to in the previous sentence unless such event of default shall have
been cured or waived for a period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and
payable before its stated maturity, then, and in such event, the holders of
Senior Indebtedness outstanding at the time this Note so becomes due and
payable shall be entitled to receive payment in full in cash of all amounts due
or to become due on or in respect of such Senior Indebtedness (whether or not a
default has occurred thereunder or such Senior Indebtedness is, or has been
declared to be, due and payable prior to the date on which it otherwise would
have become due and payable) before Payee shall be entitled to receive any
Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing
contained in this Article or elsewhere in this Note shall prevent Maker or any
person acting on behalf of Maker, at any time except as otherwise provided in
Section 3.2 from making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event
that any Security Payment is made to Payee that, because of this Article,
should not have been so made or may not be paid over to Payee, such Security
Payment shall be held by Payee for the benefit of, and shall forthwith be paid
over or delivered to, the holders of the Senior Indebtedness remaining unpaid
or their representatives, as their interests may appear, to the extent
necessary to irrevocably and indefeasibly pay such Senior Indebtedness in full
in cash in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify
Payee of any facts known to Maker that would cause a Security Payment to
violate this Article, but failure to give such notice shall not affect the
subordination provided in this Article of this Note to Senior Indebtedness.
Without limiting the foregoing, if payment of this Note is accelerated because
of an event of default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is
irrevocably and indefeasibly paid in full in cash and until this Note is paid
in full, Payee shall be subrogated to the rights of holders of Senior
Indebtedness to receive distributions applicable to Senior Indebtedness to the
extent that distributions otherwise payable to Payee have been applied to the
payment of Senior Indebtedness. A distribution made under this Article to
holders of Senior Indebtedness which otherwise would have been made to Payee is
not, as between Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative
rights of Payee and holders of Senior Indebtedness. Nothing in this Note shall:
(a) impair, as between Maker and Payee, the obligation of
Maker, which is absolute and unconditional, to pay the principal of
and interest on this Note in accordance with their terms;
5
<PAGE> 138
(b) affect the relative rights of Payee and creditors of
Maker other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies
upon a default or, subject to the rights of holders of Senior
Indebtedness to receive prepayment, payments and distributions
otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or
interest on this Note on the due date or upon the acceleration thereof, the
failure is still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No
right of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any
settlement or compromise of any Senior Indebtedness, (e) the unenforceability
of any of the Senior Indebtedness or (f) the failure of any holder of Senior
Indebtedness to pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The
provisions of this Article shall not be amended, waived or modified in a
manner that would adversely affect the rights of the holders of any Senior
Indebtedness, and no such amendment, waiver or modification shall become
effective, unless the holders of such Senior Indebtedness shall have consented
in writing (in accordance with the provisions of the agreement governing such
Senior Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this
Note shall be cumulative and not alternative. No waiver by Payee of any right
or remedy under this Note shall be effective unless in a writing signed by
Payee. Neither the failure nor any delay in exercising any right, power or
privilege under this Note will operate as a waiver of such right, power or
privilege and no single or partial exercise of any such right, power or
privilege by Payee will preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right of Payee
arising out of this Note can be discharged by Payee, in whole or in part, by a
waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
Maker will be deemed to be a waiver of any obligation of Maker or of the right
of Payee to take further action without notice or demand as
6
<PAGE> 139
provided in this Note. Maker hereby waives presentment, demand, protest and
notice of dishonor and protest.
Section 4.2 Notices. All claims, consents, designations, notices,
waivers, and other communications in connection with this Agreement shall be in
writing. Such claims, consents, designations, notices, waivers, and other
communications shall be considered received only on the day of actual receipt
unless mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed to a Party at its address set forth below (or to such
other address to which such Party has notified the other Parties in accordance
with this section to send such claims, consents, designations, notices,
waivers, and other communications), in which case such claims, consents,
designations, notices, waivers, or other communications shall be deemed to have
been received three Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee: Thomas F. "Fred" Moore
Bay Club Drive
Arlington, Texas 76013
Section 4.3 Severability. If any provision in this Note is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Note will remain in full force and effect. Any provision of
this Note held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS
OF THE STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and
its successors and assigns. This Note shall not be assigned or transferred by
Payee without the express prior written consent of Maker, except by will to
legatees or, in default thereof, by operation of law to heirs.
Section 4.6 Section Headings. Construction. The headings of
Sections in this Note are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Note unless otherwise
specified.
7
<PAGE> 140
Section 4.7 Gender and Number. All words used in this Note will
be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the words "hereof' and "hereunder" and
similar references refer to this Note in its entirety and not to any specific
section or subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding
anything herein to the contrary, this Note shall be non-negotiable and shall
not be assignable by the parties hereto. Any attempted negotiation or
assignment of this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether
now existing or hereafter arising and whether written or oral, are expressly
limited so that in no contingency or event whatsoever, whether by acceleration
of the maturity of this Note or otherwise, shall the amount paid, or agreed to
be paid, to Payee for the use, forbearance or detention of the money to be
loaned hereunder or otherwise, exceed the maximum amount permissible under
applicable law. If from any circumstances whatsoever fulfillment of any
provision of this Note or of any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by law, then, ipso facto, the obligation to be fulfilled shall be
reduced to the limit of such validity, and if from any such circumstances the
holder of this Note shall ever receive anything of value as interest or deemed
interest by applicable law under this Note or any other document evidencing,
securing or pertaining to the indebtedness evidenced hereby or otherwise an
amount that would exceed the highest lawful rate, such amount that would be
excessive interest shall be applied to the reduction of the principal amount
owing under this Note or on account of any other indebtedness of Maker to the
holder hereof relating to this Note, and not to the payment of interest, or if
such excessive interest exceeds the unpaid balance of principal of this Note and
such other indebtedness, such excess shall be refunded to Maker. In determining
whether or not the interest paid or payable with respect to any indebtedness of
Maker to the holder hereof, under any specific contingency, exceeds the highest
lawful rate, Maker and the holder hereof shall, to the maximum extent permitted
by applicable law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 141
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of
the date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
--------------------------------------
Lawrence A. Bettino, Vice President
<PAGE> 142
EXHIBIT H (to Exhibit 10.1)
FORM OF WORKING CAPITAL NOTES
<PAGE> 143
SUBORDINATED PROMISSORY NOTE
(PURCHASE PRICE ADJUSTMENT)
$230,242.88 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises to
pay to Betty Moore, an individual resident of Fort Worth, Texas ("PAYEE"), in
lawful money of the United States of America, the principal sum of Two Hundred
Thirty Thousand Two Hundred Forty-two and 88/100 dollars ($230,242.88), together
with interest as provided herein.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of that certain Stock Purchase and Redemption
Agreement dated as of November 12, 1997 (as such may be amended from time to
time, the "AGREEMENT"), and is subject to the terms and conditions of the
Agreement, which are, by this reference, incorporated herein and made a part
hereof. Capitalized terms used in this Note without definition shall have the
respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this Note
shall be due and payable in 12 consecutive monthly installments commencing on
December 15, 1997, the first eleven of which shall each be in the amount of
$19,186.61, and a final installment on November 15, 1998, in the amount of the
entire unpaid principal balance of this Note. Interest on the unpaid principal
balance of this Note shall be due and payable monthly, together with each
payment of principal. Interest shall accrue on the unpaid principal balance of
this Note at the Prime Rate (but in no event in excess of the maximum
nonusurious interest rate permitted by applicable law) and shall be calculated
on the basis of a year of 365 days and charged for the actual number of days
elapsed. "PRIME RATE" shall mean the rate that Bankers Trust Company, New York,
New York announces from time to time as its prime lending rate in the United
States for dollar denominated loans, as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or best
rate actually charged by any lending institution to any customer. Lending
institutions may make loans at rates of interest at, above or below the Prime
Rate.
Section 1.2 Manner of Payments. All payments of principal and interest
on this Note shall be made by certified check at Fort Worth, Texas, or at such
other place in the United States of America as Payee shall designate to Maker in
writing or by wire transfer of immediately available funds to an account
designated by Payee in writing. If any payment of principal or interest on this
Note is due on a day which is not a Business Day, such payment shall be due on
the next succeeding Business Day, and such extension of time shall be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of Texas.
<PAGE> 144
Section 1.3 Prepayment. Maker may, without premium or penalty, at any time
and from time to time, prepay all or any portion of the outstanding principal
balance due under this Note, provided that each such prepayment is accompanied
by accrued interest on the amount of principal prepaid calculated to the date of
such prepayment. Any partial prepayments shall be applied to installments of
principal in forward order of maturity.
Section 1.4 Right of Adjustment. Pursuant to the terms and conditions set
forth in Article II of the Agreement, this Note is subject to increase or
decrease. Any such increase or decrease shall be evidenced by an amendment
hereto executed by Maker and Payee. Each such amendment shall include a ratable
amendment to the amount of the scheduled monthly payments due hereunder.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 15 days after Payee
notifies Maker thereof in writing.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against Maker in an involuntary
case, (ii) appoints a trustee, receiver, assignee, liquidator or similar
official for Maker or substantially all of Maker's properties, or (iii) orders
the liquidation of Maker, and in each case the order or decree is not dismissed
within 60 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing within 5
days after the occurrence of any Event of Default of which Maker acquires
knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare the
entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in
2
<PAGE> 145
connection with Payee's exercise of any or all of its rights and remedies upon
the occurrence of an Event of Default under this Note, including, without
limitation, reasonable attorneys' fees.
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other provision
to the contrary in this Note, Maker covenants and agrees, and Payee by accepting
this Note covenants and agrees, that the principal of and interest on the
indebtedness now or hereafter evidenced by this Note are subordinated in right
of payment, to the extent and in the manner provided in this Article, to the
prior payment in full in cash of all existing and future Senior Indebtedness,
and that the subordination provisions set forth in this Article are for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other obligations
under (1) that certain Credit Agreement, dated as of November 12, 1997, among
Maker, BT Commercial Corporation, as agent, and the lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time, with
the same or different agent and lenders and (2) that certain Senior Secured
Credit Agreement, dated as of November 12, 1997, among Maker, Bankers Trust
Company, as administrative agent, and lenders as parties thereto, as such may be
amended, modified, restated or refinanced from time to time, with the same or
different administrative agent and lenders (subject to clause (ii) below)
specifically excluding from each of the foregoing (ii) indebtedness and other
obligations that are, by their express terms, subordinated in right of payment
to any other indebtedness of the Company. By way of example and not in
limitation of the foregoing, "Senior Indebtedness" shall not include "the Notes"
as such term is defined in the Preliminary Offering Memorandum dated October 31,
1997, relating to a proposed offering of Senior Subordinated Notes of Maker
under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the subordination
provision set forth in this Article are, and are intended to be, an inducement
and consideration to each holder of any Senior Indebtedness, whether such Senior
Indebtedness was created before or after the issuance of this Note, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness, and such
holder of Senior Indebtedness shall be deemed conclusively to have relied upon
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness, and such holder is made an obligee
hereunder and may enforce directly such subordination provisions.
Section 3.2 Liquidation; Dissolution; Bankruptcy. Upon any payment or
distribution (whether in cash, property, debt, equity or other securities, a
combination thereof or otherwise) to creditors or equity holders of Maker in a
voluntary or involuntary liquidation or dissolution of Maker, whether total or
partial, or in bankruptcy, reorganization, insolvency, receivership,
dissolution, assignment for the benefit of creditors, marshaling of assets or
similar proceeding relating to Maker or its property:
3
<PAGE> 146
(a) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in respect of
all Senior Indebtedness before Payee shall be entitled to receive any Security
Payment (as defined in Section 3.3(a)); and
(b) until all Senior Indebtedness is paid in full in cash, any
Security Payment to which Payee would be entitled but for this Article shall be
made to holders of Senior Indebtedness, as their interests may appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and payable, whether
at the stated maturity thereof or by acceleration or otherwise, such Senior
Indebtedness shall first be irrevocably and indefeasibly paid in full in cash,
or the immediate payment thereof duly provided for in cash, before Maker or any
Person acting on behalf of Maker shall directly or indirectly pay, prepay,
redeem, retire, repurchase or otherwise acquire for value or make any other
prepayment, payment or distribution (whether in cash, property, securities or a
combination thereof or otherwise) on account of the principal of (or premium, if
any) or interest on, this Note (each, a "Security Payment").
(b) No Security Payment shall be made if, at the time of such
Security Payment, Maker and Payee have received notice from a holder of Senior
Indebtedness that there exists a default in payment of all or any portion of any
principal of (and premium, if any) and interest and fees, expenses, costs and
other obligations on Senior Indebtedness, and such default shall not have been
cured or waived in writing or the benefits of this sentence waived in writing by
or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of default
(other than a default referred to in subsection (b) of this Section 3.3) with
respect to any Senior Indebtedness having a principal amount (or binding
commitment to lend principal) in excess of $15,000,000 ("SPECIFIED SENIOR
INDEBTEDNESS"), as such event of default is defined therein or in the instrument
under which such Specified Senior Indebtedness is outstanding, permitting the
holders of such Specified Senior Indebtedness to accelerate the maturity thereof
under the terms of such Specified Senior Indebtedness, and upon written notice
of such event of default given by the to Payee, with a copy to Maker, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, no Security Payment shall be made, provided, that if the
holders of the Specified Senior Indebtedness to which the default relates have
not declared such Specified Senior Indebtedness to be immediately due and
payable within 179 days after the occurrence of such default (or have declared
such Specified Senior Indebtedness to be immediately due and payable and within
such period have rescinded such declaration of acceleration), then, subject to
the provisions of Section 3.2 and 3.3(a), Maker shall pay all past due scheduled
payments and shall resume making any and all unpaid scheduled Security Payments.
Any period during which any Security Payment is prohibited pursuant to the
immediately preceding sentence is referred to in this Article as a "PAYMENT
BLOCKAGE PERIOD." Notwithstanding any other provisions of this Article or any
other provision of this Note, in no event shall a payment blockage period under
this Article extend beyond 179 days from the date on which such payment blockage
period commenced. Not more than one payment blockage
4
<PAGE> 147
period may be commenced within any consecutive 365-day period with respect to
this Note. For all purposes of this Article, no event of default that existed or
was continuing on the date of the commencement of any payment blockage period
with respect to the Specified Senior Indebtedness initiating such payment
blockage period shall be, or be made, the basis for the commencement of a second
payment blockage period by the holder or holders of such Specified Senior
Indebtedness at any time after the 365-day period referred to in the previous
sentence unless such event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and payable before
its stated maturity, then, and in such event, the holders of Senior Indebtedness
outstanding at the time this Note so becomes due and payable shall be entitled
to receive payment in full in cash of all amounts due or to become due on or in
respect of such Senior Indebtedness (whether or not a default has occurred
thereunder or such Senior Indebtedness is, or has been declared to be, due and
payable prior to the date on which it otherwise would have become due and
payable) before Payee shall be entitled to receive any Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing contained in
this Article or elsewhere in this Note shall prevent Maker or any person acting
on behalf of Maker, at any time except as otherwise provided in Section 3.2 from
making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event that any
Security Payment is made to Payee that, because of this Article, should not have
been so made or may not be paid over to Payee, such Security Payment shall be
held by Payee for the benefit of, and shall forthwith be paid over or delivered
to, the holders of the Senior Indebtedness remaining unpaid or their
representatives, as their interests may appear, to the extent necessary to
irrevocably and indefeasibly pay such Senior Indebtedness in full in cash in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify Payee of
any facts known to Maker that would cause a Security Payment to violate this
Article, but failure to give such notice shall not affect the subordination
provided in this Article of this Note to Senior Indebtedness. Without limiting
the foregoing, if payment of this Note is accelerated because of an event of
default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is irrevocably and
indefeasibly paid in full in cash and until this Note is paid in full, Payee
shall be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to Payee have been applied to the payment of Senior
Indebtedness. A distribution made under this Article to holders of Senior
Indebtedness which otherwise would have been made to Payee is not, as between
Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative rights of
Payee and holders of Senior Indebtedness. Nothing in this Note shall:
5
<PAGE> 148
(a) impair, as between Maker and Payee, the obligation of Maker,
which is absolute and unconditional, to pay the principal of and interest
on this Note in accordance with their terms;
(b) affect the relative rights of Payee and creditors of Maker
other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies upon a
default or, subject to the rights of holders of Senior Indebtedness to
receive prepayment, payments and distributions otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or interest
on this Note on the due date or upon the acceleration thereof, the failure is
still a default
Section 3.9 Subordination May Not Be Impaired by the Company. No right
of any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any settlement
or compromise of any Senior Indebtedness, (e) the unenforceability of any of the
Senior Indebtedness or (f) the failure of any holder of Senior Indebtedness to
pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The provisions of
this Article shall not be amended, waived or modified in a manner that would
adversely affect the rights of the holders of any Senior Indebtedness, and no
such amendment, waiver or modification shall become effective, unless the
holders of such Senior Indebtedness shall have consented in writing (in
accordance with the provisions of the agreement governing such Senior
Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this Note
shall be cumulative and not alternative. No waiver by Payee of any right or
remedy under this Note shall be effective unless in a writing signed by Payee.
Neither the failure nor any delay in exercising any right, power or privilege
under this Note will operate as a waiver of such right, power or privilege and
no single or partial exercise of any such right, power or privilege by Payee
will preclude any other or further exercise of such right, power or privilege or
the exercise of any other right, power or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right of Payee arising out of this
Note can be discharged by Payee, in whole or in part,
6
<PAGE> 149
by a waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on Maker
will be deemed to be a waiver of any obligation of Maker or of the right of
Payee to take further action without notice or demand as provided in this Note.
Maker hereby waives presentment, demand, protest and notice of dishonor and
protest.
Section 4.2 Notices. All claims, consents, designations, notices, waivers,
and other communications in connection with this Agreement shall be in writing.
Such claims, consents, designations, notices, waivers, and other communications
shall be considered received only on the day of actual receipt unless mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed to a Party at its address set forth below (or to such other address to
which such Party has notified the other Parties in accordance with this section
to send such claims, consents, designations, notices, waivers, and other
communications), in which case such claims, consents, designations, notices,
waivers, or other communications shall be deemed to have been received three
Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Section 4.3 Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and its
successors and assigns. This Note shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will to legatees
or, in default thereof, by operation of law to heirs.
7
<PAGE> 150
Section 4.6 Section Headings, Construction. The headings of Sections in
this Note are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified.
Section 4.7 Gender and Number. All words used in this Note will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Note in its entirety and not to any specific section or
subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding anything
herein to the contrary, this Note shall be non-negotiable and shall not be
assignable by the parties hereto. Any attempted negotiation or assignment of
this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of this Note or otherwise, shall the amount paid, or agreed to be paid,
to Payee for the use, forbearance or detention of the money to be loaned
hereunder or otherwise, exceed the maximum amount permissible under applicable
law. If from any circumstances whatsoever fulfillment of any provision of this
Note or of any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstances the holder of this Note
shall ever receive anything of value as interest or deemed interest by
applicable law under this Note or any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or otherwise an amount that
would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
this Note or on account of any other indebtedness of Maker to the holder hereof
relating to this Note, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of this Note and such other
indebtedness, such excess shall be refunded to Maker. In determining whether or
not the interest paid or payable with respect to any indebtedness of Maker to
the holder hereof, under any specific contingency, exceeds the highest lawful
rate, Maker and the holder hereof shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 151
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
-----------------------------------
Lawrence A. Bettino
Vice President
<PAGE> 152
SUBORDINATED PROMISSORY NOTE
(PURCHASE PRICE ADJUSTMENT)
$230,242.88 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises to
pay to T. W. Moore, an individual resident of Fort Worth, Texas ("PAYEE"), in
lawful money of the United States of America, the principal sum of Two Hundred
Thirty Thousand Two Hundred Forty-two and 88/100 dollars ($230,242.88),
together with interest as provided herein.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of that certain Stock Purchase and Redemption
Agreement dated as of November 12, 1997 (as such may be amended from time to
time, the "AGREEMENT"), and is subject to the terms and conditions of the
Agreement, which are, by this reference, incorporated herein and made a part
hereof. Capitalized terms used in this Note without definition shall have the
respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this Note shall
be due and payable in 12 consecutive monthly installments commencing on December
15, 1997, the first eleven of which shall each be in the amount of $19,186.61,
and a final installment on November 15, 1998, in the amount of the entire unpaid
principal balance of this Note. Interest on the unpaid principal balance of this
Note shall be due and payable monthly, together with each payment of principal.
Interest shall accrue on the unpaid principal balance of this Note at the Prime
Rate (but in no event in excess of the maximum nonusurious interest rate
permitted by applicable law) and shall be calculated on the basis of a year of
365 days and charged for the actual number of days elapsed. "PRIME RATE" shall
mean the rate that Bankers Trust Company, New York, New York announces from time
to time as its prime lending rate in the United States for dollar denominated
loans, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged by any
lending institution to any customer. Lending institutions may make loans at
rates of interest at, above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and interest on
this Note shall be made by certified check at Fort Worth, Texas, or at such
other place in the United States of America as Payee shall designate to Maker in
writing or by wire transfer of immediately available funds to an account
designated by Payee in writing. If any payment of principal or interest on this
Note is due on a day which is not a Business Day, such payment shall be due on
the next succeeding Business Day, and such extension of time shall be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of Texas.
<PAGE> 153
Section 1.3 Prepayment. Maker may, without premium or penalty, at any
time and from time to time, prepay all or any portion of the outstanding
principal balance due under this Note, provided that each such prepayment is
accompanied by accrued interest on the amount of principal prepaid calculated to
the date of such prepayment. Any partial prepayments shall be applied to
installments of principal in forward order of maturity.
Section 1.4 Right of Adjustment. Pursuant to the terms and conditions
set forth in Article II of the Agreement, this Note is subject to increase or
decrease. Any such increase or decrease shall be evidenced by an amendment
hereto executed by Maker and Payee. Each such amendment shall include a ratable
amendment to the amount of the scheduled monthly payments due hereunder.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of principal
or interest on this Note and such failure continues for 15 days after Payee
notifies Maker thereof in writing.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that (i) is for relief against Maker in an
involuntary case, (ii) appoints a trustee, receiver, assignee, liquidator or
similar official for Maker or substantially all of Maker's properties, or (iii)
orders the liquidation of Maker, and in each case the order or decree is not
dismissed within 60 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing within
5 days after the occurrence of any Event of Default of which Maker acquires
knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare the
entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in
2
<PAGE> 154
connection with Payee's exercise of any or all of its rights and remedies upon
the occurrence of an Event of Default under this Note, including, without
limitation, reasonable attorneys' fees.
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other provision
to the contrary in this Note, Maker covenants and agrees, and Payee by accepting
this Note covenants and agrees, that the principal of and interest on the
indebtedness now or hereafter evidenced by this Note are subordinated in right
of payment, to the extent and in the manner provided in this Article, to the
prior payment in full in cash of all existing and future Senior Indebtedness,
and that the subordination provisions set forth in this Article are for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other obligations
under (1) that certain Credit Agreement, dated as of November 12, 1997, among
Maker, BT Commercial Corporation, as agent, and the lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time, with
the same or different agent and lenders and (2) that certain Senior Secured
Credit Agreement, dated as of November 12, 1997, among Maker, Bankers Trust
Company, as administrative agent, and lenders as parties thereto, as such may be
amended, modified, restated or refinanced from time to time, with the same or
different administrative agent and lenders (subject to clause (ii) below)
specifically excluding from each of the foregoing (ii) indebtedness and other
obligations that are, by their express terms, subordinated in right of payment
to any other indebtedness of the Company. By way of example and not in
limitation of the foregoing, "Senior Indebtedness" shall not include "the Notes"
as such term is defined in the Preliminary Offering Memorandum dated October 31,
1997, relating to a proposed offering of Senior Subordinated Notes of Maker
under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the subordination
provision set forth in this Article are, and are intended to be, an inducement
and consideration to each holder of any Senior Indebtedness, whether such Senior
Indebtedness was created before or after the issuance of this Note, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness, and such
holder of Senior Indebtedness shall be deemed conclusively to have relied upon
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness, and such holder is made an obligee
hereunder and may enforce directly such subordination provisions.
Section 3.2 Liquidation; Dissolution; Bankruptcy. Upon any payment or
distribution (whether in cash, property, debt, equity or other securities, a
combination thereof or otherwise) to creditors or equity holders of Maker in a
voluntary or involuntary liquidation or dissolution of Maker, whether total or
partial, or in bankruptcy, reorganization, insolvency, receivership,
dissolution, assignment for the benefit of creditors, marshaling of assets or
similar proceeding relating to Maker or its property:
3
<PAGE> 155
(a) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in respect of
all Senior Indebtedness before Payee shall be entitled to receive any Security
Payment (as defined in Section 3.3(a)); and
(b) until all Senior Indebtedness is paid in full in cash, any
Security Payment to which Payee would be entitled but for this Article shall be
made to holders of Senior Indebtedness, as their interests may appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and payable, whether
at the stated maturity thereof or by acceleration or otherwise, such Senior
Indebtedness shall first be irrevocably and indefeasibly paid in full in cash,
or the immediate payment thereof duly provided for in cash, before Maker or any
Person acting on behalf of Maker shall directly or indirectly pay, prepay,
redeem, retire, repurchase or otherwise acquire for value or make any other
prepayment, payment or distribution (whether in cash, property, securities or a
combination thereof or otherwise) on account of the principal of (or premium, if
any) or interest on, this Note (each, a "Security Payment").
(b) No Security Payment shall be made if, at the time of such
Security Payment, Maker and Payee have received notice from a holder of Senior
Indebtedness that there exists a default in payment of all or any portion of any
principal of (and premium, if any) and interest and fees, expenses, costs and
other obligations on Senior Indebtedness, and such default shall not have been
cured or waived in writing or the benefits of this sentence waived in writing by
or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of default
(other than a default referred to in subsection (b) of this Section 3.3) with
respect to any Senior Indebtedness having a principal amount (or binding
commitment to lend principal) in excess of $15,000,000 ("SPECIFIED SENIOR
INDEBTEDNESS"), as such event of default is defined therein or in the instrument
under which such Specified Senior Indebtedness is outstanding, permitting the
holders of such Specified Senior Indebtedness to accelerate the maturity thereof
under the terms of such Specified Senior Indebtedness, and upon written notice
of such event of default given by the to Payee, with a copy to Maker, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, no Security Payment shall be made; provided that if the
holders of the Specified Senior Indebtedness to which the default relates have
not declared such Specified Senior Indebtedness to be immediately due and
payable within 179 days after the occurrence of such default (or have declared
such Specified Senior Indebtedness to be immediately due and payable and within
such period have rescinded such declaration of acceleration), then, subject to
the provisions of Section 3.2 and 3.3(a) Maker shall pay all past due scheduled
payments and shall resume making any and all unpaid scheduled Security Payments.
Any period during which any Security Payment is prohibited pursuant to the
immediately preceding sentence is referred to in this Article as a "PAYMENT
BLOCKAGE PERIOD." Notwithstanding any other provisions of this Article or any
other provision of this Note, in no event shall a payment blockage period under
this Article extend beyond 179 days from the date on which such payment blockage
period commenced. Not more than one payment blockage
4
<PAGE> 156
period may be commenced within any consecutive 365-day period with respect to
this Note. For all purposes of this Article, no event of default that existed or
was continuing on the date of the commencement of any payment blockage period
with respect to the Specified Senior Indebtedness initiating such payment
blockage period shall be, or be made, the basis for the commencement of a second
payment blockage period by the holder or holders of such Specified Senior
Indebtedness at any time after the 365-day period referred to in the previous
sentence unless such event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and payable before
its stated maturity, then, and in such event, the holders of Senior Indebtedness
outstanding at the time this Note so becomes due and payable shall be entitled
to receive payment in full in cash of all amounts due or to become due on or in
respect of such Senior Indebtedness (whether or not a default has occurred
thereunder or such Senior Indebtedness is, or has been declared to be, due and
payable prior to the date on which it otherwise would have become due and
payable) before Payee shall be entitled to receive any Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing contained in
this Article or elsewhere in this Note shall prevent Maker or any person acting
on behalf of Maker, at any time except as otherwise provided in Section 3.2 from
making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event that any
Security Payment is made to Payee that, because of this Article, should not have
been so made or may not be paid over to Payee, such Security Payment shall be
held by Payee for the benefit of, and shall forthwith be paid over or delivered
to, the holders of the Senior Indebtedness remaining unpaid or their
representatives, as their interests may appear, to the extent necessary to
irrevocably and indefeasibly pay such Senior Indebtedness in full in cash in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify Payee of
any facts known to Maker that would cause a Security Payment to violate this
Article, but failure to give such notice shall not affect the subordination
provided in this Article of this Note to Senior Indebtedness. Without limiting
the foregoing, if payment of this Note is accelerated because of an event of
default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is irrevocably and
indefeasibly paid in full in cash and until this Note is paid in full, Payee
shall be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to Payee have been applied to the payment of Senior
Indebtedness. A distribution made under this Article to holders of Senior
Indebtedness which otherwise would have been made to Payee is not, as between
Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative rights of
Payee and holders of Senior Indebtedness. Nothing in this Note shall:
5
<PAGE> 157
(a) impair, as between Maker and Payee, the obligation of Maker,
which is absolute and unconditional, to pay the principal of and interest
on this Note in accordance with their terms;
(b) affect the relative rights of Payee and creditors of Maker
other am holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies upon a
default or, subject to the rights of holders of Senior Indebtedness to
receive prepayment, payments and distributions otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or interest
on this Note on the due date or upon the acceleration thereof, the failure is
still a default
Section 3.9 Subordination May Not Be Impaired by the Company. No right of
any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any settlement
or compromise of any Senior Indebtedness, (e) the unenforceability of any of the
Senior Indebtedness or (f) the failure of any holder of Senior Indebtedness to
pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The provisions of
this Article shall not be amended, waived or modified in a manner that would
adversely affect the rights of the holders of any Senior Indebtedness, and no
such amendment, waiver or modification shall become effective, unless the
holders of such Senior Indebtedness shall have consented in writing (in
accordance with the provisions of the agreement governing such Senior
Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this Note shall
be cumulative and not alternative. No waiver by Payee of any right or remedy
under this Note shall be effective unless in a writing signed by Payee. Neither
the failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part,
6
<PAGE> 158
by a waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on Maker
will be deemed to be a waiver of any obligation of Maker or of the right of
Payee to take further action without notice or demand as provided in this Note.
Maker hereby waives presentment, demand, protest and notice of dishonor and
protest.
Section 4.2 Notices. All claims, consents, designations, notices, waivers,
and other communications in connection with this Agreement shall be in writing.
Such claims, consents, designations, notices, waivers, and other communications
shall be considered received only on the day of actual receipt unless mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed to a Party at its address set forth below (or to such other address to
which such Party has notified the other Parties in accordance with this section
to send such claims, consents, designations, notices, waivers, and other
communications), in which case such claims, consents, designations, notices,
waivers, or other communications shall be deemed to have been received three
Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee:
----------------------------------
----------------------------------
----------------------------------
----------------------------------
Section 4.3 Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and its
successors and assigns. This Note shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will to legatees
or, in default thereof, by operation of law to heirs.
7
<PAGE> 159
Section 4.6 Section Headings, Construction. The headings of Sections in
this Note are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified.
Section 4.7 Gender and Number. All words used in this Note will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Note in its entirety and not to any specific section or
subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding anything
herein to the contrary, this Note shall be non-negotiable and shall not be
assignable by the parties hereto. Any attempted negotiation or assignment of
this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of this Note or otherwise, shall the amount paid, or agreed to be paid,
to Payee for the use, forbearance or detention of the money to be loaned
hereunder or otherwise, exceed the maximum amount permissible under applicable
law. If from any circumstances whatsoever fulfillment of any provision of this
Note or of any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstances the holder of this Note
shall ever receive anything of value as interest or deemed interest by
applicable law under this Note or any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or otherwise an amount that
would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
this Note or on account of any other indebtedness of Maker to the holder hereof
relating to this Note, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of this Note and such other
indebtedness, such excess shall be refunded to Maker. In determining whether or
not the interest paid or payable with respect to any indebtedness of Maker to
the holder hereof, under any specific contingency, exceeds the highest lawful
rate, Maker and the holder hereof shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 160
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
-----------------------------------
Lawrence A. Bettino
Vice President
<PAGE> 161
SUBORDINATED PROMISSORY NOTE
(PURCHASE PRICE ADJUSTMENT)
$150,455.75 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises to
pay to Roy J. Moore, an individual resident of Arlington, Texas ("PAYEE"), in
lawful money of the United States of America, the principal sum of One Hundred
Fifty Thousand Four Hundred Fifty-five and 75/100 dollars ($150,455.75),
together with interest as provided herein.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of that certain Stock Purchase and Redemption
Agreement dated as of November 12, 1997 (as such may be amended from time to
time, the "AGREEMENT"), and is subject to the terms and conditions of the
Agreement, which are, by this reference, incorporated herein and made a part
hereof. Capitalized terms used in this Note without definition shall have the
respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this Note shall
be due and payable in 12 consecutive monthly installments commencing on December
15, 1997, the first eleven of which shall each be in the amount of $12,537.98,
and a final installment on November 15, 1998, in the amount of the entire unpaid
principal balance of this Note. Interest on the unpaid principal balance of this
Note shall be due and payable monthly, together with each payment of principal.
Interest shall accrue on the unpaid principal balance of this Note at the Prime
Rate (but in no event in excess of the maximum nonusurious interest rate
permitted by applicable law) and shall be calculated on the basis of a year of
365 days and charged for the actual number of days elapsed. "PRIME RATE" shall
mean the rate that Bankers Trust Company, New York, New York announces from time
to time as its prime lending rate in the United States for dollar denominated
loans, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged by any
lending institution to any customer. Lending institutions may make loans at
rates of interest at, above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and interest on
this Note shall be made by certified check at Fort Worth, Texas, or at such
other place in the United States of America as Payee shall designate to Maker in
writing or by wire transfer of immediately available funds to an account
designated by Payee in writing. If any payment of principal or interest on this
Note is due on a day which is not a Business Day, such payment shall be due on
the next succeeding Business Day, and such extension of time shall be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of Texas.
<PAGE> 162
Section 1.3 Prepayment. Maker may, without premium or penalty, at any time
and from time to time, prepay all or any portion of the outstanding principal
balance due under this Note, provided that each such prepayment is accompanied
by accrued interest on the amount of principal prepaid calculated to the date of
such prepayment. Any partial prepayments shall be applied to installments of
principal in forward order of maturity.
Section 1.4 Right of Adjustment. Pursuant to the terms and conditions set
forth in Article II of the Agreement, this Note is subject to increase or
decrease. Any such increase or decrease shall be evidenced by an amendment
hereto executed by Maker and Payee. Each such amendment shall include a ratable
amendment to the amount of the scheduled monthly payments due hereunder.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 15 days after Payee
notifies Maker thereof in writing.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against Maker in an involuntary
case, (ii) appoints a trustee, receiver, assignee, liquidator or similar
official for Maker or substantially all of Maker's properties, or (iii) orders
the liquidation of Maker, and in each case the order or decree is not dismissed
within 60 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing within 5
days after the occurrence of any Event of Default of which Maker acquires
knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare the
entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in
2
<PAGE> 163
connection with Payee's exercise of any or all of its rights and remedies upon
the occurrence of an Event of Default under this Note, including, without
limitation, reasonable attorneys' fees.
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other provision
to the contrary in this Note, Maker covenants and agrees, and Payee by accepting
this Note covenants and agrees, that the principal of and interest on the
indebtedness now or hereafter evidenced by this Note are subordinated in right
of payment, to the extent and in the manner provided in this Article, to the
prior payment in full in cash of all existing and future Senior Indebtedness,
and that the subordination provisions set forth in this Article are for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other obligations
under (1) that certain Credit Agreement, dated as of November 12, 1997, among
Maker, BT Commercial Corporation, as agent, and the lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time, with
the same or different agent and lenders and (2) that certain Senior Secured
Credit Agreement, dated as of November 12, 1997, among Maker, Bankers Trust
Company, as administrative agent, and lenders as parties thereto, as such may be
amended, modified, restated or refinanced from time to time, with the same or
different administrative agent and lenders (subject to clause (ii) below)
specifically excluding from each of the foregoing (ii) indebtedness and other
obligations that are, by their express terms, subordinated in right of payment
to any other indebtedness of the Company. By way of example and not in
limitation of the foregoing, "Senior Indebtedness" shall not include "the Notes"
as such term is defined in the Preliminary Offering Memorandum dated October 31,
1997, relating to a proposed offering of Senior Subordinated Notes of Maker
under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the subordination
provision set forth in this Article are, and are intended to be, an inducement
and consideration to each holder of any Senior Indebtedness, whether such Senior
Indebtedness was created before or after the issuance of this Note, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness, and such
holder of Senior Indebtedness shall be deemed conclusively to have relied upon
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness, and such holder is made an obligee
hereunder and may enforce directly such subordination provisions.
Section 3.2 Liquidation; Dissolution: Bankruptcy. Upon any payment or
distribution (whether in cash, property, debt, equity or other securities, a
combination thereof or otherwise) to creditors or equity holders of Maker in a
voluntary or involuntary liquidation or dissolution of Maker, whether total or
partial, or in bankruptcy, reorganization, insolvency, receivership,
dissolution, assignment for the benefit of creditors, marshaling of assets or
similar proceeding relating, to Maker or its property:
3
<PAGE> 164
(a) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in respect of
all Senior Indebtedness before Payee shall be entitled to receive any Security
Payment (as defined in Section 3.3(a)); and
(b) until all Senior Indebtedness is paid in full in cash, any
Security Payment to which Payee would be entitled but for this Article shall be
made to holders of Senior Indebtedness, as their interests may appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and payable, whether
at the stated maturity thereof or by acceleration or otherwise, such Senior
Indebtedness shall first be irrevocably and indefeasibly paid in full in cash,
or the immediate payment thereof duly provided for in cash, before Maker or any
Person acting on behalf of Maker shall directly or indirectly pay, prepay,
redeem, retire, repurchase or otherwise acquire for value or make any other
prepayment, payment or distribution (whether in cash, property, securities or a
combination thereof or otherwise) on account of the principal of (or premium, if
any) or interest on, this Note (each, a "Security Payment").
(b) No Security Payment shall be made if, at the time of such
Security Payment, Maker and Payee have received notice from a holder of Senior
Indebtedness that there exists a default in payment of all or any portion of any
principal of (and premium, if any) and interest and fees, expenses, costs and
other obligations on Senior Indebtedness, and such default shall not have been
cured or waived in writing or the benefits of this sentence waived in writing by
or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of default
(other than a default referred to in subsection (b) of this Section 3.3 with
respect to any Senior Indebtedness having a principal amount (or binding
commitment to lend principal) in excess of $15,000,000 ("SPECIFIED SENIOR
INDEBTEDNESS"), as such event of default is defined therein or in the instrument
under which such Specified Senior Indebtedness is outstanding, permitting the
holders of such Specified Senior Indebtedness to accelerate the maturity thereof
under the terms of such Specified Senior Indebtedness, and upon written notice
of such event of default given by the to Payee, with a copy to Maker, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, no Security Payment shall be made; provided that if the
holders of the Specified Senior Indebtedness to which the default relates have
not declared such Specified Senior Indebtedness to be immediately due and
payable within 179 days after the occurrence of such default (or have declared
such Specified Senior Indebtedness to be immediately due and payable and within
such period have rescinded such declaration of acceleration), then, subject to
the provisions of Section 3.2 and 3.3(a), Maker shall pay all past due scheduled
payments and shall resume making any and all unpaid scheduled Security Payments.
Any period during which any Security Payment is prohibited pursuant to the
immediately preceding sentence is referred to in this Article as a "PAYMENT
BLOCKAGE PERIOD." Notwithstanding any other provisions of this Article or any
other provision of this Note, in no event shall a payment blockage period under
this Article extend beyond 179 days from the date on which such payment blockage
period commenced. Not more than one payment blockage
4
<PAGE> 165
period may be commenced within any consecutive 365-day period with respect to
this Note. For all purposes of this Article, no event of default that existed or
was continuing on the date of the commencement of any payment blockage period
with respect to the Specified Senior Indebtedness initiating such payment
blockage period shall be, or be made, the basis for the commencement of a second
payment blockage period by the holder or holders of such Specified Senior
Indebtedness at any time after the 365-day period referred to in the previous
sentence unless such event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and payable before
its stated maturity, then, and in such event, the holders of Senior Indebtedness
outstanding at the time this Note so becomes due and payable shall be entitled
to receive payment in full in cash of all amounts due or to become due on or in
respect of such Senior Indebtedness (whether or not a default has occurred
thereunder or such Senior Indebtedness is, or has been declared to be, due and
payable prior to the date on which it otherwise would have become due and
payable) before Payee shall be entitled to receive any Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing contained in
this Article or elsewhere in this Note shall prevent Maker or any person acting
on behalf of Maker, at any time except as otherwise provided in Section 3.2 from
making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event that any
Security Payment is made to Payee that, because of this Article, should not have
been so made or may not be paid over to Payee, such Security Payment shall be
held by Payee for the benefit of, and shall forthwith be paid over or delivered
to, the holders of the Senior Indebtedness remaining unpaid or their
representatives, as their interests may appear, to the extent necessary to
irrevocably and indefeasibly pay such Senior Indebtedness in full in cash in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify Payee of
any facts known to Maker that would cause a Security Payment to violate this
Article, but failure to give such notice shall not affect the subordination
provided in this Article of this Note to Senior Indebtedness. Without limiting
the foregoing, if payment of this Note is accelerated because of an event of
default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is irrevocably and
indefeasibly paid in full in cash and until this Note is paid in full, Payee
shall be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to Payee have been applied to the payment of Senior
Indebtedness. A distribution made under this Article to holders of Senior
Indebtedness which otherwise would have been made to Payee is not, as between
Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative rights of
Payee and holders of Senior Indebtedness. Nothing in this Note shall:
5
<PAGE> 166
(a) impair, as between Maker and Payee, the obligation of Maker,
which is absolute and unconditional, to pay the principal of and interest
on this Note in accordance with their terms;
(b) affect the relative rights of Payee and creditors of Maker
other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies upon a
default or, subject to the rights of holders of Senior Indebtedness to
receive prepayment, payments and distributions otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or interest
on this Note on the due date or upon the acceleration thereof, the failure is
still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No right of
any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any settlement
or compromise of any Senior Indebtedness, (e) the unenforceability of any of the
Senior Indebtedness or (f) the failure of any holder of Senior Indebtedness to
pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The provisions of
this Article shall not be amended, waived or modified in a manner that would
adversely affect the rights of the holders of any Senior Indebtedness, and no
such amendment, waiver or modification shall become effective, unless the
holders of such Senior Indebtedness shall have consented in writing (in
accordance with the provisions of the agreement governing such Senior
Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this Note shall
be cumulative and not alternative. No waiver by Payee of any right or remedy
under this Note shall be effective unless in a writing signed by Payee. Neither
the failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part,
6
<PAGE> 167
by a waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on Maker
will be deemed to be a waiver of any obligation of Maker or of the right of
Payee to take further action without notice or demand as provided in this Note.
Maker hereby waives presentment, demand, protest and notice of dishonor and
protest.
Section 4.2 Notices. All claims, consents, designations, notices, waivers,
and other communications in connection with this Agreement shall be in writing.
Such claims, consents, designations, notices, waivers, and other communications
shall be considered received only on the day of actual receipt unless mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed to a Party at its address set forth below (or to such other address to
which such Party has notified the other Parties in accordance with this section
to send such claims, consents, designations, notices, waivers, and other
communications), in which case such claims, consents, designations, notices,
waivers, or other communications shall be deemed to have been received three
Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee: Roy J. Moore
Orchid court
Arlington, TX 76016
Section 4.3 Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and its
successors and assigns. This Note shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will to legatees
or, in default thereof, by operation of law to heirs.
7
<PAGE> 168
Section 4.6 Section Headings, Construction. The headings of Sections in
this Note are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified.
Section 4.7 Gender and Number. All words used in this Note will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Note in its entirety and not to any specific section or
subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding anything
herein to the contrary, this Note shall be non-negotiable and shall not be
assignable by the parties hereto. Any attempted negotiation or assignment of
this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of this Note or otherwise, shall the amount paid, or agreed to be paid,
to Payee for the use, forbearance or detention of the money to be loaned
hereunder or otherwise, exceed the maximum amount permissible under applicable
law. If from any circumstances whatsoever fulfillment of any provision of this
Note or of any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstances the holder of this Note
shall ever receive anything of value as interest or deemed interest by
applicable law under this Note or any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or otherwise an amount that
would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
this Note or on account of any other indebtedness of Maker to the holder hereof
relating to this Note, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of this Note and such other
indebtedness, such excess shall be refunded to Maker. In determining whether or
not the interest paid or payable with respect to any indebtedness of Maker to
the holder hereof, under any specific contingency, exceeds the highest lawful
rate, Maker and the holder hereof shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 169
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
-----------------------------------
Lawrence A. Bettino
Vice President
<PAGE> 170
SUBORDINATED PROMISSORY NOTE
(PURCHASE PRICE ADJUSTMENT)
$150,455.75 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises to
pay to Carl R. Moore, an individual resident of Arlington, Texas ("PAYEE"), in
lawful money of the United States of America, the principal sum of One Hundred
Fifty Thousand Four Hundred Fifty-five and 75/100 dollars ($150,455.75),
together with interest as provided herein.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of that certain Stock Purchase and Redemption
Agreement dated as of November 12, 1997 (as such may be amended from time to
time, the "AGREEMENT"), and is subject to the terms and conditions of the
Agreement, which are, by this reference, incorporated herein and made a part
hereof. Capitalized terms used in this Note without definition shall have the
respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this Note shall
be due and payable in 12 consecutive monthly installments commencing on December
15, 1997, the first eleven of which shall each be in the amount of $12,537.98,
and a final installment on November 15, 1998, in the amount of the entire unpaid
principal balance of this Note. Interest on the unpaid principal balance of this
Note shall be due and payable monthly, together with each payment of principal.
Interest shall accrue on the unpaid principal balance of this Note at the Prime
Rate (but in no event in excess of the maximum nonusurious interest rate
permitted by applicable law) and shall be calculated on the basis of a year of
365 days and charged for the actual number of days elapsed. "PRIME RATE" shall
mean the rate that Bankers Trust Company, New York, New York announces from time
to time as its prime lending rate in the United States for dollar denominated
loans, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged by any
lending institution to any customer. Lending institutions may make loans at
rates of interest at, above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and interest on
this Note shall be made by certified check at Fort Worth, Texas, or at such
other place in the United States of America as Payee shall designate to Maker in
writing or by wire transfer of immediately available funds to an account
designated by Payee in writing. If any payment of principal or interest on this
Note is due on a day which is not a Business Day, such payment shall be due on
the next succeeding Business Day, and such extension of time shall be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of Texas.
<PAGE> 171
Section 1.3 Prepayment. Maker may, without premium or penalty, at any time
and from time to time, prepay all or any portion of the outstanding principal
balance due under this Note, provided that each such prepayment is accompanied
by accrued interest on the amount of principal prepaid calculated to the date of
such prepayment. Any partial prepayments shall be applied to installments of
principal in forward order of maturity.
Section 1.4 Right of Adjustment. Pursuant to the terms and conditions set
forth in Article II of the Agreement, this Note is subject to increase or
decrease. Any such increase or decrease shall be evidenced by an amendment
hereto executed by Maker and Payee. Each such amendment shall include a ratable
amendment to the amount of the scheduled monthly payments due hereunder.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 15 days after Payee
notifies Maker thereof in writing.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against Maker in an involuntary
case, (ii) appoints a trustee, receiver, assignee, liquidator or similar
official for Maker or substantially all of Maker's properties, or (iii) orders
the liquidation of Maker, and in each case the order or decree is not dismissed
within 60 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing within 5
days after the occurrence of any Event of Default of which Maker acquires
knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare the
entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in
2
<PAGE> 172
connection with Payee's exercise of any or all of its rights and remedies upon
the occurrence of an Event of Default under this Note, including, without
limitation, reasonable attorneys' fees.
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other provision
to the contrary in this Note, Maker covenants and agrees, and Payee by accepting
this Note covenants and agrees, that the principal of and interest on the
indebtedness now or hereafter evidenced by this Note are subordinated in right
of payment, to the extent and in the manner provided in this Article, to the
prior payment in full in cash of all existing and future Senior Indebtedness,
and that the subordination provisions set forth in this Article are for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other obligations
under (1) that certain Credit Agreement, dated as of November 12, 1997, among
Maker, BT Commercial Corporation, as agent, and the lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time, with
the same or different agent and lenders and (2) that certain Senior Secured
Credit Agreement, dated as of November 12, 1997, among Maker, Bankers Trust
Company, as administrative agent, and lenders as parties thereto, as such may be
amended, modified, restated or refinanced from time to time, with the same or
different administrative agent and lenders (subject to clause (ii) below)
specifically excluding from each of the foregoing (ii) indebtedness and other
obligations that are, by their express terms, subordinated in right of payment
to any other indebtedness of the Company. By way of example and not in
limitation of the foregoing, "Senior Indebtedness" shall not include "the Notes"
as such term is defined in the Preliminary Offering Memorandum dated October 31,
1997, relating to a proposed offering of Senior Subordinated Notes of Maker
under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the subordination
provision set forth in this Article are, and are intended to be, an inducement
and consideration to each holder of any Senior Indebtedness, whether such Senior
Indebtedness was created before or after the issuance of this Note, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness, and such
holder of Senior Indebtedness shall be deemed conclusively to have relied upon
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness, and such holder is made an obligee
hereunder and may enforce directly such subordination provisions.
Section 3.2 Liquidation; Dissolution; Bankruptcy. Upon any payment or
distribution (whether in cash, property, debt, equity or other securities, a
combination thereof or otherwise) to creditors or equity holders of Maker in a
voluntary or involuntary liquidation or dissolution of Maker, whether total or
partial, or in bankruptcy, reorganization, insolvency, receivership,
dissolution, assignment for the benefit of creditors, marshaling of assets or
similar proceeding relating, to Maker or its property:
3
<PAGE> 173
(a) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in respect of
all Senior Indebtedness before Payee shall be entitled to receive any Security
Payment (as defined in Section 3.3(a)); and
(b) until all Senior Indebtedness is paid in full in cash, any
Security Payment to which Payee would be entitled but for this Article shall be
made to holders of Senior Indebtedness, as their interests may appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and payable, whether
at the stated maturity thereof or by acceleration or otherwise, such Senior
Indebtedness shall first be irrevocably and indefeasibly paid in full in cash,
or the immediate payment thereof duly provided for in cash, before Maker or any
Person acting on behalf of Maker shall directly or indirectly pay, prepay,
redeem, retire, repurchase or otherwise acquire for value or make any other
prepayment, payment or distribution (whether in cash, property, securities or a
combination thereof or otherwise) on account of the principal of (or premium, if
any) or interest on, this Note (each, a "Security Payment").
(b) No Security Payment shall be made if, at the time of such
Security Payment, Maker and Payee have received notice from a holder of Senior
Indebtedness that there exists a default in payment of all or any portion of any
principal of (and premium, if any) and interest and fees, expenses, costs and
other obligations on Senior Indebtedness, and such default shall not have been
cured or waived in writing or the benefits of this sentence waived in writing by
or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of default
(other than a default referred to in subsection (b) of this Section 3.3) with
respect to any Senior Indebtedness having a principal amount (or binding
commitment to lend principal) in excess of $15,000,000 ("SPECIFIED SENIOR
INDEBTEDNESS"), as such event of default is defined therein or in the instrument
under which such Specified Senior Indebtedness is outstanding, permitting the
holders of such Specified Senior Indebtedness to accelerate the maturity thereof
under the terms of such Specified Senior Indebtedness, and upon written notice
of such event of default given by the to Payee, with a copy to Maker, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, no Security Payment shall be made; provided that if the
holders of the Specified Senior Indebtedness to which the default relates have
not declared such Specified Senior Indebtedness to be immediately due and
payable within 179 days after the occurrence of such default (or have declared
such Specified Senior Indebtedness to be immediately due and payable and within
such period have rescinded such declaration of acceleration), then, subject to
the provisions of Section 3.2 and 3.3(a), Maker shall pay all past due scheduled
payments and shall resume making any and all unpaid scheduled Security Payments.
Any period during which any Security Payment is prohibited pursuant to the
immediately preceding sentence is referred to in this Article as a "PAYMENT
BLOCKAGE PERIOD." Notwithstanding any other provisions of this Article or any
other provision of this Note, in no event shall a payment blockage period under
this Article extend beyond 179 days from the date on which such payment blockage
period commenced. Not more than one payment blockage
4
<PAGE> 174
period may be commenced within any consecutive 365-day period with respect to
this Note. For all purposes of this Article, no event of default that existed or
was continuing on the date of the commencement of any payment blockage period
with respect to the Specified Senior Indebtedness initiating such payment
blockage period shall be, or be made, the basis for the commencement of a second
payment blockage period by the holder or holders of such Specified Senior
Indebtedness at any time after the 365-day period referred to in the previous
sentence unless such event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and payable before
its stated maturity, then, and in such event, the holders of Senior Indebtedness
outstanding at the time this Note so becomes due and payable shall be entitled
to receive payment in full in cash of all amounts due or to become due on or in
respect of such Senior Indebtedness (whether or not a default has occurred
thereunder or such Senior Indebtedness is, or has been declared to be, due and
payable prior to the date on which it otherwise would have become due and
payable) before Payee shall be entitled to receive any Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing contained in
this Article or elsewhere in this Note shall prevent Maker or any person acting
on behalf of Maker, at any time except as otherwise provided in Section 3.2 from
making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event that any
Security Payment is made to Payee that, because of this Article, should not have
been so made or may not be paid over to Payee, such Security Payment shall be
held by Payee for the benefit of, and shall forthwith be paid over or delivered
to, the holders of the Senior Indebtedness remaining unpaid or their
representatives, as their interests may appear, to the extent necessary to
irrevocably and indefeasibly pay such Senior Indebtedness in full in cash in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify Payee of
any facts known to Maker that would cause a Security Payment to violate this
Article, but failure to give such notice shall not affect the subordination
provided in this Article of this Note to Senior Indebtedness. Without limiting
the foregoing, if payment of this Note is accelerated because of an event of
default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is irrevocably and
indefeasibly paid in full in cash and until this Note is paid in full, Payee
shall be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to Payee have been applied to the payment of Senior
Indebtedness. A distribution made under this Article to holders of Senior
Indebtedness which otherwise would have been made to Payee is not, as between
Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative rights of
Payee and holders of Senior Indebtedness. Nothing in this Note shall:
5
<PAGE> 175
(a) impair, as between Maker and Payee, the obligation of Maker,
which is absolute and unconditional, to pay the principal of and interest
on this Note in accordance with their terms;
(b) affect the relative rights of Payee and creditors of Maker
other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies upon a
default or, subject to the rights of holders of Senior Indebtedness to
receive prepayment, payments and distributions otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or interest
on this Note on the due date or upon the acceleration thereof, the failure is
still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No right of
any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any settlement
or compromise of any Senior Indebtedness, (e) the unenforceability of any of the
Senior Indebtedness or (f) the failure of any holder of Senior Indebtedness to
pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The provisions of
this Article shall not be amended, waived or modified in a manner that would
adversely affect the rights of the holders of any Senior Indebtedness, and no
such amendment, waiver or modification shall become effective, unless the
holders of such Senior Indebtedness shall have consented in writing (in
accordance with the provisions of the agreement governing such Senior
Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this Note shall
be cumulative and not alternative. No waiver by Payee of any right or remedy
under this Note shall be effective unless in a writing signed by Payee. Neither
the failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part,
6
<PAGE> 176
by a waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on Maker
will be deemed to be a waiver of any obligation of Maker or of the right of
Payee to take further action without notice or demand as provided in this Note.
Maker hereby waives presentment, demand, protest and notice of dishonor and
protest.
Section 4.2 Notices. All claims, consents, designations, notices, waivers,
and other communications in connection with this Agreement shall be in writing.
Such claims, consents, designations, notices, waivers, and other communications
shall be considered received only on the day of actual receipt unless mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed to a Party at its address set forth below (or to such other address to
which such Party has notified the other Parties in accordance with this section
to send such claims, consents, designations, notices, waivers, and other
communications), in which case such claims, consents, designations, notices,
waivers, or other communications shall be deemed to have been received three
Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee: Carl R. Moore
Flower Garden
Arlington, TX 76016
Section 4.3 Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and its
successors and assigns. This Note shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will to legatees
or, in default thereof, by operation of law to heirs.
7
<PAGE> 177
Section 4.6 Section Headings, Construction. The headings of Sections in
this Note are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified.
Section 4.7 Gender and Number. All words used in this Note will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Note in its entirety and not to any specific section or
subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding anything
herein to the contrary, this Note shall be non-negotiable and shall not be
assignable by the parties hereto. Any attempted negotiation or assignment of
this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of this Note or otherwise, shall the amount paid, or agreed to be paid,
to Payee for the use, forbearance or detention of the money to be loaned
hereunder or otherwise, exceed the maximum amount permissible under applicable
law. If from any circumstances whatsoever fulfillment of any provision of this
Note or of any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstances the holder of this Note
shall ever receive anything of value as interest or deemed interest by
applicable law under this Note or any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or otherwise an amount that
would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
this Note or on account of any other indebtedness of Maker to the holder hereof
relating to this Note, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of this Note and such other
indebtedness, such excess shall be refunded to Maker. In determining whether or
not the interest paid or payable with respect to any indebtedness of Maker to
the holder hereof, under any specific contingency, exceeds the highest lawful
rate, Maker and the holder hereof shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 178
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
-----------------------------------
Lawrence A. Bettino
Vice President
<PAGE> 179
SUBORDINATED PROMISSORY NOTE
(PURCHASE PRICE ADJUSTMENT)
$150,455.75 November 12, 1997
FOR VALUE RECEIVED, FWT Inc., a Texas corporation ("MAKER"), promises to
pay to Thomas F. "Fred" Moore, an individual resident of Arlington, Texas
("PAYEE"), in lawful money of the United States of America, the principal sum
of One Hundred Fifty Thousand Four Hundred Fifty-five and 75/100 dollars
($150,455.75), together with interest as provided herein.
This Note has been executed and delivered pursuant to and in accordance
with the terms and conditions of that certain Stock Purchase and Redemption
Agreement dated as of November 12, 1997 (as such may be amended from time to
time, the "AGREEMENT"), and is subject to the terms and conditions of the
Agreement, which are, by this reference, incorporated herein and made a part
hereof. Capitalized terms used in this Note without definition shall have the
respective meanings set forth in the Agreement.
ARTICLE I.
PAYMENTS
Section 1.1 Principal and Interest. The principal amount of this Note shall
be due and payable in 12 consecutive monthly installments commencing on December
15, 1997, the first eleven of which shall each be in the amount of $12,537.98,
and a final installment on November 15, 1998, in the amount of the entire unpaid
principal balance of this Note. Interest on the unpaid principal balance of this
Note shall be due and payable monthly, together with each payment of principal.
Interest shall accrue on the unpaid principal balance of this Note at the Prime
Rate (but in no event in excess of the maximum nonusurious interest rate
permitted by applicable law) and shall be calculated on the basis of a year of
365 days and charged for the actual number of days elapsed. "PRIME RATE" shall
mean the rate that Bankers Trust Company, New York, New York announces from time
to time as its prime lending rate in the United States for dollar denominated
loans, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged by any
lending institution to any customer. Lending institutions may make loans at
rates of interest at, above or below the Prime Rate.
Section 1.2 Manner of Payments. All payments of principal and interest on
this Note shall be made by certified check at Fort Worth, Texas, or at such
other place in the United States of America as Payee shall designate to Maker in
writing or by wire transfer of immediately available funds to an account
designated by Payee in writing. If any payment of principal or interest on this
Note is due on a day which is not a Business Day, such payment shall be due on
the next succeeding Business Day, and such extension of time shall be taken into
account in calculating the amount of interest payable under this Note. "Business
Day" means any day other than a Saturday, Sunday or legal holiday in the State
of Texas.
<PAGE> 180
Section 1.3 Prepayment. Maker may, without premium or penalty, at any time
and from time to time, prepay all or any portion of the outstanding principal
balance due under this Note, provided that each such prepayment is accompanied
by accrued interest on the amount of principal prepaid calculated to the date of
such prepayment. Any partial prepayments shall be applied to installments of
principal in forward order of maturity.
Section 1.4 Right of Adjustment. Pursuant to the terms and conditions set
forth in Article II of the Agreement, this Note is subject to increase or
decrease. Any such increase or decrease shall be evidenced by an amendment
hereto executed by Maker and Payee. Each such amendment shall include a ratable
amendment to the amount of the scheduled monthly payments due hereunder.
ARTICLE II.
DEFAULTS
Section 2.1 Events of Default. The occurrence of any one or more of the
following events with respect to Maker shall constitute an event of default
hereunder ("EVENT OF DEFAULT"):
(a) If Maker shall fail to pay when due any payment of principal or
interest on this Note and such failure continues for 15 days after Payee
notifies Maker thereof in writing.
(b) If, pursuant to or within the meaning of the United States
Bankruptcy Code or any other federal or state law relating to insolvency or
relief of debtors (a "BANKRUPTCY LAW"), Maker shall (i) commence a voluntary
case or proceeding; (ii) consent to the entry of an order for relief against it
in an involuntary case; (iii) consent to the appointment of a trustee, receiver,
assignee, liquidator or similar official; (iv) make an assignment for the
benefit of its creditors; or (v) admit in writing its inability to pay its debts
as they become due.
(c) If a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that (i) is for relief against Maker in an involuntary
case, (ii) appoints a trustee, receiver, assignee, liquidator or similar
official for Maker or substantially all of Maker's properties, or (iii) orders
the liquidation of Maker, and in each case the order or decree is not dismissed
within 60 days.
Section 2.2 Notice by Maker. Maker shall notify Payee in writing within 5
days after the occurrence of any Event of Default of which Maker acquires
knowledge.
Section 2.3 Remedies. During the existence of an Event of Default
hereunder, Payee may, at its option, (i) by written notice to Maker, declare the
entire unpaid principal balance of this Note, together with all accrued
interest thereon, immediately due and payable regardless of any prior
forbearance, and (ii) exercise any and all rights and remedies available to it
under applicable law, including, without limitation, the right to collect from
Maker all sums due under this Note. Maker shall pay all reasonable costs and
expenses incurred by or on behalf of Payee in
2
<PAGE> 181
connection with Payee's exercise of any or all of its rights and remedies upon
the occurrence of an Event of Default under this Note, including, without
limitation, reasonable attorneys' fees.
ARTICLE III.
SUBORDINATION
Section 3.1 Agreement to Subordinate. Notwithstanding any other provision
to the contrary in this Note, Maker covenants and agrees, and Payee by accepting
this Note covenants and agrees, that the principal of and interest on the
indebtedness now or hereafter evidenced by this Note are subordinated in right
of payment, to the extent and in the manner provided in this Article, to the
prior payment in full in cash of all existing and future Senior Indebtedness,
and that the subordination provisions set forth in this Article are for the
benefit of, and shall be enforceable directly by, the holders of Senior
Indebtedness. "SENIOR INDEBTEDNESS" means (i) indebtedness and other obligations
under (1) that certain Credit Agreement, dated as of November 12, 1997, among
Maker, BT Commercial Corporation, as agent, and the lenders as parties thereto,
as such may be amended, modified, restated or refinanced from time to time, with
the same or different agent and lenders and (2) that certain Senior Secured
Credit Agreement, dated as of November 12, 1997, among Maker, Bankers Trust
Company, as administrative agent, and lenders as parties thereto, as such may be
amended, modified, restated or refinanced from time to time, with the same or
different administrative agent and lenders (subject to clause (ii) below)
specifically excluding from each of the foregoing (ii) indebtedness and other
obligations that are, by their express terms, subordinated in right of payment
to any other indebtedness of the Company. By way of example and not in
limitation of the foregoing, "Senior Indebtedness" shall not include "the Notes"
as such term is defined in the Preliminary Offering Memorandum dated October 31,
1997, relating to a proposed offering of Senior Subordinated Notes of Maker
under Rule 144A of the Securities Act of 1993, as amended which Senior
Subordinated Notes shall be pari passu with this Note.
Payee by accepting this Note acknowledges and agrees that the subordination
provision set forth in this Article are, and are intended to be, an inducement
and consideration to each holder of any Senior Indebtedness, whether such Senior
Indebtedness was created before or after the issuance of this Note, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness, and such
holder of Senior Indebtedness shall be deemed conclusively to have relied upon
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness, and such holder is made an obligee
hereunder and may enforce directly such subordination provisions.
Section 3.2 Liquidation; Dissolution: Bankruptcy. Upon any payment or
distribution (whether in cash, property, debt, equity or other securities, a
combination thereof or otherwise) to creditors or equity holders of Maker in a
voluntary or involuntary liquidation or dissolution of Maker, whether total or
partial, or in bankruptcy, reorganization, insolvency, receivership,
dissolution, assignment for the benefit of creditors, marshaling of assets or
similar proceeding relating, to Maker or its property:
3
<PAGE> 182
(a) holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due or to become due on or in respect of
all Senior Indebtedness before Payee shall be entitled to receive any Security
Payment (as defined in Section 3.3(a)); and
(b) until all Senior Indebtedness is paid in full in cash, any
Security Payment to which Payee would be entitled but for this Article shall be
made to holders of Senior Indebtedness, as their interests may appear.
Section 3.3 Default on Senior Indebtedness.
(a) Upon any Senior Indebtedness becoming due and payable, whether
at the stated maturity thereof or by acceleration or otherwise, such Senior
Indebtedness shall first be irrevocably and indefeasibly paid in full in cash,
or the immediate payment thereof duly provided for in cash, before Maker or any
Person acting on behalf of Maker shall directly or indirectly pay, prepay,
redeem, retire, repurchase or otherwise acquire for value or make any other
prepayment, payment or distribution (whether in cash, property, securities or a
combination thereof or otherwise) on account of the principal of (or premium, if
any) or interest on, this Note (each, a "Security Payment").
(b) No Security Payment shall be made if, at the time of such
Security Payment, Maker and Payee have received notice from a holder of Senior
Indebtedness that there exists a default in payment of all or any portion of any
principal of (and premium, if any) and interest and fees, expenses, costs and
other obligations on Senior Indebtedness, and such default shall not have been
cured or waived in writing or the benefits of this sentence waived in writing by
or on behalf of the holders of such Senior Indebtedness.
(c) In addition, during the continuance of any event of default
(other than a default referred to in subsection (b) of this Section 3.3 with
respect to any Senior Indebtedness having a principal amount (or binding
commitment to lend principal) in excess of $15,000,000 ("SPECIFIED SENIOR
INDEBTEDNESS"), as such event of default is defined therein or in the instrument
under which such Specified Senior Indebtedness is outstanding, permitting the
holders of such Specified Senior Indebtedness to accelerate the maturity thereof
under the terms of such Specified Senior Indebtedness, and upon written notice
of such event of default given by the to Payee, with a copy to Maker, then,
unless and until such event of default shall have been cured or waived or shall
have ceased to exist, no Security Payment shall be made, provided, that if the
holders of the Specified Senior Indebtedness to which the default relates have
not declared such Specified Senior Indebtedness to be immediately due and
payable within 179 days after the occurrence of such default (or have declared
such Specified Senior Indebtedness to be immediately due and payable and within
such period have rescinded such declaration of acceleration), then, subject to
the provisions of Section 3.2 and 3.3(a), Maker shall pay all past due scheduled
payments and shall resume making any and all unpaid scheduled Security Payments.
Any period during which any Security Payment is prohibited pursuant to the
immediately preceding sentence is referred to in this Article as a "PAYMENT
BLOCKAGE PERIOD." Notwithstanding any other provisions of this Article or any
other provision of this Note, in no event shall a payment blockage period under
this Article extend beyond 179 days from the date on which such payment blockage
period commenced. Not more than one payment blockage
4
<PAGE> 183
period may be commenced within any consecutive 365-day period with respect to
this Note. For all purposes of this Article, no event of default that existed or
was continuing on the date of the commencement of any payment blockage period
with respect to the Specified Senior Indebtedness initiating such payment
blockage period shall be, or be made, the basis for the commencement of a second
payment blockage period by the holder or holders of such Specified Senior
Indebtedness at any time after the 365-day period referred to in the previous
sentence unless such event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
(d) In the event that this Note is declared due and payable before
its stated maturity, then, and in such event, the holders of Senior Indebtedness
outstanding at the time this Note so becomes due and payable shall be entitled
to receive payment in full in cash of all amounts due or to become due on or in
respect of such Senior Indebtedness (whether or not a default has occurred
thereunder or such Senior Indebtedness is, or has been declared to be, due and
payable prior to the date on which it otherwise would have become due and
payable) before Payee shall be entitled to receive any Security Payment.
Section 3.4 Security Payments Permitted if No Default. Nothing contained in
this Article or elsewhere in this Note shall prevent Maker or any person acting
on behalf of Maker, at any time except as otherwise provided in Section 3.2 from
making any Security Payment.
Section 3.5 When Security Payment Must Be Paid Over. In the event that any
Security Payment is made to Payee that, because of this Article, should not have
been so made or may not be paid over to Payee, such Security Payment shall be
held by Payee for the benefit of, and shall forthwith be paid over or delivered
to, the holders of the Senior Indebtedness remaining unpaid or their
representatives, as their interests may appear, to the extent necessary to
irrevocably and indefeasibly pay such Senior Indebtedness in full in cash in
accordance with its terms, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
Section 3.6 Notices by the Company. Maker shall promptly notify Payee of
any facts known to Maker that would cause a Security Payment to violate this
Article, but failure to give such notice shall not affect the subordination
provided in this Article of this Note to Senior Indebtedness. Without limiting
the foregoing, if payment of this Note is accelerated because of an event of
default, Maker shall promptly notify Payee of the acceleration.
Section 3.7 Subrogation. After all Senior Indebtedness is irrevocably and
indefeasibly paid in full in cash and until this Note is paid in full, Payee
shall be subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness to the extent that distributions
otherwise payable to Payee have been applied to the payment of Senior
Indebtedness. A distribution made under this Article to holders of Senior
Indebtedness which otherwise would have been made to Payee is not, as between
Maker and Payee, payment by Maker on Senior Indebtedness.
Section 3.8 Relative Rights. This Article defines the relative rights of
Payee and holders of Senior Indebtedness. Nothing in this Note shall:
5
<PAGE> 184
(a) impair, as between Maker and Payee, the obligation of Maker,
which is absolute and unconditional, to pay the principal of and interest
on this Note in accordance with their terms;
(b) affect the relative rights of Payee and creditors of Maker
other than holders of Senior Indebtedness; or
(c) prevent Payee from exercising its available remedies upon a
default or, subject to the rights of holders of Senior Indebtedness to
receive prepayment, payments and distributions otherwise payable to Payee.
If Maker fails because of this Article to pay the principal of or interest
on this Note on the due date or upon the acceleration thereof, the failure is
still a default.
Section 3.9 Subordination May Not Be Impaired by the Company. No right of
any holder of Senior Indebtedness to enforce the subordination of the
indebtedness evidenced by this Note shall be impaired by (a) any act or failure
to act by Maker or by its failure to comply with this Note, (b) any release of
any collateral or any guarantor or any Person of Maker's obligations under the
Senior Indebtedness, (c) any amendment, supplement, extension, renewal,
restatement or other modification of the Senior Indebtedness, (d) any settlement
or compromise of any Senior Indebtedness, (e) the unenforceability of any of the
Senior Indebtedness or (f) the failure of any holder of Senior Indebtedness to
pursue claims against Maker.
Section 3.10 Distribution of Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution may be made and the notice given to their administrative agent
or other representative (if any).
Section 3.11 Consent of Holders of Senior Indebtedness. The provisions of
this Article shall not be amended, waived or modified in a manner that would
adversely affect the rights of the holders of any Senior Indebtedness, and no
such amendment, waiver or modification shall become effective, unless the
holders of such Senior Indebtedness shall have consented in writing (in
accordance with the provisions of the agreement governing such Senior
Indebtedness) to such amendment, waiver or modification.
ARTICLE IV.
MISCELLANEOUS
Section 4.1 Waiver. The rights and remedies of Payee under this Note shall
be cumulative and not alternative. No waiver by Payee of any right or remedy
under this Note shall be effective unless in a writing signed by Payee. Neither
the failure nor any delay in exercising any right, power or privilege under this
Note will operate as a waiver of such right, power or privilege and no single or
partial exercise of any such right, power or privilege by Payee will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right of Payee arising out of this Note can be
discharged by Payee, in whole or in part,
6
<PAGE> 185
by a waiver or renunciation of the claim or right unless in a writing, signed by
Payee; (b) no waiver that may be given by Payee will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on Maker
will be deemed to be a waiver of any obligation of Maker or of the right of
Payee to take further action without notice or demand as provided in this Note.
Maker hereby waives presentment, demand, protest and notice of dishonor and
protest.
Section 4.2 Notices. All claims, consents, designations, notices, waivers,
and other communications in connection with this Agreement shall be in writing.
Such claims, consents, designations, notices, waivers, and other communications
shall be considered received only on the day of actual receipt unless mailed by
certified or registered mail, postage prepaid, return receipt requested,
addressed to a Party at its address set forth below (or to such other address to
which such Party has notified the other Parties in accordance with this section
to send such claims, consents, designations, notices, waivers, and other
communications), in which case such claims, consents, designations, notices,
waivers, or other communications shall be deemed to have been received three
Business Days after the date of posting:
Maker: FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
76112-7899
Attention: President
With a copy to: Akin Gump Strauss Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4675
Attention: Gary M. Lawrence
Payee: Thomas F. "Fred" Moore
Bay Club Drive
Arlington, TX 76013
Section 4.3 Severability. If any provision in this Note is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Note will remain in full force and effect. Any provision of this Note held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
Section 4.4 Governing Law. THIS NOTE WILL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Section 4.5 Parties in Interest. This Note shall bind Maker and its
successors and assigns. This Note shall not be assigned or transferred by Payee
without the express prior written consent of Maker, except by will to legatees
or, in default thereof, by operation of law to heirs.
7
<PAGE> 186
Section 4.6 Section Headings, Construction. The headings of Sections in
this Note are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Note unless otherwise specified.
Section 4.7 Gender and Number. All words used in this Note will be
construed to be of such gender or number as the circumstances require. Unless
otherwise expressly provided, the words "hereof" and "hereunder" and similar
references refer to this Note in its entirety and not to any specific section or
subsection hereof.
Section 4.8 Non-Negotiable and Non-Assignability. Notwithstanding anything
herein to the contrary, this Note shall be non-negotiable and shall not be
assignable by the parties hereto. Any attempted negotiation or assignment of
this Note shall be null and void and of no effect.
Section 4.9 Usury. All agreements between Maker and Payee, whether now
existing or hereafter arising and whether written or oral, are expressly limited
so that in no contingency or event whatsoever, whether by acceleration of the
maturity of this Note or otherwise, shall the amount paid, or agreed to be paid,
to Payee for the use, forbearance or detention of the money to be loaned
hereunder or otherwise, exceed the maximum amount permissible under applicable
law. If from any circumstances whatsoever fulfillment of any provision of this
Note or of any other document evidencing, securing or pertaining to the
indebtedness evidenced hereby, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law,
then, ipso facto, the obligation to be fulfilled shall be reduced to the limit
of such validity, and if from any such circumstances the holder of this Note
shall ever receive anything of value as interest or deemed interest by
applicable law under this Note or any other document evidencing, securing or
pertaining to the indebtedness evidenced hereby or otherwise an amount that
would exceed the highest lawful rate, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing under
this Note or on account of any other indebtedness of Maker to the holder hereof
relating to this Note, and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of this Note and such other
indebtedness, such excess shall be refunded to Maker. In determining whether or
not the interest paid or payable with respect to any indebtedness of Maker to
the holder hereof, under any specific contingency, exceeds the highest lawful
rate, Maker and the holder hereof shall, to the maximum extent permitted by
applicable law, (a) characterize any non-principal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness is uniform throughout the term
thereof, and/or (d) allocate interest between portions of such indebtedness, to
the end that no such portion shall bear interest at a rate greater than that
permitted by law. The terms and provisions of this paragraph shall control and
supersede every other conflicting provision of all agreements between Maker and
Payee.
[SIGNATURE PAGES TO FOLLOW]
8
<PAGE> 187
IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the
date first stated above.
FWT, INC., A TEXAS CORPORATION
By: /s/ LAWRENCE A. BETTINO
-----------------------------------
Lawrence A. Bettino
Vice President
<PAGE> 1
[DELTA STEEL, INC. LETTERHEAD]
ADDENDUM A (to EXHIBIT 10.3)
MEMORANDUM OF UNDERSTANDING
LEASED DELTA FACILITY
TERM AND PAYMENT SCHEDULE
The initial lease shall be for a term of five years and shall be automatically
renewable at the end of the initial five year lease. Terms and conditions for
the renewal period will be negotiated at the end of the third year of the
initial lease period. Lease payments shall be made monthly in advance.
BASIS FOR LEASE RATE
The monthly lease rate for the initial lease term (5 years) will include
construction costs, property taxes, and property insurance as described below:
o Construction cost of FWT's lease space and equipment shall include
building, drive, crane, new gate, warehouse and manager's office but
excluding press-brake foundation costs and fencing. The construction cost
is based on the contractor's final invoice to Delta Steel which will
include such costs as contractor's overhead, permit costs, etc... The total
construction cost attributable to FWT shall be amortized over 60 months
plus interest at an annual rate of 8%. The resulting amount shall form the
construction cost component of the monthly lease payment. Additional
capital additions which both Delta Steel and FWT agree need to be made
during the lease term (e.g., more cranes, equipment, etc ... ) and for
which FWT is the direct beneficiary, shall be amortized over the remainder
of the lease term with interest at 8%.
o Property taxes shall be 1/12 of the actual annual property taxes assessed
on the leased space and equipment. The billable amount shall be based on
the previous year and then adjusted to the actual tax amount once the final
assessment is received; and
o Property insurance on the leased portion of the building and the crane in
the estimated amount of $125 per month. This does not include FWT contents.
After the initial lease term of five years, the lease rate will be set at a
mutually agreeable market rate for comparable space, equipment and terms but in
no case shall the new lease rate exceed 80% of the current lease rate unless
capital improvements are made or more equipment is added at the request of FWT.
The capital improvements will be amortized over the new lease period.
In no case shall payments on the initial five year lease begin until the new
building is completed and the inventory, burning table, press-brake, and cranes
are all available and fully operational.
Page 1
<PAGE> 2
Moreover, the facilities provided by Delta Steel for FWT shall be complete and
fully operational. Delta Steel will diligently work with the contractors to be
fully operational by 2/1/97. Any cash penalties collected by Delta from the
contractors for delays to the project which postpone the operational date past
2/1/97 will be shared equally with FWT.
If FWT is unable to use its leased space due to Delta's inability to provide
broken plate for poles, there will be no lease payment for that "period."
Instead, this "period" shall be added to the end of the initial lease term with
the same terms and conditions, including lease rate, as for the initial lease
period. The "period" is to be mutually defined by Delta Steel and FWT.
UTILITIES
FWT will be responsible for its own electrical service. A separate meter for
electrical services shall be provided by Delta Steel for FWT's leased space. FWT
shall be billed directly by the Texas Utility.
ACCESS/EGRESS
FWT shall have full access and egress to its leased facility 24 hours per day
via a dedicated entrance to the property and leased production area.
PARKING
Delta Steel shall provide parking for 8 to 10 FWT employees at no charge.
MAINTENANCE
FWT shall be responsible for maintenance and repairs associated with normal wear
on the crane which is covered by FWT's lease. FWT shall also be responsible for
any damage to the crane due to misuse or abuse. FWT shall not be responsible for
items covered under the crane manufacturer's warranty. FWT shall follow Delta
Steel's inspection and maintenance procedures.
ADVERTISING
As part of FWT's lease, Delta Steel agrees to place an FWT logo (approximately
4' x 8') at the entrance to FWT's leased facility as well as paint an FWT logo
(approximately 15' x 25') on the top, northwest corner of the FWT-leased
building.
CAPACITY ALLOCATION
FWT MONOPOLE SOURCING
Delta Steel shall be the exclusive supplier of FWT's broken-shaft monopoles with
only the following exceptions:
o Union Metals shall continue to furnish monopoles to FWT for heights of 100'
or less with base shaft diameters that are less than 28.5 inches;
Page 2
<PAGE> 3
o FWT shall have the right to purchase steel and/or monopoles from other
sources if Delta Steel is unable, for any reason, to meet FWT's demand for
broken steel shafts and base plates. Once Delta Steel is able to resume
meeting FWT's demand, FWT shall revert to purchasing from Delta on an
exclusive basis.
FWT CAPACITY ALLOCATION
FWT will have the right to schedule its orders first on the designated Delta
Steel burning and press-braking equipment. If FWT is not using the equipment to
capacity, Delta Steel has the right to schedule orders for other customers after
first giving FWT the "right of first refusal" to place orders on the equipment.
After orders for other customers are scheduled, new FWT orders will not displace
the other customers' orders.
DELTA SERVICES FOR OTHER CUSTOMERS
As a condition of the lease, Delta Steel agrees not to directly brake monopole
sections for firms competing with FWT. Current competitors include: Thomas and
Betts, Valmont Industries, ROHN Corporation, Comsat, Andrew Corporation, Sabre,
Stellar, Summit Manufacturing, LeBlanc and Royle, PiRod, Falcon Steel, North
American Pole, Engineered Endeavors, GEM Engineering, Allied Corporation, Union
Metals, or other companies that may compete or enter into the communications,
utility, lighting, or highway-safety broken-shaft markets. This does not,
however, preclude Delta Steel from providing other services for these companies.
MANAGEMENT
FWT shall provide a shop/floor manager that is acceptable to Delta Steel. This
employee shall be employed and insured by FWT. Delta Steel will contract with
FWT for 50% of the manager's salary and financial incentives. The fee shall be
deducted monthly from the lease payment due to Delta Steel. Both FWT and Delta
Steel shall designate one person in each organization to whom the manager shall
report. Both FWT and Delta Steel shall review the manager and agree on base
salary, salary adjustments and financial incentives.
POLICIES AND PROCEDURES
GENERAL
Those employed by FWT shall follow FWT'S normal policies and procedures (see
attached), while Delta Steel employees shall follow Delta Steel's normal
policies and procedures. The only modifications shall be regarding Holidays, and
that all employees of FWT at the Delta facility shall follow the Delta Steel
Safety Policy and Substance Abuse Policy.
SAFETY
FWT shall follow the Delta Steel Safety Policy and Delta Steel Substance Abuse
Policy.
Page 3
<PAGE> 4
QUALITY CONTROL
FWT and Delta Steel shall develop a mutually agreeable quality control program.
WAGE RATES
FWT and Delta Steel shall mutually discuss all base wage rates and incentives
(if any) for employees who work in the burning, braking, and seaming areas of
the plant.
HOLIDAYS
Prior to beginning the pole plant operation, FWT and Delta Steel shall agree on
the Holidays which will be offered to the pole plant employees.
INVENTORY
INITIAL LEVELS
FWT is responsible for furnishing Delta Steel specific sizes, grades, and
quantities of steel to be held in inventory for FWT's exclusive use. The
inventory held on site at Delta Steel in Ft. Worth, Texas is estimated to be
valued at approximately $2,000,000 to $2,500,000. Once the operation has been in
operation for six to nine months, the dollar value of inventory may be changed
based on the mutual agreement of Delta Steel and FWT. The shared objective is to
develop an inventory turnover of at least four times per year.
RESTOCKING
Once a piece of steel is removed from inventory, the piece shall be
automatically re-ordered by Delta Steel unless an alternate size, grade, or
quantity of steel is requested by FWT.
FWT GUARANTEE
At the termination of this lease agreement, FWT agrees to buy the remaining
plate steel inventory held by Delta Steel for FWT's exclusive use during a
period not to exceed twelve months following the termination of the agreement.
The steel shall be provided at the steel cost (as defined in this agreement)
plus $.01 per pound.
ELECTRONIC INVENTORY MANAGEMENT
Delta Steel shall furnish FWT with at least daily access to inventory
information which includes but is not limited to: size, grade, quantity, and
steel cost. In addition, FWT in cooperation with Delta Steel shall develop a
means by which inventory can be reserved for quoting purposes and then purchased
electronically.
OPERATION PRICING
Delta Steel's participation in the fabrication process of FWT monopoles is as
follows: plate steel is drawn from Delta Steel's inventory according to the
plate selected by FWT engineers (referred
Page 4
<PAGE> 5
to as Plate Inventory), the plate steel is burned by Delta Steel according to
drafting details supplied by FWT (referred to as Burning), the newly burned
steel is then placed in a press-brake and formed into a multi-sided shell or
round by Delta Steel according to FWT-supplied drafting details (referred to as
Braking).
In addition, the following price schedule shall also apply to items sold by FWT
for products other than monopoles.
STEEL COST DEFINITION
Delta Steel's "steel cost" shall be Delta's average cost determined for each
item using the invoice prices of the steel less any discounts or allowances plus
the inbound freight. This steel cost shall be reflected in an electronic
database in which FWT shall have access.
PRICING BY FABRICATION PROCESS
Delta Steel agrees to perform the previously described fabrication processes
according to the following price schedule:
o Inventory/Plate Provision: Steel cost plus $.045 per pound on the gross
weight
Scrap from burning and braking belongs to FWT.
o Burning: $.04 per pound on the net weight of the finished product
o Braking: $.115 per pound on the net weight of the finished product
(adjusted based on incentive pricing). The weight is determined based on
the plate weight actually broken. Thus, the weight will be less than the
weight logged at the burning stage.
PRESS-BRAKE INCENTIVE PRICING
To encourage FWT to build total steel volume, the below incentive schedule shall
apply only to the Braking process. The incentive discount is not available on
broken pole business for FWT competitors that Delta Steel cannot sell including
those previously named in this memorandum.
<TABLE>
<CAPTION>
DISCOUNT PER TON
----------------
OFF BRAKING PRICE AVERAGE MONTHLY VOLUME
----------------- ----------------------
<S> <C> <C>
o 0 0 - 1,000 Tons
o $10 1,001 - 1,250 Tons
o $15 1,251 - 1,500 Tons
o $20 1,500 + Tons
</TABLE>
The discount shall be calculated on a quarterly basis (i.e., at the end of
March, June, September and December) by taking the average tonnage broken during
the previous three months. A credit shall be issued for the incentive discount.
Page 5
<PAGE> 6
For example, on March 31, assume that 4,800 Tons have been broken by Delta
Steel for FWT (excluding other Delta Steel customers and FWT competitors for
which there is no incentive discount). The incentive discount amount would be
calculated as follows:
o The average tonnage is 1,600 Tons per month (4,800 Tons divided by three
months).
o The respective incentive discount due per month for the braking operation
would equal $8,250 computed as (250 tons * $10) + (250 tons * $15) + (100
tons * $20).
PAYMENT TERMS
1% / 10 days, net forty days from date of invoice.
INDEMNIFICATION
This section is to be completed by FWT and Delta Steel. The intent is that each
company would be responsible for its actions and/or negligence.
INSURANCE
To be completed after discussion between FWT and Delta Steel.
Executed this 26 day of June, 1996
/s/ THOMAS W. MOORE /s/ ROBERT A. EMBRY
- --------------------------------------- --------------------------------------
Thomas W. Moore, President, FWT C.E.O. Robert A. Embry, President Delta Steel
/s/ BETTY MOORE /s/ V. THOMAS RUDD
- --------------------------------------- --------------------------------------
Betty Moore, Treasurer, FWT V. Thomas Rudd, VP-Finance
/s/ FRED MOORE /s/ NICK WALKER
- --------------------------------------- --------------------------------------
Fred Moore, Vice President, FWT Nick Walker, Division Manager
Ft. Worth Division
/s/ CARL MOORE
- ---------------------------------------
Carl Moore, Vice President FWT
/s/ ROY MOORE
- ---------------------------------------
Roy Moore, Vice President, FWT
Page 6
<PAGE> 7
ADDENDUM B (to EXHIBIT 10.3)
NON-DISCLOSURE/CONFIDENTIALITY AGREEMENT
This agreement is effective as of March 10, 1997 by and between Delta Steel,
Inc., a Texas corporation, hereafter referred to as "Delta" or "party", and FWT,
Inc., a Texas corporation, hereafter referred to as "FWT" or "party".
WITNESSETH:
1.0 Both parties understand the nature and character of this Agreement, and
intend for this to be a fully binding agreement. The parties may use all legal
means at their disposal to enforce this Agreement. Reference to Delta and FWT
includes any subsidiary, affiliated or parent companies, and the directors,
officers, employees, agents, representatives and contractors of the respective
companies.
1.1 "Period of Affiliation", as used below, refers to the period of the
business relationship between the parties under the Cooperative Production
Agreement dated March 10, 1997.
1.2 Consideration for compliance with this Agreement is the opportunity to
work under the aforementioned Cooperative Production Agreement and any
remuneration in any form agreed to by the parties. This Agreement is intended to
extend beyond the Period of Affiliation.
2.0 Both parties agree that its representatives and employees will not at any
time, either during or subsequent to the Period of Affiliation, either directly
or indirectly, disclose to others or use any secret, confidential or proprietary
information and know-how of the other party (whether or not developed by the
other party) without that party's written consent. The term "secret,
confidential or proprietary information and know-how" shall include, but shall
not be limited to, company plans, customers, costs, programs, prices, computer
programs and methods used, developed, investigated, made or sold, at any time,
either before or during the parties' Period of Affiliation.
2.1 Salary and compensation information is considered confidential and
proprietary information, and is fully subject to the disclosure restrictions of
this Agreement.
3.0 The rights and obligations of the parties hereto shall be construed under
the laws of the State of Texas and shall be binding upon the heirs, legal
representatives and assigns with respect to the subject matter thereof. No
changes to this Agreement shall be effective unless made in writing and executed
by both parties.
DELTA STEEL, INC. FWT, Inc.
P.O. Box 2289 P.O. Box 8597
Houston, TX 77252 Fort Worth, TX 76124
BY: /s/ R. A. EMBRY BY: /s/ T. W. MOORE
----------------------- --------------------------
TITLE: PRESIDENT TITLE: PRESIDENT
-------------------- -----------------------
DATE: 3/10/97 DATE: 3/31/97
--------------------- ------------------------
<PAGE> 1
EXHIBIT A (to EXHIBIT 10.4)
[DELTA STEEL, INC. LETTERHEAD]
FWT Date: March 21, 1997
P O Box 8597
Fort Worth, TX 76124
Attention: Betty Moore, Tommy Moore, Fred Moore, and
Bill Sales
This letter is to clear up the freight issue per our conversation 3/20/97.
Delta is committed of serving FWT and our joint interests any way possible. We
have committed a couple to stretch trailers for our local deliveries as well as
trucks and drivers. Delta would also commit four trailers, two trucks and two
drivers for the night hauling to Houston for galvanizing. As I stated, I feel
the rates we had were fair and if you wanted to discuss them just let me know.
You now have let it be known and these are the changes that I discussed with
Bill Sales 3/20/97.
1. Truckload from FWT or to FWT locally = $75.00 per load
2. Truck to Houston from FWT = $400.00 per load
3. Truckload from Houston to FWT = $400.00 per load
4. If FWT can load our trucks to and
from Houston (loaded both ways) = $700.00 per load
These rates should beat any current rates and we can come out okay by using our
trucks and trailers 24 hours a day. The bills dated after 3/21/97 will all be
at our new rates, however, bills prior to that date will remain at the original
rates. Again, I want to say the original rates were fair considering the
equipment tide up, however, we will try these new rates and if we can come out
okay then we will continue.
Sincerely yours,
/s/ NICK WALKER
Nick Walker
Division Manager
<PAGE> 1
EXHIBIT A (to EXHIBIT 10.5)
DELTA STEEL, INC., - FORT WORTH DIVISION
[FLOOR PLAN]
Exhibit A is a drawing of Delta Steel's Fort Worth, Texas facility, which
the drawing indicates is on a site consisting of 18.9 acres. The drawing
indicates the portions of the facility that the Company leases from Delta Steel.
The drawing indicates that the Company leases a 195 feet by 116 feet section and
a 20 feet by 50 feet section located in the northwest portion of Delta Steel's
property.
<PAGE> 1
SCHEDULE 2.1 (to EXHIBIT 10.11)
<TABLE>
<CAPTION>
REVOLVING LOAN
LENDER COMMITMENT PRO RATA SHARE
------ ------------- --------------
<S> <C> <C>
BT Commercial Corporation $25,000,000 100%
</TABLE>
<PAGE> 2
SCHEDULE 4.1C (to EXHIBIT 10.11)
CAPITALIZATION
Prior to Transaction:
Capitalization:
<TABLE>
<CAPTION>
JURISDICTION SHARES AUTHORIZED/
ENTITY ORGANIZATION OUTSTANDING
- ------ ------------ -----------
<S> <C> <C>
FWT, Inc. Texas Common $10.00 par value:
1000 Authorized/
372 Outstanding
</TABLE>
Ownership:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENTAGE OF CLASS
- ---- ---------------- -------------------
<S> <C> <C>
T.W. Moore 93.93 25.25%
Betty Moore 93.93 25.25%
Thomas F. Moore 61.38 16.5%
Carl R. Moore 61.38 16.5%
Roy J. Moore 61.38 16.5%
TOTAL 372 100%
</TABLE>
<PAGE> 3
Following the Transaction:
Capitalization:
<TABLE>
<CAPTION>
JURISDICTION SHARES AUTHORIZED/
ENTITY ORGANIZATION OUTSTANDING
- ------ ------------ -----------
<S> <C> <C>
FWT, Inc. Texas Common $10.00 par value:
1000 Authorized/
136.22 Outstanding
</TABLE>
Ownership:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENTAGE OF CLASS
- ---- ---------------- -------------------
<S> <C> <C>
FWT Acquisition, Inc. 108.9135 80.00004407%
Thomas F. Moore 9.0761 6.66665198%
Carl R. Moore 9.0761 6.66665198%
Roy J. Moore 9.0761 6.66665198%
TOTAL 136.1418 100%
</TABLE>
<PAGE> 4
SCHEDULE 5.1 (to EXHIBIT 10.11)
SUBSIDIARIES
None
<PAGE> 5
SCHEDULE 5.5 (to EXHIBIT 10.11)
REAL PROPERTY ASSETS
FORT WORTH PLANT AND OFFICE (OWNED)
1901 East Loop 820 South
Fort Worth, Texas
KENNEDALE (OWNED)
5650 Interstate 20 East
Kennedale, Texas
DELTA STEEL (LEASED)
9217 South Freeway
Fort Worth, Texas
<PAGE> 6
SCHEDULE 5.6 (to EXHIBIT 10.11)
LITIGATION
None
<PAGE> 7
SCHEDULE 5.12 (to EXHIBIT 10.11)
FEES
None
<PAGE> 8
SCHEDULE 5.13 (to EXHIBIT 10.11)
ENVIRONMENTAL PROTECTION
The underground storage tanks which are or have been located on the Real
Property are described or referred to in the Environmental Assessment Report
prepared for Baker Capital Corporation prepared by Entrix, Inc., Dallas, Texas
(Project No. 271201).
<PAGE> 9
SCHEDULE 7.3 (to EXHIBIT 10.11)
EXISTING INVESTMENTS
None
<PAGE> 10
EXHIBIT C
(to Exhibit VI
to Exhibit 10.11)
[HOULIHAN LOKEY HOWARD & ZUKIN LOGO]
November 12, 1997
The Board of Directors and the Shareholders of
FWT, Inc.
1901 East Loop 820 South
Ft. Worth, Texas 76112-7899
Banker's Trust NY Corporation
Swiss Bank Corporation, Stamford Branch
Smith Barney Funding Corporation
c/o Banker's Trust NY Corporation
130 Liberty Street
New York, NY 10005
BT Commercial Corporation
300 South Grand Avenue, Suite 4100
Los Angeles, CA 90071
Attention: Albert Sun
The Board of Directors
FWT Acquisition, Inc.
c/o Baker Communications Fund L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Dear Ladies and Gentlemen:
We understand that FWT Acquisition, Inc. ("Newco" hereinafter), a company
formed by an investment group led by Baker Communications Fund L.P. (the
"Sponsor" hereinafter), is recapitalizing FWT, Inc. (the "Company" hereinafter)
for approximately $145 million (U.S.) including the repayment in full of all
outstanding indebtedness for borrowed money of the Company. Furthermore, we
understand that Newco, the Company, and T.W. Moore, Betty Moore, Roy J. Moore,
Thomas F. Moore and Carl R. Moore (the "Existing Shareholders" hereinafter)
entered into a Stock Purchase and Redemption Agreement (collectively, the
"Transaction Agreements"). The
[HOULIHAN LOKEY HOWARD & ZUKIN FINANCIAL ADVISORS LETTERHEAD]
<PAGE> 11
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -2-
Transaction Agreements and related documents effect or contemplate two primary
transactions. The first transaction includes: (i) the incurrence by the Company
of $100.0 million senior secured indebtedness (the "Senior Credit Facility"),
(ii) the redemption by the Company from the Existing Shareholders of an
aggregate 235.78 shares of the Company's common stock, par value $10.00 per
share (the "Common Stock"), for aggregate consideration of approximately $77.9
million, (iii) the repayment of all the outstanding funded indebtedness of the
Company in an aggregate amount of approximately $22.1 million, and (iv) the
distribution of selected assets to certain Existing Shareholders (such
transactions are collectively referred to as the "Recapitalization"). The
second transaction contemplated by the Transaction Agreements includes the
purchase by Newco of an aggregate of 108.98 shares of the Common Stock from
Existing Shareholders for aggregate consideration of approximately $36.0
million (the "Stock Purchase" hereinafter). At closing, Newco will hold
approximately 80.0% of the issued and outstanding shares of Common Stock, and
Roy J. Moore, Thomas F. Moore and Carl R. Moore (collectively, the "Roll-over
Shareholders") will hold in the aggregate approximately 20.0% of the issued and
outstanding shares of the Common Stock. The Stock Purchase, together with the
Recapitalization and other related transactions disclosed to Houlihan Lokey, are
referred to collectively herein as the "Transaction." It is our understanding
that a significant part of the financing for the Transaction will be obtained by
the Company from one or more institutional lenders (the "Lenders").
You have requested our written opinion (the "Opinion") as to the matters set
forth below. This Opinion values the Company as a going-concern (including
goodwill), on a pro forma basis, immediately after and giving effect to the
Transaction and the associated indebtedness. For purposes of this Opinion, "fair
value" shall be defined as the amount at which the Company would change hands
between a willing buyer and a willing seller, each having reasonable knowledge
of the relevant facts, neither being under any compulsion to act, with equity to
both; and "present fair saleable value" shall be defined as the amount that may
be realized if the Company's aggregate assets are sold as an entirety with
reasonable promptness in an arm's length transaction under present conditions
for the sale of comparable aggregation of assets, as such conditions can be
reasonably evaluated by Houlihan Lokey. These definitions do not contemplate a
distressed sale or piecemeal disposition. We have used the same valuation
methodologies in determining fair value and present fair saleable value for
purposes of rendering this Opinion. The term "identified contingent liabilities"
shall mean the stated amount of contingent liabilities identified to us and
explained by responsible officers, employees and agents of the Company, upon
whom we have relied upon without independent verification, including liabilities
that may result from pending litigation, asserted claims and assessments,
guaranties, environmental conditions, uninsured risks, and any other contingent
liabilities identified and explained. Being "able to pay its debts as they
become absolute and mature" shall mean that, assuming the Transaction has been
consummated as proposed, the financial forecasts for the Company for the period
1997 to 2002 indicate positive cash flow for such period, including (and after
giving effect to) the payment of installments due under loans made pursuant to
the indebtedness incurred in the Transaction, as such installments are scheduled
at the close of the Transaction. It is Houlihan Lokey's understanding, upon
which it is relying, that the Company's Board of Directors
<PAGE> 12
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -3-
and the Lenders and any other recipient of the Opinion will consult with and
rely solely upon their own legal counsel with respect to said definitions. No
representation is made herein, or directly or indirectly by the Opinion, as to
any legal matter or as to the sufficiency of said definitions for any purpose
other than setting forth the scope of Houlihan Lokey's Opinion hereunder.
Notwithstanding the use of the defined terms "fair value" and "present fair
saleable value," we have not been engaged to identify prospective purchasers or
to ascertain the actual prices at which and terms on which the Company can
currently be sold, and we know of no such efforts by others. Because the sale
of any business enterprise involves numerous assumptions and uncertainties, not
all of which can be quantified or ascertained prior to engaging in an actual
selling effort, we express no opinion as to whether the Company would actually
be sold for the amount we believe to be its fair value and present fair
saleable value.
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
1. reviewed the Company's unaudited financial statements for fiscal
years ended April 30, 1993 and April 30, 1994, the Company's audited
financial statements for the fiscal years ended April 30, 1995 through
April 30, 1997, and Company's unaudited interim financial statements
for the period ended July 31, 1997;
2. reviewed copies of relevant documents including, but not limited to,
the following:
o Preliminary Offering Memorandum, dated October 31, 1997, for the
$100,000,000 Senior Subordinated Notes due 2007 (the "Senior
Subordinated Notes")
o Master Agreement draft dated October 24, 1997 by and among FWT
Acquisition, Inc., FWT, Inc., T.W. Moore, Betty Moore, Carl
Moore, Thomas F. Moore, and Roy J. Moore
o Memorandum of Understanding addressed to FWT, Inc. and its
Stockholders dated September 26, 1997
o Preliminary Draft of the Senior Secured Credit Agreement (the
"Credit Agreement") among FWT, Inc., As Borrower, The Lenders,
and Bankers Trust Company (November 2, 1997)
o Preliminary Draft of the $25,000,000 Credit Agreement among FWT,
Inc., The Lenders and BT Commercial Corporation ("Revolving
Credit Facilities")
3. met with certain members of the senior management of the Company to
discuss the operations, financial condition, future prospects and
projected operations and performance of the Company and held
conversations with representatives of the Company's independent
accounting firm and counsel to discuss certain matters;
<PAGE> 13
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -4-
4. visited the production facilities and business offices of the Company;
5. reviewed forecasts and projections prepared by the Sponsor with
respect to the Company for the fiscal year ended April 30, 1998
through 2002;
6. reviewed other publicly available financial data for the Company and
certain companies that we deem comparable to the Company; and
7. conducted such other studies, analyses and investigations as we have
deemed appropriate.
We have relied upon and assumed, without independent verification, that the
financial forecasts and projections provided to us have been reasonably
prepared and reflect the best currently available estimates of the future
financial results and condition of the Company, and that there has been no
material adverse change in the assets, financial condition, business or
prospects of the Company since the date of the most recent financial statements
made available to us.
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume any
responsibility with respect to it. We have not made any physical inspection or
independent appraisal of any of the properties or assets of the Company. Our
opinion is necessarily based on business, economic, market and other conditions
as they exist and can be evaluated by us at the date of this letter. We have
assumed that the Revolving Credit Facilities will be refinanced on or before
maturity having material terms and conditions no less favorable taken as a
whole, than those entered into the Credit Agreement, which assumptions are
incorporated in the projections provided to us by the Sponsor.
Based upon the foregoing, and in reliance thereon, it is our opinion as of the
date of this letter that, assuming the Transaction is consummated as proposed,
immediately after and giving effect to the Transaction:
(a) on a pro forma basis, the fair value and present fair saleable value
of the Company's assets would exceed the aggregate of its respective
stated liabilities and identified contingent liabilities by at least
twenty million dollars;
(b) the Company should be able to pay its debts as they become due,
absolute, and mature in the usual course of its business as proposed
following the consummation of the Transaction;
(c) the Company will have sufficient capital to engage in its business,
as management has indicated it is now conducted and is proposed to be
conducted following the consummation of the Transaction; and
<PAGE> 14
The Board of Directors and the Shareholders of FWT, Inc.
Banker's Trust NY Corporation
BT Commercial Corporation
The Board of Directors of FWT Acquisition, Inc.
November 12, 1997 -5-
(d) for purposes of determining that the amount paid by the Company to
redeem shares of Common Stock from existing shareholders in the
Transaction does not exceed the amount of the Company's surplus, as
defined in the Texas Business Corporation Act, the fair value and
present fair saleable value of the Company's total assets will exceed
the total of the Company's stated liabilities and identified
contingent liabilities by an amount greater than the stated value of
its issued capital stock.
This Opinion is furnished solely for your benefit and may not be relied upon by
any other person without our express, prior written consent. This Opinion is
delivered to each recipient subject to the conditions, scope of engagement,
limitations and understandings set forth in this Opinion, and subject to the
understanding that the obligations of Houlihan Lokey in the Transaction are
solely corporate obligations, and no officer, director, employee, agent,
shareholder or controlling person of Houlihan Lokey shall be subjected to any
personal liability whatsoever to any person, nor will any such claim be
asserted by or on behalf of you or your affiliates.
HOULIHAN, LOKEY, HOWARD & ZUKIN FINANCIAL ADVISORS, INC.
/s/ HOULIHAN, LOKEY, HOWARD & ZUKIN FINANCIAL ADVISORS, INC.
<PAGE> 1
EXHIBIT 10.17
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated as of
November 12, 1997 and entered into by and between FWT, INC., a Texas corporation
("PLEDGOR"), and BT COMMERCIAL CORPORATION, as agent for and representative of
(in such capacity herein called "SECURED PARTY") the financial institutions
("LENDERS") party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit Agreement dated
as of November 12, 1997 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Pledgor pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Pledgor.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and issue Letters of Credit under the Credit Agreement and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. CERTAIN DEFINITIONS. The following terms used in this
Agreement shall have the following meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all interest, cash,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Collateral, and (iv) to the extent not covered by clauses (i) through
(iii) above, all proceeds of any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account established
and maintained by Secured Party pursuant to Section 2(a).
"SECURED OBLIGATIONS" means all obligations and liabilities of every
nature of Pledgor now or hereafter existing under or arising out of or in
connection
1
<PAGE> 2
with the Credit Agreement and the other Loan Documents and all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Pledgor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnities or otherwise, whether voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or incurred,
and all or any portion of such obligations or liabilities that are paid, to the
extent all or any part of such payment is avoided or recovered directly or
indirectly from Secured Party or any Lender as a preference, fraudulent transfer
or otherwise, and all obligations of every nature of Pledgor now or hereafter
existing under this Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
a. Secured Party is hereby authorized to establish and maintain at its
office at 14 Wall Street, New York, New York 10005, as a blocked account in the
name of Secured Party and under the sole dominion and control of Secured Party,
a restricted deposit account designated as "FWT, Inc. Collateral Account".
b. The Collateral Account shall be operated in accordance with the
terms of this Agreement.
c. All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
d. Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
SECTION 3. DEPOSITS OF CASH COLLATERAL.
(a) All deposits of funds in the Collateral Account shall be made by
wire transfer (or, if applicable, by intra-bank transfer from another account of
Pledgor) of immediately available funds to such Collateral Account. Pledgor
shall, promptly after initiating a transfer of funds to the Collateral Account,
give notice to Secured Party by telefacsimile of the date, amount and method of
delivery of such deposit.
2
<PAGE> 3
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding under the Credit Agreement, Pledgor shall deliver funds in such an
amount for deposit in the Collateral Account in accordance with Section 3(a). If
for any reason the aggregate amount delivered by Pledgor for deposit in the
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Pledgor shall be apportioned among all
outstanding Letters of Credit issued for the account of Pledgor for purposes of
this Section 3(b) in accordance with the ratio of the maximum amount available
for drawing under each such Letter of Credit (as to such Letter of Credit, the
"MAXIMUM AVAILABLE AMOUNT") to the Aggregate Available Amount. Upon any drawing
under any outstanding Letter of Credit issued for the account of Pledgor in
respect of which Pledgor has deposited in the Collateral Account any amounts
described above, Secured Party shall apply such amounts to reimburse the Issuing
Lender for the amount of such drawing. In the event of cancellation or
expiration of any Letter of Credit issued for the account of Pledgor in respect
of which Pledgor has deposited in the Collateral Account any amounts described
above, or in the event of any reduction in the Maximum Available Amount under
such Letter of Credit, Secured Party shall apply the amount then on deposit in
the Collateral Account in respect of such Letter of Credit (less, in the case of
such a reduction, the Maximum Available Amount under such Letter of Credit
immediately after such reduction) first, to the payment of any amounts payable
to Secured Party pursuant to Section 13, second, to the extent of any excess, to
the cash collateralization pursuant to the terms of this Agreement of any
outstanding Letters of Credit issued for the account of Pledgor in respect of
which Pledgor has failed to pay all or a portion of the amounts described above
(such cash collateralization to be apportioned among all such Letters of Credit
in the manner described above), third, to the extent of any further excess, to
the payment of any other outstanding Secured Obligations in such order as
Secured Party shall elect, and fourth, to the extent of any further excess, to
the payment to whomsoever shall be lawfully entitled to receive such funds.
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS. Pledgor hereby
pledges and assigns to Secured Party, and hereby grants to Secured Party a
security interest in, all of Pledgor's right, title and interest in and to the
Collateral as collateral security for the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all Secured Obligations.
3
<PAGE> 4
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT; INTEREST
ON AMOUNTS IN THE COLLATERAL ACCOUNT.
a. Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement.
b. To the extent permitted under Regulation Q of the Board of Governors
of the Federal Reserve System, any cash held in the Collateral Account shall
bear interest at the standard rate paid by Secured Party to its customers for
deposits of like amounts and terms.
c. Subject to Secured Party's rights under Section 12, any interest
earned on deposits of cash in the Collateral Account in accordance with Section
5(b) shall be deposited directly in, and held in the Collateral Account.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants as follows:
a. Ownership of Collateral. Pledgor is (or at the time of transfer
thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
b. Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except as may have been taken by or
at the direction of Pledgor).
c. Perfection. The pledge and assignment of the Collateral pursuant to
this Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
d. Other Information. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Pledgor with respect to the
Collateral is accurate and complete in all respects.
SECTION 7. FURTHER ASSURANCES. Pledgor agrees that from time to time,
at the expense of Pledgor, Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Secured
4
<PAGE> 5
Party to exercise and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing, Pledgor will:
(a) execute and file such financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as Secured Party may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby and (b) at Secured
Party's request, appear in and defend any action or proceeding that may affect
Pledgor's beneficial title to or Secured Party's security interest in all or any
part of the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Except to the extent permitted
under the Credit Agreement, Pledgor agrees that it will not (a) sell, assign (by
operation of law or otherwise) or otherwise dispose of any of the Collateral or
(b) create or suffer to exist any Lien upon or with respect to any of the
Collateral, except for the security interest under this Agreement.
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation to file one or more financing or continuation statements, or
amendments thereto, relative to all or any part of the Collateral without the
signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 13.
SECTION 11. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral, it being understood that Secured Party shall
have no responsibility for (a) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Collateral) to preserve rights against any parties with
respect to any Collateral or (b) taking any necessary steps to collect or
realize upon the Secured Obligations or any guarantee therefor, or any part
thereof, or any of the Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property of like kind.
SECTION 12. REMEDIES. Subject to the provisions of Section 3(b),
Secured Party may exercise In respect of the Collateral, in addition to all
other rights
5
<PAGE> 6
and remedies otherwise available to it, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral).
SECTION 13. INDEMNIFY AND EXPENSES.
a. Pledgor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Lender's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
b. Pledgor shall pay to Secured Party upon demand the amount of any and
all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its permitted successors and assigns, and (c) inure, together with
the rights and remedies of Secured Party hereunder, to the benefit of Secured
Party and its successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate automatically and all rights to the
Collateral shall revert to Pledgor. Upon any such termination Secured Party
shall, at Pledgor's expense, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination and Pledgor shall
be entitled to the return, upon its request and at its expense, against receipt
and without recourse to Secured Party, of such of the Collateral as shall not
have been otherwise applied pursuant to the terms hereof.
6
<PAGE> 7
SECTION 15. SECURED PARTY AS AGENT.
a. Secured Party has been appointed to act as Secured Party hereunder
by Lenders. Secured Party shall be obligated, and shall have the right
hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action (including,
without limitation, the release or substitution of Collateral), solely in
accordance with this Agreement and the Credit Agreement.
b. Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums
held by Secured Party hereunder (which shall be deposited in a new Collateral
Account established and maintained by such successor Secured Party,together
with all records and other documents necessary or appropriate in connection
with the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Agent's
resignation or removal hereunder as Secured Party, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
Pledgor herefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 17. NOTICES. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered
7
<PAGE> 8
in person or by courier service, upon receipt of telefacsimile or telex, or
three Business Days after depositing it in the United States mail with postage
prepaid and properly addressed. For the purposes hereof, the address of each
party hereto shall be as set forth under such party's name on the signature
pages hereof or, as to either party, such other address as shall be designated
by such party in a written notice delivered to the other party hereto.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 19. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW
8
<PAGE> 9
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR ACCEPTS FOR ITSELF
AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. Pledgor hereby agrees that service of
all process in any such proceeding in any such court may be made by registered
or certified mail, return receipt requested, to Pledgor at its address provided
in Section 17, such service being hereby acknowledged by Pledgor to be
sufficient for personal jurisdiction in any action against Pledgor in any such
court and to be otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of Secured Party to bring proceedings
against Pledgor in the courts of any other jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured Party each
acknowledge that this waiver is a material inducement for Pledgor and Secured
Party to enter into a business relationship, that Pledgor and Secured Party have
already relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Pledgor and
Secured Party further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 23
AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.
In the event of litigation, this Agreement may be filed as a written consent to
a trial by the court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
9
<PAGE> 10
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By: [ILLEGIBLE]
----------------------------------
Name: [ILLEGIBLE]
--------------------------------
Title: [ILLEGIBLE]
------------------------------
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, TX 76112
Attn: Chief Executive Officer
BT COMMERCIAL CORPORATION, as
Secured Party
By: /s/ ALBERT SUN
----------------------------------
Name: Albert Sun
--------------------------------
Title: Vice President
-------------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attention: Bhartai Baliga
S-1
<PAGE> 1
EXHIBIT 10.18
BLOCKED ACCOUNT AGREEMENT
This BLOCKED ACCOUNT AGREEMENT ("Agreement") is entered into as of
November 12, 1997 and entered into by and between FWT, INC., a Texas
corporation ("PLEDGOR"), and BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined), and BANK ONE TEXAS, NA, as the account bank ("BANK").
PRELIMINARY STATEMENTS
A. Agent and certain financial institutions acting as Lenders
("LENDERS") have entered into that certain Credit Agreement, dated as of
November 12, 1997 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT") with Pledgor, wherein Pledgor has granted the Lenders a security
interest in its present and future accounts receivable, and all proceeds
thereof and Pledgor has agreed that all collections and proceeds of such
accounts receivable shall be remitted in kind to the Agent;
B. Pledgor has granted to Agent a security interest in the funds
deposited in the Account (as defined below);
C. Agent has agreed to maintain with Bank deposit account number
1561678150 in its name (the "ACCOUNT") in which Pledgor shall deposit cash,
checks, drafts or other orders for payment of money;
D. Pledgor, Agent and Bank are entering into this Agreement to
provide for the disposition of net proceeds of cash, checks, drafts and other
orders for the payment of money deposited by Pledgor into the Account.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter set forth, Pledgor, Agent and Bank agree
as follows:
1. Agent hereby authorizes Bank and Bank hereby agrees:
(a) to charge the Account for all returned checks
associated with this Agreement;
(b) to follow its usual procedures in the event the
Account or any check, draft or other order for payment of money should be or
become the subject of any writ, levy, order or other similar judicial or
regulatory order or process;
1
<PAGE> 2
(c) to supply any necessary endorsements and to deposit
any and all monies and instruments received by Bank in the Account when
received, whether in the form of checks, wire transfers or otherwise; and
(d) to transfer pursuant to Agent's instructions any
collected and available balances in the Account each Business Day by wire
transfer to the following account:
Bank Name: Bankers Trust Company
Location: New York, New York
ABA Routing No.: 021001033
To Credit: BT Commercial Corporation - L.A.
Credit Account No.: 00103253
Attention: B. Baliga
Re: FWT, Inc.
Agent will give Bank sufficient advance written notice of any change
in the instructions for Bank to act upon such changes. Funds are not available
if, in the reasonable determination of Bank, they are subject to a hold,
dispute or legal process preventing their withdrawal. "Business Day" means each
Monday through Friday, excluding Bank holidays.
2. (a) If the balances in the Account are not sufficient to
pay Bank for any returned check, draft or other order for the payment of money,
Bank can make a demand for such deficiency upon Agent in writing, no longer
than 30 days from the date of the returned item and Agent, and Agent, on behalf
of itself and Lenders, agrees to promptly reimburse Bank for the amount of the
deficiency. If Agent makes any payments pursuant to this Section 2(a), Pledgor
will promptly reimburse Agent for such payment.
(b) Pledgor agrees to pay Bank on demand (i) the amount
for any fees or charges due Bank under this Agreement, and (ii) all expenses
for the maintenance of the Account, and Bank agrees that such fees, charges or
expenses under this Section 2(b) are the responsibility of Pledgor and will not
deduct such amounts from funds in the Account or seek payment from Agent,
except for returned check charges pursuant to Section 1(a), above.
(c) Pledgor hereby authorizes Bank, without prior notice,
from time to time to debit any account Pledgor may have with Bank for the
amount or amounts due Bank under subsection 2(a) or 2(b).
(d) Bank agrees it shall not offset against the Account,
except as permitted under this Agreement, until it has been advised in writing
by Pledgor and Agent that all of Pledgor's obligations, which are secured by
the Account and all funds deposited in the Account, are paid in full. Agent
shall notify Bank promptly in writing upon payment in full of Pledgor's
obligations and this Agreement shall
2
<PAGE> 3
automatically terminate upon receipt of such notice. Bank further agrees that
the Account and the funds deposited in such Account shall not be subject to any
banker's lien, deductions or any other right in favor of any person (including
Bank) other than Agent, except as expressly provided for herein with respect to
Bank.
3. Termination of this Agreement shall be as follows:
(a) Bank may terminate this Agreement upon 45 days' prior
written notice to Pledgor and Agent. Agent may terminate this Agreement at any
time which termination shall be effective upon receipt of written notice by the
Bank and by Pledgor. Pledgor may not terminate this Agreement except with the
written consent of Agent and upon 45 days' prior written notice to Bank and
Agent.
(b) Notwithstanding subsection 3(a), Bank may terminate
this Agreement at any time by written notice to Pledgor and Agent if (i) either
Pledgor or Agent breaches any of the terms of this Agreement, any other
agreement with Bank or any agreement involving the borrowing of money or the
extension of credit; (ii) either Pledgor or Agent terminates its business,
fails generally or admits in writing its inability to pay its debts as they
become due; any bankruptcy, reorganization, arrangement, insolvency,
dissolution or similar proceeding is instituted with respect to either Pledgor
or Agent; either Pledgor or Agent makes any assignment for the benefit of
creditors or enters into any composition with creditors or takes any action in
furtherance of any of the foregoing; or (iii) any material adverse change
occurs in either Pledgor's or Agent's financial condition, results of
operations or ability to perform its obligations under this Agreement. Pledgor
and Agent shall each promptly give written notice to Bank of the occurrence of
any of the foregoing events as it applies to it.
4. (a) Bank will not be liable to Pledgor or Agent for any
expense, claim, loss, damage or cost ("DAMAGES") arising out of or relating to
its performance under this Agreement other than those Damages which result
directly from its acts or omissions constituting negligence, subject to the
limits in the next succeeding sentence. Bank's liability is limited to direct
money Damages actually incurred in an amount not exceeding the compensation for
the service during the month in which such acts or omissions occurred.
(b) In no event will Bank be liable for any special,
indirect, exemplary or consequential damages, including but not limited to lost
profits.
(c) Bank will be excused from failing to act or delay in
acting, and no such failure or delay shall constitute a breach of this
Agreement or otherwise give rise to any liability of Bank, if (i) such failure
or delay is caused by circumstances beyond Bank's reasonable control, including
but not limited to legal constraint, emergency conditions, action or inaction
of governmental, civil or military authority, fire, strike, lockout or other
labor dispute, war, riot, theft, flood, earthquake or other natural disaster,
breakdown of public or private or common carrier communications
3
<PAGE> 4
or transmission facilities, equipment failure, or act, negligence or default of
Pledgor or Agent or (ii) such failure or delay resulted from Bank's reasonable
belief that the action would have violated any guideline, rule or regulation of
any governmental authority
5. Pledgor hereby agrees to indemnify Bank against, and hold it
harmless from, any and all liabilities, claims, costs, expenses and damages of
any nature (including but not limited to allocated costs of staff counsel,
other reasonable attorneys' fees and any fees and expenses incurred in
enforcing this Agreement) in any way arising out of or relating to disputes or
legal actions concerning this Agreement or the Account. This section does not
apply to any cost or damage attributable to the gross negligence or intentional
misconduct of Bank. Pledgor's obligations under this section shall survive
termination of this Agreement.
6. (a) Pledgor and Agent each represent and warrant to Bank
that (i) this Agreement constitutes its duly authorized, legal, valid, binding
and enforceable obligation; (ii) the performance of its obligations under this
Agreement and the consummation of the transactions contemplated hereunder will
not (A) constitute or result in a breach of its certificate or articles of
incorporation, bylaws or partnership agreement, as applicable, or the
provisions of any material contract to which it is a party or by which it is
bound or (B) result in the violation of any law, regulation, judgment, decree
or governmental order applicable to it; and (iii) all approvals and
authorizations required to permit the execution, delivery, performance and
consummation of this Agreement and the transactions contemplated hereunder have
been obtained.
(b) Pledgor and Agent each agrees that it shall be deemed
to make and renew each representation and warranty in subsection 6(a) on and as
of each day on which it uses the service.
7. Pledgor represents and warrants that it has not assigned or
granted a security interest in the Account or any funds now or hereafter
deposited in the Account, except to Agent.
8. Pledgor agrees that:
(a) Agent shall have exclusive interest in and control of
the Account, and all items and funds received by, and held in the Account shall
be the sole and exclusive property of Agent for the benefit of itself and the
Lenders;
(b) It cannot, and will not, withdraw any monies from the
Account until such time as Agent advises Bank in writing that Agent no longer
claims any interest in the Account and the monies deposited and to be deposited
in the Account; and
4
<PAGE> 5
(c) Except to the extent permitted under the Credit
Agreement, it will not permit the Account to become subject to any other
pledge, assignment, lien, charge or encumbrance of any kind, nature or
description, other than Agent's security interest referred to herein.
9. Agent acknowledges and agrees that Bank has the right to
charge the Account from time to time, as set forth in this Agreement and the
Account agreement, as said agreements are amended from time to time, and that
Agent has no right to the sum so withdrawn by Bank.
10. In addition to the original statement which will be provided
to Pledgor, Bank will provide Agent with a duplicate statement and such other
account information reasonably requested by Agent. Pledgor authorizes Bank to
provide any account information requested by Agent.
11. Pledgor agrees to pay to Bank, upon receipt of Bank's invoice,
all reasonable costs, expenses and attorneys' fees (including reasonable
allocated costs for in-house legal services) incurred by Bank in connection
with the preparation of this Agreement, the administration (including any
amendments), and enforcement of this Agreement and any instrument or agreement
required hereunder, including but not limited to any such reasonable costs,
expenses and fees arising out of the resolution of any conflict, dispute,
motion regarding entitlement to rights or rights of action, or other action to
enforce Bank's rights hereunder in a case arising under Title 11, United States
Code.
12. Notwithstanding any of the other provisions in this Agreement,
in the event of the commencement of a case pursuant to Title 11, United States
Code filed by or against Pledgor, or in the event of the commencement of any
similar case under then applicable federal or state law providing for the
relief of debtors or the protection of creditors by or against Pledgor, Bank
may act as Bank deems necessary to comply with all applicable provisions of
governing statutes and neither Pledgor nor Agent shall assert any claim against
Bank for so doing.
13. This Agreement may be amended only by a writing signed by
Pledgor, Agent and Bank; except that Bank's charges are subject to change by
Bank upon 60 days' prior written notice to Pledgor and Agent.
14. This Agreement may be executed in counterparts; all such
counterparts shall constitute but one and the same agreement.
15. Any written notice or other written communication to be given
to each party under this Agreement shall be addressed to the person at the
address set forth on the signature page of this Agreement or to such other
person or address as a party may specify in writing. Except as otherwise
expressly provided herein, any such notice shall be effective upon receipt.
5
<PAGE> 6
16. This Agreement supersedes all prior understandings, writings,
proposals, representations and communications, oral or written, of any party
relating to the subject matter hereof.
17. Neither Pledgor nor Agent may assign any of its rights under
this Agreement without the prior written consent of Bank.
18. This Agreement shall be interpreted in accordance with the
laws of New York, without giving effect to the conflicts of law principles
thereof.
(Remainder of page intentionally left blank]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
FWT, INC.
Address for notices:
By: /s/ [ILLEGIBLE] FWT, Inc.
------------------------------- 1901 East Loop 820 South
Name: [ILLEGIBLE Fort Worth, TX 76112
-----------------------------
Title: CEO Attn: Chief Executive Officer
----------------------------
BT COMMERCIAL CORPORATION
Address for notices:
By: /s/ ALBERT SUN BT Commercial Corporation
------------------------------- 14 Wall Street, 3rd Floor
Name: Albert Sun Mail Stop #4032
----------------------------- New York, NY 90071
Title: Vice President
---------------------------- Attention: Bhartai Baliga
BANK ONE TEXAS, NA
Address for notices:
By: /s/ DAVID E. WILLIAMS Bank One Texas, NA
------------------------------- P.O. Box 2050
Name: David E. Williams Fort Worth, TX 76113
-----------------------------
Title: Vice President Attention: David Williams
----------------------------
S-1 (Blocked Account Agreement)
<PAGE> 1
EXHIBIT 10.19
NON-OFFSET AGREEMENT
November 10, 1997
Mr. Russell Wallace
Texas Galvanizing, Inc.
645 West Hurst Boulevard
Hurst, Texas 76053
Re: Non-Offset Agreement
Dear Mr. Wallace:
FWT, INC. ("FWT") is entering into a Credit Agreement dated November 12,
1997 (said Credit Agreement, as amended, supplemented or otherwise modified from
time to time, being the "Credit Agreement"), with BT COMMERCIAL CORPORATION, as
agent ("Agent") for financial institutions ("Lenders") which are or may
hereafter become parties to the Credit Agreement. In connection therewith, FWT
will grant to Agent on behalf of Lenders a security interest in substantially
all of its personal property, including all inventory, raw materials,
work-in-progress, spare parts, finished goods, accounts and proceeds thereof,
whether now existing or hereafter acquired (the "Collateral") including all
Collateral located at your facility.
1. FWT hereby irrevocably instructs you, upon notice from Agent that an
event of default has occurred under the Credit Agreement, (a) to turn over to
Agent, or to permit the Agent to remove, such Collateral as may then be in your
possession or under your control, and (b) not to release any such Collateral to
FWT. The authorizations and instructions herein contained may be modified or
terminated with the written consent of Agent.
2. By executing this letter, you hereby agree to (a) waive and release
unto Agent and its successors and assigns any and all rights granted by or
under any present or future laws to levy or distraint for amounts due from FWT,
or any other charges which may be due to you against the Collateral, any and
all other claims, liens, offsets, deductions and demands of every kind which
you now have or may hereafter have against the Collateral, and (b) agree that
any rights you may have in or to the Collateral, no matter how arising (to the
extent not effectively waived pursuant to clause (a) of this paragraph), shall
be second and subordinate to the rights of Agent in respect thereof.
3. This agreement shall be binding upon and shall inure to the
benefit of Agent, FWT, and you and each party's respective successors,
administrators and assigns.
<PAGE> 2
Russell Wallace
November 10, 1997
Page Two
IN WITNESS WHEREOF, Texas Galvanizing, Inc., FWT, Inc. and Agent have
caused this agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first written above.
FWT, Inc.
By: /s/ THOMAS F. MOORE
------------------------------
Name: Thomas F. Moore
----------------------------
Title: Vice President
---------------------------
BT COMMERCIAL CORPORATION, as Agent
By: /s/ ALBERT SUN
------------------------------
Name: Albert Sun
------------------------------
Title: Vice President
---------------------------
TEXAS GALVANIZING, INC
By: /s/ RUSSELL WALLACE
------------------------------
Name: Russell Wallace
----------------------------
Title: President
---------------------------
<PAGE> 1
EXHIBIT 10.20
LOCKBOX AGREEMENT
This LOCKBOX AGREEMENT (this "AGREEMENT"), dated as of November
12, 1997, is entered into by and among FWT, INC., a Texas corporation
("Company"), BT COMMERCIAL CORPORATION, as agent ("AGENT"), and BANK ONE TEXAS,
NA ("BANK").
PRELIMINARY STATEMENTS
A. Agent and certain financial institutions acting as Lenders
("LENDERS") have entered into that certain Credit Agreement, dated as of
November 12, 1997 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT") with Company, wherein the Company has granted the Lenders a
security interest in its present and future accounts receivable, and all
proceeds thereof and Company has agreed that all collections and proceeds of
such accounts receivable shall be remitted in kind to the Agent; and
B. In order to provide for a more efficient and faster
collection and deposit of said collection and proceeds the Agent and Company
desire to use the lockbox service of Bank; and
C. Bank is willing to provide said service for Company and
the Agent commencing as of November 12, 1997; and
WHEREAS, Schedule I to that certain Security Agreement, dated
as of November 12, 1997, by and between Company and Agent, sets forth all of
the Company's deposit accounts.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Post Office Box. The Bank will rent P.O. Box 99236 (the
"LOCKBOX") of the post office located at Fort Worth, TX 76199-0236 in the name
of Company. Customers of Company have been, or will be, instructed to mail
their remittances to the Lockbox.
2. Access to Mail. The Bank will have exclusive and
unrestricted access to the Lockbox and will have complete and exclusive
authority to receive, pick up and open all regular, registered, certified or
insured mail addressed to the Lockbox. On written demand of the Agent, Bank
shall cease its processing of said mail, and shall release some, in kind, to
the Agent, without the prior consent of
1
<PAGE> 2
Company, and the Agent shall thereafter process said mail promptly in
accordance with this Agreement. Bank shall not inquire into the Agent's right
to make such a demand under any agreement among the Agent, the Lenders and
Company, and shall be forever released of all obligations with respect to said
remittances upon release to the Agent. Company shall have no control whatsoever
over any mail, checks, money orders, collections or other forms of remittances
received in the Lockbox. Appropriate instructions have been, or will be, given
by the Bank to the post office where the Lockbox is maintained, and such
instructions shall not be revoked without the prior written consent of the
Agent. Any instruction given to the Bank by Company without the prior or
concurrent written agreement of the Agent shall be void and of no force or
effect. All mail addressed to the Lockbox will be picked up by the Bank
according to its regular collection schedule.
3. Remittance Collection. On the day received the Bank will
open all mail addressed to the Lockbox and remove and inspect the enclosures.
All checks, money orders and other forms or orders for the payment of money and
other collection remittances (hereinafter collectively referred to as "checks")
shall be processed by the Bank as follows:
(1) Missing Date. Undated checks will not be reviewed,
and will be processed as hereafter provided.
(2) Postdated. Postdated checks will not be reviewed,
and will be processed as hereafter provided.
(3) Stale Date. Bank will not review for stale checks,
and will process stale checks as hereafter provided.
(4) Different Amount. Where written and numeric amounts
differ, a check will be processed by the Bank if the correct amount can be
determined from the accompanying documents, otherwise the check will processed
based on the written amount shown on the check.
(5) Signature Missing. The Bank will deposit and process
the check by affixing a stamped impression requesting the drawer bank to
contact the drawer for authority to pay.
(6) Alterations and Restrictions. Checks with alterations
and checks bearing restrictive notations such as "Payment in Full" will be
processed as if no such alterations or restrictions exist, as hereafter
provided.
(7) Foreign Banks and Currency. Checks drawn in foreign
currency will be processed in accordance with the Bank's normal procedure for
such checks and the Agent will be notified by advice of any such checks in the
detail provided to the Company and Agent daily.
2
<PAGE> 3
' (8) Other Items. Any items which the Agent has
specifically instructed the Bank in writing not to process will not be
deposited and shall be sent to the Company, with a copy to the Agent.
Notwithstanding anything to the contrary contained in
this Agreement, Bank shall have no obligation to perform services on a basis
any different than it performs lockbox services in the normal course of
business, except with respect to receiving instructions from the Agent rather
than Company.
4. Processing Acceptable Checks. All checks, except those
not acceptable for deposit under the terms of this Agreement, shall be
deposited on the day of receipt by the Bank to Account No. 1561678150 (the
"LENDER ACCOUNT"), which is an account owned and controlled exclusively by the
Agent, and all such checks shall be endorsed as follows:
credited to account number 1561678150; absence of
endorsement hereby supplied and guarantied by Bank One
Texas, NA;
Until a Notice of Redirection substantially in the form
of Exhibit A hereto (a "Notice") is delivered by Agent to Bank, all available
balances in the Lender Account will be transferred on a daily basis via the
automated clearing house system or wire transfer with the following
instructions:
Bankers Trust Company
New York, New York
ABA No. 021 001 033
Account No. 00103253
Account Name: BT Commercial Corporation-LA
Ref.: FWT, Inc.
Attn: B. Baliga
Upon the delivery of a Notice by Agent to Bank, Bank shall transfer such funds
only as provided in such Notice.
All remittance advices, envelopes, and written matter (except as expressly
provided herein) received in the Lockbox together with photocopies of all
checks shall be sent to Company and, if requested by the Agent, copies of same
shall be sent to the Agent. Bank shall mail both a deposit advice for all
deposits to the Lender Account, on a daily basis, and a statement of account,
on a monthly basis, to both the Agent and Company. In addition, Bank shall
facsimile to Agent on each business day by 2:30 p.m., New York City time the
amount of each day's deposit total. Facsimiles shall be sent to BT Commercial
Corporation; attention: Bhartai Baliga, at (212) 618-2428.
5. Returned Checks. Checks deposited in the Lender Account
which are returned unpaid because of "Insufficient Funds," "Uncollected Funds,"
etc. will be redeposited by the Bank only once, except that if a returned check
exceeds,
3
<PAGE> 4
$ 1,000 the Bank shall not redeposit such check but shall telephone the Agent
for further instructions on the day such check is received. If redeposit is not
warranted for reasons such as "account closed" or "payment stopped" or if a
check is returned a second time, the Bank will charge the Lender Account and
send a debit advice with the item to Company with copies of same to Agent.
6. Remittance Received by Company. Remittances which are
sent directly to or received by Company shall be forwarded to the Lockbox on
the day received.
7. Record Maintenance . All deposit checks will be scanned
into digital format (on front and back) by the Bank and retained for five years
by the bank prior to destruction. CD-Roms of digital data will be provided to
the Agent or Company on request, within the five-year period.
8. Bank Charges. All charges of Bank for services rendered
pursuant to this agreement shall be billed to and paid directly by Company.
Said charges shall not be charged against remittances nor shall they be debited
to the Lender Account.
9. No Offset. Bank hereby agrees that it will treat all
remittances received in the Lockbox in accordance with the terms of this
agreement and it will not offset or assert any claim against the Lockbox or the
Lender Account or divert such remittances on account of any obligations owed to
the Bank by Company or by the party making the remittance, except as provided in
paragraph 5 hereof.
10. Bank Liability. In acting under this agreement Bank shall
not be liable to the Agent, the Lenders or Company for any error of judgment,
or for any act done or step taken or omitted by it in good faith, except for
gross negligence or willful misconduct.
11. Term. This agreement shall continue in full force and
effect until termination by the Bank on 60 days' prior written notice to all
other parties. The Agent may terminate this Agreement at any time which
termination shall be effective on receipt of written notice by Bank and in the
event of such termination, the Agent shall at its option, have the sole right
to remove mail from the Lockbox. Company shall have no right to unilaterally
terminate this Agreement.
12. Modification. This agreement may only be modified by a
writing signed by all of the parties hereto.
13. Addresses .
(1) All notices, including phone notice, daily deposit
advices, monthly statements of account and copies of all checks and the
documents which are
4
<PAGE> 5
to be given or sent to the Agent shall be sent to the following address, and,
where applicable, given at the following phone number:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attn: Bhartai Baliga
Fax: (212) 618-2428
(2) All notices to Bank shall be sent to:
Bank One Texas, NA
P.O. Box 2050
Fort Worth, TX 76113
Attn: David Williams
Fax: (817) 884-5697
(3) All notices and items which are to be sent to
Company shall be sent to:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, TX 76112
Attn: Chief Executive Officer
Fax: (817) 446-7095
14. Agent Agreement . The Agent agrees that it will indemnify
and hold Bank harmless from any and all loss, liability, expense or damage that
Bank may incur in processing lockbox items in accordance with this Agreement,
including, without limitation any loss that Bank experiences as a result of
returned items to the extent the balances in the Lender Account referenced in
paragraph 5 are insufficient to cover such losses or in the event the balances
in such Lender Account are insufficient to cover Bank charges referenced in
paragraph 8.
15. Limitation on Liability The Agent and Company acknowledge
that the bank undertakes to perform only such duties as are expressly set forth
in this Agreement and those which are normally undertaken by Bank in connection
with lockbox processing. Notwithstanding any other provision of this Agreement,
it is agreed by the parties that Bank shall not be liable for any action taken
by Bank or any of its directors, officers, agents or employees in accordance
with this Agreement, except for Bank's or such natural person's gross
negligence or wilful misconduct. In no event shall Bank be liable for losses or
delays resulting from force majeure, computer malfunction, interruption of
communication facilities, labor difficulties or other causes beyond its
reasonable control or for any indirect, special or consequential damages.
5
<PAGE> 6
16. Governing Law. This Agreement shall be governed in
accordance with the laws of Texas, without giving effect to the conflict of law
principles thereof.
17. Effectiveness . This Agreement shall become effective
upon its receipt by the Agent, properly executed by all of the parties hereto.
[Remainder of page intentionally left blank]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers as of the day and year first above
written.
BT COMMERCIAL CORPORATION, as Agent
By: /s/ ALBERT SUN
--------------------------------
Name: Albert Sun
------------------------------
Title: Vice President
-----------------------------
BANK ONE TEXAS, NA
By: /s/ DAVID WILLIAMS
---------------------------------
Name: David Williams
-------------------------------
Title: Vice President
------------------------------
FWT, INC., as Company
By: [ILLEGIBLE]
---------------------------------
Name: [ILLEGIBLE]
-------------------------------
Title: C.E.O.
------------------------------
S-1
<PAGE> 8
EXHIBIT A (to Exhibit 10.20)
Bank One Texas, NA
P.O. Box 2050
Forth Worth, TX 76113
Attn: David Williams
Re: Lockbox Account for FWT, Inc.
Account No. 1561678150
Ladies and Gentlemen:
Reference is made to that certain Lockbox Agreement, dated as of
November 12, 1997 (the "AGREEMENT") among you, us, as Agent, and FWT, Inc.
pursuant to which we, for our benefit and for the benefit of the Lenders (as
defined in the Agreement), were given exclusive interest and control of the
Account. This notice is given in accordance with the terms of the Agreement.
Effective immediately and continuing until we shall authorize you
in writing to do otherwise, we hereby direct you to transfer on a daily basis
all funds deposited into the Account with the instructions attached hereto.
Very truly yours,
BT COMMERCIAL CORPORATION, as
Agent
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Exhibit A-1
<PAGE> 1
EXHIBIT 10.21
COMPANY SECURITY AGREEMENT
This COMPANY SECURITY AGREEMENT (this "AGREEMENT") is dated as of
November 12, 1997 and entered into by and between FWT, INC., a Texas
corporation ("GRANTOR"), and BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit Agreement
dated as of November 12, 1997 (said Credit Agreement, as it may hereafter he
amended, supplemented or otherwise modified from time to time, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined) with Grantor, pursuant to which Lenders
have made certain commitments, subject to the terms and conditions set forth in
the Credit Agreement, to extend certain credit facilities to Grantor.
B. It is a condition precedent to the initial extensions of credit
by Lenders under the Credit Agreement that Grantor shall have granted the
security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor hereby agrees with Secured
Party as follows:
SECTION 1. GRANT OF SECURITY. Grantor hereby assigns for security
purposes to Secured Party, and hereby grants to Secured Party a security
interest in. all of Grantor"s right, title and interest in and to the
following, in each case whether now or hereafter existing or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located
(the "COLLATERAL"):
(a) all machinery and equipment in all of its forms (including, but
not limited to, all computers, office furniture, other office equipment and all
rolling stock), all parts thereof and all accessions thereto (any and all such
equipment, parts and accessions being the "EQUIPMENT");
(b) all inventory in all of its forms (including, but not limited
to, (i) all goods held by Grantor for sale or lease or to be furnished under
contracts of service or so leased or furnished, (ii) all raw materials, work in
process, finished goods, and materials used or consumed in the manufacture,
packing, shipping, advertising, selling, leasing, furnishing or production of
such inventory or otherwise
1
<PAGE> 2
used or consumed in Grantor"s business, (iii) all goods in which Grantor has an
interest in mass or a joint or other interest or right of any kind, and (iv)
all goods which are returned to or repossessed by Grantor, and (v) any
inventory specifically listed in Schedule I annexed hereto) and all accessions
thereto and products thereof (all such inventory, accessions and products being
the "INVENTORY") and all negotiable documents of title (including without
limitation warehouse receipts, dock receipts and bills of lading) issued by any
Person covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper, documents,
instruments, investment property, general intangibles and other rights and
obligations of any kind arising out of or in connection with the sale or lease
of goods or the rendering of services and all rights in, to and under all
security agreements, leases and other contracts securing or otherwise relating
to any such accounts, contract rights, chattel paper, documents, instruments,
investment property, general intangibles or other obligations (any and all such
accounts, contract rights, chattel paper, documents, instruments, general
intangibles and other obligations being the "ACCOUNTS", and any and all such
security agreements, leases and other contracts being the "RELATED CONTRACTS");
(d) any agreements, if any, specifically listed in Schedule I
annexed hereto, as each such agreement may be amended, supplemented or
otherwise modified from time to time (said agreements, as so amended,
supplemented or otherwise modified, being referred to herein individually as an
"ASSIGNED AGREEMENT" and collectively as the "ASSIGNED AGREEMENTS"), including
without limitation (i) all rights of Grantor to receive moneys due or to become
due under or pursuant to the Assigned Agreements, (ii) all rights of Grantor to
receive proceeds of any insurance, indemnity, warranty or guaranty with respect
to the Assigned Agreements, (iii) all claims of Grantor for damages arising out
of any breach of or default under the Assigned Agreements, and (iv) all rights
of Grantor to terminate, amend, supplement, modify or exercise rights or
options under the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder
(e) all deposit accounts, including without limitation any deposit
accounts specifically listed in Schedule I annexed hereto, and all deposit
accounts maintained with Secured Party;
(f) all trademarks, tradenames, tradesecrets, business names,
patents, patent applications, licenses, copyrights, registrations and franchise
rights (including, but not limited to, any trademarks, copyrights or patents
listed in Schedule I hereto) (collectively, "INTELLECTUAL PROPERTY") and all
goodwill associated with any of the foregoing and all renewals, reissues and
extensions of, all applications for any such trademarks, tradenames, patents,
licenses, copyrights and registrations;
2
<PAGE> 3
(g) to the extent not included in any other paragraph of this
Section 1, all investment property and all other general intangibles (including
without limitation all production techniques, quality control procedures and
product specifications relating to the products and services sold or delivered
by Grantor and all tax refunds, rights to payment or performance, choses in
action and judgments taken on any rights or claims included in the Collateral);
(h) all plant fixtures, business fixtures and other fixtures and
storage and office facilities, and all accessions thereto and products thereof;
(i) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at
any time evidence or contain information relating to any of the Collateral or
are otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(j) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right, contracts and agreements to the extent, and only
to the extent, that such intellectual property right, contract or agreement
contains a provision enforceable at law and in equity that would be breached by
(or would result in the termination of such intellectual property, contract or
agreement upon) the grant of the security interest created herein pursuant to
the terms of this Agreement; provided, however, that if and when any
prohibition on the assignment, pledge or grant of a security interest in such
intellectual property right, contract or agreement is removed, the Secured
Party will be deemed to have been granted a security interest in such
intellectual property right, contract or agreement as of the date hereof, and
the Collateral will be deemed to include such intellectual property right,
contract or agreement.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and
the Collateral is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of every nature of Grantor now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but
3
<PAGE> 4
for the filing of a petition in bankruptcy with respect to Grantor, would
accrue on such obligations), reimbursement of amounts drawn under Letters of
Credit, fees, expenses, indemnities or otherwise, whether voluntary or
involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from
time to time decreased or extinguished and later increased, created or
incurred, and all or any portion of such obligations or liabilities that are
paid, to the extent all or any part of such payment is avoided or recovered
directly or indirectly from Secured Party or any Lender as a preference,
fraudulent transfer or otherwise (all such obligations and liabilities being
the "UNDERLYING DEBT"), and all obligations of every nature of Grantor now or
hereafter existing under this Agreement (all such obligations of Grantor,
together with the Underlying Debt, being the "SECURED OBLIGATIONS").
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein to
the contrary notwithstanding, (a) Grantor shall remain liable under any
contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights hereunder shall not release Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Secured Party shall not have any obligation or liability
under any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants as follows:
(a) Ownership of Collateral. Except for Liens permitted under the
Credit Agreement and the security interest created by any Collateral Document,
Grantor owns the Collateral free and clear of any Lien. Except for any
financing statements listed in Schedule III annexed hereto and such financing
statements as may have been filed in favor of Secured Party relating to this
Agreement, no effective financing statement or other instrument similar in
effect covering all or any part of the Collateral is on file in any filing or
recording office as of the date hereof.
(b) Location of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, located at the places specified in
Schedule II annexed hereto.
(c) Negotiable Documents of Title. No Negotiable Documents of Title
are outstanding as of the date hereof with respect to any of the Inventory
(other than in respect of (i) Inventory with an aggregate value not in excess
of $50,000 or (ii) Inventory which, in the ordinary course of business, is in
transit either (A) from a supplier to Grantor, (B) between the locations
specified in Schedule II hereto, or (C) to customers of Grantor).
4
<PAGE> 5
(d) Office Locations; Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Accounts and all originals of all chattel paper that evidence Accounts is,
and has been for the four month period preceding the date hereof, located at
the locations identified as such on Schedule II hereto. Grantor has not in the
past done, and does not now do, business under any other name (including any
trade-name or fictitious business name) except as set forth on Schedule II
hereto.
(e) Delivery of Certain Collateral. All notes and other instruments
(excluding checks) comprising any and all items of Collateral have been
delivered to Secured Party duly endorsed and accompanied by duly executed
instruments of transfer or assignment in blank.
(f) Patents, Trademarks and Copyrights. Schedule I hereto includes
all registered trademarks, patents and copyrights owned as of the date hereof
by Grantor in its own name. Each trademark, patent and copyright listed on
Schedule I hereto is valid, subsisting, unexpired, enforceable and has not been
abandoned (except where Grantor has determined that they have immaterial
value). No action or proceeding is pending which, if adversely determined,
could be reasonably expected to have a material adverse effect on the value of
any material trademark, patent or copyright listed on Schedule I.
(g) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Grantor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Grantor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except for filings of UCC financing
statements, filings with the United States Patent and Trademark Office, and any
state trademark filing as identified by Grantor to Secured Party, and as may
have been taken by or at the direction of Grantor).
(h) Perfection. This Agreement, together with (i) the filing of
financing statements in the jurisdictions listed in Schedule II hereto, (ii)
the recording of the Company Patent Security Agreement in the United States
Trademark Office ("PTO"), (iii) the recording of the Company Trademark Security
Agreement in the PTO, and (iv) delivery to, and possession by, the Secured
Party, of notes and instruments constituting Collateral, creates a valid,
perfected and, except as may be permitted under the Intercreditor Agreement
with respect to machinery and equipment, first priority security interest in
the Collateral, securing the payment of the Secured Obligations, and all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly made or taken.
(i) Other Information. All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of Grantor with respect to
the Collateral is accurate and complete in all respects.
5
<PAGE> 6
SECTION 5. FURTHER ASSURANCES.
(a) Grantor agrees that from time to time, at the expense of
Grantor, Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
Grantor will: (i) mark conspicuously each item of chattel paper included in the
Accounts, each Related Contract and, at the request of Secured Party, each of
its records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to
the security interest granted hereby, (ii) if any Account shall be evidenced by
a promissory note or other instrument (excluding checks), deliver and pledge to
Secured Party hereunder such note or instrument, duly endorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to Secured Party, and at the request of Secured Party,
deliver and pledge to Secured Party hereunder all original counterparts of
chattel paper constituting Collateral, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to Secured Party, (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Secured Party may request, in
order to perfect and preserve the security interests granted or purported to be
granted hereby, (iv) promptly after the acquisition by Grantor of any item of
Equipment which is covered by a certificate of title under a statute of any
jurisdiction under the law of which indication of a security interest on such
certificate is required as a condition of perfection thereof, at the request of
Secured Party, execute and file with the registrar of motor vehicles or other
appropriate authority in such jurisdiction an application or other document
requesting the notation or other indication of the security interest created
hereunder on such certificate of title, (v) within 30 days after the end of
each calendar quarter, deliver to Agent copies of all such applications or
other documents filed during such calendar quarter and copies of all such
certificates of title issued during such calendar quarter indicating the
security interest created hereunder in the items of Equipment covered thereby,
(vi) at any reasonable time, upon request by Secured Party, exhibit the
Collateral to and allow inspection of the Collateral by Secured Party, or
persons designated by Secured Party, and (vii) at Secured Party's request,
appear in and defend any action or proceeding that may affect Grantor's title
to or Secured Party's security interest in all or any part of the Collateral.
(b) If Grantor shall obtain rights to any new trademarks or patents,
the provisions of this Agreement shall automatically apply thereto. Grantor
shall promptly notify the Secured Party in writing of any rights to any new
trademark registrations or issued patent registrations acquired by Grantor
after the date hereof and of any applications therefor made after the date
hereof. Concurrently with such acquisition or with the filing of any such
application or registration, Grantor shall
6
<PAGE> 7
execute, deliver and record in all places where the Secured Party deems
necessary or desirable to perfect or protect its interest in such Collateral an
appropriate conditional assignment or other agreement or instrument, in form
and substance satisfactory to the Secured Party, pursuant to which Grantor
shall grant a security interest and conditional assignment to the extent of its
interest in such patent or trademark as provided herein to the Secured Party,
unless so doing would, in the reasonable judgment of Grantor, after due
inquiry, result in the grant of a patent or registration of trademark in the
name of the Secured Party, in which event Grantor shall give written notice to
the Secured Party as soon as reasonably practicable and the filing shall
instead by undertaken as soon as practicable but in no case later than
immediately following the grant or the registration of the patent or trademark.
(c) Grantor hereby authorizes Secured Party to file (to the extent
permitted by law) one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral without the
signature of Grantor. Grantor agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement signed by Grantor
shall be sufficient as a financing statement and may be filed as a financing
statement in any and all jurisdictions.
(d) Grantor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Secured Party may
reasonably request, all in reasonable detail.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name, identity
or corporate structure within 15 days after such change;
(c) give Secured Party at least 30 days' prior written notice of any
change in Grantor's chief place of business, chief executive office or
residence or the office where Grantor keeps its records regarding the Accounts
and all originals of all chattel paper that evidence Accounts;
(d) if Secured Party gives value to enable Grantor to acquire rights
in or the use of any Collateral, use such value for such purposes;
(e) pay promptly when due all property and other taxes, assessments
and governmental charges or levies imposed upon, and all claims (including
claims for labor, materials and supplies) against, the Collateral, except to
the extent the validity thereof is being contested in good faith; provided that
Grantor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the
7
<PAGE> 8
date of any proposed sale under any judgement, writ or warrant of attachment
entered or filed against Grantor or any of the Collateral as a result of the
failure to make such payment; and
(f) shall use commercially reasonable efforts not to permit the
inclusion of any prohibitions on assignments, pledges or grants of security
interests in any licenses of Intellectual Property, contracts or agreements
entered into by Grantor after the date hereof.
SECTION 7. SPECIAL COVENANTS WITH RESPECT TO EQUIPMENT AND
INVENTORY. Grantor shall:
(a) keep the Equipment and Inventory at the places therefor
specified on Schedule II annexed hereto or, upon at least 30 days' prior
written notice to Secured Party, at such other places in jurisdictions where
all action that may be necessary or desirable, or that Secured Party may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder, with respect to such Equipment and
Inventory shall have been taken;
(b) cause the Equipment to be maintained and preserved in accordance
with Grantor's past practices in good condition, ordinary wear and tear
excepted, and shall forthwith, or, in the case of any loss or damage to any of
the Equipment (other than obsolete or surplus Equipment) when subsection (c) of
Section 8 is not applicable, as quickly as practicable after the occurrence
thereof, make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Grantor shall promptly furnish to Secured Party a statement respecting any
loss or damage to any of the Equipment that is material;
(c) keep correct and accurate records of the Inventory, itemizing
and describing the kind, type and quantity thereof, Grantor's cost therefor and
(where applicable) the current list prices therefor; and
(d) if any Inventory is in possession or control of any of Grantor's
agents or processors, if the aggregate book value of all such Inventory exceeds
$100,000, and in any event upon the occurrence of an Event of Default, instruct
such agent or processor to hold all such Inventory for the account of Secured
Party an subject to the instructions of Secured Party; and
(e) promptly upon the issuance and delivery to Grantor of any
Negotiable Document of Title (other than any one or more Negotiable Documents
of Title covering (i) Inventory with an aggregate value not in excess of
$100,000 or (ii) Inventory which, in the ordinary course of business, is in
transit either (A) from a supplier to Grantor, (B) between the locations
specified in Schedule II hereto, or (C)
8
<PAGE> 9
to customers of Grantor), deliver such Negotiable Document of Title to Secured
Party.
SECTION 8. INSURANCE.
(a) Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement, in such amounts, against such risks, in such form and with
such insurers as shall be required under the Credit Agreement from time to
time. Grantor shall, if so requested by Secured Party, deliver to Secured Party
original or duplicate policies of such insurance and, as often as Secured Party
may reasonably request, a report of a reputable insurance broker with respect
to such insurance. Further, Grantor shall, at the request of Secured Party,
duly execute and deliver instruments of assignment of such insurance policies
to comply with the requirements of Section 5(a) and cause the respective
insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by
Grantor pursuant to this Section 8 may be paid directly to the Person who shall
have incurred liability covered by such insurance. In case of any loss
involving damage to Equipment or Inventory when subsection (c) of this Section
8 is not applicable, Grantor shall make or cause to be made the necessary
repairs to or replacements of such Equipment or Inventory, and any proceeds of
insurance maintained by Grantor pursuant to this Section 8 shall be paid to
Grantor as reimbursement for the costs of such repairs or replacements.
(c) All insurance payments in respect of such Equipment or Inventory
shall be paid to and applied by Secured Party as specified in subsection 6.4 of
the Credit Agreement.
SECTION 9. SPECIAL COVENANTS WITH RESPECT TO ACCOUNTS AND RELATED
CONTRACTS.
(a) Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the location therefor specified in Section 4 or, upon at
least 30 days' prior written notice to Secured Party, at such other location in
a jurisdiction where all action that may be necessary or desirable, or that
Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Grantor
will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and Grantor
agrees to render to Secured Party, at Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
Promptly upon the request of
9
<PAGE> 10
Secured Party, Grantor shall deliver to Secured Party complete and correct
copies of each Related Contract.
(b) Grantor shall, for not less than three years from the date on
which such Account arose, maintain (i) complete records of each Account,
including records of all payments received, credits granted and merchandise
returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to Grantor under the Accounts and Related Contracts. In connection with such
collections, Grantor may take (and, at Secured Party's direction, shall take)
such action as Grantor or Secured Party may deem necessary or advisable to
enforce collection of amounts due or to become due under the Accounts;
provided, however, that Secured Party shall have the right at any time, upon
the occurrence and during the continuation of an Event of Default or a
Potential Event of Default and upon written notice to Grantor of its intention
to do so, to notify the account debtors or obligors under any Accounts of the
assignment of such Accounts to Secured Party and to direct such account debtors
or obligors to make payment of all amounts due or to become due to Grantor
thereunder directly to Secured Party, to notify each Person maintaining a
lockbox or similar arrangement to which account debtors or obligors under any
Accounts have been directed to make payment to remit all amounts representing
collections on checks and other payment items from time to time sent to or
deposited in such lockbox or other arrangement directly to Secured Party and,
upon such notification and at the expense of Grantor, to enforce collection of
any such Accounts and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as Grantor might have done.
After receipt by Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by Grantor in respect of the Accounts
and the Related Contracts shall be received in trust for the benefit of Secured
Party hereunder, shall be segregated from other funds of Grantor and shall be
forthwith paid over or delivered to Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
either (A) be released to Grantor so long as no Event of Default shall have
occurred and be continuing or (B) if any Event of default shall have occurred
and be continuing, be applied as provided by Section 18, and (ii) Grantor shall
not adjust, settle or compromise the amount or payment of any Account, or
release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
10
<PAGE> 11
SECTION 10. SPECIAL PROVISIONS WITH RESPECT TO THE ASSIGNED
AGREEMENTS.
(a) Grantor shall at its expense:
(i) perform and observe all terms and provisions of the
Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their terms, and take all such action to
such end as may be from time to time reasonably requested by Secured
Party; and
(ii) from time to time (A) furnish to Secured Party such
information and reports regarding the Assigned Agreements as Secured
Party may reasonably request and (B) upon request of Secured Party
make such demands and requests for information and reports or for
action as Grantor is entitled to make under the Assigned Agreements.
(b) Grantor shall not during the continuance of any Event of
Default:
(i) cancel or terminate any of the Assigned Agreements or
consent to or accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give
any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned
Agreements; or
(iv) take any other action in connection with the Assigned
Agreements that would impair the value of the interest or rights of
Grantor thereunder or that would impair the interest or rights of
Secured Party.
SECTION 11. DEPOSIT ACCOUNTS. Upon the occurrence and during the
continuation of an Event of Default, Secured Party may exercise dominion and
control over, and refuse to permit further withdrawals (whether of money,
securities, instruments or other property) from any deposit accounts maintained
with Secured Party constituting part of the Collateral.
SECTION 12. LICENSE OF PATENTS, TRADEMARKS, COPYRIGHTS, ETC.
Grantor hereby grants to Secured Party, effective upon the occurrence and
during the continuation of any Event of Default, the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes owned or used by Grantor that relate to the Collateral and any other
collateral granted by Grantor as security for the Secured Obligations, together
with any goodwill associated therewith, all to the extent necessary to enable
Secured Party to use, possess and realize on the Collateral and to enable any
successor or assign to enjoy the benefits of the
11
<PAGE> 12
Collateral. This right and license shall inure to the benefit of all
successors, assigns and transferees of Secured Party and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.
Such right and license is granted free of charge, without requirement that any
monetary payment whatsoever be made to Grantor.
SECTION 13. TRANSFERS AND OTHER LIENS. Grantor shall not:
(a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral, except as permitted by the Credit Agreement;
or
(b) except for any Liens, if any, permitted under the Credit
Agreement and the security interest created by this Agreement, create or suffer
to exist any Lien upon or with respect to any of the Collateral to secure the
indebtedness or other obligations of any Person.
SECTION 14. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Grantor
hereby irrevocably appoints Secured Party as Grantor's attorney-in-fact, with
full authority in the place and stead of Grantor and in the name of Grantor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable, consistent with the provisions of the Agreement, to
accomplish the purposes of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to be maintained by
Grantor or paid to Secured Party pursuant to Section 8;
(b) during the continuation of any Event of Default, to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) during the continuation of any Event of Default, to file any
claims or take any action or institute any proceedings that Secured Party may
deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce the rights of Secured Party with respect to any of the
Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in
its sole discretion, any such payments made by Secured Party to become
obligations of Grantor to Secured Party, due and payable immediately without
demand;
12
<PAGE> 13
(f) to sign and endorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications and notices in connection with Accounts and other
documents relating to the Collateral; and
(g) upon the occurrence and during the continuation of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and Grantor's expense, at any time or from time
to time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as Grantor might do.
SECTION 15. SECURED PARTY MAY PERFORM. If Grantor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Grantor under Section 19.
SECTION 16. STANDARD OF CARE. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the
exercise of reasonable care in the custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Collateral or as to the taking of any necessary
steps to preserve rights against prior parties or any other rights pertaining
to any Collateral. Secured Party shall be deemed to have exercised reasonable
care in the custody and preservation of Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which Secured
Party accords its own property.
SECTION 17. REMEDIES. If any Event of Default shall have occurred
and be continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "Code") (whether or not the Code applies to the affected collateral), and
also may (a) require Grantor to, and Grantor hereby agrees that it will at its
expense and upon request of Secured Party forthwith, assemble all or part of
the Collateral as directed by Secured Party and make it available to Secured
Party at a place to be designated by Secured Party that is reasonably
convenient to both parties, (b) enter onto the property where any Collateral is
located and take possession thereof with or without judicial process, (c) prior
to the disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Secured Party deems appropriate, (d) take possession of Grantor's
premises or place custodians in exclusive control thereof, remain on such
premises and use the same and any of Grantor's equipment for the purpose of
completing any work in
13
<PAGE> 14
process, taking any actions described in the preceding clause (c) and
collecting any Secured Obligation, and (e) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Secured Party's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Secured Party may deem commercially
reasonable. Secured Party or any Lender may be the purchaser of any or all of
the Collateral at any such sale and Secured Party, as agent for and
representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing), shall be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any portion of the
Collateral sold at any such public sale, to use and apply any of the Secured
Obligations as a credit on account of the purchase price for any Collateral
payable by Secured Party at such sale. Each purchaser at any such sale shall
hold the property sold absolutely free from any claim or right on the part of
Grantor, and Grantor hereby waives (to the extent permitted by applicable law)
all rights of redemption, stay and/or appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to Grantor of the time and place of
any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Secured Party shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Grantor hereby waives any claims against Secured Party arising by reason of the
fact that the price at which any Collateral may have been sold at such a
private sale was less than the price which might have been obtained at a public
sale, even if Secured Party accepts the first offer received and does not offer
such Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all the Secured
Obligations, Grantor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
SECTION 18. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured
Party as Collateral for, and/or then, or at any other time thereafter, applied
in full or in part by Secured Party against, the Secured Obligations in the
following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder
for the account of Grantor, and
14
<PAGE> 15
to the payment of all costs and expenses paid or incurred by Secured Party
in connection with the exercise of any right or remedy hereunder, all in
accordance with Section 19;
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then remaining from
proceeds.
SECTION 19. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Secured Party and each Lender from
and against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result from
Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Grantor to
perform or observe any of the provisions hereof.
SECTION 20. CONTINUING SECURITY INTEREST, TRANSFER OF LOANS. This
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Grantor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its permitted successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), but subject to the provisions of
subsection 10.1 of the Credit Agreement, any Lender may assign or otherwise
transfer any Loans held by it to any other Person, and such other Person shall
thereupon become vested with all the benefits in respect thereof granted to
Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such
15
<PAGE> 16
termination Secured Party will, at Grantor's expense, execute and deliver to
Grantor such documents as Grantor shall reasonably request to evidence such
termination.
SECTION 21. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders. Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain from
exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person that is
Agent under the Credit Agreement. Written notice of resignation by Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute notice
of resignation as Secured Party under this Agreement; removal of Agent pursuant
to subsection 9.5 of the Credit Agreement shall also constitute removal as
secured party under this Agreement; and appointment of a successor Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as to any actions taken
or omitted to be taken by it under this Agreement while it was Secured Party
hereunder.
SECTION 22. AMENDMENTS; ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to
any departure by Grantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by Secured Party and, in the case of any
such amendment or modification, by Grantor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 23. NOTICES. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall he
16
<PAGE> 17
deemed to have been given when delivered in person or by courier service, upon
receipt of telefacsimile or telex, or four Business Days after depositing it in
the United States mail with postage prepaid and properly addressed. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or, as to either party, such
other address as shall be designated by such party in a written notice
delivered to the other party hereto.
SECTION 24. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 25. SEVERABILITY. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 26. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 27. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Credit Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined.
SECTION 28. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW
17
<PAGE> 18
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT GRANTOR ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Grantor hereby agrees that
service of all process in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to Grantor at its
address provided in Section 23, such service being hereby acknowledged by
Grantor to be sufficient for personal jurisdiction in any action against
Grantor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Secured Party to
bring proceedings against Grantor in the courts of any other jurisdiction.
SECTION 29. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW,
GRANTOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Grantor and Secured Party each acknowledge that this waiver is a material
inducement for Grantor and Secured Party to enter into a business relationship,
that Grantor and Secured Party have already relied on this waiver in entering
into this Agreement and that each will continue to rely on this waiver in their
related future dealings. Grantor and Secured Party further warrant and
represent that each has reviewed this waiver with its legal counsel, and that
each knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 30. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signature pages are physically
attached to the same document.
[Remainder of page intentionally left blank]
18
<PAGE> 19
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By: [ILLEGIBLE]
----------------------------------
Name:
---------------------------------
Title:
-------------------------------
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, TX 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION,
as Secured Party
By: /s/ ALBERT SUN
-----------------------------------
Name: Albert Sun
---------------------------------
Title: Vice President
---------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop # 4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 20
SCHEDULE I (to Exhibit 10.21)
TO SECURITY AGREEMENT
SUPPLEMENTAL DESCRIPTIONS OF COLLATERAL
Assigned Agreements:
None
Deposit Accounts:
<TABLE>
<CAPTION>
Account Type Account Account No. Authorized
- ------- ------------ ----------- ----------
Signers
-------
<S> <C> <C> <C>
Fort Worth Tower Company, Inc. Demand 1180161000 T.W. Moore
Bank One, Fort Worth Downtown Deposit Betty Moore
P.O. Box 2050 Fred Moore
Fort Worth, Texas 76113-2050 Carl Moore
Roy Moore
FWT, Inc. Payroll Account Demand 1823422868 T.W. Moore
Bank One, Fort Worth Downtown Deposit Betty Moore
P.O. Box 2050 Fred Moore
Fort Worth, Texas 76113-2050 Carl Moore
Roy Moore
FWT, Inc. Expansion Account Demand 1823422876 T.W. Moore
Bank One, Forth Worth Downtown Deposit Betty Moore
P.O. Box 2050 Fred Moore
Fort Worth, Texas 76113-2050 Carl Moore
Roy Moore
FWT, Inc. Demand 163-040684-3 T.W. Moore
NationsBank of Texas, N.A. Deposit Betty Moore
Commercial Banking-Fort Worth Fred Moore
P.O. Box 820040 Carl Moore
Dallas, Texas 75283-0040 Roy Moore
</TABLE>
Schedule I-1
<PAGE> 21
Trademark & Patent Registration:
(1) Antenna Support For Power Transmission Tower - Patent No. 5,649,402,
issued July 22, 1997. Continuation Patent Application of patent No.
5,649,402 - Serial No. 08/877,717 filed June 23, 1997.
The following reflect the status of the foreign counterparts to United
States Patent No. 5,649,402 issued July 22, 1997:
CANADA
The Canadian counterpart was filed on March 27, 1996, and was assigned
Patent File No. 2,172,743. The application was laid open on March 2, 1997.
The first maintenance fee is due on March 27, 1998. A Request for
Substantive Examination is due by March 27, 2003. The application is
pending.
MALAYSIA
The Malaysian counterpart was filed on August 22, 1996, and was assigned
Application No. PI 9603450. A Request for Substantive Examination is
due by August 22, 1998; however, Lee Ong & Kandiah, FWT, Inc.'s foreign
associate, has been instructed to file a Request for Modified Substantive
Examination based on the issued United States patent.
PCT INTERNATIONAL
The PCT International Request designating all regions and countries
(except the United States) was filed on August 20, 1996, and was assigned
International Application No. PCT/US96/13733. A Demand for International
Preliminary Examination was filed on March 31, 1997. A favorable
International Preliminary Examination Report was mailed on May 21, 1997.
The deadline for entering the National Phase is March 1, 1998; however,
FWT, Inc. has entered the National Phase early in Brazil and South Korea
(see below).
BRAZIL
The Brazilian National Phase application was filed on August 1, 1997, and
assigned a filing date of August 20, 1996, and Deposit No. PCT/US96/13733.
SOUTH KOREA
The South Korean National Phase application was filed on August 1, 1997,
and was assigned patent Application No. 705250 in 1997. A Request for
Examination is due by August 19, 2001.
(2) POWERMOUNT trademark - Registration No 2,088,202, August 12, 1997.
(3) SMARTROC trademark - Registration No. 1,944,176, December 26, 1995.
Schedule 1-2
<PAGE> 22
(4) License Agreement by and among PrimeCo Personal Communications, L.P., a
Delaware limited partnership, Texas Utilities Electric Company, a Texas
corporation, and FWT, Inc.
(5) Palm & Pine Tree Patents as assigned to FWT, Inc. by Roy J. Moore as of
November 12, 1997.
COMPUTER SOFTWARE LICENSES:
(1) PJF Pole Automated Telecom Monopole Design and Analysis Software ("PJF
Pole") under Software License Agreement between Paul J. Ford and Company,
an Ohio corporation, and FWT, Inc.
(2) PJF Caisson (monopole foundation design).
Schedule 1-3
<PAGE> 23
SCHEDULE II (to Exhibit 10.21)
TO SECURITY AGREEMENT
Tradenames:
None
Location of Inventory & Equipment
(1) FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas
(2) FWT, Inc.
5650 Interstate 20 East
Kennedale, Texas
(3) FWT, Inc.
9217 South Freeway
Fort Worth, Texas
(4) United Galvanizing, Inc.
6123 Cunningham
Houston, Texas
Filing Jurisdictions:
Tarrant County
Harris County
Schedule II-1
<PAGE> 24
SCHEDULE III (to Exhibit 10.21)
TO SECURITY AGREEMENT
EXISTING FINANCIAL STATEMENTS
(1) Financing Statement No. 284140 filed in the Office of the
Secretary of State of Texas on December 31, 1993. To be paid in full and
canceled by delivery of a validly executed UCC-3 Statement of Release at
Closing.
Schedule III-1
<PAGE> 1
EXHIBIT 10.22
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "AGREEMENT") is dated as
of November 12, 1997 and entered into by and between FWT, INC., a Texas
corporation ("PLEDGOR"), and BT COMMERCIAL CORPORATION, as agent for and
representative of (in such capacity herein called "SECURED PARTY") the
financial institutions ("LENDERS") party to the Credit Agreement (as
hereinafter defined).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of (i) the
shares of stock (the "PLEDGED SHARES") described in Part A of Schedule I
annexed hereto and issued by the corporations named therein and (ii) the
indebtedness (the "PLEDGED DEBT") described in Part B of said Schedule I and
issued by the obligors named therein.
B. Secured Party and Lenders have entered into a Credit
Agreement dated as of November 12, 1997 (said Credit Agreement, as it may
hereafter be amended, supplemented or otherwise modified from time to time,
being the "CREDIT AGREEMENT", the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Pledgor pursuant to
which Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to Pledgor.
C. It is a condition precedent to the initial extensions
of credit by Lenders under the Credit Agreement that Pledgor shall have granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Pledgor hereby agrees with Secured
Party as follows:
SECTION 1. PLEDGE OF SECURITY. Pledgor hereby pledges to
Secured Party, and hereby grants to Secured Party a security interest in, all
of Pledgor's right, title and interest in and to the following (the "PLEDGED
COLLATERAL"):
(a) the Pledged Shares and the certificates representing
the Pledged Shares and any interest of Pledgor in the entries on the books of
any financial intermediary pertaining to the Pledged Shares, and all dividends,
cash, warrants, rights, instruments and other property or proceeds from time to
time received, receivable or otherwise distributed in respect of or in exchange
for any or all of the Pledged Shares;
1
<PAGE> 2
(b) the Pledged Debt and the instruments evidencing the
Pledged Debt, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Pledged Debt;
(c) all additional shares of, and all securities
convertible into and warrants, options and other rights to purchase or
otherwise acquire, stock of any issuer of the Pledged Shares from time to time
acquired by Pledgor in any manner (which shares shall be deemed to be part of
the Pledged Shares), the certificates or other instruments representing such
additional shares, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any financial intermediary
pertaining to such additional shares, and all dividends, cash, warrants,
rights, instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such additional shares, securities, warrants, options or other rights;
(d) all additional indebtedness from time to time owed to
Pledgor by any obligor on the Pledged Debt and the instruments evidencing such
indebtedness, and all interest, cash, instruments and other property or
proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such indebtedness;
(e) all shares of, and all securities convertible into
and warrants, options and other rights to purchase or otherwise acquire, stock
of any Person that, after the date of this Agreement, becomes, as a result of
any occurrence, a direct Subsidiary of Pledgor (which shares shall be deemed to
be part of the Pledged Shares), the certificates or other instruments
representing such shares, securities, warrants, options or other rights and any
interest of Pledgor in the entries on the books of any financial intermediary
pertaining to such shares, and all dividends, cash, warrants, rights,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such shares, securities, warrants, options or other rights;
(f) all indebtedness from time to time owed to Pledgor by
any Person that, after the date of this Agreement, becomes, as a result of any
occurrence, a direct or indirect Subsidiary of Pledgor, and all interest, cash,
instruments and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of such indebtedness; and
(g) to the extent not covered by clauses (a) through (f)
above, all proceeds of any or all of the foregoing Pledged Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Pledged Collateral or proceeds are sold, exchanged, collected
or otherwise disposed of, whether such disposition is voluntary or involuntary,
and includes, without limitation, proceeds of any indemnity or guaranty payable
to Pledgor or Secured Party from time to time with respect to any of the
Pledged Collateral.
2
<PAGE> 3
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. Section 362(a)), of
all obligations and liabilities of every nature of Pledgor now or hereafter
existing under or arising out of or in connection with the Credit Agreement and
the other Loan Documents and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to Pledgor, would accrue on
such obligations), reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any
portion of such obligations or liabilities that are paid, to the extent all or
any part of such payment is avoided or recovered directly or indirectly from
Secured Party or any Lender as a preference, fraudulent transfer or otherwise
(all such obligations and liabilities being the "UNDERLYING DEBT"), and all
obligations of every nature of Pledgor now or hereafter existing under this
Agreement (all such obligations of Pledgor, together with the Underlying Debt,
being the "SECURED OBLIGATIONS").
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. All certificates or
instruments representing or evidencing the Pledged Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and
shall be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by Pledgor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. Secured Party shall have the right, at any time
in its discretion and without notice to Pledgor, to transfer to or to register
in the name of Secured Party or any of its nominees any or all of the Pledged
Collateral, subject only to the revocable rights specified in Section 7(a). In
addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor represents
and warrants as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of
the Pledged Shares have been duly authorized and validly issued and are fully
paid and nonassessable. All of the Pledged Debt has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof (subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally and equitable principles relating to enforceability) and is
not in default.
3
<PAGE> 4
(b) Description of Pledged Collateral. The Pledged Shares
constitute the percentage of the issued and outstanding shares of stock of each
of the direct Subsidiaries of Pledgor set forth on Schedule I hereto, and there
are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged Shares.
The Pledged Debt constitutes all of the issued and outstanding intercompany
indebtedness evidenced by a promissory note of the respective issuers thereof
owing to Pledgor.
(c) Ownership of Pledged Collateral. Pledgor is the
legal, record and beneficial owner of the Pledged Collateral free and clear of
any Lien except for the security interest created by this Agreement, except for
Permitted Encumbrances.
(d) Governmental Authorizations. No authorization,
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required for either (i) the pledge by Pledgor
of the Pledged Collateral pursuant to this Agreement and the grant by Pledgor
of the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by Pledgor, or (iii) the exercise by Secured
Party of the voting or other rights, or the remedies in respect of the Pledged
Collateral, provided for in this Agreement (except for any UCC financing
statements and as may be required in connection with the pledging of and a
disposition of Pledged Collateral by laws affecting the offering and sale of
securities generally).
(e) Perfection. Assuming Secured Party's continued
possession of the certificates representing the Pledged Shares and notes
representing Pledged Debt, the pledge of the Pledged shares and notes
representing Pledged Debt pursuant to this Agreement creates a valid and
perfected first priority security interest in the Pledged Shares and notes
representing Pledged Debt, securing the payment of the Secured Obligations.
(f) Margin Regulations. The pledge of the Pledged
Collateral pursuant to this Agreement does not violate Regulation G, T, U or X
of the Board of Governors of the Federal Reserve System.
SECTION 5. TRANSFERS AND OTHER LIENS, ADDITIONAL PLEDGED
COLLATERAL; ETC. Pledgor shall:
(a) not, except to the extent permitted by the Credit
Agreement, (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral,
(ii) create or suffer to exist any Lien upon or with respect to any of the
Pledged Collateral, except for the security interest under this Agreement, or
(iii) permit any issuer of Pledged Shares to merge or consolidate unless all
the outstanding capital stock of the surviving or resulting corporation is,
upon such merger or consolidation, pledged hereunder and no cash, securities or
other property is distributed in respect of the outstanding shares of any
4
<PAGE> 5
other constituent corporation; provided that in the event Pledgor makes an
Asset Sale permitted by the Credit Agreement and the assets subject to such
Asset Sale are Pledged Shares, Secured Party shall release the Pledged Shares
that are the subject of such Asset Sale to Pledgor free and clear of the Lien
under this Agreement concurrently with the consummation of such Asset Sale;
provided, further that, as a condition precedent to such release, Secured Party
shall have received evidence satisfactory to it that arrangements satisfactory
to it have been made for delivery to Secured Party of the net cash proceeds of
such Asset Sale to the extent contemplated in the Credit Agreement;
(b) (i) cause each issuer of Pledged Shares that is a
Subsidiary of Pledgor not to issue any stock or other securities in addition to
or in substitution for the Pledged Shares issued by such issuer, except to
Pledgor, (ii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock or other securities
of each issuer of Pledged Shares, and (iii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all shares of stock
issued to or otherwise acquired by Pledgor of any Person that, after the date
of this Agreement, becomes, as a result of any occurrence, a direct Subsidiary
of Pledgor;
(c) (i) pledge hereunder, immediately upon their
issuance, any and all instruments or other evidences of additional indebtedness
from time to time owed to Pledgor by any obligor on the Pledged Debt, and (ii)
pledge hereunder, immediately upon their issuance, any and all instruments or
other evidences of indebtedness from time to time owed to Pledgor by any Person
that after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of Pledgor;
(d) promptly deliver to Secured Party all written notices
received by it as holder of the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the
Pledged Collateral, except to the extent the validity thereof is being
contested in good faith; provided that Pledgor shall in any event pay such
taxes, assessments, charges, levies or claims not later than five days prior to
the date of any proposed sale under any judgement, writ or warrant of
attachment entered or filed against Pledgor or any of the Pledged Collateral as
a result of the failure to make such payment.
SECTION 6. FURTHER ASSURANCES; PLEDGE AMENDMENTS.
(a) Pledgor agrees that from time to time, at the expense
of Pledgor, Pledgor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Secured Party may request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Secured Party
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral. Without limiting the
5
<PAGE> 6
generality of the foregoing, Pledgor will: (i) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments
or notices, as may be necessary or desirable, or as Secured Party may
reasonably request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (h) at Secured Party's request,
appear in and defend any action or proceeding that may affect Pledgor's title
to or Secured Party's security interest in all or any part of the Pledged
Collateral.
(b) Pledgor further agrees that it will, upon obtaining
any additional shares of stock or other securities required to be pledged
hereunder as provided in Section 5(b) or (c), promptly (and in any event within
five Business Days) deliver to Secured Party a Pledge Amendment, duly executed
by Pledgor, in substantially the form of Schedule II annexed hereto (a "PLEDGE
AMENDMENT"), in respect of the additional Pledged Shares or Pledged Debt to be
pledged pursuant to this Agreement. Pledgor hereby authorizes Secured Party to
attach each Pledge Amendment to this Agreement and agrees that all Pledged
Shares or Pledged Debt listed on any Pledge Amendment delivered to Secured
Party shall for all purposes hereunder be considered Pledged Collateral;
provided that the failure of Pledgor to execute a Pledge Amendment with respect
to any additional Pledged Shares or Pledged Debt pledged pursuant to this
Agreement shall not impair the security interest of Secured Party therein or
otherwise adversely affect the rights and remedies of Secured Party hereunder
with respect thereto.
SECTION 7. VOTING RIGHTS; DIVIDENDS; ETC.
(a) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement; provided,
however, that Pledgor shall not exercise or refrain from exercising
any such right if Secured Party shall have notified Pledgor that, in
Secured Party's judgment, such action would have a material adverse
effect on the value of the Pledged Collateral or any part thereof; and
provided, further, that Pledgor shall give Secured Party at least five
Business Days' prior written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such
right. It is understood, however, that neither (A) the voting by
Pledgor of any Pledged Shares for or Pledgor's consent to the election
of directors at a regularly scheduled annual or other meeting of
stockholders (or by written consent) or with respect to incidental
matters at any such meeting nor (B) Pledgor's consent to or approval
of any action otherwise permitted under this Agreement and the Credit
Agreement shall be deemed inconsistent with the terms of this
Agreement or the Credit Agreement within the meaning of this Section
7(a)(i), and no notice of any such voting or consent need be given to
Secured Party;
6
<PAGE> 7
(ii) Pledgor shall be entitled to receive and retain, and
to utilize free and clear of the lien of this Agreement (but subject
to the provisions of the Credit Agreement), any and all dividends,
principal and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
(A) dividends, principal and interest paid or
payable other than in cash in respect of, and instruments and
other property received, receivable or otherwise distributed
in respect of, or in exchange for, any Pledged Collateral,
(B) dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution
or in connection with a reduction of capital, capital surplus
or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed
in redemption of or in exchange for any Pledged Shares,
shall be, and shall forthwith be delivered to Secured Party to hold
as, Pledged Collateral and shall, if received by Pledgor, be received
in trust for the benefit of Secured Party, be segregated from the
other property or funds of Pledgor and be forthwith delivered to
Secured Party as Pledged Collateral in the same form as so received
(with all necessary endorsements); and
(iii) Secured Party shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies,
dividend payment orders and other instruments as Pledgor may from time
to time reasonably request for the purpose of enabling Pledgor to
exercise the voting and other consensual rights which it is entitled
to exercise pursuant to paragraph (i) above and to receive the
dividends, principal or interest payments which it is authorized to
receive and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuation of an
Event of Default:
(i) upon written notice from Secured Party to Pledgor,
all rights of Pledgor to exercise the voting and other consensual
rights which it would otherwise be entitled to exercise pursuant to
Section 7(a)(i) shall be suspended, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the
sole right to exercise such voting and other consensual rights;
(ii) all rights of Pledgor to receive the dividends and
interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 7(a)(ii) shall be suspended, and all
such rights shall
7
<PAGE> 8
become vested in Secured Party who shall have the sole right to
receive and hold as Pledged Collateral such dividends and interest
payments; and
(iii) all dividends, principal and interest payments which
are received by Pledgor contrary to the provisions of paragraph (ii)
of this Section 7(b) shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Pledgor and
shall forthwith be paid over to Secured Party as Pledged Collateral in
the same form as so received (with any necessary endorsements).
(c) In order to permit Secured Party to exercise the
voting and other consensual rights which it may be entitled to exercise
pursuant to Section 7(b)(i) and to receive all dividends and other
distributions which it may be entitled to receive under Section 7(a)(ii) or
Section 7(b)(ii), (i) Pledgor shall promptly execute and deliver (or cause to
be executed and delivered) to Secured Party all such proxies, dividend payment
orders and other instruments as Secured Party may from time to time reasonably
request and (ii) without limiting the effect of the immediately preceding
clause (i), Pledgor hereby grants to Secured Party an irrevocable proxy to vote
the Pledged Shares and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Shares would be entitled (including,
without limitation, giving or withholding written consents of shareholders,
calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any action
(including any transfer of any Pledged Shares on the record books of the issuer
thereof) by any other Person (including the issuer of the Pledged Shares or any
officer or agent thereof), during the existence of an Event of Default.
SECTION 8. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with
full authority in the place and stead of Pledgor and in the name of Pledgor,
Secured Party or otherwise, from time to time in Secured Party's discretion to
take any action and to execute any instrument that Secured Party may deem
necessary or advisable to accomplish the purposes of this Agreement, including
without limitation:
(a) to file one or more financing or continuation
statements, or amendments thereto, relative to all or any part of the Pledged
Collateral without the signature of Pledgor (to the extent permitted by
applicable law);
(b) during the continuance of any Event of Default, to
ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Pledged Collateral;
(c) during the continuance of any Event of Default, to
receive, endorse and collect any instruments made payable to Pledgor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same; and
8
<PAGE> 9
(d) during the continuance of any Event of Default, to
file any claims or take any action or institute any proceedings that Secured
Party may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of Secured Party with respect to
any of the Pledged Collateral.
SECTION 9. SECURED PARTY MAY PERFORM. If Pledgor fails to
perform any agreement contained herein, Secured Party may itself perform, or
cause performance of, such agreement, and the expenses of Secured Party
incurred in connection therewith shall be payable by Pledgor under Section
13(b).
SECTION 10. STANDARD OF CARE. The powers conferred on Secured
Party hereunder are solely to protect its interest in the Pledged Collateral
and shall not impose any duty upon it to exercise any such powers. Except for
the exercise of reasonable care in the custody of any Pledged Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Secured Party shall have no duty as to any Pledged Collateral, it being
understood that Secured Party shall have no responsibility for (a) ascertaining
or taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relating to any Pledged Collateral, whether or not
Secured Party has or is deemed to have knowledge of such matters, (b) taking
any necessary steps (other than steps taken in accordance with the standard of
care set forth above to maintain possession of the Pledged Collateral) to
preserve rights against any parties with respect to any Pledged Collateral, (c)
taking any necessary steps to collect or realize upon the Secured Obligations
or any guarantee therefor, or any part thereof, or any of the Pledged
Collateral, or (d) initiating any action to protect the Pledged Collateral
against the possibility of a decline in market value. Secured Party shall be
deemed to have exercised reasonable care in the custody and preservation of
Pledged Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property consisting of negotiable securities.
SECTION 11. REMEDIES.
(a) If any Event of Default shall have occurred and be
continuing, Secured Party may exercise in respect of the Pledged Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "CODE") (whether or not the Code applies to the affected Pledged
Collateral), and Secured Party may also in its sole discretion, without notice
except as specified below, sell the Pledged Collateral or any part thereof in
one or more parcels at public or private sale, at any exchange or broker's
board or at any of Secured Party's offices or elsewhere, for cash, on credit or
for future delivery, at such time or times and at such price or prices and upon
such other terms as Secured Party may deem commercially reasonable,
irrespective of the impact of any such sales on the market price of the Pledged
Collateral. Secured Party or any Lender may be the purchaser of any or all of
the Pledged Collateral at any such sale and Secured Party, as agent for and
representative of Lenders (but not
9
<PAGE> 10
any Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for the
purpose of bidding and making settlement or payment of the purchase price for
all or any portion of the Pledged Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of the
purchase price for any Pledged Collateral payable by Secured Party at such
sale. Each purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of Pledgor, and Pledgor hereby waives
(to the extent permitted by applicable law) all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. Pledgor agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to Pledgor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
Secured Party shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. Secured Party may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. Pledgor hereby waives any claims
against Secured Party arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if Secured Party
accepts the first offer received and does not offer such Pledged Collateral to
more than one offeree. If the proceeds of any sale or other disposition of the
Pledged Collateral are insufficient to pay all the Secured Obligations, Pledgor
shall be liable for the deficiency and the fees of any attorneys employed by
Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as from time to time
amended (the "SECURITIES ACT"), and applicable state securities laws, Secured
Party may be compelled, with respect to any sale of all or any part of the
Pledged Collateral conducted without prior registration or qualification of
such Pledged Collateral under the Securities Act and/or such state securities
laws, to limit purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor acknowledges that
any such private sales may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions (including, without
limitation, a public offering made pursuant to a registration statement under
the Securities Act) and Pledgor agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to engage in public sales and no obligation to
delay the sale of any Pledged Collateral for the period of time necessary to
permit the issuer thereof to register it for a form of public sale requiring
registration under the Securities Act or under applicable state securities
laws, even if such issuer would, or should, agree to so register it (and
Pledgor has no obligation to cause any such registration).
10
<PAGE> 11
(c) If Secured Party determines to exercise its right to
sell any or all of the Pledged Collateral, upon written request, Pledgor shall
and shall cause each issuer (which is a Subsidiary of Pledgor) of any Pledged
Shares to be sold hereunder from time to time to furnish to Secured Party all
such information as Secured Party may request in order to determine the number
of shares and other instruments included in the Pledged Collateral which may be
sold by Secured Party in exempt transactions under the Securities Act and the
rules and regulations of the Securities and Exchange Commission thereunder, as
the same are from time to time in effect.
SECTION 12. APPLICATION OF PROCEEDS. Except as expressly
provided elsewhere in this Agreement, all proceeds received by Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral may, in the discretion of Secured Party, be held
by Secured Party as Pledged Collateral for, and/or then, or at any time
thereafter, applied in full or in part by Secured Party against, the Secured
Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of Pledgor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection
with the exercise of any right or remedy hereunder, all in accordance
with Section 13;
SECOND: To the payment of all other Secured Obligations in
such order as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Pledgor, or to
whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 13. INDEMNITY AND EXPENSES.
(a) Pledgor agrees to indemnify Secured Party and each
Lender from and against any and all claims, losses and liabilities in any way
relating to, growing out of or resulting from this Agreement and the
transactions contemplated hereby (including, without limitation, enforcement of
this Agreement), except to the extent such claims, losses or liabilities result
from Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
11
<PAGE> 12
(b) Pledgor shall pay to Secured Party upon demand the
amount of any and all costs and expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, that Secured Party may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iv) the
failure by Pledgor to perform or observe any of the provisions hereof.
SECTION 14. CONTINUING SECURITY INTEREST: TRANSFER OF LOANS.
This Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the payment in
full of all Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and (c) inure,
together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its permitted successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to the
provisions of subsection 10.1 of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to Lenders herein or otherwise. Upon the payment in full of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Pledged
Collateral shall revert to Pledgor. Upon any such termination Secured Party
will, at Pledgor's expense, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination and Pledgor shall
be entitled to the return, upon its request and at its expense, against receipt
and without recourse to Secured Party, of such of the Pledged Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.
SECTION 15. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Pledged
Collateral), solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the
12
<PAGE> 13
Credit Agreement shall also constitute appointment of a successor Secured Party
under this Agreement. Upon the acceptance of any appointment as Agent under
subsection 9.5 of the Credit Agreement by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Secured Party under this
Agreement, and the retiring or removed Secured Party under this Agreement shall
promptly (i) transfer to such successor Secured Party all sums, securities and
other items of Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Secured Party under this Agreement, and (ii) execute
and deliver to such successor Secured Party such amendments to financing
statements, and take such other actions, as may be necessary or appropriate in
connection with the assignment to such successor Secured Party of the security
interests created hereunder, whereupon such retiring or removed Secured Party
shall be discharged from its duties and obligations under this Agreement. After
any retiring or removed Agent's resignation or removal hereunder as Secured
Party, the provisions of this Agreement shall inure to its benefit as to any
actions taken or omitted to be taken by it under this Agreement while it was
Secured Party hereunder.
SECTION 16. AMENDMENTS: ETC. No amendment, modification,
termination or waiver of any provision of this Agreement, and no consent to any
departure by Pledgor therefrom, shall in any event be effective unless the same
shall be in writing and signed by Secured Party and, in the case of any such
amendment or modification, by Pledgor. Any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it was given.
SECTION 17. NOTICES. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telexed or sent by telefacsimile or United States mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telefacsimile or telex, or four Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES
CUMULATIVE. No failure or delay on the part of Secured Party in the exercise of
any power, right or privilege hereunder shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
SECTION 19. SEVERABILITY. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the
13
<PAGE> 14
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF
THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER
THAN THE STATE OF NEW YORK. Unless otherwise defined herein or in the Credit
Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code in the
State of New York are used herein as therein, defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
Pledgor hereby agrees that service of all process in any such proceeding in any
such court may be made by registered or certified mail, return receipt
requested, to Pledgor at its address provided in Section 17, such service being
hereby acknowledged by Pledgor to be sufficient for personal jurisdiction in
any action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right of
Secured Party to bring proceedings against Pledgor in the courts of any other
jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
LAW, PLEDGOR AND SECURED PARTY HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO
A JURY TRIAL OF AN CLAIM OR CAUSE OF
14
<PAGE> 15
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured Party each
acknowledge that this waiver is a material inducement for Pledgor and Secured
Party to enter into a business relationship, that Pledgor and Secured Party
have already relied on this waiver in entering into this Agreement and that
each will continue to rely on this waiver in their related future dealings.
Pledgor and Secured Party further warrant and represent that each has reviewed
this waiver with its legal counsel, and that each knowingly and voluntarily
waives its jury trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in
one or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank
15
<PAGE> 16
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, TX 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION,
as Secured Party
By: /s/ ALBERT SUN
-----------------------------------
Name: Albert Sun
---------------------------------
Title: Vice President
--------------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1 (Company Pledge Agreement)
<PAGE> 17
SCHEDULE I (to Exhibit 10.22)
Attached to and forming a part of the Company Pledge Agreement
dated as of November 12, 1997, between FWT, Inc., as Pledgor, and BT Commercial
Corporation, as Secured Party.
Part A
<TABLE>
<CAPTION>
Class of Stock Par Number of
Stock Issuer Stock Certificate Nos. Value Shares
------------ ----- ---------------- ----- ------
<S> <C> <C> <C> <C>
None
</TABLE>
Part B
<TABLE>
<CAPTION>
Debt Issuer Amount of Indebtedness
----------- ----------------------
<S> <C>
None
</TABLE>
Schedule I-1 (Company Pledge Agreement)
<PAGE> 18
SCHEDULE II (to Exhibit 10.22)
PLEDGE AMENDMENT
This Pledge Amendment, dated , 19 , is delivered pursuant to
Section 6(b) of the Company Pledge Agreement referred to below. The undersigned
hereby agrees that this Pledge Amendment may be attached to the Pledge Agreement
dated November 12, 1997, between the undersigned and BT Commercial Corporation,
as Secured Party (the "Pledge Agreement," capitalized terms defined therein
being used herein as therein defined), and that the [Pledged Shares] [Pledged
Debt] listed on this Pledge Amendment shall be deemed to be part of the [Pledged
Shares] [Pledged Debt] and shall become part of the Pledged Collateral and shall
secure all Secured Obligations.
FWT, INC.
By:
----------------------------
Title:
<TABLE>
<CAPTION>
Class of Stock Par Number of
Stock Issuer Stock Certificate Nos. Value Shares
------------ ----- ---------------- ----- ------
<S> <C> <C> <C> <C>
Debt Issuer Amount of Indebtedness
----------- ----------------------
</TABLE>
Schedule II-1 (Company Pledge Agreement)
<PAGE> 1
EXHIBIT 10.23
COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT
This COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT (this
"Agreement") is dated as of November 12, 1997 and entered into by and between
FWT, INC., a Texas corporation ("GRANTOR"), and BT COMMERCIAL CORPORATION, as
agent for and representative of (in such capacity herein called "SECURED
PARTY") the financial institutions ("LENDERS") party to the Credit Agreement
(as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit Agreement
dated as of November 12, 1997 (said Credit Agreement, as it may hereafter be
amended, supplemented or otherwise modified from time to time, being the
"CREDIT AGREEMENT", the terms defined therein and not otherwise defined herein
being used herein as therein defined) with Grantor pursuant to which Lenders
have made certain commitments, subject to the terms and conditions set forth in
the Credit Agreement, to extend certain credit facilities to Grantor.
B. Grantor owns and uses in its business, and will in the future
adopt and so use, various intangible assets, including trademarks, service
marks, designs, logos, indicia, tradenames, corporate names, company names,
business names, fictitious business names, trade styles and/or other source
and/or business identifiers and applications pertaining thereto (collectively,
the "TRADEMARKS").
C. Secured Party desires Grantor to assign and grant to it a lien on
and security interest in all of Grantor's existing and future Trademarks, all
registrations that have been or may hereafter be issued or applied for thereon
in the United States and any state thereof and in foreign countries (the
"REGISTRATIONS"), all common law and other rights in and to the Trademarks in
the United States and any state thereof and in foreign countries (the
"TRADEMARK RIGHTS"), all goodwill of Grantor's business symbolized by the
Trademarks and associated therewith, including without limitation the documents
and things described in Section 1(b) (the "ASSOCIATED GOODWILL"), and all
proceeds of the Trademarks, the Registrations, the Trademark Rights and the
Associated Goodwill, and Grantor agrees to assign and grant to Secured Party a
secured and protected interest in the Trademarks, the Registrations, the
Trademark Rights, the Associated Goodwill and all the proceeds thereof as
provided herein.
D. Grantor has executed and delivered the Company Security Agreement
dated as of November 12, 1997 (the "COMPANY SECURITY AGREEMENT") between
Grantor and Secured Party for the benefit of Lenders, pursuant to which Grantor
has granted Secured Party a security interest in all of its personal property,
including, without limitation, the Collateral, as defined below, which Company
Security Agreement is to be supplemented by this Agreement.
1
<PAGE> 2
E. Pursuant to the Security Agreement, Grantor has assigned and
granted to Secured Party a lien on and security interest in, among other
assets, all of Grantor's equipment, inventory, accounts and general intangibles
relating to the products and services sold or delivered under or in connection
with the Trademarks such that, upon the occurrence and during the continuation
of an Event of Default, Secured Party would be able to exercise its remedies
consistent with the Security Agreement, this Agreement and applicable law to
foreclose upon Grantor's business and use the Trademarks, the Registrations and
the Trademark Rights in conjunction with the continued operation of such
business, maintaining substantially the same product and service specifications
and quality as maintained by Grantor, and benefit from the Associated Goodwill.
F. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Grantor shall have assigned and granted
the security interests and undertaken the obligations contemplated by this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Lenders to make Loans and other extensions of credit under the Credit
Agreement and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Grantor hereby agrees with Secured
Party as follows:
SECTION 1. GRANT OF SECURITY INTEREST. Grantor hereby grants to
Secured Party a security interest in, all of Grantor's right, title and
interest in and to the following, in each case whether now or hereafter
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located (the "COLLATERAL"):
(a) each of the Trademarks and rights and interests in Trademarks that
are presently, or in the future may be, owned, held (whether pursuant to a
license or otherwise) or used by Grantor, in whole or in part (including,
without limitation, the Trademarks specifically identified in Schedule A
annexed hereto, as the same may be amended pursuant hereto from time to time),
and including all Trademark Rights with respect thereto and all federal, state
and foreign Registrations therefor heretofore or hereafter granted or applied
for, the right (but not the obligation) to register claims under any state or
federal trademark law or regulation or any trademark law or regulation of any
foreign country and to apply for, renew and extend the Trademarks,
Registrations and Trademark Rights, the right (but not the obligation) to sue
or bring opposition or cancellation proceedings in the name of Grantor or in
the name of Secured Party or otherwise for past, present and future
infringements of the Trademarks, Registrations or Trademark rights and all
rights (but not obligations) corresponding thereto in the United States and any
foreign country, and the Associated Goodwill; it being understood that the
rights and interests included herein shall include, without limitation, all
rights and interests pursuant to licensing or other contracts in favor of
Grantor pertaining to any Trademarks, Registrations or Trademark Rights
presently or in the future owned, held or used by third parties but, in the
case of third parties which are not Affiliates of Grantor, only to the extent
permitted by such licensing or other contracts or otherwise permitted by
applicable law and, if not so permitted under any such contracts and applicable
law, only with the consent of such third parties;
2
<PAGE> 3
(b) the following documents and things in Grantor's possession, or
subject to Grantor's right to possession, related to (Y) the production, sale
and delivery by Grantor, or by any Affiliate, licensee or subcontractor of
Grantor, of products or services sold or delivered by or under the authority of
Grantor in connection with the Trademarks, Registrations or Trademark Rights
(which products and services shall, for purposes of this Agreement, be deemed
to include, without limitation, products and services sold or delivered
pursuant to merchandising operations utilizing any Trademarks, Registrations or
Trademark Rights); or (Z) any retail or other merchandising operations
conducted under the name of or in connection with the Trademarks, Registrations
or Trademark Rights by Grantor or any Affiliate, licensee or subcontractor of
Grantor:
(i) all lists and ancillary documents that identify and describe any
of Grantor's customers, or those of its Affiliates, licensees or
subcontractors, for products sold and services delivered under or in
connection with the Trademarks or Trademark Rights, including without
limitation any lists and ancillary documents that contain a customer's name
and address, the name and address of any of its warehouses, branches or
other places of business, the identity of the Person or Persons having the
principal responsibility on a customer's behalf for ordering products or
services of the kind supplied by Grantor, or the credit, payment, discount,
delivery or other sale terms applicable to such customer, together with
information setting forth the total purchases, by brand, product, service,
style, size or other criteria, and the patterns of such purchases;
(ii) all product and service specification documents and production
and quality control manuals used in the manufacture or delivery of products
and services sold or delivered under or in connection with the Trademarks
or Trademark Rights;
(iii) all documents which reveal the name and address of any source
of supply, and any terms of purchase and delivery, for any and all
materials, components and services used in the production of products and
services sold or delivered under or in connection with the Trademarks or
Trademark Rights; and
(iv) all documents constituting or concerning the then current or
proposed advertising and promotion by Grantor or its Affiliates, licensees
or subcontractors of products and services sold or delivered under or in
connection with the Trademarks or Trademark Rights including, without
limitation, all documents which reveal the media used or to be used and the
cost for all such advertising conducted within the described period or
planned for such products and services;
(c) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or
are otherwise necessary or helpful in the collection thereof or realization
thereupon;
3
<PAGE> 4
(d) to the extent not included in the foregoing clauses (a) - (c), all
general intangibles relating to the Collateral; and
(e) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity. warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right, contracts and agreements to the extent, and only
to the extent, that such intellectual property right, contract or agreement
contains a provision enforceable at law and in equity that would be breached by
(or would result in the termination of such intellectual property right,
contract, or agreement upon) the grant of the security interest created herein
pursuant to the terms of this Agreement; provided, however, that if and when
any prohibition on the assignment, pledge or grant of a security interest in
such intellectual property right, contract or agreement is removed, the Secured
Party will be deemed to have been granted a security interest in such
intellectual property right, contract or agreement as of the date hereof, and
the Collateral will be deemed to include such intellectual property right,
contract or agreement.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in
full when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. Section 362(a)), of all obligations and
liabilities of every nature of Grantor now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Grantor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from Secured
Party or any Lender as a preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "UNDERLYING DEBT"), and all obligations
of every nature of Grantor now or hereafter existing under this Agreement (all
such obligations of Grantor, together with the Underlying Debt, being the
"SECURED OBLIGATIONS").
4
<PAGE> 5
SECTION 3. GRANTOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Grantor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Secured Party of any
of its rights hereunder shall not release Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Secured Party shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Secured Party be obligated to perform any of the
obligations or duties of Grantor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Grantor represents and
warrants as follows:
(a) Description of Collateral. A true and complete list of all
Trademarks, Registrations and Trademark Rights owned, held (whether pursuant to
a license or otherwise) or used by Grantor, in whole or in part, as of the date
of this Agreement is set forth in Schedule A annexed hereto. Each Trademark,
Registration or Trademark Right designated on Schedule A annexed hereto as a
Material Trademark Property, and each other Trademark, Registration or
Trademark Right hereafter arising or otherwise owned, held or used by Grantor
that is subsequently so designated, is referred to herein as a "MATERIAL
TRADEMARK PROPERTY".
(b) Validity and Enforceability of Collateral. Each Material Trademark
Property is valid, subsisting and enforceable. As of the Closing Date, Grantor
is not aware of any pending or threatened claim by any third party that any
Material Trademark Property is invalid or unenforceable or that the use of any
Material Trademark Property violates the rights of any third person or of any
basis for any such claim, and there is no such pending or threatened claim,
whether arising prior to or after the Closing Date, that could reasonably be
expected to have a Material Adverse Effect.
(c) Ownership of Collateral. Except for the interests disclosed in
Schedule B annexed hereto and the security interest assigned and created by
this Agreement, Grantor is the sole legal and beneficial owner of the entire
right, title and interest in and to each Material Trademark Property, free and
clear of any Lien other than Permitted Encumbrances and the interests disclosed
in Schedule B annexed hereto and Liens of mechanics, materialmen, attorneys and
other similar liens imposed by law in the ordinary course of business in
connection with the establishment, creation or application for Registration of
any Trademarks, Registrations or Trademark Rights for sums not yet delinquent
or being contested in good faith (such Liens being referred to herein as
"PERMITTED TRADEMARK LIENS"). Except with respect to Permitted Encumbrances and
the interests disclosed in Schedule B annexed hereto and such as may have been
filed in favor of Secured Party relating to this Agreement, no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office, including
the United States Patent and Trademark Office.
5
<PAGE> 6
(d) Office Locations: Other Names. The chief place of business, the
chief executive office and the office where Grantor keeps its records regarding
the Collateral is, and has been for the four month period preceding the date
hereof, located at 1901 East Loop 820 South, Forth Worth, Texas 76112. Grantor
has not in the past done, and does not now do, business under any other name
(including any trade-name or fictitious business name).
(e) Governmental Authorizations. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body, except for UCC-1 filings, filings with the United States
Patent and Trademark Office or any state trademark office as identified by
Grantor to Secured Party is required for either (i) the assignment and grant by
Grantor of the security interest created hereby, (h) the execution, delivery or
performance of this Agreement by Grantor, or (iii) the perfection or exercise
by Secured Party of its rights and remedies hereunder (except as may have been
taken by or at the direction of Grantor).
(f) Perfection. This Agreement, together with the filing of a
financing statement describing the Collateral with the Secretary of State of
the State of Texas and the recording of this Agreement with the United States
Patent and Trademark Office, assigns and creates a valid, perfected and, except
for the interests disclosed in Schedule B annexed hereto, first priority
security interest in the Collateral (subject only to Permitted Trademark
Liens), securing the payment of the Secured Obligations, and all filings and
other actions necessary or desirable to perfect and protect such security
interest have been duly made or taken.
(g) Other Information. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Grantor with respect to the
Collateral is accurate and complete in all respects.
SECTION 5. FURTHER ASSURANCES; NEW TRADEMARKS, REGISTRATIONS AND
TRADEMARK RIGHTS; CERTAIN INSPECTION RIGHTS.
(a) Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that Secured Party may request, in order to perfect and protect any security
interest assigned or granted or purported to be assigned or granted hereby or
to enable Secured Party to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, Grantor will: (i) at the request of Secured Party, mark
conspicuously each of its records pertaining to the Collateral with a legend,
in form and substance satisfactory to Secured Party, indicating that such
Collateral is subject to the security interest granted hereby, (ii) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby, (iii) use commercially reasonable
efforts to obtain any necessary consents of third parties to the assignment and
perfection of a security interest
6
<PAGE> 7
to Secured Party with respect to any Collateral, (iv) at any reasonable time,
upon request by Secured Party, exhibit the Collateral to and allow inspection
of the Collateral by Secured Party, or persons designated by Secured Party, and
(v) at Secured Party's request, appear in and defend any action or proceeding
that may affect Grantor's title to or Secured Party's security interest in all
or any part of the Collateral.
(b) Grantor hereby authorizes Secured Party to file one or more
financing or continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of Grantor. Grantor agrees
that a carbon, photographic or other reproduction of this Agreement or of a
financing statement signed by Grantor shall be sufficient as a financing
statement and may be filed as a financing statement in any and all
jurisdictions.
(c) Grantor hereby authorizes Secured Party to modify this Agreement
without obtaining Grantor's approval of or signature to such modification by
amending Schedule A annexed hereto to include reference to any right, title or
interest in any existing Trademark, Registration or Trademark Right or any
Trademark, Registration or Trademark Right acquired or developed by Grantor
after the execution hereof or to delete any reference to any right, title or
interest in any Trademark, Registration or Trademark Right in which Grantor no
longer has or claims any right, title or interest.
(d) Grantor will furnish to Secured Party from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as Secured Party may reasonably
request, all in reasonable detail.
(e) If Grantor shall obtain rights to any new Trademarks,
Registrations or Trademark Rights, the provisions of this Agreement shall
automatically apply thereto. Grantor shall promptly notify Secured Party in
writing of any rights to any new Trademarks or Trademark Rights acquired by
Grantor after the date hereof and of any Registrations issued or applications
for Registration made after the date hereof, which notice shall state whether
such Trademark, Registration or Trademark Right constitutes a Material
Trademark Property. Concurrently with the filing of an application for
Registration for any Trademark, Grantor shall execute, deliver and record in
all places where this Agreement is recorded an appropriate Trademark Security
Agreement, substantially in the form hereof, with appropriate insertions, or an
amendment to this Agreement, in form and substance satisfactory to Secured
Party, pursuant to which Grantor shall assign and grant a security interest to
the extent of its interest in such Registration as provided herein to Secured
Party unless so doing would, in the reasonable judgment of Grantor, after due
inquiry, result in the grant of a Registration in the name of Secured Party, in
which event Grantor shall give written notice to Secured Party as soon as
reasonably practicable and the filing shall instead be undertaken as soon as
practicable but in no case later than immediately following the grant of the
Registration.
(f) Grantor hereby grants to Secured Party and its employees,
representatives and agents the right to visit Grantor's and any of its
Affiliate's or
7
<PAGE> 8
subcontractor's plants, facilities and other places of business that are
utilized in connection with the manufacture, production, inspection, storage or
sale of products and services sold or delivered under any of the Trademarks,
Registrations or Trademark Rights (or which were so utilized during the prior
six month period), and to inspect the quality control and all other records
relating thereto upon reasonable notice to Grantor and as often as may be
reasonably requested.
SECTION 6. CERTAIN COVENANTS OF GRANTOR. Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral;
(b) notify Secured Party of any change in Grantor's name, identity or
corporate structure within 15 days of such change;
(c) give Secured Party 30 days' prior written notice of any change in
Grantor's chief place of business or chief executive office or the office where
Grantor keeps its records regarding the Collateral;
(d) to the extent required under the Credit Agreement, pay promptly
when due all property and other taxes, assessments and governmental charges or
levies imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Collateral, except to the extent the validity thereof is
being contested in good faith; provided that Grantor shall in any event pay
such taxes, assessments, charges, levies or claims not later than five days
prior to the date of any proposed sale under any judgement, writ or warrant of
attachment entered or filed against Grantor or any of tile Collateral as a
result of the failure to make such payment;
(e) not sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral except as permitted by the Credit Agreement;
(f) except for the interests disclosed in Schedule B annexed hereto,
Permitted Trademark Liens, Permitted Encumbrances and the security interest
assigned and created by this Agreement, not create or suffer to exist any Lien
upon or with respect to any of the Collateral to secure the indebtedness or
other obligations of any Person;
(g) diligently keep reasonable records respecting the Collateral and
at all times keep at least one complete set of its records concerning
substantially all of the Trademarks, Registrations and Trademark Rights at its
chief executive office or principal place of business;
(h) not permit the inclusion in any contract to which it becomes a
party of any provision that could or might in any way conflict with this
Agreement or impair or prevent the assignment and creation of a security
interest in Grantor's rights and interests
8
<PAGE> 9
in any property included within the definitions of any Trademarks,
Registrations, Trademark Rights and Associated Goodwill;
(i) take all reasonable steps necessary to protect the secrecy of all
trade secrets relating to the products and services sold or delivered under or
in connection with the Trademarks and Trademark Rights, including without
limitation entering into confidentiality agreements with employees and labeling
and restricting access to secret information and documents;
(j) use proper statutory notice in connection with its use of each
Material Trademark Property to the extent reasonably necessary for the
protection of such Material Trademark Property;
(k) use consistent standards of high quality (which may be consistent
with Grantor's past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the
Trademarks, Registrations and Trademark Rights, including, to the extent
applicable, in the operation and maintenance of its merchandising operations;
and
(1) upon any officer of Grantor obtaining knowledge thereof, promptly
notify Secured Party in writing of any event that may materially and adversely
affect the value of the Collateral or any portion thereof, the ability of
Grantor or Secured Party to dispose of the Collateral or any portion thereof,
or the rights and remedies of Secured Party in relation thereto, including
without limitation the levy of any legal process against the Collateral or any
portion thereof.
SECTION 7. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL. Except as
otherwise provided in this Section 7, Grantor shall continue to collect, at its
own expense, all amounts due or to become due to Grantor in respect of the
Collateral or any portion thereof. In connection with such collections, Grantor
may take (and, at Secured Party's direction, shall take) such action as Grantor
or Secured Party may deem necessary or advisable to enforce collection of such
amounts; provided, however, that Secured Party shall have the right at any
time, upon the occurrence and during the continuation of all Event of Default
or a Potential Event of Default and upon written notice to Grantor of its
intention to do so, to notify the obligors with respect to any such amounts of
the existence of the security interest assigned and created hereby, and to
direct such obligors to make payment of all such amounts directly to Secured
Party, and, upon such notification and at the expense of Grantor, to enforce
collection of any such amounts and to adjust, settle or compromise the amount
or payment thereof, in the same manner and to the same extent as Grantor might
have done. After receipt by Grantor of the notice from Secured Party referred
to in the proviso to the preceding sentence, (i) all amounts and proceeds
(including checks and other instruments) received by Grantor in respect of
amounts due to Grantor in respect of the Collateral or any portion thereof
shall be received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of Grantor and shall be forthwith paid over or
delivered to Secured Party in the same form as so received (with any necessary
endorsement) to be held as cash Collateral and applied as
9
<PAGE> 10
provided by Section 14, and (ii) Grantor shall not adjust, settle or compromise
tile amount or payment of any such amount or release wholly or partly any
obligor with respect thereto or allow any credit or discount thereon.
SECTION 8. TRADEMARK APPLICATIONS AND LITIGATION.
(a) Grantor shall have the duty diligently, through counsel reasonably
acceptable to Secured Party, to prosecute any trademark application relating to
any Material Trademark Property that is pending as of the date of this
Agreement, to make federal application on any existing or future registerable
but unregistered Material Trademark Property (whenever it is commercially
reasonable in the reasonable judgment of Grantor to do so), and to file and
prosecute opposition and cancellation proceedings, renew Registrations and do
any and all acts which are necessary or desirable to preserve and maintain all
rights in all Material Trademark Properties. Any expenses incurred in
connection therewith shall be borne solely by Grantor. Grantor shall not
abandon any Material Trademark Property.
(b) Except as provided in Section 8(d), Grantor shall have the right
to commence and prosecute in its own name, as real party in interest, for its
own benefit and at its own expense, such suits, proceedings or other actions
for infringement, unfair competition, dilution or other damage as are in its
reasonable business judgment necessary to protect the Collateral. Secured Party
shall provide, at Grantor's expense, all reasonable and necessary cooperation
in connection with any such suit, proceeding or action including, without
limitation, joining as a necessary party.
(c) Grantor shall promptly, following its becoming aware thereof,
notify Secured Party of the institution of, or of any adverse determination in,
any proceeding (whether in the United States Patent and Trademark Office or any
federal, state, local or foreign court) described in Section 8(a) or 8(b) or
regarding Grantor's claim of ownership in or right to use any of the
Trademarks, Registrations or Trademark Rights, its right to register the same,
or its right to keep and maintain such Registration. Grantor shall provide to
Secured Party any information with respect thereto requested by Secured Party.
(d) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, Secured
Party shall have the right (but not the obligation) to bring suit, in the name
of Grantor, Secured Party or otherwise, to enforce any Trademark, Registration,
Trademark Right, Associated Goodwill and any license thereunder, in which event
Grantor shall, at the request of Secured Party, do any and all lawful acts and
execute any and all documents required by Secured Party in aid of such
enforcement and Grantor shall promptly, upon demand, reimburse and indemnify
Secured Party as provided in Section 15 in connection with the exercise of its
rights under this Section 8. To the extent that Secured Party shall elect not
to bring suit to enforce any Trademark, Registration, Trademark Right,
Associated Goodwill or any license thereunder as provided in this Section 8(d),
Grantor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the Trademarks,
Registrations, Trademark Rights or Associated
10
<PAGE> 11
Goodwill by others and for that purpose agrees to diligently maintain any
action, suit or proceeding against any Person so infringing necessary to
prevent such infringement.
SECTION 9. NON-DISTURBANCE AGREEMENTS, ETC. If and to the extent that
Grantor is permitted to license the Collateral, Secured Party shall enter into
a non-disturbance agreement or other similar arrangement, at Grantor's request
and expense, with Grantor and any licensee of any Collateral permitted
hereunder in form and substance satisfactory to Secured Party pursuant to which
(a) Secured Party shall agree not to disturb or interfere with such licensee's
rights under its license agreement with Grantor so long as such licensee is not
in default thereunder and (b) such licensee shall acknowledge and agree that
the Collateral licensed to it is subject to the security interest assigned and
created in favor of Secured Party and the other terms of this Agreement.
SECTION 10. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Grantor hereby
irrevocably appoints Secured Party as Grantor's attorney-in-fact, with full
authority in the place and stead of Grantor and in the name of Grantor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
(a) to endorse Grantor's name on all applications, documents, papers
and instruments necessary for Secured Party in the use or maintenance of the
Collateral;
(b) during the continuation of any Event of Default to ask for,
demand, collect, sue for, recover, compound, receive and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) during the continuance of any Event of Default to file any claims
or take any action or Institute any proceedings that Secured Party may deem
necessary or desirable for the collection of any of the Collateral or otherwise
to enforce the rights of Secured Party with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Secured Party in
its sole discretion, any such payments made by Secured Party to become
obligations of Grantor to Secured Party, due and payable immediately without
demand; and
(f) upon the occurrence and during the continuation of an Event of
Default, (i) to execute and deliver any of the assignments or documents
requested by Secured Party pursuant to Section 13(b), (ii) to grant or issue an
exclusive or non-exclusive license to the Collateral or any portion thereof to
any Person, and
11
<PAGE> 12
(iii) otherwise generally to sell, transfer, pledge, make any agreement with
respect to or otherwise deal with any of the Collateral as fully and completely
as though Secured Party were the absolute owner thereof for all purposes, and
to do, at Secured Party's option and Grantor's expense, at any time or from
time to time, all acts and things that Secured Party deems necessary to
protect, preserve or realize upon the Collateral and Secured Party's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as Grantor might do.
SECTION 11. SECURED PARTY MAY PERFORM. If Grantor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Grantor under Section 15.
SECTION 12. STANDARD OF CA. THE powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Secured Party shall be deemed to have exercised reasonable care in
the custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property.
SECTION 13. REMEDIES. If any Event of Default shall have occurred and
be continuing:
(a) Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all tile rights and remedies of a secured party on default
under the Uniform Commercial Code as in effect in any relevant jurisdiction
(the "CODE") (whether or not the Code applies to tile affected Collateral), and
also may (i) require Grantor to, and Grantor hereby agrees that it will at its
expense and upon request of Secured Party forthwith, assemble all or part of
the Collateral as directed by Secured Party and make it available to Secured
Party at a place to be designated by Secured Party that is reasonably
convenient to both parties, (ii) enter onto the property where any Collateral
is located and take possession thereof with or without judicial process, (iii)
prior to the disposition of the Collateral, store the Collateral or otherwise
prepare the Collateral for disposition in any manner to the extent Secured
Party deems appropriate, (iv) take possession of Grantor's premises or place
custodians in exclusive control thereof, remain on such premises and use the
same for the purpose of taking any actions described in the preceding clause
(iii) and collecting any Secured Obligation, (v) exercise any and all rights
and remedies of Grantor under or in connection with the contracts related to
the Collateral or otherwise in respect of the Collateral, including without
limitation any and all rights of Grantor to demand or otherwise require payment
of any amount under, or performance of any provision of, such contracts, and
(vi) without notice except as specified below, sell the Collateral or
12
<PAGE> 13
any part thereof in one or more parcels at public or private sale, at any of
Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as Secured Party may deem commercially reasonable. Secured Party or any
Lender may be the purchaser of any or all of the Collateral at any such sale
and Secured Party, as agent for and representative of Lenders (but not any
Lender or Lenders in its or their respective individual capacities unless
Requisite Lenders shall otherwise agree in writing), shall be entitled, for
the purpose of bidding and making settlement or payment of the purchase price
for all or any portion of the Collateral sold at any such public sale, to use
and apply any of the Secured Obligations as a credit on account of the purchase
price for any Collateral payable by Secured Party at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free from any claim or
right on the part of Grantor, and Grantor hereby waives (to the extent
permitted by applicable law) all rights of redemption, stay and/or appraisal
which it now has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. Grantor agrees that, to the extent
notice of sale shall be required by law, at least ten days' notice to Grantor
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which
it was so adjourned. Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, Grantor shall be liable for the deficiency and
the fees of any attorneys employed by Secured Party to collect such deficiency.
(b) Upon written demand from Secured Party, Grantor shall execute and
deliver to Secured Party an assignment or assignments of the Trademarks,
Registrations, Trademark Rights and the Associated Goodwill and such other
documents as are requested by Secured Party. Grantor agrees that such an
assignment and/or recording shall be applied to reduce the Secured Obligations
outstanding only to the extent that Secured Party (or any Lender) receives cash
proceeds in respect of the sale of, or other realization upon, the Collateral.
(c) Within five Business Days after written notice from Secured Party,
Grantor shall make available to Secured Party, to the extent within Grantor's
power and authority, such personnel in Grantor's employ on the date of such
Event of Default as Secured Party may reasonably designate, by name, title or
job responsibility, to permit Grantor to continue, directly or indirectly, to
produce, advertise and sell the products and services sold or delivered by
Grantor under or in connection with the Trademarks, Registrations and Trademark
Rights, such persons to be available to perform their prior functions on
Secured Party's behalf and to be compensated by Secured Party at Grantor's
13
<PAGE> 14
expense on a per diem, pro-rata basis consistent with the salary and benefit
structure applicable to each as of the date of such Event of Default.
SECTION 14. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral may, in the discretion of Secured Party, be held by Secured
Party as Collateral for, and/or then, or at any other time thereafter, applied
in full or in part by Secured Party against, the Secured Obligations in the
following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including\reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in connection
therewith, and all amounts for which Secured Party is entitled to
indemnification hereunder and all advances made by Secured Party hereunder
for the account of Grantor, and to the payment of all costs and expenses
paid or incurred by Secured Party in connection with the exercise of any
right or remedy hereunder, all in accordance with Section 15;
SECOND: To the payment of all other Secured Obligations in such order
as Secured Party shall elect; and
THIRD: To the payment to or upon the order of Grantor, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
SECTION 15. INDEMNITY AND EXPENSES.
(a) Grantor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result from
Secured Party's or such Lender's gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction.
(b) Grantor shall pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Grantor to
perform or observe any of the provisions hereof.
SECTION 16. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Agreement shall assign and create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of the Secured Obligations, the
14
<PAGE> 15
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, (b) be binding upon Grantor,
its successors and assigns, and (c) inure, together with the rights and
remedies of Secured Party hereunder, to the benefit of Secured Party and its
permitted successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), but subject to the provisions of subsection 10.1
of the Credit Agreement, any Lender may assign or otherwise transfer any Loans
held by it to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to Lenders herein or
otherwise. Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest assigned
and granted hereby shall terminate and all rights to the Collateral shall
revert to Grantor. Upon any such termination Secured Party will, at Grantor's
expense, execute and deliver to Grantor such documents as Grantor shall
reasonably request to evidence such termination.
SECTION 17. SECURED PARTY AS AGENT.
(a) Secured Party has been appointed to act as Secured
Party hereunder by Lenders. Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Agreement and the Credit Agreement.
(b) Secured Party shall at all times be the same Person
that is Agent under the Credit Agreement. Written notice of resignation by
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
notice of resignation as Secured Party under this Agreement; removal of Agent
pursuant to subsection 9.5 of the Credit Agreement shall also constitute
removal as Secured Party under this Agreement; and appointment of a successor
Agent pursuant to subsection 9.5 of the Credit Agreement shall also constitute
appointment of a successor Secured Party under this Agreement. Upon the
acceptance of any appointment as Agent under subsection 9.5 of the Credit
Agreement by a successor Agent, that successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Secured Party under this Agreement, and the retiring or
removed Secured Party under this Agreement shall promptly (i) transfer to such
successor Secured Party all sums, securities and other items of Collateral held
hereunder, together with all records and other documents necessary or
appropriate in connection with the performance of the duties of the successor
Secured Party under this Agreement, and (ii) execute and deliver to such
successor Secured Party such amendments to financing statements, and take such
other actions, as may be necessary or appropriate in connection with the
assignment to such successor Secured Party of the security interests created
hereunder, whereupon such retiring or removed Secured Party shall be discharged
from its duties and obligations under this Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Agreement shall inure to its benefit as
15
<PAGE> 16
to any actions taken or omitted to be taken by it under this Agreement while it
was Secured Party hereunder.
SECTION 18. AMENDMENTS; ETC. Subject to Section 5(c), no amendment,
modification, termination or waiver of any provision of this Agreement, and no
consent to any departure by Grantor therefrom, shall in any event be effective
unless the same shall be in writing and signed by Secured Party and, in the
case of any such amendment or modification, by Grantor. Any such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
SECTION 19. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or three Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes hereof, the address of each party hereto shall be
as set forth under such party's name on the signature pages hereof or, as to
either party, such other address as shall be designated by such party in a
written notice delivered to the other party hereto.
SECTION 20. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
SECTION 21. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 22. HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 23. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT
16
<PAGE> 17
THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR
REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Credit Agreement, terms used in Articles 8 and 9 of
the Uniform Commercial Code in the State of New York are used herein as therein
defined.
SECTION 24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, GRANTOR, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO GRANTOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION
19;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER GRANTOR IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT;
(V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST GRANTOR IN
THE COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SECTION 24 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
SECTION 25. WAIVER OF JURY TRIAL. GRANTOR AND SECURED PARTY HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be
17
<PAGE> 18
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction, including without
limitation contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims. Grantor and Secured Party each acknowledge
that this waiver is a material inducement for Grantor and Secured Party to
enter into a business relationship, that Grantor and Secured Party have already
relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Grantor and
Secured Party further warrant and represent that each has reviewed this waiver
with its legal counsel, and that each knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
25 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
SECTION 26. COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signature pages are physically
attached to the same document.
[Remainder of page intentionally left blank]
18
<PAGE> 19
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
FWT. INC.
By: [ILLEGIBLE]
--------------------------------------
Title:
-----------------------------------
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, TX 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION,
as Secured Party
By: /s/ ALBERT SUN
--------------------------------------
Name: Albert Sun
------------------------------------
Title: Vice President
-----------------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop # 4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 20
SCHEDULE A (to Exhibit 10.23)
TO
COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT
Trademarks & Registration:
<TABLE>
<CAPTION>
United States
Trademark Registration
Registered Owner Description Number Registration Date
- ---------------- ------------- ------------ -----------------
<S> <C> <C> <C>
FWT, Inc. POWERMOUNT 2,088,202 August 12, 1997
FTW, Inc. SMARTROCC 1,944,176 December 26, 1995
</TABLE>
Software Licenses:
(1) PJF Pole Automated Telecom Monopole Design and Analysis Software ("PJF
Pole") under Software License Agreement between Paul J. Ford and Company, an
Ohio corporation, and FWT, Inc.
(2) PJF Caisson (monopole foundation design).
Schedule A-1
<PAGE> 21
SCHEDULE B (to Exhibit 10.23)
TO
COMPANY TRADEMARK COLLATERAL SECURITY AGREEMENT
Permitted Trademark Liens:
None
Schedule B-1
<PAGE> 1
EXHIBIT 10.24
COMPANY PATENT COLLATERAL ASSIGNMENT
AND SECURITY AGREEMENT
This COMPANY PATENT COLLATERAL ASSIGNMENT AND SECURITY AGREEMENT (this
"AGREEMENT") is dated as of November 12, 1997 and entered into by and between
FWT, INC., a Texas corporation ("ASSIGNOR"), and BT COMMERCIAL CORPORATION, as
agent for and representative of (in such capacity herein called "ASSIGNEE") the
financial institutions ("LENDERS") party to the Credit Agreement (as hereinafter
defined).
PRELIMINARY STATEMENTS
A. Assignee and Lenders have entered into a Credit Agreement dated as
of November 12, 1997 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Assignor, pursuant to which Lenders have
made certain commitments, subject to the terms and conditions set forth in the
Credit Agreement, to extend certain credit facilities to Assignor.
B. Assignor has and may in the future have rights, title and interests
in and to various Patents and other related Collateral (as such terms are
hereinafter defined).
C. Assignor is willing to grant to Assignee (i) a security interest in
all such Collateral for the purpose of securing the complete and timely
satisfaction of all of the Secured Obligations (as hereinafter defined) and (ii)
effective upon the occurrence and during the continuation of an Event of
Default, an assignment of Assignor's entire right, title and interest in and to
all such Collateral.
D. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Assignor shall have granted the security
interests and made the conditional assignment and undertaken the obligations
contemplated by this Agreement.
NOW, THEREFORE in consideration of the premises and in order to induce
Lenders to make Loans and other extensions of credit under the Credit Agreement
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, Assignor hereby agrees with Assignee as follows:
SECTION 1. GRANT OF SECURITY. Assignor hereby grants to Assignee a
security interest in all of Assignor's right, title and interest in and to the
following, in each case whether now or hereafter existing or in which Assignor
now has or hereafter acquires an interest and wherever the same may be located
(the "COLLATERAL"):
1
<PAGE> 2
(a) all patents and patent applications and rights and interests in
patents and patent applications under any domestic law that are presently, or in
the future may be, owned by Assignor and all patents and patent applications and
rights and interests in patents and patent applications under any domestic law
that are presently, or in the future may be, held or used by Assignor in whole
or in part (including, without limitation, the patents and patent applications
listed in Schedule A annexed hereto, as the same may be amended pursuant hereto
from time to time), all rights (but not obligations) corresponding thereto
(including without limitation the right (but not the obligation) to sue for
past, present and future infringements in the name of Assignor or in the name of
Assignee or Lenders), and all re-issues, divisions, continuations, renewals,
extensions and continuations-in-part thereof (all of the foregoing being
collectively referred to as the "PATENTS"); it being understood that the rights
and interest assigned hereby shall include, without limitation, all rights and
interests pursuant to licensing or other contracts in favor of Assignor
pertaining to patent applications and patents presently or in the future owned
or used by third parties but, in the case of third parties which are not
Affiliates of Assignor, only to the extent permitted by such licensing or other
contracts and, if not so permitted, only with the consent of such third parties;
(b) All general intangibles relating to the Patents;
(c) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(d) all proceeds, products, rents and profits (including without
limitation license royalties and proceeds of infringement suits) of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Assignee is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is
receivable or received when Collateral or proceeds are sold, exchanged,
collected or otherwise disposed of, whether such disposition is voluntary or
involuntary.
Notwithstanding the foregoing, Collateral shall exclude any
intellectual property right, contracts and agreements to the extent, and only to
the extent, that such intellectual property right, contract or agreement
contains a provision enforceable at law and in equity that would be breached by
(or would result in the termination of such intellectual property contract or
agreement upon) the grant of the security interest created herein pursuant to
the terms of this Agreement; provided, however, that if and when any prohibition
on the assignment, pledge or grant of a security interest in such intellectual
property right, contract or agreement is removed, the Secured Party will be
deemed to have been granted a security interest in such intellectual property
right, contract or agreement as of the date hereof, and the
2
<PAGE> 3
Collateral will be deemed to include such intellectual property right, contract
or agreement.
SECTION 2. CONDITIONAL ASSIGNMENT. In addition to, and not by way of
limitation of, the granting of a security interest in the Collateral pursuant to
Section 1, Assignor hereby, effective only upon the occurrence and during the
continuance of an Event of Default and upon written notice from Assignee and
subject to the terms of this Agreement, grants, sells, conveys, transfers,
assigns and sets over to Assignee, for its benefit and the ratable benefit of
Lenders, all of Assignor's right, title and interest in and to the Collateral,
including without limitation Assignor's right, title and interest in and to the
Patents identified in Schedule A annexed hereto.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including the payment of amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. section 362(a), of all obligations and
liabilities of every nature of Assignor now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents and all extensions or renewals thereof, whether for principal,
interest (including without limitation interest that, but for the filing of a
petition in bankruptcy with respect to Assignor, would accrue on such
obligations), reimbursement of amounts drawn under Letters of Credit, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from Assignee or
any Lender as a preference, fraudulent transfer or otherwise (all such
obligations and liabilities being the "UNDERLYING DEBT"), and all obligations
of every nature of Assignor now or hereafter existing under this Agreement (all
such obligations of Assignor, together with the Underlying Debt, being the
"SECURED OBLIGATIONS").
SECTION 4. ASSIGNOR REMAINS LIABLE. Anything contained herein to the
contrary notwithstanding, (a) Assignor shall remain liable under any contracts
and agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Assignee of any of its
rights hereunder shall not release Assignor from any of its duties or
obligations under the contracts and agreements included in the Collateral, and
(c) Assignee shall not have any obligation or liability under any contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
Assignee be obligated to perform any of the obligations or duties of Assignor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
3
<PAGE> 4
SECTION 5. REPRESENTATIONS AND WARRANTIES. Assignor represents and
warrants as follows:
(a) Description of Collateral. A true and complete list of all Patents
owned, held (whether pursuant to a license or otherwise) or used by Assignor, in
whole or in part, as of the date of this Agreement is set forth in Schedule A
annexed hereto.
(b) Validity and Enforceability of Collateral. Each of the Patents that
is material to Assignor's business is valid, subsisting and enforceable and
Assignor is not aware of any pending or, to Assignor's knowledge, threatened
claim by any third party that any such material Patent is invalid or
unenforceable or that the use of any such material Patents violates the rights
of any third person or of any basis for any such claim.
(c) Ownership of Collateral. Except for any interests disclosed in
Schedule B annexed hereto, if any, Permitted Encumbrances and the security
interest and conditional assignment created by this Agreement, Assignor owns the
Collateral free and clear of any Lien. Except with respect to any interests
disclosed in Schedule B annexed hereto and such as may have been filed in favor
of Assignee relating to this Agreement, (i) no effective financing statement or
other instrument similar in effect covering all or any part of the Collateral is
on file in any filing or recording office and (ii) no effective filing covering
all or any part of the Collateral is on file in the United States Patent and
Trademark Office.
SECTION 6. NEW PATENTS AND PATENT APPLICATIONS.
(a) Assignor hereby authorizes Assignee to modify this Agreement
without obtaining Assignor's approval of or signature to such modification by
amending Schedule A annexed hereto to include reference to any right, title or
interest in any existing Patent or any Patent acquired or developed by Assignor
after the execution hereof or to delete any reference to any right, title or
interest in any Patent in which Assignor no longer has or claims any right,
title or interest.
(b) If Assignor shall hereafter obtain rights to any patentable
inventions, or become entitled to the benefit of any patent application or
patent or any reissue, division, continuation, renewal, extension, or
continuation-in-part of any Patent or any improvement on any Patent, the
provisions of this Agreement shall automatically apply thereto. Assignor shall
promptly notify Assignee in writing of any Patents acquired by Assignor after
the date hereof. Concurrently with the filing of an application for any Patent,
Assignor shall execute, deliver and record in all places where this Agreement is
recorded an appropriate Patent Collateral Assignment and Security Agreement,
substantially in the form hereof, with appropriate insertions, or an amendment
to this Agreement, in form and substance satisfactory to Assignee, pursuant to
which Assignor shall grant a security interest and conditional assignment to the
extent of its interest in such Patent as provided herein to Assignee unless so
doing would, in the reasonable judgment of Assignor, after due inquiry, result
in the
4
<PAGE> 5
grant of a patent in the name of Assignee, in which event Assignor shall give
written notice to Assignee as soon as reasonably practicable and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the Patent.
SECTION 7. CERTAIN COVENANTS OF ASSIGNOR. Assignor shall:
(a) diligently keep reasonable records respecting the Collateral and at
all times keep at least one complete set of its records concerning substantially
all of the Patents at its chief executive office or principal place of business;
(b) use commercially reasonable efforts not to permit the inclusion in
any contract to which it becomes a party after the date hereof of any provision
that could or might in any way impair or prevent the creation of a security
interest in, or the assignment of, Assignor's rights and interests in any
property included within the definition of any Patents acquired under such
contracts;
(c) take all steps reasonably necessary to protect the secrecy of all
trade secrets relating to the products and services sold or delivered under or
in connection with the Patents, including without limitation entering into
confidentiality agreements with employees and labeling and restricting access to
secret information and documents;
(d) use proper statutory notice in connection with its use of each of
the Patents; and
(e) use consistent standards of high quality (which may be consistent
with Assignor's past practices) in the manufacture, sale and delivery of
products and services sold or delivered under or in connection with the Patents,
including, to the extent applicable, in the operation and maintenance of its
retail stores and other merchandising operations.
SECTION 8. CERTAIN INSPECTION RIGHTS. Assignor hereby grants to
Assignee and its employees, representatives and agents the right to visit,
during Assignor's normal business hours, Assignor's plants, facilities and other
places of business that are utilized in connection with the manufacture,
production, inspection, storage or sale of products and services sold or
delivered under any of the Patents (or which were so utilized during the prior
six month period), and to inspect the quality control and all other records
relating thereto upon reasonable notice to Assignor and as often as may be
reasonably requested (but in no event more than two (2) times in any calendar
year), provided, however, that Assignee shall have the right to an unlimited
number of visits during an Event of Default.
SECTION 9. AMOUNTS PAYABLE IN RESPECT OF THE COLLATERAL. Except as
otherwise provided in this Section 9, Assignor shall continue to collect, at its
own expense, all amounts due or to become due to Assignor in respect of the
Collateral or any portion thereof. In connection with such collections, Assignor
may take (and, at
5
<PAGE> 6
Assignee's direction, shall take) such action as Assignor or Assignee may deem
necessary or advisable to enforce collection of such amounts; provided, however,
that Assignee shall have the right at any time, upon the occurrence and during
the continuation of an Event of Default and upon written notice to Assignor of
its intention to do so, to notify the obligors with respect to any such amounts
of the existence of the security interest created, and the conditional
assignment effected hereby, and to direct such obligors to make payment of all
such amounts directly to Assignee, and, upon such notification and at the
expense of Assignor, to enforce collection of any such amounts and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as Assignor might have done. After receipt by Assignor of the
notice from Assignee referred to in the proviso to the preceding sentence, (i)
all amounts and proceeds (including checks and other instruments) received by
Assignor in respect of amounts due to Assignor in respect of the Collateral or
any portion thereof shall be received in trust for the benefit of Assignee
hereunder, shall be segregated from other funds of Assignor and shall be
forthwith paid over or delivered to Assignee in the same form as so received
(with any necessary endorsement) to be held as cash Collateral and applied as
provided by Section 17, and (ii) Assignor shall not adjust, settle or compromise
the amount or payment of any such amount or release wholly or partly any obligor
with respect thereto or allow any credit or discount thereon.
SECTION 10. PATENT APPLICATIONS AND LITIGATION.
(a) Assignor shall have the duty diligently (subject to Assignor's
reasonable business judgment), through counsel reasonably acceptable to
Assignee, to prosecute any patent application relating to any of the Patents
specifically identified in Schedule A annexed hereto that is pending as of the
date of this Agreement, to make application on any existing or future unpatented
but patentable invention that is material to Assignor, and to do any and all
acts which are necessary or desirable to preserve and maintain all rights in all
Patents. Any expenses incurred in connection therewith shall be borne solely by
Assignor. Subject to the foregoing and Assignor's reasonable judgment, Assignor
shall not abandon any right to file a patent application or any pending patent
application or any Patent without the prior written consent of Assignee.
(b) Except as provided in Section 10(d) and notwithstanding Section 2,
Assignor shall have the right to commence and prosecute in its own name, as real
party in interest, for its own benefit and at its own expense, such suits,
proceedings or other actions for infringement, unfair competition, or other
damage or reexamination or reissue proceedings as are in its reasonable business
judgment necessary to protect the Collateral. Assignee shall provide, at
Assignor's expense, all reasonable and necessary cooperation in connection with
any such suit, proceeding or action including, without limitation, joining as a
necessary party.
(c) Assignor shall promptly, following its becoming aware thereof,
notify Assignee of the institution of, or of any adverse determination in, any
proceeding (whether in the United States Patent and Trademark Office or any
federal, state,
6
<PAGE> 7
local or foreign court) described in Section 10(a) or 10(b) or regarding
Assignor's interests in any material Collateral. Assignor shall provide to
Assignee any information with respect thereto reasonably requested by Assignee.
(d) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, Assignee shall
have the right (but not the obligation) to bring suit, in the name of Assignor,
Assignee or otherwise, to enforce any Patent and any license thereunder, in
which event Assignor shall, at the request of Assignee, do any and all lawful
acts and execute any and all documents required by Assignee in aid of such
enforcement and Assignor shall promptly, upon demand, reimburse and indemnify
Assignee as provided in Section 18 in connection with the exercise of its rights
under this Section 10. To the extent that Assignee elects not to bring suit to
enforce any Patent or any license thereunder as provided in this Section 10(d),
Assignor agrees to use all reasonable measures, whether by action, suit,
proceeding or otherwise, to prevent the infringement of any of the Patents by
others and for that purpose agrees to diligently maintain any action, suit or
proceeding against any Person so infringing necessary to prevent such
infringement.
SECTION 11. NON-DISTURBANCE AGREEMENTS, ETC. If and to the extent that
Assignor is permitted to license the Collateral, Assignee shall enter into a
non-disturbance agreement or other similar arrangement, at Assignor's request
and expense, with Assignor and any licensee of any Collateral permitted
hereunder in form and substance satisfactory to Assignee pursuant to which (a)
Assignee shall agree not to disturb or interfere with such licensee's rights
under its license agreement with Assignor so long as such licensee is not in
default thereunder and (b) such licensee shall acknowledge and agree that the
Collateral licensed to it is subject to the security interest and conditional
assignment created in favor of Assignee and the other terms of this Agreement.
SECTION 12. REASSIGNMENT OF COLLATERAL. If (a) an Event of Default
shall have occurred and, by reason of cure, waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of Default shall have
occurred and be continuing, (c) an assignment to Assignee of any rights, title
and interests in and to the Collateral shall have been previously made and shall
have become absolute and effective pursuant to Section 2, Section 13(f) or
Section 16(b), and (d) the Secured Obligations shall not have become immediately
due and payable, upon the written request of Assignor and the written consent of
Assignee; then Assignee shall promptly execute and deliver to Assignor such
assignments as may be necessary to reassign to Assignor any such rights, title
and interests as may have been assigned to Assignee as aforesaid, subject to any
disposition thereof that may have been made by Assignee pursuant hereto;
provided that, after giving effect to such reassignment, Assignee's security
interest and conditional assignment granted pursuant to Section 1 and Section 2,
as well as all other rights and remedies of Assignee granted hereunder, shall
continue to be in full force and effect; and provided, further that the rights,
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if
7
<PAGE> 8
any) encumbering such rights, title and interest at the time of their assignment
to Assignee and Permitted Encumbrances
SECTION 13. ASSIGNEE APPOINTED ATTORNEY-IN-FACT. Assignor hereby
irrevocably appoints Assignee as Assignor's attorney-in-fact, with full
authority in the place and stead of Assignor and in the name of Assignor,
Assignee or otherwise, from time to time in Assignee's discretion to take any
action and to execute any instrument that Assignee may deem necessary or
advisable, consistent with the terms of this Agreement, to accomplish the
purposes of this Agreement, including without limitation:
(a) to endorse Assignor's name on all applications, documents, papers
and instruments necessary for Assignee in the use or maintenance of the
Collateral;
(b) during the continuance of an Event of Default, to ask for, demand,
collect, sue for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral;
(c) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (b) above;
(d) during the continuance of an Event of Default, to file any claims
or take any action or institute any proceedings that Assignee may deem necessary
or desirable for the collection of any of the Collateral or otherwise to endorse
the rights of Assignee with respect to any of the Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted
under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the
amounts necessary to discharge the same to be determined by Assignee in its
sole discretion, any such payments made by Assignee to become obligations of
Assignor to Assignee, due and payable immediately without demand; and
(f) upon the occurrence and during the continuation of an Event of
Default, (i) to execute and deliver any of the assignments or documents
requested by Assignee pursuant to Section 16(b), (ii) to grant or issue an
exclusive or non-exclusive license to the Collateral or any portion thereof to
any Person, and (iii) otherwise generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral as fully
and completely as though Assignee were the absolute owner thereof for all
purposes, and to do, at Assignee's option and Assignor's expense, at any time or
from time to time, all acts and things that Assignee deems necessary to protect,
preserve or realize upon the Collateral and Assignee's security interest therein
in order to effect the intent of this Agreement, all as fully and effectively as
Assignor might do.
8
<PAGE> 9
SECTION 14. ASSIGNEE MAY PERFORM. If Assignor fails to perform any
agreement contained herein, Assignee may itself perform, or cause performance
of, such agreement, and the expenses of Assignee incurred in connection
therewith shall be payable by Assignor under Section 18.
SECTION 15. STANDARD OF CARE. The powers conferred on Assignee
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Assignee shall have no
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
Assignee shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Assignee accords its own property.
SECTION 16. REMEDIES. If any Event of Default shall have occurred and
be continuing:
(a) Assignee may exercise in respect of the Collateral, in addition to
all other rights and remedies provided for herein or otherwise available to it,
all the rights and remedies of a secured party on default under the Uniform
Commercial Code as in effect in any relevant jurisdiction (the "CODE") (whether
or not the Code applies to the affected Collateral), and also may (i) require
Assignor to, and Assignor hereby agrees that it will at its expense and upon
request of Assignee forthwith, assemble all or part of the Collateral as
directed by Assignee and make it available to Assignee at a place to be
designated by Assignee that is reasonably convenient to both parties, (ii) enter
onto the property where any Collateral is located and take possession thereof
with or without judicial process, (iii) prior to the disposition of the
Collateral, store the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent Assignee deems appropriate, (iv) take
possession of Assignor's premises or place custodians in exclusive control
thereof, remain on such premises and use the same for the purpose of taking any
actions described in the preceding clause (iii) and collecting any Secured
Obligation, (v) exercise any and all rights and remedies of Assignor under or in
connection with the contracts related to the Collateral or otherwise in respect
of the Collateral, including without limitation any and all rights of Assignor
to demand or otherwise require payment of any amount under, or performance of
any provision of, such contracts, and (vi) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Assignee's offices or elsewhere, for cash, on credit
or for future delivery, at such time or times and at such price or prices and
upon such other terms as Assignee may deem commercially reasonable. Assignee or
any Lender may be the purchaser of any or all of the Collateral at any such sale
and Assignee, as agent for and representative of Lenders (but not any Lender or
Lenders in its or their respective individual capacities unless Requisite
Lenders shall otherwise agree in writing), shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any
9
<PAGE> 10
such public sale, to use and apply any of the Secured Obligations as a credit on
account of the purchase price for any Collateral payable by Assignee at such
sale. Each purchaser at any such sale shall hold the property sold absolutely
free from any claim or right on the part of Assignor, and Assignor hereby waives
(to the extent Permitted by applicable law) all rights of redemption, stay
and/or appraisal which it now has or may at any time in the future have under
any rule of law or statute now existing or hereafter enacted. Assignor agrees
that, to the extent notice of sale shall be required by law, at least ten days'
notice to Assignor of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable notification.
Assignee shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given. Assignee may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. Assignor hereby waives any claims against Assignee arising by
reason of the fact that the price at which any Collateral may have been sold at
such a private sale was less than the price which might have been obtained at
a public sale, even if Assignee accepts the first offer received and does not
offer such Collateral to more than one offeree. If the proceeds of any sale or
other disposition of the Collateral are insufficient to pay all the Secured
Obligations, Assignor shall be liable for the deficiency and the fees of any
attorneys employed by Assignee to collect such deficiency.
(b) Upon written demand from Assignee, Assignor shall execute and
deliver to Assignee an assignment or assignments of the Patents and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; provided that the failure of Assignor to comply with such
demand will not impair or affect the validity of the conditional assignment
effected by Section 2 or its effectiveness upon notice by Assignee as specified
in Section 2. Assignor agrees that such an assignment (including without
limitation the conditional assignment effected by Section 2) and/or recording
shall be applied to reduce the Secured Obligations outstanding only to the
extent that Assignee (or any Lender) receives cash proceeds in respect of the
sale of, or other realization upon, the Collateral.
SECTION 17. APPLICATION OF PROCEEDS. Except as expressly provided
elsewhere in this Agreement, all proceeds received by Assignee in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of Assignee, be held by Assignee as Collateral
for, and/or then, or at any other time thereafter, applied in full or in part by
Assignee against, the Secured Obligations in the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Assignee and its agents and counsel, and all other expenses, liabilities
and advances made or incurred by Assignee in connection therewith, and all
amounts for which Assignee is entitled to indemnification hereunder and
all advances made by Assignee hereunder for the account of Assignor, and
to the payment of all
10
<PAGE> 11
costs and expenses paid or incurred by Assignee in connection with the
exercise of any right or remedy hereunder, all in accordance with
Section 18;
SECOND: To the payment of all other Secured Obligations in such order
as Assignee shall elect; and
THIRD: To the payment to or upon the order of Assignor, or to whosoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such proceeds.
SECTION 18. INDEMNITY AND EXPENSES.
(a) Assignor agrees to indemnify Assignee and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Assignee's or such Lender's gross negligence or willful misconduct
as finally determined by a court of competent jurisdiction.
(b) Assignor shall pay to Assignee upon demand the amount of any and
all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Assignee may incur in connection
with (i) the administration of this Agreement, (ii) the custody, preservation,
use or operation of, or the sale of, collection from, or other realization upon,
any of the Collateral, (iii) the exercise or enforcement of any of the rights of
Assignee hereunder, or (iv) the failure by Assignor to perform or observe any of
the provisions hereof.
SECTION 19. CONTINUING ASSIGNMENT AND SECURITY INTEREST: TRANSFER OF
LOANS. This Agreement shall create a continuing security interest in, and
conditional assignment of, the Collateral and shall (a) remain in full force and
effect until the payment in full of the Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, (b) be binding upon Assignor, its permitted
successors and assigns, and (c) inure, together with the rights and remedies of
Assignee hereunder, to the benefit of Assignee and its successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), but
subject to the provisions of subsection 10.1 of the Credit Agreement, any
Lender may assign or otherwise transfer any Loans held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
payment in full of all Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, the security interest and conditional assignment granted hereby shall
terminate and all rights to the Collateral shall revert to Assignor. Upon any
such termination Assignee will, at Assignor's expense, execute and deliver to
Assignor such documents as Assignor shall reasonably request to evidence such
termination.
11
<PAGE> 12
SECTION 20. ASSIGNEE AS AGENT.
(a) Assignee has been appointed to act as Assignee hereunder by
Lenders. Assignee shall be obligated, and shall have the right hereunder, to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of Collateral), solely in accordance
with this Agreement and the Credit Agreement.
(b) Assignee shall at all times be the same Person that is Agent under
the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Assignee under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Assignee
under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Assignee under this Agreement. Upon the acceptance of any appointment
as Agent under subsection 9.5 of the Credit Agreement by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Assignee under
this Agreement, and the retiring or removed Assignee under this Agreement shall
promptly (i) transfer to such successor Assignee all sums, securities and other
items of Collateral held hereunder, together with all records and other
documents necessary or appropriate in connection with the performance of the
duties of the successor Assignee under this Agreement, and (ii) execute and
deliver to such successor Assignee such amendments to financing statements, and
take such other actions, as may be necessary or appropriate in connection with
the assignment to such successor Assignee of the security interests created
hereunder, whereupon such retiring or removed Assignee shall be discharged from
its duties and obligations under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as Assignee, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Assignee hereunder.
SECTION 21. AMENDMENTS; ETC. Subject to Section 6(a), no amendment,
modification, termination or waiver of any provision of this Agreement, and no
consent to any departure by Assignor therefrom, shall in any event be effective
unless the same shall be in writing and signed by Assignee and, in the case of
any such amendment or modification, by Assignor. Any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.
SECTION 22. NOTICES. Any notice or other communication herein required
or permitted to be given shall be in writing and may be personally served,
telexed or sent by telefacsimile or United States mail or courier service and
shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telefacsimile or telex, or four Business Days after
depositing it in the United States mail with postage prepaid and properly
addressed. For the purposes
12
<PAGE> 13
hereof, the address of each party hereto shall be as set forth under such
party's name on the signature pages hereof or, as to either party, such other
address as shall be designated by such party in a written notice delivered to
the other party hereto.
SECTION 23. FAILURE OR INDULGENCE NOT WAIVER, REMEDIES CUMULATIVE. No
failure or delay on the part of Assignee in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude any other or
further exercise thereof or of any other power, right or privilege. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 24. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 25. HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 26. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Credit Agreement, terms used
in Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 27. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ASSIGNOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
ASSIGNOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF
13
<PAGE> 14
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. Assignor hereby agrees that service
of all process in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to Assignor at its
address provided in Section 22, such service being hereby acknowledged by
Assignor to be sufficient for personal jurisdiction in any action against
Assignor in any such court and to be otherwise effective and binding service in
every respect. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of Assignee to bring
proceedings against Assignor in the courts of any other jurisdiction.
SECTION 28. WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY LAW,
ASSIGNOR AND ASSIGNEE HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Assignor and Assignee each acknowledge that this waiver is a material inducement
for Assignor and Assignee to enter into a business relationship, that Assignor
and Assignee have already relied on this waiver in entering into this Agreement
and that each will continue to rely on this waiver in their related future
dealings. Assignor and Assignee further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 29. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
14
<PAGE> 15
IN WITNESS WHEREOF, Assignor and Assignee have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
FWT, INC.
By: [ILLEGIBLE]
---------------------------------
Title: CEO
--------------------------
Notice Address:
FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112
Attention: Chief Executive Officer
BT COMMERCIAL CORPORATION
as Assignee
By: /s/ ALBERT SUN
---------------------------------
Title: Vice President
-------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Telecopy: (212) 618-2428
Attention: Bhartai Baliga
S-1
<PAGE> 16
SCHEDULE A (to Exhibit 10.24)
TO COMPANY PATENT COLLATERAL
ASSIGNMENT AND SECURITY AGREEMENT
<TABLE>
<CAPTION>
Patents Issued and Patents Pending:
Patent No. Issue Date Invention Inventor
- --------------- -------------------- ----------------------- -------------------
<S> <C> <C> <C>
5,649,402 July 22, 1997 Antenna Support For FWT, Inc.
Power Transmission (Assignee)
Tower
</TABLE>
<TABLE>
<CAPTION>
Application No. Filing Date Invention Assignee
- ---------------- --------------------- ------------------------ ------------------
<S> <C> <C> <C>
08/877,717 June 23, 1997 Antenna Support For FWT, Inc.
Power Transmission
Tower
08/202,444 February 28, 1994 Tree Styled Monopole FWT, Inc.
Tower
08/381,504 January 31, 1995 Tree Styled Monopole FWT, Inc.
Tower
</TABLE>
The following reflect the status of the foreign counterparts to United
States Patent No. 5,649,402 issued July 22, 1997.
CANADA
The Canadian counterpart was filed on March 27, 1996 and was assigned
Patent File No. 2,172,743. The application was laid open on March 2,
1997. The first maintenance fee is due on March 27, 1998. A Request for
Substantive Examination is due by March 27, 2003. The application is
pending.
MALAYSIA
The Malaysian counterpart was filed on August 22, 1996 and was assigned
Application No. PI 9603450. A Request for Substantive Examination is
due by August 22, 1998; however, Lee Ong & Kandiah, FWT, Inc.'s foreign
associate, has been instructed to file a Request for Modified
Substantive Examination based on the issued United States patent.
PCT INTERNATIONAL
The PCT International Request designating all regions and countries
(except the United States) was filed on August 20, 1996 and was
assigned International Application No. PCT/US96/13733. A Demand for
International Preliminary
<PAGE> 17
SCHEDULE B (to Exhibit 10.24)
TO
COMPANY PATENT COLLATERAL SECURITY AGREEMENT
Permitted Patent Liens:
(1) Tree Styled Monopole Tower - Patent Application Serial No. 08/202,444,
(Attorney's Docket No. 1684B-25663), filed February 28, 1994. The Patent
rights are held jointly and severally among the Company and Harold Sriver
and Nestor Popowych who are both affiliated with PAL Cellular Group, Inc.
and hold joint and several rights to the above-mentioned patent in their
individual capacities.
(2) Tree Styled Monopole Tower - Patent Application Serial No. 08/381,504,
(Attorney's Docket No. 1684B-25357), filed January 31, 1995. The Patent
rights are held jointly and severally among the Company and Harold Sriver
and Nestor Popowych who are both affiliated with PAL Cellular Group, Inc.
and hold joint and several rights to the above-mentioned patent in their
individual capacities.
Schedule B-1
<PAGE> 18
Examination was filed on March 31, 1997. A favorable International
Preliminary Examination Report was mailed on May 21, 1997. The deadline
for entering the National Phase is March 1, 1998; however, FWT, Inc.
has entered the National Phase early in Brazil and South Korea (see
below).
BRAZIL
The Brazilian National Phase application was filed on August 1, 1997,
and assigned a filing date of August 20, 1996 and Deposit No.
PCT/US96/13733.
SOUTH KOREA
The South Korea National Phase application was filed on August 1, 1997
and was assigned patent Application No. 705250 in 1997. A Request for
Examination is due by August 19, 2001.
(1) POWERMOUNT trademark - Registration No. 2,088,202.
(2) SMARTROCC trademark - Registration No. 1,944,176.
Computer Software Licenses:
(1) PJF Pole Automated Telecom Monopole Design and Analysis Software ("PJF
Pole") under Software License Agreement between Paul J. Ford and
Company, an Ohio corporation, and FWT, Inc.
(2) PJF Caisson (monopole foundation design).
<PAGE> 1
EXHIBIT 10.25
INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
This INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT (this
"Agreement") is dated as of November 10, 1997, and entered into by BT
COMMERCIAL CORPORATION, as administrative agent (in such capacity, the
"Revolving Agent") for the lenders under the Credit Agreement referred to
below, BANKERS TRUST COMPANY, as agent (in such capacity, the "Bridge Agent")
for the lenders under the Senior Secured Credit Agreement referred to below,
BANKERS TRUST COMPANY, as collateral agent (in such capacity, the "Collateral
Agent") under the Pledge Agreements referred to below, and FWT, INC., a Texas
corporation (the "Borrower").
PRELIMINARY STATEMENTS
A. The Borrower, the several lenders from time to time
parties thereto (the "Revolving Lenders") and the Revolving Agent, have entered
into a Credit Agreement dated as of the date hereof, pursuant to which the
Revolving Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Borrower.
B. The Borrower, the several lenders from time to time
parties thereto (the "Bridge Lenders"; the Bridge Lenders, the Revolving
Lenders, the Bridge Agent, the Revolving Agent and the Collateral Agent are
sometimes hereinafter collectively referred to as the "Secured Parties") and
the Bridge Agent have entered into a Senior Secured Credit Agreement dated as
of the date hereof, pursuant to which the Bridge Lenders have made certain
commitments, subject to the terms and conditions set forth in the Senior
Secured Credit Agreement, to extend certain credit facilities to the Borrower,
involving the Bridge Loans, the Term Loans, and Exchange Notes (each as defined
in the Senior Secured Credit Agreement).
C. As required by the Credit Agreement, the Borrower has
executed and delivered in favor of the Revolving Agent for the benefit of the
Revolving Lenders that certain Company Security Agreement dated as of the date
hereof (said agreement, as it may hereafter be amended, restated or otherwise
modified from time to time, being the "Revolving Borrower Security Agreement")
granting to Revolving Agent a security interest in all the personal property of
Borrower (the "Revolving Borrower Personal Property Collateral").
D. As required by the Senior Secured Credit Agreement,
the Borrower has executed and delivered in favor of the Bridge Agent for the
benefit of the Bridge Lenders that certain Company Security Agreement dated as
of the date hereof (said agreement, as it may hereafter be amended, restated or
otherwise modified from time to
<PAGE> 2
time, being the "Bridge Borrower Security Agreement") granting to Bridge Agent
a security interest in all the personal property of Borrower other than the
inventory, the accounts receivable and the general intangibles (including
without limitation, intellectual property) of Borrower (the "Bridge Borrower
Personal Property Collateral").
E. The Credit Agreement requires that each future
Subsidiary of the Borrower that is a Guarantor execute and deliver in favor of
the Revolving Agent for the benefit of the Revolving Lenders a security
agreement in the form required by such Credit Agreement (said agreement, as it
may be amended, restated or otherwise modified from time to time, being a
"Revolving Subsidiary Security Agreement") granting to Revolving Agent a
security interest in all the personal property of such Subsidiary (the
"Revolving Subsidiary Personal Property Collateral"; the Revolving Borrower
Security Agreement and the Revolving Subsidiary Security Agreement being herein
collectively referred to as the "Revolving Security Agreements" and the
Revolving Borrower Personal Property Collateral and the Revolving Subsidiary
Personal Property Collateral being herein collectively referred to as the
"Revolving Personal Property Collateral").
F. The Senior Secured Credit Agreement requires that
each future Subsidiary of the Borrower that is a Guarantor execute and deliver
in favor of the Bridge Agent for the benefit of the Bridge Lenders a security
agreement in the form required by such Senior Secured Credit Agreement (said
agreement, as it may be amended, restated or otherwise modified from time to
time, being a "Bridge Subsidiary Security Agreement") granting to Bridge Agent
a security interest in all the personal property of such Subsidiary other than
the inventory, the accounts receivable and the general intangibles (including
without limitation, the intellectual property) of such Subsidiary (the "Bridge
Subsidiary Personal Property Collateral"; the Bridge Borrower Security
Agreement and the Bridge Subsidiary Security Agreement being herein
collectively referred to as the "Bridge Security Agreements" and the Bridge
Borrower Personal Property Collateral and the Bridge Subsidiary Personal
Property Collateral being herein collectively referred to as the "Bridge
Personal Property Collateral").
G. Each of the Credit Agreement and the Senior Secured
Credit Agreement requires that upon acquisition of the stock of a Subsidiary,
the Borrower execute and deliver in favor of the Collateral Agent for the
benefit of the Secured Parties a pledge agreement in the form required by such
Credit Agreement and such Senior Secured Credit Agreement (said agreement, as
it may be amended, restated or otherwise modified from time to time, being a
"Borrower Pledge Agreement") granting to Collateral Agent a security interest
in all of the shares of stock of Borrower's Subsidiaries held by Borrower (the
"Borrower Stock Collateral").
H. Each of the Credit Agreement and the Senior Secured
Credit Agreement requires that each future Subsidiary of the Borrower that is a
Guarantor execute and deliver in favor of the Collateral Agent for the benefit
of the Secured Parties a pledge agreement in the form required by such Credit
Agreement and such Senior Secured Credit Agreement (such agreement, as it may
be amended, restated or otherwise modified
2
<PAGE> 3
from time to time, being a "Subsidiary Pledge Agreement") granting to
Collateral Agent a security interest in all of the shares of stock of
Borrower's indirect Subsidiaries held by such Subsidiary (the "Subsidiary Stock
Collateral"; the Borrower Pledge Agreement and the Subsidiary Pledge Agreement
being herein collectively referred to as the "Pledge Agreements"; the Borrower
Stock Collateral and the Subsidiary Stock Collateral being herein collectively
referred to as the "Stock Collateral"; the Pledge Agreements, the Revolving
Security Agreements and the Bridge Security Agreements being herein
collectively referred to as the "Collateral Documents"; and the Stock
Collateral, the Revolving Personal Property Collateral and the Bridge Personal
Property Collateral being herein collectively referred to as the "Collateral").
I. The Revolving Agent, the Bridge Agent and the
Collateral Agent desire to set forth their agreement as to the relative
priority of their respective security interests in the Collateral, as to the
manner of sharing amounts received from exercise of their rights with respect
to the Collateral and as to the exercise of remedies under the Collateral
Documents.
J. The parties hereto desire to set forth certain
provisions regarding the appointment, duties and responsibilities of the
Collateral Agent.
NOW, THEREFORE, the parties party hereto agree as follows:
Section 1. Intercreditor Arrangements.
A. Priority. Irrespective of any statement contained in
the Collateral Documents and irrespective of the time, order or method of
attachment or perfection of the security interests granted thereby, the
security interests in the Collateral created by the Collateral Documents in
favor of the Bridge Agent and the Bridge Lenders shall have priority to the
extent set forth herein over the security interests in the Collateral created
by the Collateral Documents in favor of the Revolving Agent and the Revolving
Lenders.
B. Extent of Priority. The proceeds in respect of any
Collateral, whether in the form of cash, securities, insurance proceeds, in
kind or otherwise, shall first be distributed to or set aside for the Bridge
Agent for the benefit of the Bridge Lenders in an amount equal to the aggregate
amount owed to the Bridge Agent and the Bridge Lenders under the Senior Secured
Credit Agreement. Any proceeds in excess of such amount shall then be
distributed to or set aside for the Revolving Agent for the benefit of the
Revolving Lenders in an amount equal to the aggregate amount owed to the
Revolving Lenders and the Revolving Agent under the Credit Agreement.
C. Enforcement of Remedies. Bridge Agent and Revolving
Agent agree to give notice to the other and to the Collateral Agent of the
acceleration or demand for payment of any amounts due under the Credit
Agreement, the Senior Secured Credit Agreement and the Collateral Documents, as
the case may be. With respect to the Bridge Security Agreements and the
Revolving Security Agreements, each of the Bridge Agent and
3
<PAGE> 4
Revolving Agent may, without the consent of the other or of the Collateral
Agent, proceed to enforce against the Borrower, the Borrower's Subsidiaries or
the Collateral any right or remedy which is available to it under such
Collateral Documents; provided, however, that it shall give five Business Days
prior written notice of such action to the other unless it determines in good
faith that immediate action is necessary to protect the Collateral, in which
case such notice may be given contemporaneously with the taking of such action.
With respect to the Pledge Agreements, the Collateral Agent may, without the
consent of the other Secured Parties, proceed to enforce against the Borrower,
the Borrower's Subsidiaries or the Collateral any right or remedy which is
available to it under such Collateral Documents upon the direction of the
Revolving Lenders holding a majority of the Revolving Loan Exposure (as defined
in the Credit Agreement) (the "Requisite Revolving Lenders") or the Bridge
Lenders holding a majority of the Bridge Loans, the Term Loans and the Exchange
Notes then outstanding (the "Requisite Bridge Lenders"), as the case may be;
provided, however, that it shall give five Business Days prior written notice
of such action to the other Secured Parties unless it determines in good faith
that immediate action is necessary to protect the Collateral, in which case
such notice may be given contemporaneously with the taking of such action.
D. If any Secured Party acquires custody, control or
possession of any Collateral or proceeds therefrom, such Secured Party shall
promptly cause such Collateral, proceeds or payments to be delivered or
distributed in accordance with the provisions of Section 2 of this Agreement.
Until such time as the provisions of the immediately preceding sentence have
been complied with, such Secured Party shall be deemed to hold all such
Collateral, proceeds and payments in trust for the Secured Parties entitled
thereto hereunder. Nothing in this Section shall prevent a Secured Party from
receiving and retaining payments (a) for the provision of services to Borrower
or its Subsidiaries, or (b) in connection with any extension of credit or other
financial accommodation to Borrower or its Subsidiaries, or (c) as security for
any such extension of credit or other financial accommodation if the
obligations of Borrower or its Subsidiaries incurred in connection with such
services, extension of credit or other financial accommodation do not
constitute obligations secured by the Collateral Documents, and if such
obligations are not incurred and such security is not given in breach of the
Credit Agreement or the Senior Secured Credit Agreement.
E. This Agreement shall only apply to the Secured
Parties' rights with respect to the Collateral and the Collateral Documents.
Nothing in this Agreement is intended to affect the rights and remedies of any
of the Secured Parties with respect to any other security interests, liens,
mortgages, pledges or charges of any kind whatsoever which such Secured Parties
may now have or may hereafter obtain with respect to any of the Borrower, its
Subsidiaries or any of the property or assets of the Borrower or its
Subsidiaries other than the Collateral.
Section 2. Application of Collateral or Proceeds of
Collateral. All Collateral or proceeds therefrom shall be applied in the
following order of priority:
4
<PAGE> 5
First, to the extent not theretofore paid by or on behalf of
Borrower, to pay the fees, costs, expenses of the Revolving Agent, the Bridge
Agent or the Collateral Agent incurred in connection with the performance of
its duties under the Collateral Documents, including reasonable attorneys' fees
and expenses, and any other amounts payable to the Revolving Agent, the Bridge
Agent or the Collateral Agent hereunder or under any of the Collateral
Documents in respect of any indemnities or other obligations of the Borrower or
its Subsidiaries;
Second, to the Bridge Agent for the benefit of the Bridge
Lenders in the aggregate amount owed to the Bridge Lenders and the Bridge Agent
under the Senior Secured Credit Agreement;
Third, to the Revolving Agent for the benefit of the Revolving
Lenders in the aggregate amount owed to Revolving Lenders and the Revolving
Agent under the Credit Agreement; and
Fourth, after the payment in full of all obligations under the
Collateral Documents, the balance, if any, to such Person or Persons as are
entitled thereto.
Section 3. Appointment of Collateral Agent.
A. The Revolving Agent on behalf of the Revolving
Lenders and the Bridge Agent on behalf of the Bridge Lenders hereby severally
appoint Bankers Trust Company as Collateral Agent, and authorize the Collateral
Agent to serve as the agent and representative of the Revolving Lenders and the
Bridge Lenders for the purposes of executing and delivering on their behalf the
Pledge Agreements to be executed and delivered by the Borrower and its
Subsidiaries party thereto and, subject to the provisions of this Agreement,
enforcing the Revolving Lenders' and the Bridge Lenders' rights in respect of
the Stock Collateral and the obligations of the Borrower and its Subsidiaries
under the Pledge Agreements. Bankers Trust Company hereby accepts such
appointment and agrees to act as Collateral Agent hereunder and to enter into
and act as Collateral Agent under the Pledge Agreements in accordance with the
terms thereof and of this Agreement.
B. Each party executing this Agreement which is entitled
to give directions to the Collateral Agent agrees that the Collateral Agent may
act as Requisite Revolving Lenders or Requisite Bridge Lenders may request
(regardless of whether any individual Revolving Lender or Bridge Lender agrees,
disagrees or abstains with respect to such request) and that the Collateral
Agent shall have no liability for acting in accordance with such request
(provided such action does not conflict with the express terms of this
Agreement).
C. The Collateral Agent may at any time request
directions from the Requisite Revolving Lenders or Requisite Bridge Lenders
as to any course of action or other matter relating hereto or to the Pledge
Agreements. Except as otherwise may be
5
<PAGE> 6
provided in the Pledge Agreements, directions given by Requisite Revolving
Lenders or Requisite Bridge Lenders to the Collateral Agent hereunder shall be
binding on all Revolving Lenders or all Bridge Lenders, as the case may be.
D. Each of the Revolving Agent, the Bridge Agent, the
Revolving Lenders and the Bridge Lenders agrees not to take any action
whatsoever to enforce any term or provision of the Pledge Agreements or to
enforce any of its rights in respect of the Stock Collateral except through the
Collateral Agent in accordance with this Agreement.
Section 4. Disclaimers, Indemnity, Etc.
A. The Collateral Agent shall have no duties or
responsibilities to the Secured Parties except those expressly set forth in
this Agreement and the Collateral Documents and the Collateral Agent shall not
by reason of this Agreement or the Collateral Documents be a trustee for any
Secured Party or have any other fiduciary obligation to any Secured Party
(other than, if the Exchange Notes are subject to the Trust Indenture Act of
1939, as amended (the "TIA"), any obligation under the TIA). The Collateral
Agent shall not be responsible to any Secured Party for any recitals,
statements, representations or warranties contained in this Agreement, the
Credit Agreement or the Senior Secured Credit Agreement or any related loan
documents (collectively, the "Financing Agreements") or in any certificate or
other document referred to or provided for in, or received by any of them
under, any of the Financing Agreements, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any of the
Financing Agreements or any other document referred to or provided for therein
or any lien under the Collateral Documents or the perfection or priority of any
such lien or the value or condition of the Collateral or the title of the
Borrower or its Subsidiaries to the Collateral or for any failure by Borrower
or its Subsidiaries to perform any of its obligations under any of the
Financing Agreements. The Collateral Agent may employ agents and attorneys-
in-fact and shall not be responsible for the negligence or misconduct of any
such agents or attorneys-in-fact selected by it with reasonable care. Neither
the Collateral Agent nor any of its directors, officers, employees or agents
shall be liable or responsible for any action taken or omitted to be taken by
it or them hereunder or in connection herewith, except to the extent of its or
their own gross negligence or willful misconduct.
B. The Collateral Agent shall be entitled to rely upon
any certification, notice or other communication (including any thereof by
telex, telecopy, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel (including counsel to
the Borrower or any Subsidiary of the Borrower), independent accountants and
other experts selected by the Collateral Agent.
C. Notwithstanding anything to the contrary contained
herein, the Collateral Agent shall not be required to take any action that is
in its opinion contrary to law or to the terms of this Agreement or any or all
of the Collateral Documents or which
6
<PAGE> 7
would in its opinion subject it or any of its officers, employees or directors
to liability, and the Collateral Agent shall not be required to take any action
under this Agreement or any or all of the Collateral Documents unless and until
the Collateral Agent shall be indemnified to its satisfaction by the Secured
Parties against any and all loss, cost, expense or liability in connection
therewith.
D. Except as expressly provided herein or in the
Collateral Documents, the Collateral Agent shall have no duty to take any
affirmative steps with respect to the collection of amounts payable in respect
of the Collateral. The Collateral Agent shall incur no liability as a result of
any sale of any Collateral at any private sale, except to the extent that such
liability arises or results from its gross negligence or willful misconduct.
E. (i) The Collateral Agent may resign at any time by
giving at least 30 days notice thereof to the Secured Parties (such resignation
to take effect as hereinafter provided). In the event of any such resignation
of the Collateral Agent, the Revolving Lenders and the Bridge Lenders shall
thereupon have the right to appoint a successor Collateral Agent. If no
successor Collateral Agent shall have been so appointed and shall have accepted
such appointment within 30 days after the notice of the intent of the
Collateral Agent to resign, then the retiring Collateral Agent may, on behalf
of the other Secured Parties, appoint a successor Collateral Agent. Any
successor Collateral Agent appointed pursuant to this clause (i) shall be a
bank party to the Credit Agreement or the Senior Secured Credit Agreement or a
commercial bank organized under the laws of the United States of America or any
state thereof and having a combined capital and surplus of at least
$250,000,000.
(ii) Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Collateral
Agent, and the retiring or removed Collateral Agent shall thereupon be
discharged from its duties and obligations hereunder. After any retiring or
removed Collateral Agent's resignation or removal hereunder as Collateral
Agent, the provisions of this Section shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was
acting as the Collateral Agent.
F. The Borrower agrees (i) to reimburse the Collateral
Agent, on demand, for any expenses incurred by the Collateral Agent, including
counsel fees and compensation of agents, arising out of, in any way connected
with, or as a result of, the execution or delivery of this Agreement, any
Collateral Document or any agreement or instrument contemplated hereby or
thereby or the performance by the parties hereto or thereto of their respective
obligations hereunder or thereunder or in connection with the enforcement or
protection of the rights of the Collateral Agent and the Secured Parties under
this Agreement and any Collateral Documents and (ii) to indemnify and hold
harmless the Collateral Agent and its directors, officers, employees and
agents, on demand, from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever
7
<PAGE> 8
which may be imposed on, incurred by or asserted against the Collateral Agent
in its capacity as the Collateral Agent or any of them in any way relating to
or arising out of this Agreement or any Collateral Document, or any action
taken or omitted by them under this Agreement or any Collateral Document;
provided that the Borrower shall not be liable to the Collateral Agent for any
portion of such claims, liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements to the extent
resulting from the gross negligence or willful misconduct of the Collateral
Agent or any of its directors, officers, employees or agents. In addition, in
the event that any successor Collateral Agent shall be appointed, the Borrower
agrees to pay the reasonable fees and expenses of such successor Collateral
Agent for the performance of its duties hereunder and under the Collateral
Documents.
Section 5. Miscellaneous.
A. All notices and other communications provided for
herein shall be in writing and may be personally served, telecopied, or sent by
courier delivery or United States mail and shall be deemed to have been given
when delivered in person, or upon receipt of such telecopy, courier delivery or
mail. For the purposes hereof, the addresses of the parties hereto (until
notice of a change thereof is delivered as provided in this Section 5(A)) shall
be as set forth under each party's name on the signature pages hereof.
B. This Agreement and the Collateral Documents may be
modified or waived only by an instrument or instruments in writing signed by
the Revolving Agent, the Bridge Agent and the Collateral Agent and the Borrower
and its Subsidiaries signatory hereto or to any such Collateral Document.
C. This Agreement shall be binding upon and inure to the
benefit of the Revolving Agent, the Bridge Agent and the Collateral Agent, each
other Person party hereto and each Secured Party and their respective
successors and assigns.
D. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
E. Upon the earlier to occur of: (I) the payment in full
of the Borrower's obligations under the Senior Secured Credit Agreement through
the proceeds of the issuance of the Takeout Securities (as defined in the
Credit Agreement) or (II) the termination of all commitments to extend credit
which would constitute obligations secured by the Collateral Documents and the
indefeasible payment in full of all such obligations and expiration or
cancellation of all letters of credit secured by the Collateral Documents, this
Agreement shall terminate.
F. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT
LIMITATION SECTION 5-1401 OF THE
8
<PAGE> 9
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK) WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES.
G. By countersigning or otherwise accepting the terms of
this Agreement, the Borrower and each Subsidiary party hereto acknowledge and
consent to and agree to perform and be bound by each of the provisions hereof
stated to be applicable to them.
H. All judicial proceedings brought against any party
hereto arising out of or relating to this Agreement may be brought in any state
or federal court of competent jurisdiction located in the Borough of Manhattan
in the State of New York and by execution and delivery of this Agreement, each
party hereto accepts for itself and in connection with its properties,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid
courts and waives any defense of forum non conveniens and irrevocably agrees to
be bound by any judgment rendered thereby in connection with this Agreement.
I. EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
The scope of this waiver is intended to be all encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter
of this transaction, including without limitation contract claims, tort claims,
breach of duty claims, and all other common law and statutory claims. Each
party hereto acknowledges that this waiver is a material inducement to enter
into a business relationship, that each has already relied on this waiver in
entering into this Agreement and that each will continue to rely on this waiver
in their related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal counsel, and that it
knowingly and voluntarily waives its jury trial rights following consultation
with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
J. Nothing contained in this Agreement and no action
taken by the Bridge Agent, the Revolving Agent or the Collateral Agent
hereunder shall be deemed to constitute the Bridge Agent, the Revolving Agent
or the Collateral Agent a partnership, association, joint venture or other
entity.
9
<PAGE> 10
IN WITNESS HEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
BANKERS TRUST COMPANY, as Bridge Agent
By: /s/ Victoria T. Page
-------------------------------------
Title: Managing Director
----------------------------------
Notice Address:
130 Liberty Street, 31st Floor
New York, NY 10006
Attention:
----------------------
Telecopy No.: (212) 669-0021
BT COMMERCIAL CORPORATION
as Revolving Agent
By: /s/ [ILLEGIBLE]
-------------------------------------
Title: Vice President
----------------------------------
Notice Address:
BT Commercial Corporation
14 Wall Street, 3rd Floor
Mail Stop #4032
New York, NY 10005
Attention: Bharti Baliga
Telecopy: (212) 618-2428
S-1
<PAGE> 11
Each Loan Party, by its execution of this Agreement in the
space provided below, hereby accepts and agrees to be bound by the foregoing
provisions of this Agreement.
FWT, INC.
By: /s/ ROY J. MOORE
---------------------------------------
Title: C.E.O.
------------------------------------
S-2
<PAGE> 1
EXHIBIT 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31,
---------------------------------------------- ----------------
1993 1994 1995 1996 1997 1996 1997
----- ------ ------ ------ ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges
Interest expense.... $ 10 $ 21 $ 45 $ 33 $ 75 $ 14 $ 403
Amortization of
capitalized
expenses related
to indebtedness... -- -- -- -- -- -- --
----- ------ ------ ------ ------- ------ ------
TOTAL FIXED
CHARGES............. $ 10 $ 21 $ 45 $ 33 $ 75 $ 14 $ 403
===== ====== ====== ====== ======= ====== ======
Income from
continuing
operations before
taxes............... (6) 337 2,483 7,086 14,354 5,562 5,433
Fixed charges......... 10 21 45 33 75 14 403
----- ------ ------ ------ ------- ------ ------
TOTAL EARNINGS........ $ 4 $ 358 $2,528 $7,119 $14,429 $5,576 $5,836
===== ====== ====== ====== ======= ====== ======
RATIO OF EARNINGS TO
FIXED CHARGES....... 0.40 17.05 56.18 215.73 192.39 398.29 14.48
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
FISCAL YEAR SIX MONTH PERIOD SIX MONTH PERIOD
ENDED APRIL 30, ENDED OCTOBER 31, ENDED OCTOBER 31,
1997 1996 1997
--------------- ---------------- --------------
<S> <C> <C> <C>
Fixed charges
Interest expense.... $10,369 $5,184 $5,184
Amortization of
capitalized
expenses related
to indebtedness... 734 367 367
------- ------ ------
TOTAL FIXED
CHARGES............. $11,103 $5,551 $5,551
======= ====== ======
Income from
continuing
operations before
taxes............... 3,930 (96) 156
Fixed charges......... 11,103 5,551 5,551
------- ------ ------
TOTAL EARNINGS........ $15,033 $5,455 $5,707
======= ====== ======
RATIO OF EARNINGS TO
FIXED CHARGES....... 1.35 .98 1.03
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report dated October 1, 1997, (except with respect to the matters discussed in
Note 7, as to which the date is February 27, 1998) and to all references to our
Firm, included in or made a part of this registration statement.
ARTHUR ANDERSEN LLP
Dallas, Texas,
March 9, 1998
<PAGE> 1
EXHIBIT 25.1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------
[ ] CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
A. U.S. NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization
if not a U.S. national bank) Identification No.)
Corporate Trust Operations
Northstar East, 12th floor
608 2nd Avenue
Minneapolis, MN 55402 55402
(Address of principal executive offices) (Zip code)
</TABLE>
STANLEY S. STROUP, GENERAL COUNSEL
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
SIXTH STREET AND MARQUETTE AVENUE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
(AGENT FOR SERVICE)
---------------------
FWT, INC.
(Exact name of obligor as specified in its charter)
<TABLE>
<S> <C>
TEXAS 75-104073
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1901 EAST LOOP 820 SOUTH
FT. WORTH, TX 76112-7899
(Address of principal executive offices) (Zip code)
</TABLE>
---------------------
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None with respect to the trustee.
No responses are included for Items 3-14 of this Form T-1 because the obligor
is not in default as provided under Item 13.
ITEM 15. FOREIGN TRUSTEE.
Not applicable.
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this Statement of Eligibility.
Norwest Bank incorporates by reference into this Form T-1 the exhibits attached
hereto.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.a -- A copy of the Articles of Association of the trustee now
in effect.*
2.a -- A copy of the certificate of authority of the trustee to
commence business issued June 28, 1872, by the
Comptroller of the Currency to The Northwestern National
Bank of Minneapolis.*
2.b -- A copy of the certificate of the Comptroller of the
Currency dated January 2, 1934, approving the
consolidation of The Northwestern National Bank of
Minneapolis and The Minnesota Loan and Trust Company of
Minneapolis, with the surviving entity being titled
Northwestern National Bank and Trust Company of
Minneapolis.*
2.c -- A copy of the certificate of the Acting Comptroller of
the Currency dated January 12, 1943, as to change of
corporate title of Northwestern National Bank and Trust
Company of Minneapolis to Northwestern National Bank of
Minneapolis.*
2.d -- A copy of the letter dated May 12, 1983 from the Regional
Counsel, Comptroller of the Currency, acknowledging
receipt of notice of name change effective May 1, 1983
from Northwestern National Bank of Minneapolis to Norwest
Bank Minneapolis, National Association.*
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
2.e -- A copy of the letter dated January 4, 1988 from the
Administrator of National Banks for the Comptroller of
the Currency certifying approval of consolidation and
merger effective January 1, 1988 of Norwest Bank
Minneapolis, National Association with various other
banks under the title of "Norwest Bank Minnesota,
National Association."*
3. -- A copy of the authorization of the trustee to exercise
corporate trust powers issued January 2, 1934, by the
Federal Reserve Board.*
4. -- Copy of By-laws of the trustee as now in effect.*
5. -- Not applicable.
6. -- The consent of the trustee required by Section 321(b) of
the Act.
7. -- A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.**
8. -- Not applicable.
9. -- Not applicable.
</TABLE>
- ---------------
* Incorporated by reference to exhibit number 25 filed with registration
statement number 33-66026.
** Incorporated by reference to exhibit number 25 filed with registration
statement number 333-43005.
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Norwest Bank Minnesota, National Association, a national
banking association organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 9th day of January, 1998.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ JANE Y. SCHWEIGER
------------------------------------
Jane Y. Schweiger
Corporate Trust Officer
<PAGE> 5
EXHIBIT 6
January 9, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321(b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal, State, Territorial, or District authorities
authorized to make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ JANE Y. SCHWEIGER
------------------------------------
Jane Y. Schweiger
Corporate Trust Officer
<PAGE> 1
EXHIBIT 99.1
FORM OF
LETTER OF TRANSMITTAL
FWT, INC.
OFFER TO EXCHANGE ITS 9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ANY AND ALL OF ITS OUTSTANDING
9 7/8% SENIOR SUBORDINATED NOTES DUE 2007
---------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON , 1998,
UNLESS THE OFFER IS EXTENDED
---------------------
Deliver to Norwest Bank Minnesota, N.A.
(the "Exchange Agent")
By Registered or Certified Mail: By Overnight Courier:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
By Hand: By Facsimile:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Operations Corporate Trust Operations
Northstar East, 12th Floor (612) 667-4927
608 2nd Avenue Confirm by telephone:
Minneapolis, MN 55402 (612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONES LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.
The undersigned hereby acknowledges receipt of the Prospectus dated
, 1998 (the "Prospectus") of FWT, Inc. (the "Company") and this
Letter of Transmittal, which together constitute the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 9 7/8% Senior
Subordinated Notes due 2007 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a Registration Statement of which the Prospectus is a part, for each $1000
principal amount of its outstanding 9 7/8% Senior Subordinated Notes due 2007
(the "Outstanding Notes"). The terms "Expiration Date" shall mean 5:00 p.m., New
York City time, on , 1997, unless the Company, in its sole
discretion, extends the Exchange Offer, in which case the term shall mean the
latest date and time to which the Exchange Offer is extended.
Capitalized terms used but not defined herein have the meaning given to them in
the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS RELATING TO THE PROCEDURE FOR TENDERING AND REQUESTS FOR ADDITIONAL
COPIES OF THE PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE
EXCHANGE AGENT. QUESTIONS RELATING TO THE EXCHANGE OFFER AND REQUESTS FOR
ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS AND THIS LETTER OF
TRANSMITTAL MAY BE DIRECTED TO THE COMPANY.
<PAGE> 2
List below the Outstanding Notes to which this Letter of Transmittal
relates. If the space indicated below is inadequate, the certificate numbers and
principal amounts should be listed on a separately signed schedule affixed
hereto.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OUTSTANDING NOTES TENDERED HEREBY
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) REGISTRATION AMOUNT PRINCIPAL
EXACTLY AS NAME(S) APPEAR(S) ON OUTSTANDING NOTES NUMBER(S)* REPRESENTED BY AMOUNT
(PLEASE FILL IN) AND SERIES OUTSTANDING NOTES TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
======================================================
------------------------------------------------------
Total
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full aggregate principal amount represented by such Outstanding Notes. All
tenders must be in integral multiples of $1,000.
This Letter of Transmittal is to be used (i) if certificates of Outstanding
Notes are to be forwarded herewith, (ii) if delivery of Outstanding Notes is to
be made by book-entry transfer to an account maintained by the Exchange Agent at
The Depository Trust Company ("DTC"), pursuant to the procedures set forth in
"The Exchange Offer-Procedures for Tendering" in the Prospectus or (iii) tender
of the Outstanding Notes is to be made according to the guaranteed delivery
procedures described in the Prospectus under the caption "The Exchange
Offer -- Guaranteed Delivery Procedures." See Instruction 2. Delivery of
documents to a book-entry transfer facility does not constitute delivery to the
Exchange Agent. It is understood that participants in DTC's book-entry system
will, in accordance with DTC's Automated Tender Offer Program procedures and in
lieu of physical delivery to the Exchange Agent of a Letter of Transmittal,
electronically acknowledge receipt of, and agreement to be bound by, the terms
of this Letter of Transmittal.
The term "Holder" with respect to the Exchange Offer means any person in
whose name Outstanding Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Outstanding
Notes must complete this letter in its entirety.
<PAGE> 3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
[ ] The Depository Trust Company
Account Number
Transaction Code Number
Holders whose Outstanding Notes are not immediately available or who cannot
deliver their Outstanding Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Outstanding
Notes according to the guaranteed delivery procedure set forth in the Prospectus
under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s)
Date of Execution of Notice of Guaranteed Delivery
Name of Eligible Institution that Guaranteed Delivery
If delivered by book-entry transfer:
Account Number
Transaction Code Number
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name
Address
<PAGE> 4
SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of the
Outstanding Notes indicated above. Subject to, and effective upon, the
acceptance for exchange of such Outstanding Notes tendered hereby, the
undersigned hereby exchanges, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to such Outstanding Notes as
are being tendered hereby, including all rights to accrued and unpaid interest
thereon as of the Expiration Date. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent the true and lawful agent and
attorney-in-fact of the undersigned (with full knowledge that said Exchange
Agent acts as the agent of the Company in connection with the Exchange Offer) to
cause the Outstanding Notes to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the Outstanding Notes and to acquire
Exchange Notes issuable upon the exchange of such tendered Outstanding Notes,
and that when the same are accepted for exchange, the Company will acquire good
and unencumbered title to the tendered Outstanding Notes, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim.
The undersigned represents to the Company that (i) the Exchange Notes
acquired pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, and (ii) neither the undersigned nor any such
other person has an arrangement or understanding with any person to participate
in the distribution of such Exchange Notes. If the undersigned or the person
receiving the Exchange Notes covered hereby is a broker-dealer that is receiving
the Exchange Notes for its own account in exchange for Outstanding Notes that
were acquired as a result of market-making activities or other trading
activities, the undersigned acknowledges that it or such other person will
deliver a prospectus in connection with any resale of such Exchange Notes. The
undersigned and any such other person acknowledge that, if they are
participating in the Exchange Offer for the purpose of distributing the Exchange
Notes, (i) they cannot rely on the position of the staff of the Securities and
Exchange Commission enunciated in Exxon Capital Holdings Corporation (available
April 13, 1989) or similar no-action letters and, in the absence of an exemption
therefrom, must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with the resale transaction and
(ii) failure to comply with such requirements in such instance could result in
the undersigned or any such other person incurring liability under the
Securities Act for which such persons are not indemnified by the Company. If the
undersigned or the person receiving the Exchange Notes covered by this letter is
an affiliate (as defined under Rule 405 of the Securities Act) of the Company,
the undersigned represents to the Company that the undersigned understands and
acknowledges that such Exchange Notes may not be offered for resale, resold or
otherwise transferred by the undersigned or such other person without
registration under the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered Outstanding Notes or transfer ownership of such Outstanding Notes on
the account books maintained by a Book-Entry Transfer Facility. The undersigned
further agrees that acceptance of any tendered Outstanding Notes by the Company
and the issuance of Exchange Notes in exchange therefor shall constitute
performance in full by the Company of its obligations under the Registration
Rights Agreement and that the Company shall have no further obligations or
liabilities thereunder for the registration of the Outstanding Notes or the
Exchange Notes.
The Exchange Offer is subject to certain conditions set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The undersigned
recognizes that as a result of these conditions (which may be waived, in whole
or in part, by the Company), as more particularly set forth in the Prospectus,
the Company may not be required to exchange any of the Outstanding Notes
tendered hereby and, in such event, the Outstanding Notes not exchanged will be
returned to the undersigned at the address shown below the signature of the
undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered Outstanding Notes may be withdrawn at
any time prior to the Expiration Date.
<PAGE> 5
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Notes delivered in exchange for
tendered Outstanding Notes, and any Outstanding Notes delivered herewith but not
exchanged, will be registered in the name of the undersigned and shall be
delivered to the undersigned at the address shown below the signature of the
undersigned. If an Exchange Note is to be issued to a person other than the
person(s) signing this Letter of Transmittal, or if the Exchange Note is to be
mailed to someone other than the person(s) signing this Letter of Transmittal or
to the person(s) signing this Letter of Transmittal at an address different than
the address shown on this Letter of Transmittal, the appropriate boxes of this
Letter of Transmittal should be completed. IF OUTSTANDING NOTES ARE SURRENDERED
BY HOLDER(S) THAT HAVE COMPLETED EITHER THE BOX ENTITLED "SPECIAL REGISTRATION
INSTRUCTIONS" OR THE BOX ENTITLED "SPECIAL DELIVERY INSTRUCTIONS" IN THIS LETTER
OF TRANSMITTAL, SIGNATURE(S) ON THIS LETTER OF TRANSMITTAL MUST BE GUARANTEED BY
AN ELIGIBLE INSTITUTION (SEE INSTRUCTION 4).
SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTION 5)
To be completed ONLY if the Exchange Notes are to be issued in the name of
someone other than the undersigned.
Issue Exchange Note to:
Name:
- -------------------------------------------------
Address:
- -----------------------------------------------
- ---------------------------------------------------------
(Please print or type)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 5)
To be completed ONLY if the Exchange Notes are to be sent to someone other
than the undersigned, or to the undersigned at an address other than that shown
under "Description of Outstanding Notes Tendered Hereby."
Mail Exchange Note to:
Name:
Address:
- ---------------------------------------------------------
(Please print or type)
<PAGE> 6
REGISTERED HOLDER (S) OF OUTSTANDING NOTES SIGN HERE
(IN ADDITION COMPLETE SUBSTITUTE FORM W-9 BELOW)
X
(Signature(s) of Registered Holder(s))
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
Outstanding Notes or on a security position listing as the owner of the
Outstanding Notes or by person(s) authorized to become registered holder(s) by
properly completed bond powers transmitted herewith. If signature is by
attorney-in-fact trustee executor, administrator, guardian, officer of a
corporation or other person acting in a fiduciary capacity, please provide the
following information (Please print or type):
Name and Capacity (full title):
Address: (including zip):
Area Code and Telephone Number:
Dated: ____________________________
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTION 4)
Authorized Signature:
(Signature of Representative of Signature Guarantor)
Name and Title:
Name of Firm:
Area Code and Telephone Number:
(Please print or type)
Dated: ____________________________
<PAGE> 7
PAYOR'S NAME: [ ]
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer identification
number on the following Substitute Form W-9 and certify therein that you are not
subject to backup withholding.
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------
SUBSTITUTE
PART L -- Please provide your TIN in the box at
FORM W-9 right and certify by signing and dating below.
DEPARTMENT OF THE PART 2 -- Check the box if you are not subject to
TREASURY backup withholding under the provisions of section -------------------------
INTERNAL REVENUE SERVICE 3406(a)(l)(C) of the Internal Revenue Code because Social Security Number or
(l) you have not been notified that you are Employer Identification
PAYOR'S REQUEST FOR subject to backup withholding as a result of Number
TAXPAYER IDENTIFICATION failure to report all interest or dividends or (2) [ ]
NO. ("TIN") the Internal Revenue Service has notified you that
you are no longer subject to backup withholding. Part 3
AWAITING TIN [ ]
Certification Under the penalties of perjury I
certify that the information provided on this form
is true correct and complete.
SIGNATURE DATE _____________
- ---------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
<TABLE>
<S> <C>
- ---------------------------------------------- ----------------------------------------------
Signature Date
</TABLE>
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Outstanding Notes or any confirmation of a
book-entry transfer to the Exchange Agent's account at a Book-Entry Transfer
Facility of Outstanding Notes tendered by book-entry transfer, as well as a
properly completed and duly executed copy of this Letter of Transmittal or
facsimile thereof, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at any of its addresses set
forth herein on or prior to the Expiration Date (as defined in the Prospectus).
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OUTSTANDING NOTES AND
ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER, AND
EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS
SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED,
BE USED.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile thereof), shall waive any right to receive notice of the acceptance of
the Outstanding Notes for exchange.
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH HEREIN, OR INSTRUCTIONS VIA
A FACSIMILE NUMBER OTHER THAN THE ONES SET FORTH HEREIN, WILL NOT CONSTITUTE A
VALID DELIVERY.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Outstanding Notes, but whose Outstanding
Notes are not immediately available and thus cannot deliver their Outstanding
Notes, the Letter of Transmittal or any other required documents to the Exchange
Agent (or comply with the procedures for book-entry transfer) prior to the
Expiration Date, may effect a tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent
in the United States or an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (an "Eligible Institution");
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the registration
number(s) and series of such Outstanding Notes and the principal amount of
Outstanding Notes tendered, stating that the tender is being made thereby
and guaranteeing that, within five New York Stock Exchange trading days
after the Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the Outstanding Notes (or a confirmation of
book-entry transfer of such Outstanding Notes into the Exchange Agent's
account at the Book-Entry Transfer Facility) and any other documents
required by the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered Outstanding Notes in proper
form for transfer (or a confirmation of book-entry transfer of such
Outstanding Notes into the Exchange Agent's account at the Book-Entry
Transfer Facility) and all other documents required by the Letter of
Transmittal, are received by the Exchange Agent within five New York Stock
Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Outstanding Notes according to the
guaranteed delivery procedures set forth above. Any Holder who wishes to tender
Outstanding Notes pursuant to the guaranteed delivery procedures described above
must ensure that the Exchange
<PAGE> 9
Agent receives the Notice of Guaranteed Delivery relating to such Outstanding
Notes prior to the Expiration Date. Failure to complete the guaranteed delivery
procedures outlined above will not, of itself, affect the validity or effect a
revocation of any Letter of Transmittal form properly completed and executed by
a Holder who attempted to use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Outstanding Notes evidenced by
a submitted certificate is tendered, the tendering Holder should fill in the
principal amount tendered in the column entitled "Principal Amount Tendered" of
the box entitled "Description of Outstanding Notes Tendered Hereby." A newly
issued Outstanding Note for the principal amount of Notes submitted but not
tendered will be sent to such Holder as soon as practicable after the Expiration
Date. All Outstanding Notes delivered to the Exchange Agent will be deemed to
have been tendered in full unless otherwise indicated. Tenders of Outstanding
Notes will be accepted only in integral multiples of $1,000.
Outstanding Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date, after which tenders of Outstanding
Notes are irrevocable. To be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Exchange Agent.
Any such notice of withdrawal must (i) specify the name of the person having
deposited the Outstanding Notes to be withdrawn (the "Depositor"), (ii) identify
the Outstanding Notes to be withdrawn (including the registration number(s),
series and principal amount of such Outstanding Notes, or, in the case of
Outstanding Notes transferred by book-entry transfer, the name and number of the
account at the Book-Entry Transfer Facility to be credited), (iii) be signed by
the Holder in the same manner as the original signature on this Letter of
Transmittal (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
Outstanding Notes register the transfer of such Outstanding Notes into the name
of the person withdrawing the tender and (iv) specify the name in which any such
Outstanding Notes are to be registered, if different from that of the Depositor.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by the Company, whose determination
shall be final and binding on all parties. Any Outstanding Notes so withdrawn
will be deemed not to have been validly tendered for purposes of the Exchange
Offer and no Exchange Notes will be issued with respect thereto unless the
Outstanding Notes so withdrawn are validly retendered. Any Outstanding Notes
that have been tendered but not accepted for exchange, will be returned to the
Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of the Outstanding Notes tendered hereby, the signature
must correspond with the name(s) as written on the face of the certificates
without alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Book-Entry Transfer Facility, the
signature must correspond with the name as it appears on the security position
listing as the holder of the Outstanding Notes.
If any of the Outstanding Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If a number of Outstanding Notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Outstanding Notes.
Signatures on this Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution unless the
Outstanding Notes tendered hereby are tendered (i) by a registered Holder who
has not completed the box entitled "Special Registration Instructions" or
"Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of Outstanding Notes (which term, for the purposes described herein, shall
include a participant in the Book-Entry Transfer Facility whose name appears on
a security listing as the holder of the Outstanding Notes) listed and tendered
hereby, no endorsements of the tendered Outstanding Notes or separate written
instruments of transfer or exchange are required. In any other case, the
registered
<PAGE> 10
Holder (or acting Holder) must either properly endorse the Outstanding Notes or
transmit properly completed bond powers with this Letter of Transmittal (in
either case, executed exactly as the name(s) of the registered Holder(s)
appear(s) on the Outstanding Notes, and, with respect to a participant in the
Book-Entry Transfer Facility whose name appears on a security position listing
as the owner of Outstanding Notes, exactly as the name of the participant
appears on such security position listing), with the signature on the
Outstanding Notes or bond power guaranteed by an Eligible Institution (except
where the Outstanding Notes are tendered for the account of an Eligible
Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the name and
address (or account at the Book-Entry Transfer Facility) in which the Exchange
Notes or substitute Outstanding Notes for principal amounts not tendered or not
accepted for exchange are to be issued (or deposited), if different from the
names and addresses or accounts of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification number or social security number of the person named must also be
indicated and the tendering Holder should complete the applicable box.
If no instructions are given, the Exchange Notes (and any Outstanding Notes
not tendered or not accepted) will be issued in the name of and sent to the
acting Holder of the Outstanding Notes or deposited at such Holder's account at
the Book-Entry Transfer Facility.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable to the
transfer and exchange of Outstanding Notes to it or its order pursuant to the
Exchange Offer. If a transfer tax is imposed for any other reason other than the
transfer and exchange of Outstanding Notes to the Company or its order pursuant
to the Exchange Offer, the amount of any such transfer taxes (whether imposed on
the registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exception therefrom
is not submitted herewith, the amount of such transfer taxes will be billed
directly to such tendering Holder.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the Outstanding Notes listed in this Letter of
Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the absolute right to waive, in whole or in part, any
of the conditions to the Exchange Offer set forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any holder whose Outstanding Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering as well as requests for
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Exchange Agent at the address and telephone number(s) set forth
above. In addition, all questions relating to the Exchange Offer, as well as
requests for assistance or additional copies of the Prospectus and this Letter
of Transmittal, may be directed to the Company at 1901 East Loop 820 South, Fort
Worth, Texas 76112, Attention: Secretary (telephone: (817) 457-3060).
<PAGE> 11
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Outstanding Notes and withdrawal of tendered
Outstanding Notes will be determined by the Company in its sole discretion,
which determination will be final and binding. The Company reserves the absolute
right to reject any and all Outstanding Notes not properly tendered or any
Outstanding Notes the Company's acceptance of which would, in the opinion of
counsel for the Company, be unlawful. The Company also reserves the right to
waive any defects, irregularities or conditions of tender as to particular
Outstanding Notes. The Company's interpretation of the terms and conditions of
the Exchange Offer (including the instructions in this Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Outstanding Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify Holders of defects or irregularities with respect to tenders of
Outstanding Notes, neither the Company, the Exchange Agent nor any other person
shall incur any liability for failure to give such notification. Tenders of
Outstanding Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Outstanding Notes received by the
Exchange Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders as soon as practicable following the Expiration
Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Outstanding Notes is
required to provide the Exchange Agent with such holder's correct TIN on
Substitute Form W-9 below. If such Holder is an individual, the TIN is the
Holder's social security number. The Certificate of Awaiting Taxpayer
Identification Number should be completed if the tendering Holder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. If the Exchange Agent is not provided with the correct TIN, the
Holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, payments that are made to such Holder with respect to tendered
Outstanding Notes may be subject to backup withholding.
Certain Holders (including, among others, all corporations and certain
foreign individuals and foreign entities) are not subject to these backup
withholding and reporting requirements. In order for such a Holder to qualify as
an exempt recipient, that Holder must submit to the Exchange Agent a properly
completed Internal Revenue Service Form W-8, signed under penalties of perjury,
attesting to that Holder's exempt status. Such forms can be obtained from the
Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a Holder with
respect to Outstanding Notes tendered for exchange, the Holder is required to
notify the Exchange Agent of his or her correct TIN by completing the form
herein certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (i) such Holder has not been
notified by the Internal Revenue Service that he or she is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the Internal Revenue Service has notified such Holder that he or she is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social security
number or employer identification number of the record Holder(s) of the
Outstanding Notes. If Outstanding Notes are in more than one name or are not in
the name of the actual Holder, consult the instructions on Internal Revenue
Service Form W-9, which may be obtained from the Exchange Agent, for additional
guidance on which number to report.
<PAGE> 12
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has applied for a
number or intends to apply for a number in the near future, write "Applied For"
in the space for the TIN on Substitute Form W-9, sign and date the form and the
Certificate of Awaiting Taxpayer Identification Number and return them to the
Exchange Agent. If such certificate is completed and the Exchange Agent is not
provided with the TIN within 60 days, the Exchange Agent will withhold 31% of
all payments made thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A MANUALLY SIGNED FACSIMILE
THEREOF (TOGETHER WITH OUTSTANDING NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER
AND ALL OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
