<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 2, 1998
REGISTRATION NO. 333-44273
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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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)
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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.
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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: [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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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
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</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.
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<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 2, 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
, 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)
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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 , 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 ,
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.
THE INFORMATION CONTAINED IN THIS PROSPECTUS WAS OBTAINED FROM THE COMPANY
AND OTHER SOURCES, BUT NO ASSURANCE CAN BE GIVEN AS TO THE ACCURACY OR
COMPLETENESS OF THE INFORMATION OBTAINED FROM SOURCES OTHER THAN THE COMPANY. IN
MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED. THE CONTENTS OF THIS PROSPECTUS ARE NOT TO BE CONSTRUED AS LEGAL,
BUSINESS OR TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN
ATTORNEY, BUSINESS ADVISOR AND TAX ADVISOR AS TO LEGAL, BUSINESS OR TAX ADVICE.
<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 October 31, 1997, the Company
generated pro forma sales of $81.4 million, and pro forma earnings before
interest, taxes, depreciation and amortization ("EBITDA") of $15.9 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 producer. 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 significantly
reduce product lead time. The Company's automated design, 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, will 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 five participants, respectively, who together have a
dominant 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 are highly automated resulting in 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 producer. 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
one of the leading providers in both the monopole and tower markets and,
in recent years, it has significantly increased its market share in each
of these segments. The Company believes it is currently the second
largest participant in
2
<PAGE> 8
each of the monopole and tower markets, with market shares that it
estimates to be 18.0% and 12.0%, respectively. Although the Company
believes it is well 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 with
FWT. The existing management team is responsible for the Company's
significant 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 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. The ability of the Company to
engage in any transaction with Baker is limited by the terms and
conditions of the Revolving Credit Facility and the Indenture.
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<PAGE> 9
- 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 , 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 (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 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 , 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 unaudited income statement data for the latest twelve month ("LTM")
period ended October 31, 1997 represent the summation of the Statement of Income
for Fiscal Year 1997 and the unaudited Statement of Income for the six month
period ended October 31, 1997, less the unaudited Statement of Income for the
six month period ended October 31, 1996. 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>
PRO FORMA
SIX MONTH PERIOD LTM PERIOD LTM PERIOD
ENDED ENDED ENDED
FISCAL YEAR ENDED APRIL 30, OCTOBER 31, OCTOBER 31, 1997(6) OCTOBER 31, 1997(6)
--------------------------- ----------------- ------------------- -------------------
1995 1996 1997 1996 1997
------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales............................. $30,388 $42,701 $71,188.. $27,132 $37,350 $81,406 $ 81,406
Cost of sales..................... 23,838 32,006 49,249 18,771 26,652 57,130 57,130
------- ------- ------- ------- ------- ------- --------
Gross profit...................... 6,550 10,695 21,939 8,361 10,698 24,276 24,276
Selling, general and
administrative.................. 4,139 4,244 8,353 2,942 5,389 10,800 9,750
------- ------- ------- ------- ------- ------- --------
Operating income.................. 2,411 6,451 13,586 5,419 5,309 13,476 14,526
Interest income (expense), net.... 69 123 197 102 (157) (62) (10,701)
Other income(1)................... 3 512 571 41 281 811 357
------- ------- ------- ------- ------- ------- --------
Income before income tax
provision....................... 2,483 7,086 14,354 5,562 5,433 14,225 4,182
Income tax provision(2)........... 53 162 316 125 113 304 1,589
------- ------- ------- ------- ------- ------- --------
Net income(2)..................... $ 2,430 $ 6,924 $14,038 $ 5,437 $ 5,320 $13,921 $ 2,593
======= ======= ======= ======= ======= ======= ========
OTHER FINANCIAL DATA:
EBITDA(3)......................... $ 2,827 $ 7,494 $14,937 $ 5,835 $ 6,248 $15,350 $ 15,946
Depreciation...................... 299 375 508 259 412 661 661
Capital expenditures.............. 1,324 1,198 4,341 1,086 664 3,919 3,919
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 31.66x 1.38x
Ratio of long term debt to
EBITDA(4)....................... -- -- -- -- -- -- 6.58x
Ratio of EBITDA to pro forma
interest expense(4)(5).......... -- -- -- -- -- -- 1.54x
BALANCE SHEET DATA:
Working capital................... 5,278 9,815 18,509 14,370 2,531 2,531 13,991
Total assets...................... 11,854 19,489 40,203 27,523 40,838 40,838 60,284
Long term debt, less current
maturities...................... 475 375 1,512 325 1,410 1,410 105,000
Shareholders' equity (deficit).... 8,412 13,977 25,297 19,414 9,617 9,617 (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.
(4) These calculations are similar to calculations required in the Indenture and
the Revolving Credit Facility.
(5) Pro forma interest expense used in the calculation of the ratio excludes
amortization of deferred financing costs as amortization is a non-cash
expense.
(6) The columns captioned "LTM Period Ended October 31, 1997," and "Pro Forma
LTM Period Ended October 31, 1997," reflect unaudited income statement data
and unaudited pro forma income statement data for the latest twelve-month
periods ended October 31, 1997. LTM information provides an additional
measure of the Company's most recent annual historical operating
performance. However, it should be noted that this information is unaudited
and should not be confused with the audited information provided for Fiscal
Year 1997.
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 "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."
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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." 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
"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
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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
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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.
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<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
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<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
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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.
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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 , 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
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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> <C>
By Registered or Certified By Overnight Mail or Hand: By Facsimile:
Mail:
Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Services Corporate Trust Services Attn: Ms. Jane Schweiger
Group Group Facsimile No. 612-667-9825
6th and Marquette, MS 0069 6th and Marquette, MS 0069 Confirm by Telephone No. 612-
Minneapolis, Minnesota Minneapolis, Minnesota 667-2344
55479-0069 55479-0069
</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.
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
25
<PAGE> 31
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 April 13, 1989) 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.
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.
26
<PAGE> 32
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
Ratio of long term debt to
EBITDA(5)................... -- -- -- -- -- -- --
Ratio of EBITDA to pro forma
interest expense(5)......... -- -- -- -- -- -- --
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 for the latest twelve months ended
October 31, 1997 is 31.66x and for the latest twelve months ended October
31, 1997 on a pro forma basis is 1.38x.
(5) These calculations are similar to calculations required in the Indenture and
the Revolving Credit Facility.
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
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.
37
<PAGE> 43
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 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. However, in some circumstances, revenue is recorded upon completion of
a product and satisfactory compliance with the terms of specific customer
purchase agreements. If all the customer terms have not been met, revenue is not
recorded. 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
38
<PAGE> 44
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.
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
39
<PAGE> 45
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.
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
40
<PAGE> 46
approximately $11.4 million of availability under the Revolving Credit Facility.
The Revolving Credit Facility requires the Company to maintain specified
financial ratios including a minimum interest coverage ratio, a maximum leverage
coverage ratio and a minimum consolidated EBITDA. The Revolving Credit Facility
also limits the Company to a specified amount of consolidated capital
expenditures and a specified amount of indebtedness. 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 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.
41
<PAGE> 47
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 October 31, 1997, the Company generated pro forma sales of $81.4
million, and pro forma EBITDA of $15.9 million.
PRODUCTS
The Company has grown from a small manufacturing shop into an industry
leader with three manufacturing facilities that provide a broad array of
infrastructure products for the telecommunications industry, including:
Monopoles. Monopoles are tapered, sleeve-fit or round flange-fit antenna
structures that serve as an alternative to towers, and are generally regarded as
more aesthetically pleasing and easier to install than towers. The Company's
monopole manufacturing process is highly automated.
Towers. Lattice towers are vertical structures most frequently used by
wireless and broadcast service providers to support antennas. They can be
self-supporting, typically three-legged structures, or supported by guy wires
attached to anchors in the ground.
COWS. COWS are mobile structures that combine an antenna support
structure, power supply and radio equipment enclosure. COWS are used when
temporary coverage is needed, often before a permanent site is built, for
special high usage events or for disaster recovery.
Shelters. Shelters are small, pre-fabricated buildings which are used to
house the electronic equipment required at cell sites. Shelters generally range
from 100 to 500 square feet and are typically made with an aluminum exterior.
PowerMount(TM). The PowerMount(TM) is a patented product that allows a
wireless service provider to install a fully sectored antenna array on an
electrical utility support structure, thereby taking advantage of an existing
site.
The following chart displays sales of the Company by product category.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED ($ 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
42
<PAGE> 48
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 are highly automated resulting in 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
one of the leading providers in both the monopole and tower markets and,
in recent years, it has significantly increased its market share in each
of these segments. The Company believes it is currently the second
largest participant in each of the monopole and tower markets, with
market shares that it estimates to be 18.0% and 12.0%, respectively.
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 with
FWT. The existing management team is responsible for the Company's
significant 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
43
<PAGE> 49
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 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. The ability of the Company to
engage in any transaction with Baker 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
of the manufacturing process. Management believes that strategic alliances with
key suppliers have led to further 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 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.
44
<PAGE> 50
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.
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
volume-based commission. 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
45
<PAGE> 51
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.
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.
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<PAGE> 52
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.
47
<PAGE> 53
INDUSTRY OVERVIEW
The monopole and tower segments of the communications infrastructure
industry have seven and five participants, respectively, who together have a
dominant 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
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<PAGE> 54
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.
49
<PAGE> 55
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
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<PAGE> 56
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
51
<PAGE> 57
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.
52
<PAGE> 58
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.
53
<PAGE> 59
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
54
<PAGE> 60
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
55
<PAGE> 61
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.
56
<PAGE> 62
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 a commitment fee 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."
57
<PAGE> 63
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
58
<PAGE> 64
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
59
<PAGE> 65
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
60
<PAGE> 66
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
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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
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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
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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
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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
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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
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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
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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);
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(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
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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
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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.
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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.
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"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.
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"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
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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.
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"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
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(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
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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;
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(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
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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;
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(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
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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.
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"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.
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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
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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 GENERAL 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 certain 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
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authority to issue Regulations allowing certain trusts in existence on 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. 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 should not constitute a
significant modification of the terms of the Outstanding Notes and, accordingly,
such exchange should be treated as a "non-event" for federal income tax
purposes. Therefore, such exchange should have no federal income tax
consequences to holders of the Outstanding Notes, the holding period of an
Exchange Note will 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.
EFFECT OF CHANGE OF CONTROL
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 will not treat
the Change of Control redemption provisions of the Exchange Notes as affecting
the calculation of the yield to maturity of any Exchange Note.
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 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.
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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.
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., 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.
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
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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 , 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 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
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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.
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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> 96
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> 97
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> 98
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> 99
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> 100
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> 101
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. 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> 102
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 some circumstances,
revenue is recognized upon completion of a product and satisfactory compliance
with terms of specific customer purchase agreements.
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> 103
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> 104
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> 105
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> 106
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> 107
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> 108
======================================================
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
Business.............................. 42
Industry Overview..................... 48
Management............................ 50
Principal Shareholders................ 53
Certain Relationships and Related
Transactions........................ 54
Description of the Revolving Credit
Facility............................ 57
Description of Exchange Notes......... 58
Book-Entry; Delivery and Form......... 84
Federal Income Tax Consequences....... 85
Plan of Distribution.................. 88
Independent Public Accountants........ 89
Legal Matters......................... 89
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
, 1998
======================================================
<PAGE> 109
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 is filed herewith
separately as Exhibit 10.10 and Exhibit B is filed
herewith separately as Exhibit 4.3.
</TABLE>
II-1
<PAGE> 110
<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 is filed 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 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.
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.
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
II-2
<PAGE> 111
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 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-3
<PAGE> 112
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this Amendment No. 1 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 2nd 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. 1 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 2, 1998
- ----------------------------------------------------- Chief Executive Officer
Roy J. Moore
* Chief Operations Officer and March 2, 1998
- ----------------------------------------------------- President, Fort Worth
Douglas A. Standley Division
* Vice President of Finance March 2, 1998
- ----------------------------------------------------- (signing in the capacity
William R. Estill of principal financial
officer and principal
accounting officer)
* Director March 2, 1998
- -----------------------------------------------------
John C. Baker
* Director March 2, 1998
- -----------------------------------------------------
Edward W. Scott
* Director March 2, 1998
- -----------------------------------------------------
Lawrence A. Bettino
/s/ ROY J. MOORE* March 2, 1998
- -----------------------------------------------------
Roy J. Moore,
Attorney-in-Fact
</TABLE>
II-4
<PAGE> 113
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 is filed herewith
separately as Exhibit 10.10 and Exhibit B is filed
herewith separately 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 is filed 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 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> 114
<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.
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.
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
EXHIBIT 5.1
[AKIN, GUMP, STRAUSS, HAUER & FELD L.L.P. LETTERHEAD]
February 27, 1998
FWT, Inc.
1901 East Loop 820 South
Ft. Worth, TX 76112-7889
Ladies and Gentlemen:
We have acted as counsel for FWT, Inc., a Texas corporation (the
"Company"), in connection with the proposed offer by the Company to exchange
(the "Exchange Offer") all outstanding 9 7/8% Senior Subordinated Notes Due 2007
($105 million principal amount outstanding) (the "Outstanding Notes") for 9 7/8%
Senior Subordinated Notes Due 2007 ($105 million principal amount) (the
"Exchange Notes"). The Outstanding Notes have been, and the Exchange Notes will
be, issued pursuant to an Indenture dated as of November 15, 1997, between the
Company and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"). Unless otherwise defined herein capitalized terms used in this
opinion shall have the same meanings set forth in the Indenture.
The law covered by the opinions expressed herein is limited to the Federal
laws of the United States and the laws of the State of New York and the State
of Texas. This firm is a registered limited liability partnership organized
under the laws of the State of Texas.
We have examined the Indenture and the form of Exchange Notes, which are
filed as Exhibit 4.1 to the Registration Statement, the Registration Statement
on for S-4, as amended by Amendment No. 1 thereto, filed by the Company with the
Securities and Exchange Commission, for the registration of the Exchange Notes
under the Securities Act of 1933 (the Registration Statement as amended at the
time it becomes effective being referred to as the "Registration Statement") and
such corporate records of the Company, certificates of public officials and such
other documents as we have deemed necessary or appropriate for the purpose of
this opinion.
<PAGE> 2
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
FWT, Inc.
February 27, 1998
Page 2
Based upon such examination and review, we are of the opinion that:
The Exchange Notes proposed to be issued by the Company pursuant to the
Exchange Offer have been duly authorized for issuance and, subject to the
Registration Statement becoming effective under the Securities Act of 1933,
and to compliance with any applicable state securities laws, the Exchange
Notes when issued, delivered by the Company, authenticated by the Trustee
and delivered and sold in accordance with the Indenture, will be valid and
binding obligations of the Company.
The opinion expressed herein as to the valid, binding and enforceable
nature of the Exchange Notes is subject to the exceptions that (i) enforcement
may be limited by bankruptcy, insolvency (including without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally, and (ii) enforcement is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law). In addition, the foregoing
opinion is subject to the qualifications that certain remedial, waiver and other
similar provisions of the Indenture may not be enforceable in whole or in part
under the laws of the State of New York or the United States, but such
provisions do not void the Indenture or frustrate the basic purpose thereof, and
subject to the other qualifications set forth in this opinion, the Indenture
contains adequate provisions for the practical realization of the rights and
benefits afforded thereby, 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 New York or the United
States. In addition, we express no opinion as to (i) the enforceability of any
provisions contained in the Indenture purporting to waive the benefits of any
stay, extension or usury law or waive any rights under any applicable statutes
or rules thereafter enacted or promulgated or (ii) the validity, legally binding
effect or enforceability of any provision of any agreement that requires or
relates to payment of any interest at a rate or in an amount which a court would
determine in the circumstances under applicable law to be commercially
unreasonable or a penalty or a forfeiture. In addition, the rights to
indemnification contained in the Indenture may be limited by Federal or New York
State laws or the policies underlying such laws.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to the firm under "Legal Matters"
in the Prospectus forming a part of the Registration Statement.
Sincerely,
/s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE> 1
SCHEDULE I
SHAREHOLDINGS
Name Shares
---- ------
T. W. Moore 93.93
Betty Moore 93.93
Carl R. Moore 61.38
Thomas F. "Fred" Moore 61.38
Roy J. Moore 61.38
46
<PAGE> 2
SCHEDULE 1.2
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> 3
SCHEDULE 1.9
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> 4
SCHEDULE 2.8
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> 5
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> 6
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> 7
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> 8
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> 9
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> 10
(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> 11
SCHEDULE 4.5
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> 12
SCHEDULE 4.11
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> 13
SCHEDULE 4.15
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> 14
SCHEDULE 4.16
OFFICES OF COMPANY
(1) 1901 East Loop 820 South, Fort Worth, Texas
(2) 5720 Interstate 20 East, Kennedale, Texas
<PAGE> 15
SCHEDULE 4.17
AUDITED FINANCIAL STATEMENTS
[see attached]
<PAGE> 16
SCHEDULE 4.18
INTERIM FINANCIAL STATEMENTS
[see attached}
<PAGE> 17
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> 18
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> 19
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> 20
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> 21
SCHEDULE 4.19
ACCOUNTING
None except as required by Arthur Andersen & Co. in connection with the
preparation of Audited Financial Statements and the Interim Financial
Statements.
<PAGE> 22
SCHEDULE 4.20
ABSENCE OF CERTAIN CHANGES
None
<PAGE> 23
SCHEDULE 4.21
MANAGEMENT LETTERS
None
<PAGE> 24
SCHEDULE 4.22
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> 25
SCHEDULE 4.23
ACCOUNTS RECEIVABLE
By letter dated October 28, 1997, PrimeCo Personal Communications
notified FWT, Inc. of certain claims against FWT, Inc.
<PAGE> 26
SCHEDULE 4.26
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> 27
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> 28
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> 29
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> 30
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> 31
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> 32
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> 33
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> 34
SCHEDULE 4.28(c)
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> 35
SCHEDULE 4.29
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> 36
SCHEDULE 4.30
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> 37
<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> 38
<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> 39
SCHEDULE 4.31
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> 40
SCHEDULE 4.32
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> 41
(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> 42
(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> 43
SCHEDULE 4.35
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> 44
(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> 45
SCHEDULE 4.36(b)
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> 46
(4) POWERMOUNT trademark - Registration No. 2,088,202.
(5) SMARTROC trademark - Registration No. 1,944,176.
<PAGE> 47
SCHEDULE 4.37
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> 48
SCHEDULE 4.40
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> 49
SCHEDULE 4.42
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> 50
SCHEDULE 4.43
LITIGATION HISTORY
None
<PAGE> 51
SCHEDULE 4.46
INVESTIGATIONS
NONE
<PAGE> 52
SCHEDULE 4.47
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> 53
SCHEDULE 4.49
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> 54
SCHEDULE 4.50
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> 55
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> 56
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> 57
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> 58
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> 59
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> 60
SCHEDULE 4.51
TAX EXCEPTIONS
Certain state tax returns or reports relating to taxes which are not material in
amount.
<PAGE> 61
SCHEDULE 4.52
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> 62
SCHEDULE 4.53
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> 63
SCHEDULE 4.56
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> 64
SCHEDULE 4.58
DISTRIBUTORS
Wei Sheng Investment and Development Co., Ltd.
(sales representative in Taiwan)
<PAGE> 65
SCHEDULE 4.59
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> 66
SCHEDULE 4.60
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> 67
SCHEDULE 4.67
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> 68
ANNEX I
DEFINITIONS
Terms with initial capitalized letters that are not otherwise defined
in this Agreement shall have the meanings set forth below:
Affiliate. The term "AFFILIATE" with respect to a Person means any
other Person that directly or indirectly controls, is controlled by, or is
under common control with such Person. For the purposes of this definition,
control means 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. Control shall be presumed by an individual that is a
director or executive officer of a Person, or a Person that beneficially owns
more than 10% of any class of securities of such Person having general voting
rights. During the period before the Closing and at the Closing, Company shall
be considered an Affiliate of each Shareholder. During the period after the
Closing, Purchaser and Baker Communications Fund, L.P. shall be considered an
Affiliate of Company for so long as Purchaser controls Company.
Applicable Law. The term "APPLICABLE LAW" means any applicable code,
common law, law, Order, ordinance, regulation, rule, or statute of any
Governmental Authority.
Business. The term "BUSINESS" means the following businesses related
to towers and monopoles for the telecommunications and utility industries:
fabrication, erection, build to suits, site acquisition and zoning.
Business Day. The term "BUSINESS DAY" means a day that is not a
Sunday, Saturday, or holiday when banks in the State of Texas are required or
permitted to be closed.
Claim. The term "CLAIM" means any arbitration award, assessment,
charge, citation, claim, damage, demand, expense, fine, joint or several
liability or penalty, and any reasonable attorneys' fees and expenses.
Closing Transactions. The term "CLOSING TRANSACTIONS" means the
transactions effected on the Closing Date pursuant to the Closing Documents and
the incurrence of fees and expenses related thereto, including, without
limitation, all fees and expenses of Arthur Anderson & Co. in connection with
its audit of the Audited Financial Statements and its review of the Interim
Financial Statements.
Confidential Information. The term "CONFIDENTIAL INFORMATION" means
any confidential or proprietary information concerning a Company's assets,
business, cash flows, financial condition, liabilities, operations, prospects,
or relationships, including Company's proprietary databases and software
programs and Company's Trade Secrets. Confidential Information may exist in
oral or written form or in any other medium.
47
<PAGE> 69
EXHIBIT C
---------
ESCROW AGREEMENT
<PAGE> 70
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> 71
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> 72
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> 73
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> 74
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> 75
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> 76
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> 77
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> 78
SCHEDULE I
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> 79
SCHEDULE II
Compensation of Escrow Agent
<PAGE> 80
SCHEDULE II
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> 81
EXHIBIT D
---------
FORM OF PURCHASER'S LEGAL OPINION
56
<PAGE> 82
[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> 83
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> 84
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> 85
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> 86
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> 87
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> 88
SCHEDULE I
Shareholders of FWT, Inc.
-------------------------
T.W. Moore
Betty Moore
Carl Moore
Thomas F. "Fred" Moore
Roy J. Moore
<PAGE> 89
SCHEDULE II
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> 90
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> 91
EXHIBIT E
FORM OF SHAREHOLDERS LEGAL OPINION
57
<PAGE> 92
[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> 93
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> 94
[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> 95
EXHIBIT F
FORM OF COMPANY'S LEGAL OPINIONS
<PAGE> 96
[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> 97
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> 98
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> 99
EXHIBIT G
FORM OF TAX NOTE
<PAGE> 100
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> 101
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> 102
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
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<PAGE> 103
(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> 104
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;
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<PAGE> 105
(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> 106
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> 107
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> 108
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> 109
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> 110
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> 111
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
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<PAGE> 112
(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> 113
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> 114
(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> 115
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> 116
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> 117
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> 118
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> 119
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.
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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
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(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
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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;
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(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
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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.
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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]
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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> 127
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> 128
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.
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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
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(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
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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;
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(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
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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.
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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]
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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> 136
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> 137
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.
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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
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(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
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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;
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<PAGE> 141
(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
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<PAGE> 142
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> 143
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]
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<PAGE> 144
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> 145
EXHIBIT H
FORM OF WORKING CAPITAL NOTES
<PAGE> 146
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> 147
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
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<PAGE> 148
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:
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(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
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<PAGE> 150
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> 151
(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> 152
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> 153
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> 154
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> 155
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> 156
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
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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:
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<PAGE> 158
(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
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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:
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(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,
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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:
----------------------------------
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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.
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<PAGE> 162
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]
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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> 164
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> 165
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
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<PAGE> 166
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:
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(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
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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:
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(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,
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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.
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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]
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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> 173
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> 174
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
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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:
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(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
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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:
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(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,
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<PAGE> 179
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> 180
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]
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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> 182
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> 183
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
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<PAGE> 184
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:
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<PAGE> 185
(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
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<PAGE> 186
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> 187
(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> 188
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> 189
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> 190
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
EXHIBIT 10.3
COOPERATIVE PRODUCTION AGREEMENT
This agreement is effective as of the 10th day of March, 1997, by and between
Delta Steel, Inc., a Texas Corporation herein referred to as "Delta" or
"party", and FWT, Inc., a Texas corporation herein referred to as "FWT" or
"party". By this Agreement, the parties hereby adopt the terms and conditions
of the Memorandum of Understanding dated June 26, 1996 and attached as Addendum
A to this Agreement, except that the terms and conditions relating to the lease
are excluded and replaced by the Lease Agreement dated March 10, 1997 between
the parties.
Both parties understand the character of the services to be provided under this
Agreement and represents itself as competent to perform such services. Each
party also represents itself as having the authority and licenses to do
business and perform the services in the area and state in which the work is to
be performed.
TERM
1.1 This Agreement shall be for an initial term of five years and shall be
automatically renewable at the end of the initial five year period.
Terms and conditions for the renewal period will be negotiated at the
end of the third year of the initial period.
CONFIDENTIALITY
2.1 The terms of this Agreement and the aforementioned Lease Agreement
shall be maintained in confidence by the parties. A Confidentiality
Agreement dated March 10, 1997 is attached as Addendum B to this
Agreement.
INSURANCE
3.1 To the extent that work is done by Delta or FWT personnel under the
supervision or direction of an employee of the other company, for
purposes of liability and indemnification, that work will be deemed to
have been performed solely by the company responsible for performing
such work.
3.2 Each party, at its sole expense, shall provide, at all times during
the performance of this Agreement, the following minimum insurance
coverage.
A. WORKER'S COMPENSATION INSURANCE providing statutory benefits
under the law in the state where the work is to be performed.
EMPLOYER'S LIABILITY INSURANCE with limits of
1,000,000/$1,000,000/$1,000,000.
Each party's policy shall include an alternate employer
endorsement naming the other party as an alternate employer.
Each party shall file workers' compensation claims, for
workers on its payroll, under its respective insurance
policy.
B. COMMERCIAL GENERAL LIABILITY INSURANCE providing coverage for
premises - operations, and products/completed operations; to
include contractual liability coverage, personal injury, x, c,
and u, broad form property damage and independent contractors
working for the parties. Limits of liability shall not be
less than the following:
$1,000,000 each occurrence
$1,000,000 aggregate-products/completed operations
$1,000,000 aggregate-general
$1,000,000 personal injury/advertising injury liability
$1,000,000 legal liability
FWT's CGL policy shall contain a legal liability form
endorsement which shall include fire, explosion, smoke and
water damage.
- --------------------------------------------------------------------------------
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<PAGE> 2
COOPERATIVE PRODUCTION AGREEMENT
C. BUSINESS-AUTOMOBILE LIABILITY AND PROPERTY DAMAGE INSURANCE
providing coverage for all owned, non-owned and hired
vehicles. Combined single limits of liability for bodily
injury/property damage of $1,000,000 each accident.
D. UMBRELLA INSURANCE providing excess liability over General
Liability, Auto Liability and Employer's Liability with
minimum limits of $10 million each occurrence and $10 million
aggregate.
3.3 UNDERWRITERS SHALL HAVE NO RIGHT OF RECOVERY OR SUBROGATION AGAINST
THE OTHER PARTY, as the parties to this Agreement intend that the
insurance each has in force shall protect both parties and be liable
for all losses covered. All of the above policies must include a
waiver of subrogation in favor of the other party. Policies specified
in 3.2.B, C and D must name the other party as an additional insured.
3.4 CERTIFICATES AND ACKNOWLEDGMENT - Each party must provide current
certificates of insurance and proof of acknowledgement by the
respective insurance carrier prior to beginning any work. Insurers
must give 30 days notice of any cancellations of policies identified
in the certificates of insurance.
INDEMNIFICATION
4.1 Each party agrees to protect, indemnify, defend and hold the other
party free and harmless from all losses, costs and expenses -
including the amount of judgments, penalties, interest, court costs
and legal fees - of legal liabilities (claims, demands, and causes of
action, etc.) imposed in favor of or asserted by governmental agencies
or third parties (including employees of the other party or of its
contractors or subcontractors) caused by or associated with its (or
its contractors or subcontractors) failure to pay any tax, wage, debt
or other sum incurred by the indemnifying party (or its contractors or
subcontractors).
4.2 It is the intention of each party to maintain the insurance coverage
and limits specified in paragraph 3.2 above and indemnify the other
for claims or other liabilities caused by its actions or inactions.
For liability and indemnification purposes, each party shall be
responsible for the operations and products from its normal work
activities under the Agreement. This includes work performed under
the supervision or direction of managers or foremen who supervise the
work of both parties.
Each party agrees to indemnify and hold the other party harmless from
all losses, costs and expenses - including the amount of judgments,
penalties, interest, court costs and legal fees - of alleged or actual
legal liabilities (including settlements) for personal injuries,
illnesses, deaths or property damage founded upon occurrences in the
course of, or incident to, services performed or products or equipment
provided under the Agreement due to its negligence or gross
negligence. This indemnification obligation includes, but is not
limited to, claims made by its employees or employees of its
contractors or subcontractors, if the injury, illness or death is
sustained while the employee is in, on, or about the premises of
Delta, or is otherwise associated with services performed for, or
products or equipment provided to, the other party.
4.3 DEFENSE - Each party to the Agreement agrees to investigate, handle,
respond to, provide defense of, and defend any claim or other
potential legal liability for which it is responsible under this
Agreement's indemnification provisions at its sole expense, and agrees
to bear all other related costs and expenses, even if such claim, etc.
is groundless, false or fraudulent. The indemnification provisions
are intended to survive the termination of this Agreement.
4.4 ENFORCEMENT OF INDEMNITY OBLIGATIONS - All indemnity obligations
assumed by the parties are in no way limited by the insurance
provisions of this Agreement, as the parties intend that each be fully
responsible for liabilities assumed under this Agreement. All
indemnity obligations in this Agreement shall be enforced in the
courts of Tarrant County, Texas, with all costs of enforcement and
attorneys' fees of the prevailing party to be paid by the other party.
Each party to this Agreement hereby waives all defenses to such
enforcement which do not turn on factual issues affecting the
applicability of indemnity obligations.
- --------------------------------------------------------------------------------
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<PAGE> 3
COOPERATIVE PRODUCTION AGREEMENT
DISPUTE RESOLUTION
5.1 Both parties agree to work together to resolve any issues or disputes
that arise under the Agreement. If a dispute cannot be resolved
between the parties within thirty (30) days of written notice to the
other party, then the dispute will be submitted to mediation through
the procedures then in effect by a dispute resolution organization
selected by mutual agreement of both parties. Both parties agree that
the mediation will be scheduled to begin no later than sixty (60) days
after the initial written notice of a dispute. If mediation is not
successful, both parties agree that the dispute will be submitted to
binding arbitration through an organization selected by mutual
agreement of both parties and the arbitration is to begin no later
than 30 days after the mediation is concluded.
GENERAL TERMS AND GOVERNING LAWS
6.1 The Agreement shall bind the parties, their respective successors,
heirs and assigns; but this Agreement shall not be assignable without
the prior written consent of the other party.
6.2 In the case of a change in ownership, management or corporate
organization of FWT, the successor owner(s), et. al. shall continue
operations under this Agreement, for the remainder of the then-term of
the Agreement, with a minimum monthly purchase volume from Delta equal
to the previous 12 months average. All other terms and conditions of
the Agreement shall remain in force.
6.3 "Party" means Delta or FWT, as applicable. Reference in this
Agreement to Delta, FWT or party includes any subsidiary, affiliated
or parent companies, and employees, officers, directors, agents,
representatives and contractors of the respective companies provided,
however, that the use of the term 'party' shall not impose any
personal liability on any such employees, officers, directors, agents,
representatives or contractors of the parties.
6.4 Obligations of the parties are subject to all valid applicable
federal, state, and local laws, rules and regulations. Venue for any
dispute or controversy relating to or arising out of this Agreement
shall lie in Tarrant County, Texas.
6.5 No conduct by a party, including waiver of any single performance of
obligations of the other party, shall affect required subsequent
performance of the other party's obligations under this Agreement.
6.6 The Agreement and referenced addenda comprise the entire agreement of
the parties; no changes shall be effective unless made in writing and
executed by both parties. The terms of the Agreement and addenda
shall govern in case of conflict with any previous or subsequent
writing, except any subsequent addenda executed by both the parties.
6.7 This Agreement is not intended to and shall not create a joint venture
or partnership between Delta and FWT.
NOTICES
7.1 Every notice, request, statement or bill provided for in the Agreement
shall be in writing and mailed or delivered to the following
addresses):
ADDRESSES:
<TABLE>
<S> <C> <C>
FWT, Inc.: DELTA STEEL, INC: (Corporate Office) FORT WORTH DIVISION:
Delta Steel, Inc. Delta Steel Inc.
P.O. Box 8597 P.O. Box 2289 9217 South Freeway
Fort Worth, TX 76124 Houston, TX 77252 Fort Worth, TX 76140
</TABLE>
Executed in duplicate original on the 24th day of March, 1997.
FWT, Inc.: DELTA STEEL, INC.
By: /s/ T. W. MOORE By: /s/ R. A. EMBRY
--------------------------- ---------------------------
Title: President Title: President
------------------------ ------------------------
- --------------------------------------------------------------------------------
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<PAGE> 4
[DELTA STEEL, INC. LETTERHEAD]
ADDENDUM A
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.
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<PAGE> 5
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;
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<PAGE> 6
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.
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<PAGE> 7
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
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<PAGE> 8
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.
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<PAGE> 9
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> 10
ADDENDUM B
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 10.4
TRANSPORTATION CONTRACT
This Contract is made and entered into effective the 26th day of March,
1997, by and between Delta Steel, Inc., hereinafter called "Carrier", and, FWT,
Inc., hereinafter called "Shipper".
Carrier agrees to offer transportation services under this Contract as
provided in 49 U.S.C.S. 14101(b) of the U.S. Code, and Shipper agrees to use
Carrier's services subject to terms and conditions as follows:
1. TRANSPORTATION SERVICES: Shipper agrees to tender and Carrier agrees to
transport commodities in interstate, intrastate and/or international commerce
in such quantities as the parties may mutually agree and to/from such
destination/origination points with reasonable dispatch.
1. RATES: Rates shall be as set forth in a letter from the Carrier to the
Shipper (Exhibit A) and shall be effective on all shipments. Rates may be
changed thereafter by letter to the Shipper with fifteen (15) days notice.
Special rates may be used from time to time; such special rates shall be set
out in a letter or fax.
3. SHIPPING AND PICKUP TICKETS: A shipping or pickup ticket shall be issued
for each shipment with the commodity description or part number.
4. INSURANCE: Carrier shall carry and maintain transit insurance which names
Shipper as a loss payee and general liability insurance which names Shipper as
an additional insured. Prior to transporting any commodities, products or
materials on behalf of Shipper, Carrier shall furnish Shipper with a
certificate of transit insurance reflecting Shipper as a loss payee and general
liability insurance reflecting Shipper as an additional insured.
5. INDEMNITY, RISK OF LOSS: Carrier shall be responsible for all claims,
causes of action, losses and damages resulting from or in any manner relating
to the transporting by Carrier of commodities, products and materials. Carrier
shall bear the risk of loss to commodities, products and materials transported
by Carrier to the point of delivery specified by Shipper and shall pay and be
responsible for any losses and damages resulting from the delivery by Carrier
or unloading by Carrier of commodities, products and materials at such point of
delivery. Carrier unconditionally agrees to defend, indemnify and hold harmless
Shipper from any and all demands, claims, causes of action, liabilities,
losses, costs and expenses resulting from or in any manner arising out of any
actions or omissions for which Carrier has agreed to be responsible herein.
This provision shall survive the termination of the Contract.
6. ENTIRE CONTRACT: This Contract with any attachments or modifications
constitutes the entire agreement between the parties for transportation
services. No change or modification of the Contract shall be effective unless in
writing and signed by both parties, and no tariff, bill of lading or any other
document, other than rate letters, will have any legal effect with regard to
transportation services between the parties.
7. SUITS: Any suit between Carrier and Shipper arising out of the provisions
of this Contract shall be brought in Tarrant County, Texas and be governed by
Texas law. The prevailing party to any suit shall be entitled to reasonable
attorney's fees and its related costs.
8. TERM OF CONTRACT: This Contract shall be effective for twelve (12) months
beginning March 26, 1997 and will continue in effect thereafter until and
unless canceled by either party with thirty (30) days written notice to the
other at its address below.
IN WITNESS WHEREOF, the parties have executed this Contract in duplicate.
ADDRESSES:
FWT, Inc. Delta Steel, Inc.
Shipper Carrier
P.O. Box 8597 P.O. Box 2289
Fort Worth, Tx. 78124 Houston, Tx. 77252
By: By: R.A. EMBRY
____________________________ ________________________________
Title: Title: President
__________________________ _____________________________
<PAGE> 2
EXHIBIT A
[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
DELTA STEEL, INC., - FORT WORTH DIVISION
[FLOOR PLAN]
<PAGE> 1
EXHIBIT A
STOCK APPRECIATION RIGHTS
AGREEMENT
THIS STOCK APPRECIATION RIGHTS AGREEMENT, effective the 14th day of
November, 1997, is made by FWT, Inc. (the "Company") to Douglas A. Standley (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive is Chief Operations and President, Ft.
Worth Division of the Company upon whose effort the continual successful and
profitable operation of the Company is dependent; and
WHEREAS, the Company wants to assure the continued availability of the
services of the Executive to the Company; and
WHEREAS, the Executive and the Company desire to grant to Executive
the right to participate in an increase in the value of the Company's Common
Stock, par value $10.00 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the Company hereby agrees with Executive as follows:
1. Defined Terms. As used herein, each of the following terms
shall have the following definitions:
"Affiliate" means any other Person that directly or indirectly
controls, is controlled by, or is under common control with such Person. For
the purposes of this definition, control means 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. Control shall be
presumed by an individual that is a director or executive officer of a Person,
or a Person that beneficially owns more than 10% of any class of securities of
such Person having general voting rights. During the period before the Closing
and at the Closing, Company shall be considered an Affiliate of each
Shareholder. During the period after the Closing, Purchaser and Baker
Communications Fund, L.P. shall be considered an Affiliate of Company for so
long as Purchaser controls Company.
"Appraisal Event" means a Dilution Adjustment Event or delivery of a
Payment Notice to the extent that, in either such case, Fair Market Value is to
be determined pursuant to clause (c) of the definition of Fair Market Value.
"Appraisal Procedure" shall mean the following procedure for
determining the Appraised Value of one share of Common Stock: (a) upon the
occurrence of any Appraisal Event, the Company and the Executive shall attempt
to agree on a mutually acceptable Qualified Appraiser to value the Common
Stock, and if such parties agree on a Qualified Appraiser within ten (10) days
following the occurrence of any Appraisal Event such Qualified Appraiser shall,
on or before twenty (20) days
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following the date it is appointed, determine the Appraised Value of the Common
Stock, and such determination shall be binding upon the Company and the
Executive: (b) in the event the Company and the Executive are unable to agree
on a mutually acceptable Qualified Appraiser within ten (10) days following the
occurrence of any Appraisal Event, on the expiration of such ten (10) day
period, the Company and the Executive shall each appoint a Qualified Appraiser
to value the Common Stock. Within twenty (20) days following the date they are
appointed, the Qualified Appraisers appointed by the Company and the Executive
shall determine the Appraised Value of the Common Stock. In the event the
Appraised Value determined by the Company's Qualified Appraiser is more than
95% of the Appraised Value determined by the Executive's Qualified Appraiser,
the Appraised Value for purposes of this Agreement shall be the average of the
values determined by such appraisers and such determination shall be binding
upon the Company and the Executive. In the event the Appraised Value
determined by the Company's Qualified Appraiser is equal to or less than 95%
of the value determined by the Executive's Qualified Appraiser, such appraisers
shall in turn promptly appoint a third Qualified Appraiser who shall, within
twenty (20) days following the date it is appointed, determine the Appraised
Value of the Common Stock. The value which is neither the lowest nor the
highest of the values determined by the three Qualified Appraisers shall be the
Appraised Value of the Common Stock for purposes of this Agreement and shall be
binding upon the Company and the Executive. In the event either the Company or
the Executive fails to timely appoint a Qualified Appraiser, such failing party
will be deemed to have waived its rights to appoint a Qualified Appraiser, and
the Qualified Appraiser appointed by the other party shall determine the
Appraised Value for purposes of this Agreement which determination shall be
binding upon the Executive and the Company. The costs of each Qualified
Appraiser referred to herein shall be paid by the Company.
"Appraised Value" has the meaning set forth in the definition of "Fair
Market Value."
"Base Numerator" initially means 6.8071; provided, that such amount is
subject to adjustment as provided in Section 3 hereof.
"Base Value" means $45,000,000.
"Current Market Value" means, with respect to a share of Common Stock,
the average of the daily closing prices for a share of Common Stock for the ten
(10) consecutive trading days before such date, excluding any trades which are
not bona fide arm's length transactions. The closing price for each day shall
be:
(i) if Common Stock is listed or admitted for trading on any
national securities exchange, the last sale price of such security, regular
way, or the mean of the closing bid and asked prices therefor if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which Common Stock is listed; or
(ii) if so quoted, the mean between the closing high bid and low
asked quotations of the Common Stock in the over-the-counter market as shown by
the National Association of Securities
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Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use in the
United States, as reported by any member firm of the New York Stock Exchange
selected by the Company; or
(iii) if not quoted as described in clauses (i) or (ii) above, the
mean between the high bid and low asked quotations for any such security as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, as reported by any member firm of the New York Stock
Exchange selected by the Company.
(iv) "Dilution Adjustment Event" has the meaning set forth in
Section 3(b) hereof.
"Fair Market Value" means, on any date of determination, (a) if the
Common Stock is listed or admitted for trading on any securities exchange or
subject to quotations in any quotation system described in the definition of
"Current Market Value," and has been so listed or subject to such quotations
for the preceding ten (10) consecutive trading days, the Current Market Value,
(b) if clause (a) preceding is not applicable, and Fair Market Value is being
determined in connection with any Liquidity Event or Dilution Adjustment Event
in which shares of Common Stock are being (or were) issued, sold, assigned,
transferred or otherwise disposed of (including any merger or consolidation)
for consideration consisting solely of cash in a transaction with a Person who
is not an Affiliate with respect to the Company, Purchaser or Baker
Communications Fund, L.P., the highest price per share at which a share of
Common Stock is being or was issued or disposed of in such Liquidity Event, and
(c) if neither clause (a) nor clause (b) preceding is applicable, the fair
market value of one share of Common Stock (determined without giving effect to
any minority discount and without giving effect to any restrictions imposed
pursuant to any shareholders agreement, voting agreements or similar
agreements) as determined pursuant to the Appraisal Procedure (the "Appraised
Value"). In the event Fair Market Value is being determined in connection with
a Liquidity Event or Dilution Adjustment Event under circumstances in which
clause (b) of this definition is applicable, Fair Market Value shall be
determined based on the cash consideration received in the most recent
Liquidity Event or Dilution Adjustment Event as of the date of such
determination of Fair Market Value.
"Liquidity Event" means the occurrence of any of the following events
(a) the completion by the Company of an initial public offering of Common Stock
pursuant to a registration statement under the Securities Act of 1933, (b)
Purchaser ceases, for any reason, to hold more than fifty percent (50%) of the
outstanding Common Stock of the Company on a fully diluted basis, (c) the sale,
assignment, transfer or other disposition by the Company and its subsidiaries
of substantially all of their assets considered as a whole, (d) a merger or
consolidation involving the Company in which the Company is not the surviving
entity, (e) Baker Communications Fund, L.P. or any Affiliate of Baker
Communications Fund, L.P. shall cease, for any reason to hold more than fifty
percent (50%) of the outstanding common stock of Purchaser on a fully diluted
basis, (f) a merger or consolidation involving Purchaser in any transaction in
which Purchaser is not the surviving entity, or (g) Purchaser issues any of its
capital stock in an initial public offering pursuant to a registration
statement under the Securities Act of 1933.
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"Multiplier Fraction" means a fraction, the numerator of which is the
Base Numerator, and the denominator of which is the number of shares of Common
Stock of the Company calculated on a fully diluted basis at the time the
Multiplier Fraction is being determined.
"Payment Amount" means, as of any date, an amount equal to the
remainder of (a) the Total Common Equity Value on such date multiplied times
the Multiplier Fraction, minus (b) the Base Value.
"Payment Notice" has the meaning set forth in Section 2 hereof.
"Purchaser" means FWT Acquisition, Inc., a Delaware corporation.
"Qualified Appraiser" means an investment banking firm of national
recognition.
"Total Common Equity Value" means, on any date of determination, the
product of the Fair Market Value determined as of such date multiplied times
the total number of shares of Common Stock of the Company calculated on a fully
diluted basis.
2. Payment Obligation. Upon the occurrence of a Liquidity Event
or at any time thereafter, Executive, at its option, may deliver written notice
to the Company (the "Payment Notice") requiring the Company to pay to Executive
in cash the Payment Amount. The Payment Amount shall be determined as of the
date of delivery of the Payment Notice, and the Company shall pay to Executive
the Payment Amount (a) within ten (10) days following delivery of such Payment
Notice if the Payment Amount is based on Fair Market Value determined pursuant
to clauses (a) or (b) of the definition of "Fair Market Value," and (b) within
ten (10) days following final determination of Appraised Value pursuant to the
Appraisal Procedure if Fair Market Value is being determined pursuant to clause
(c) of the definition of "Fair Market Value."
3. Adjustment of Base Numerator. The Base Numerator is subject
to adjustment from time to time upon the occurrence of any of the events
enumerated in this Section 3.
(a) In the event that the Company shall at any time after
the date of this Agreement (i) declare a dividend on the Common Stock in shares
of its capital stock (whether in shares of such Common Stock or in capital
stock of any other class of the Company), (ii) split or subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, the Base Numerator after the time of the record date
for such dividend or of the effective date of such split, subdivision or
combination shall be adjusted to equal the number of shares of Common Stock
which a shareholder having a number of shares of Common Stock equal to the Base
Numerator immediately prior to such record date or effective date, as the case
may be, would own or be entitled to receive after such record date or effective
date.
(b) In the event that the Company shall at any time after
the date of this Agreement (i) issue any shares of Common Stock without
consideration or at a price per share less
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than Fair Market Value, or (ii) issue options, rights or warrants to subscribe
for or purchase such Common Stock (or securities convertible into such Common
Stock) without consideration or at a price per share (or having a conversion
price per share, if a security convertible into such Common Stock) less than
Fair Market Value (a "Dilution Adjustment Event"), the Base Numerator shall be
adjusted to equal the product obtained by multiplying the Base Numerator
immediately prior to such Dilution Adjustment Event by a fraction, the
numerator shall be the number of shares of Common Stock outstanding immediately
after such Dilution Adjustment Event, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
Dilution Adjustment Event plus the number of shares of such Common Stock which
the aggregate offering price of the total number of shares of such Common Stock
so to be issued or to be offered for subscription or purchase (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at Fair Market Value immediately prior to such issuance. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined by a Qualified Appraiser mutually acceptable to the Executive of the
Company (the cost of the engagement of said Qualified Appraiser to be borne by
the Company). Shares of such Common Stock owned by or held for the account of
the Company or any Subsidiary thereof shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever the date of such issuance is fixed (which date of issuance shall be
the record date for such issuance if a record date therefor is fixed); and, in
the event that such shares or options, rights or warrants are not so issued,
the Base Numerator shall again be adjusted to be such number which would be in
effect if the date of such issuance had not been fixed.
(c) In case the Company shall make a distribution to all
holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the surviving
corporation) of evidences of its indebtedness or assets (whether a liquidating
dividend or distribution or otherwise), the Base Numerator after such date of
distribution shall be adjusted to equal the product obtained by multiplying the
Base Numerator immediately prior to such date by a fraction, the numerator of
which shall be the Fair Market Value immediately prior to such distribution,
and the denominator of which shall be the Fair Market Value immediately prior
to such distribution less the fair market value as determined by a Qualified
Appraiser mutually acceptable to the Executive and the Company (the cost of the
engagement of said Qualified Appraiser to be borne by the Company) of the
portion of the assets or evidences of indebtedness so to be distributed
applicable to one share of Common Stock. Such adjustment shall be made
successively whenever a date for such distribution is fixed (which date of
distribution shall be the record date for such issuance if a record date
therefor is fixed); and, if such distribution is not so made, the Base
Numerator shall again be adjusted to be such number which would then be in
effect if the date of such distribution had not been fixed.
(d) The Company shall not effect any consolidation,
merger or sale of the properties and assets of the Company as an entirety or
substantially as an entirety to any other person or entity, unless prior to or
simultaneously with the consummation thereof, the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation
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purchasing such assets or the appropriate corporation or entity shall assume,
by written instrument, the obligations of the Company under this Agreement.
(e) If any question shall at any time arise with respect
to the adjusted Base Numerator, such question shall be determined by an
independent firm of certified public accountants of recognized national
standing mutually acceptable to the Company and Executive.
(f) Upon any adjustment of the Base Numerator pursuant to
this Section 3, the Company shall promptly, but in all events within thirty
(30) days thereafter, cause to be given to Executive a certificate signed by
the Company's Chief Financial Officer setting forth the Base Numerator as so
adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as part of the notice required
to be mailed under the other provisions of this Section 3(f).
In the event:
(i) that the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe for or purchase
capital stock of the Company or of any other subscription rights or warrants;
or
(ii) that the Company shall authorize the distribution to
holders of its Common Stock of evidences of its indebtedness or assets; or
(iii) of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets of the
Company substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination); or
(iv) of the voluntary dissolution, liquidation or winding
up of the Company; or
(v) that the Company proposes to take any other action
which would require an adjustment of the Base Numerator pursuant to this
Section 3;
then the Company shall deliver to Executive, at least twenty (20) days prior
notice stating (i) the date as of which the holders of record of Common Stock
to be entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that the holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up.
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4. Limited Interest. The award of stock appreciation rights
pursuant to this Agreement shall not be construed as giving the Executive any
rights relating to the stock of the Company. Neither shall this Agreement be
construed as giving the Executive any interest in the Company other than as
provided pursuant to the terms of this Agreement. Further, this Agreement
shall not give the Executive any right to continue as an officer or Executive
of the Company or any subsidiary of the Company or affect the right of the
Company to dismiss the Executive to the extent permitted pursuant to the terms
of the Employment Agreement with the Company.
5. Notices. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Douglas A. Standley
c/o FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112-7899
If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, New York 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6. Assignment. The Company shall not assign, transfer or convey
its rights or delegate its duties under this Agreement. Any attempted
assignment or delegation shall be void. Executive shall not be permitted to
assign or otherwise transfer its rights under this Agreement.
7. Modification and Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and the Company's
duly authorized executive officer.
8. No Waiver. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed
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by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
10. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of any subject matter contained
herein and supersedes all prior severance or other agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, Executive or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By: /s/ WILLIAM R. ESTILL
-----------------------------------
Name: William R. Estill
---------------------------------
Title: Vice President
--------------------------------
DOUGLAS A. STANDLEY
/s/ DOUGLAS A. STANDLEY
--------------------------------------
Douglas A. Standley
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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "AGREEMENT") is made this 12th day of
November, 1997, by and between FWT, Inc. (the "COMPANY"), and Roy J. Moore (the
"EXECUTIVE").
PRELIMINARY STATEMENTS
A. On and subject to the terms and conditions herein provided, the
Company desires to retain the services of the Executive in the capacities and
with the responsibilities and the titles set forth herein in order to ensure the
attention and dedication to the Company of the Executive as the Company's
President and Chief Executive Officer, all of which the Company's Board of
Directors (the "BOARD") believes will be in the best interests of the Company
and its stockholders.
B. The Executive desires to commit himself to so serve the Company.
C. In order to effect the foregoing, the Company and the Executive wish
to enter into an employment agreement on the terms and conditions set forth
herein.
Accordingly, in consideration of these preliminary statements and the
respective covenants and agreements of the parties herein contained, and for
other good, valid and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
STATEMENT OF AGREEMENT
1. Employment. The Company hereby agrees to employ the Executive, and
the Executive hereby accepts such employment on the terms and conditions set
forth herein.
2. Term. The employment of the Executive by the Company shall commence
on the date hereof and end on December 31, 2000 (the "TERM"), unless earlier
terminated as provided herein.
3. Positions and Duties. The Executive shall serve as the President and
Chief Executive Officer of the Company and shall have such additional positions,
if any, from time to time as may be assigned to the Executive by the Board. The
Executive shall report and be responsible to the Board of the Company. The
Executive shall devote substantially all his working time and efforts to the
business and affairs of the Company. At all times that Executive is employed as
the Chief
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Executive Officer of the Company under this Agreement, Executive shall also hold
a seat on the Board, and the Company hereby agrees to use its best efforts to
cause its shareholders to vote all shares of voting capital stock of the Company
entitled to vote for directors of the Company to cause Executive to, at all such
times, hold such seat on the Board.
4. Place of Performance. The Company maintains its principal office in
Fort Worth, Texas where Executive shall fulfill his responsibilities hereunder
except for required travel in the course of the Company's business.
5. Compensation and Related Matters.
(a) Salary. During the term of this Agreement, the Company shall pay
to the Executive an annual base salary of Two Hundred Thousand Dollars
($200,000) ("BASE SALARY"), such Base Salary to be payable in
accordance with the Company's ordinary payroll practices.
(b) Bonus. In addition to his Base Salary, the Executive shall be
entitled to receive a bonus ("Bonus") computed and payable with
respect to each fiscal year ending April 30 (a "Calculation Period")
commencing with the Calculation Period ending April 30, 1998, based on
the ratio of the Company's actual EBITDA (as defined below) for such
Calculation Period to the Targeted EBITDA (as defined below) for such
Calculation Period in accordance with the following:
(i) if Company's actual EBITDA is greater than or equal to
seventy-five percent (75%), but less than one hundred percent
(100%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in
accordance with the following formula:
A=50 + (2 x (B-75%)
(ii) if Company's actual EBITDA is greater than or equal to one
hundred percent (100%), but less than one ten hundred percent
(110%) of Targeted EBITDA for any Calculation Period, the
Executive's Bonus for such Calculation Period shall be a
percentage of Executive's Base Salary determined in
accordance with the following formula:
A=100 + (B-100%)
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(iii) if Company's actual EBITDA is greater than or equal to one
hundred ten percent (110%), but less than one hundred twenty
five percent (125%) of Targeted EBITDA for any Calculation
Period, the Executive's Bonus for such Calculation Period
shall be a percentage of Executive's Base Salary determined
in accordance with the following formula:
A=110+(1.8333 x (B-110%)
(iv) if Company's actual EBITDA is greater than one hundred twenty
five percent (125%) of Targeted EBITDA for any calculation
period, the Bonus shall be a percentage of Executive's Base
Salary determined in accordance with the following formula:
A=137.5 + (B-125%)
As used in each formula set forth in clauses (i) through (iv)
above, "A" equals the percentage of the Executive's Base Salary
which is the amount of the Bonus and "B" equals the percentage of
Targeted EBITDA actually achieved by the Company for such
Calculation Period.
The Bonus shall be due and payable as soon as practicable following
delivery of the Company's financial statements for the Calculation
Period for which the Bonus is payable, but in no event later than sixty
(60) days following the end of the Calculation Period for which the
Bonus is payable. Any Bonus to which Executive is entitled under this
Agreement shall be payable on the date specified in this paragraph even
through the Term or Executive's employment with the Company may
terminate prior to the date such Bonus is payable hereunder.
As used in this Section 6(b), Targeted EBITDA shall mean (i) with
respect to the Calculation Period ending April 30, 1998, $21,700,000,
and (ii) with respect to each Calculation Period ending thereafter, an
amount determined by a majority vote of the Compensation Committee of
the Board of Directors of the Company which will consist of Lorenzo
Bettino, Edward W. Scott and Roy J. Moore; provided, however, in no
event shall the Targeted EBITDA for any Calculation Period exceed the
EBITDA target for the same Calculation Period established pursuant to
the terms of the Financial Advisory Agreement between the Company and
Baker Capital Corp. As used in this Section 5, EBITDA shall mean the
consolidated net income for such Calculation Period which would be
reflected on a consolidated income statement of the Company for such
Calculation Period prepared in accordance with generally accepted
accounting principles, (A) plus, the sum of, but without duplication
and only to the extent deducted in determining consolidated net income
for such period, (1) all income tax expense, (2) all interest expense
(including imputed interest with respect to capital leases), (3) all
amortization expense, (4) all depreciation expense, (5) all financial
advisory fees, management fees, consulting fees, bonuses and similar
fees and amounts paid or payable by
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the Company and its Subsidiaries with respect to such Calculation
Period (including without limitation all of the foregoing payable to
Baker Communications Fund, L.P.), (6) other non-cash items reducing
consolidated net income and (7) any items of extraordinary loss, and
(B) minus, any items of extraordinary gain.
(c) Vehicle Allowance. During the term of Executive's
employment hereunder, Executive shall receive from the Company an
automobile allowance in the amount of $700.00 per month.
(d) Expenses. During the term of the Executive's employment
hereunder, the Company shall, upon submission of reasonable
documentation of such expense incurrence in accordance with the
standard policies and procedures established by the Company, reimburse
the Executive for all reasonable expenses incurred by the Executive on
the Company's behalf.
(e) Other Benefits. During the term of the Executive's
employment hereunder, the Executive shall be entitled to participate in
all of the Executive benefit plans and arrangements available to the
most senior executive officers of the Company (including, without
limitation, the Company's health insurance, life insurance, dental
insurance, long-term disability insurance, 401(k) and cafeteria plans,
if any, payment of all country club dues at Woodhaven Country Club (or
such other country club selected by Executive). All of such benefits
shall be provided in accordance with the past practices and policies of
the Company in effect with respect to Executive prior to the date of
this Agreement. All such benefits which are not provided to other
executive officers of the Company generally consist of payment of
country club dues, payment of certain life insurance premiums with
respect to policies owned by the Executive or his family members and
certain health and long term disability insurance benefits.
(f) Vacations. The Executive shall be entitled to four weeks
of vacation in each calendar year. In addition the Executive shall also
be entitled to all paid holidays given by the Company to its senior
executives.
(g) Services Furnished. The Company shall furnish the
Executive with office space, secretarial and support staff assistance
and such other facilities, equipment, services and resources as shall
be reasonably required for the optimal performance of his duties
hereunder.
(h) SARS. Concurrent with the execution of this Agreement, the
Company will enter into a Stock Appreciation Rights Agreement with the
Employee, in substantially the form of Exhibit A hereto.
6. Termination. Prior to the expiration of the Term, the Executive's
employment hereunder may be terminated under the following circumstances:
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(a) Death. The Executive's death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness which incapacity cannot be reasonably
accommodated, the Executive shall have been absent from his duties
hereunder on a full-time basis for an entire period of six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given (which notice may be given before or after the end
of such six-month period) Executive shall not have returned to the
performance of his duties hereunder on a full time basis.
(c) Cause. The occurrence of any act constituting "CAUSE." For
purposes of this Agreement, "CAUSE" means (i) commission by Executive
of a felony, (ii) embezzlement or fraudulent conduct by Executive,
(iii) willful or wanton, and gross negligence of Executive in the
performance of his duties to the Company, or (iv) failure or refusal by
Executive to comply in all material respects, within a period of 30
days after notice to Executive, with a lawful and reasonable directive
of the Board.
(d) Termination by the Executive.
(i) The Executive may terminate his employment
hereunder (A) for Good Reason (as defined below) or (B) if his
health should become impaired to an extent that makes his
continued performance of his duties hereunder hazardous to his
physical or mental health despite reasonable accommodation
therefor, provided that the Executive shall have furnished the
Company with a written statement from a qualified physician to
such effect and, provided further that, at the Company's
request, the Executive shall submit to an examination by a
physician or other health professional selected by the Company
and such physician or other health professional shall have
concurred in the conclusion of the Executive's physician.
(ii) For purposes of this Agreement, "GOOD REASON"
shall mean, without the Executive's consent, of any of the
following:
(A) a change in Executive's title;
(B) a material reduction in the nature or status
of the Executive's responsibilities;
(C) the relocation of the Company's principal
executive offices to any place other than
Tarrant County, Texas, or the Company's
requiring the Executive to perform his
duties other than in compliance with Section
4 hereof;
(D) (i) FWT Acquisition, Inc. ceases, for any reason,
to hold at least seventy percent (70%) of the
issued and outstanding capital stock of
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the Company of every class on a fully diluted
basis, (ii) the sale, assignment, transfer or
other disposition by the Company and its
subsidiaries of substantially all of their assets
considered as a whole, (iii) a merger or
consolidation involving the Company in which the
Company is not the surviving entity, (iv) Baker
Communications Fund, L.P. or any affiliate of
Baker Communications Fund, L.P. shall cease, for
any reason to hold at least seventy percent (70%)
of the outstanding capital stock of FWT
Acquisition, Inc. of every class on a fully
diluted basis, or (v) a merger or consolidation
involving FWT Acquisition, Inc. in any
transaction in which FWT Acquisition, Inc. is not
the surviving entity.
(E) any failure by the Company to comply with any
material provision of this Agreement.
(e) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination
pursuant to subsection (a) hereof) shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this
Agreement, a "NOTICE OF TERMINATION" shall mean a written notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated.
(f) "DATE OF TERMINATION" shall mean (i) if the Executive's
employment is terminated by his death, the date of his death, (ii) if
the Executive's employment is terminated pursuant to subsection (b)
hereof (relating to disability), thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during
such thirty (30)-day period), (iii) if the Executive's employment is
terminated pursuant to subsection (c) hereof (relating to Cause), the
date specified in the Notice of Termination, and (iv) if the
Executive's employment is terminated for any other reason, the date on
which a Notice of Termination is given.
7. Compensation Upon Termination or During Disability.
(a) During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to
physical or mental illness, which incapacity cannot be
reasonably accommodated, the Executive shall continue to
receive all compensation and benefits provided for herein for
such period until his employment is terminated pursuant to
Section 6(b) hereof, and shall receive the Prorated Bonus (as
herein defined) for the portion of the Calculation Period
during which his employment is terminated occurring prior to
termination. As used herein "PRORATED BONUS" means for any
portion of a Calculation Period, the Bonus for such
6
<PAGE> 7
Calculation Period multiplied by a fraction, the numerator of
which is the number of days in such portion of such
Calculation Period and the denominator of which is 365.
(b) If the Executive's employment is terminated
pursuant to Section 6(a) or 6(c) hereof then he shall receive
no further compensation hereunder after the Date of
Termination; provided, that Executive shall receive the
Prorated Bonus for the portion of the Calculation Period
during which his employment is terminated with respect to the
portion of such Calculation Period occurring prior to
termination.
(c) If the Executive's employment is terminated for
any other reason (or such other country club selected by
Executive), then he shall receive all compensation and
benefits set forth in Section 5 hereof payable as provided
herein for the remainder of the Term, including, without
limitation, all Bonus.
(d) If the Executive's employment is terminated
hereunder for any reason or if the Executive terminates his
employment for Good Reason, the Company will cause, at the
Company's sole expense, a corporate membership to Woodhaven
Country Club to be issued in the name of the Executive.
8. Noncompetition; Nondisclosure.
(a) The Executive agrees that he will not engage in
any Competitive Activity (as defined below) during any period
with respect to which he is receiving payments or benefits of
any kind or character from the Company. For purposes of this
Section, "COMPETITIVE ACTIVITY" shall mean activity, without
the written consent of the Board, consisting of the
Executive's participation in the management of or as an
Executive of or advisor to any other business operation if
such operation (a "COMPETITIVE OPERATION") is then in material
competition with a principal business operation of the
Company.
(b) The Executive agrees not to disclose, while in
the Company's employ or during any period with respect to
which he is receiving payments or benefits of any kind or
character from the Company to any person not employed on a
full-time basis by the Company or its affiliates, or not
engaged to render services to the Company or its affiliates,
except with the prior written consent of an officer authorized
to act in the matter by the Board, any proprietary and
confidential information obtained by him while in the employ
of the Company, provided, however, that this provision shall
not preclude the Executive from the use or disclosure of (i)
information known generally to the public, (ii) information
which was rightfully in the Executive's possession prior to
the date hereof, (iii) information rightfully acquired from a
third party able to convey it lawfully, (iv) information not
generally considered confidential by persons engaged in the
business conducted by the Company or (v) information required
by law or court order to be disclosed.
7
<PAGE> 8
(c) In the event Executive is terminated without
Cause or terminates his employment for Good Reason, Executive
may, from and after such date of Termination, elect to no
longer receive payment of compensation or benefits under this
Agreement, in which event Executive shall be released from his
obligations under this Section 8.
9. Director and Officer Indemnification and Insurance. At all
times during the term hereof, the Company shall indemnify the Executive to the
fullest extent permitted by applicable law and shall 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.
10. Notices. For the purposes of this Agreement, notices,
demands and all other communications provided for in this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or (unless
otherwise specified) mailed by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Roy J. Moore
3508 Orchid Court
Arlington, Texas 76016
If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, NY 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Prohibition on Assignment. Neither the Company nor Executive shall
assign, transfer or convey its rights or delegate its duties under this
Agreement. Any attempted assignment or delegation shall be void.
12. Modification and Amendments. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company's duly authorized
executive officer.
8
<PAGE> 9
13. No Waiver. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.
14. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
15. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of any subject matter contained herein and
supersedes all prior severance or other agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, Executive or representative of any party hereto; and
any prior agreement of the parties hereto in respect of the subject matter
contained herein is hereby terminated and cancelled.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By:
----------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXECUTIVE:
-------------------------------------------
Roy J. Moore
10
<PAGE> 1
SCHEDULE 2.1
<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
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
SUBSIDIARIES
None
<PAGE> 5
SCHEDULE 5.5
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
LITIGATION
None
<PAGE> 7
SCHEDULE 5.12
FEES
None
<PAGE> 8
SCHEDULE 5.13
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
EXISTING INVESTMENTS
None
<PAGE> 1
EXHIBIT 10.13
FINANCIAL ADVISORY AGREEMENT
THIS FINANCIAL ADVISORY AGREEMENT (this "AGREEMENT") is made and
entered into as of November 12, 1997, between FWT, Inc. a Texas corporation
(the "COMPANY"), and Baker Capital Corp., a Delaware corporation ("BAKER
CAPITAL").
PRELIMINARY STATEMENT
A. Baker Communications Fund, L.P., an affiliate of Baker Capital
is simultaneously with the execution of this Agreement acquiring approximately
80% of the common stock of the Company.
B. Baker Capital has rendered financial advisory services in
connection with, among other things, the negotiation of the acquisition of the
common stock of the Company and the debt and equity financing transactions
related thereto.
C. The Company has requested that Baker Capital render financial
advisory and other similar services to the Company with respect to certain
future transactions by the Company.
D. The Company has requested that Baker Capital render financial
oversight and monitoring services to the Company on an ongoing basis.
NOW, THEREFORE, in consideration of the services rendered and to be
rendered by Baker Capital and the mutual covenants herein contained, and for
other good, valuable and binding consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and Baker Capital, intending to be
legally bound hereby, now agree as follows:
STATEMENT OF AGREEMENT
Section 1. Retention.
(a) The Company hereby retains Baker Capital as financial
advisor to the Company in connection with the leveraged recapitalization of the
Company to be effected pursuant to the Stock Purchase and Redemption Agreement
of even date herewith and related transactions, including the financing thereof
(collectively, the "TRANSACTION").
(b) The Company may, but is not obligated to retain Baker
Capital as its financial advisor with respect to future transaction involving
the sale of securities by the Company, tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring or other similar transaction
directly or indirectly involving the Company or any of its subsidiaries
(collectively, "FUTURE TRANSACTIONS"). If so retained, the
1
<PAGE> 2
Company will pay to Baker Capital reasonable compensation no less favorable to
the Company than could be obtained in a transaction involving an unrelated
third party. Any retention of Baker Capital pursuant to this clause (b) will
constitute a "Related Party Transaction" for purposes of Section 1.4 of the
Shareholders' Agreement of even date herewith among the Company, Baker Capital,
FWT Acquisition, Inc. and the other shareholders of the Company.
(c) The Company hereby retains Baker Capital to provide
ongoing financial oversight and monitoring services to the Company as may be
reasonably requested by the board of directors of the Company during the term
of this Agreement.
Section 2. Term. The term of this Agreement shall continue
until the earlier to occur of (i) the tenth anniversary of the date hereof and
(ii) the date on which Baker Capital and its affiliates cease to beneficially
own, (as such term is defined in Rule 13d under the Securities Exchange Act of
1934) directly or indirectly, at least five percent (5%) of the outstanding
Common Stock of the Company or its successors.
Section 3. Compensation.
(a) As compensation for Baker Capital's services as
financial advisor to the Company in connection with the Transaction, the
Company agrees to pay to Baker Capital a cash fee of: (i) One Million Dollars
($1,000,000) to be paid upon consummation of the acquisition of Common Stock of
the Company by Baker Communications Fund, L.P. and (ii) an additional One
Million Dollars ($1,000,000) upon closing of the related offering of the
Company's Senior Subordinated Notes due 2007.
(b) As compensation for Baker Capital's oversight and
monitoring services under Section 1(c) hereof, the Company shall pay to Baker
Capital an annual base fee (the "MONITORING FEE") of $250,000, subject to
adjustment pursuant to paragraphs (d) and (e) below and prorated on a daily
basis for any period less than a full calendar year. The Monitoring Fee shall
be payable in arrears in quarterly installments on each January 1, April 1,
July 1, and October 1 during the term of this Agreement, commencing January 1,
1998.
(c) For each year during the term of this Agreement
commencing 1998, the Monitoring Fee shall be increased by an additional
$250,000 (the "EBITDA FEE") for each year the Company meets the EBITDA target
("TARGETED EBITDA") for the Company and its Subsidiaries on a consolidated
basis for the year. For purposes hereof, "Targeted EBITDA" shall mean: (i)
with respect to the period ending April 30, 1998, $21,700,000, and (ii) with
respect to each calculation period ending thereafter, an amount determined by a
majority vote of the Compensation Committee of the board of directors of the
Company. In no event shall the Targeted EBITDA for any period exceed the
EBITDA target for the same period established pursuant to the terms of the
Employment Agreement between the Company and Roy J. Moore. The EBITDA Fee
2
<PAGE> 3
earned for any year shall be payable no later than the publication of the
Company's audited annual financial statement for the year.
Section 4. Reimbursement of Expenses. In addition to the
compensation to be paid pursuant to Section 3 hereof, the Company agrees to pay
or reimburse Baker Capital for all "Reimbursable Expenses", which shall consist
of all reasonable disbursements and out-of-pocket expenses (including without
limitation, fees and disbursements of counsel, costs of travel, postage,
deliveries, communications, etc.) incurred by Baker Capital or its affiliates
for the account of the Company or in connection with the performance by Baker
Capital of the services contemplated by Section 1 hereof.
Section 5. Indemnification. The Company shall indemnify and
hold harmless each of Baker Capital, its affiliates, and their respective
directors, officers, controlling persons (within the meaning of Section 15 of
the Securities Act of 1933 or Section 20(a) of the Securities Exchange Act of
1934), if any, agents and employees (Baker Capital, its affiliates, and such
other specified persons being collectively referred to as "Indemnified Persons"
and individually as an "Indemnified Person") from and against any and all
claims, liabilities, losses, damages and expenses incurred by any Indemnified
Person (including those resulting from the negligence of the Indemnified Person
and fees and disbursements of the respective Indemnified Person's counsel)
which (A) are related to or arise out of (i) actions taken or omitted to be
taken (including any untrue statements made or any statements omitted to be
made) by the Company or (ii) actions taken or omitted to be taken by an
Indemnified Person with the Company's consent or in conformity with the
Company's instructions or the Company's actions or omissions or (B) are
otherwise related to or arise out of Baker Capital's engagement hereunder, and
will reimburse each Indemnified Person for all costs and expenses, including
fees of any Indemnified Person's counsel, as they are incurred, in connection
with investigating, preparing for, defending, or appealing any action, formal
or informal claim, investigation, inquiry or other proceeding, whether or not
in connection with pending or threatened litigation, caused by or arising out
of or in connection with Baker Capital's acting pursuant to the engagement,
whether or not any Indemnified Person is named as a party thereto and whether
or not any liability results therefrom. The Company will not however, be
responsible for any claims, liabilities, losses, damages, or expenses pursuant
to clause (B) of the preceding sentence that have resulted primarily from Baker
Capital's bad faith, gross negligence or willful misconduct. The Company also
agrees that neither Baker Capital nor any other Indemnified Person shall have
any liability to the Company for or in connection with such engagement except
for any such liability for claims, liabilities, losses, damages, or expenses
incurred by the Company that have resulted primarily from Baker Capital's bad
faith, gross negligence or willful misconduct. The Company further agrees that
it will not, without the prior written consent of Baker Capital, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional
3
<PAGE> 4
release of Baker Capital and each other Indemnified Person hereunder from all
liability arising out of such claim, action, suit or proceeding. THE COMPANY
HEREBY ACKNOWLEDGES THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ANY
CLAIMS, LIABILITIES, LOSSES, DAMAGES, OR EXPENSES THAT HAVE RESULTED FROM OR
ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR
CONCURRENT ORDINARY NEGLIGENCE OF BAKER CAPITAL OR ANY OTHER INDEMNIFIED
PERSON.
The foregoing right to indemnity shall be in addition to any rights
that Baker Capital and/or any other Indemnified Person may have at common law
or otherwise and shall remain in full force and effect following the completion
or any termination of the engagement. The Company hereby consents to personal
jurisdiction and to service and venue in any court in which any claim which is
subject to this Agreement is brought against Baker Capital or any other
Indemnified Person.
It is understood that, in connection with Baker Capital's engagement,
Baker Capital may also be engaged to act for the Company in one or more
additional capacities, and that the terms of this engagement or any such
additional engagement may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
the first paragraph hereof as well as to any such additional engagement(s)
(whether written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and effect following
the completion or termination of said engagement or such additional
engagements.
If the indemnity referred to in this Agreement should be, for any
reason whatsoever, rendered unenforceable, unavailable or otherwise
insufficient to hold each Indemnified Person harmless, the Company shall pay to
or on behalf of each Indemnified Person contributions for Losses so that each
Indemnified Person ultimately bears only a portion of such Losses as is
appropriate to reflect the relative benefits received by and the relative fault
of each such Indemnified Person, respectively, on the one hand and the Company
on the other hand in connection with the transaction; provided, however, that
in no event shall the aggregate contribution of all Indemnified Persons to all
Losses in connection with any transaction exceed the amount of the fee actually
received by the Manager pursuant to this Agreement. The relative fault of each
Indemnified Person and the Company shall be determined by reference to, among
other things, whether the actions or omissions to act were by such Indemnified
Person or the Fund and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action or omission to
act.
Section 6. Confidential Information. In connection with the
performance of the services hereunder, Baker Capital agrees not to divulge any
confidential information, secret processes or trade secrets disclosed by the
Company to it solely in its capacity as a financial advisor, unless the Company
consents to the divulging thereof or such information, secret processes, or
trade secrets are publicly available or otherwise available to Baker Capital
without restriction or breach of any confidentiality agreement
4
<PAGE> 5
or unless required by any governmental authority or in response to any valid
legal process.
Section 7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of New York,
excluding any choice-of-law provisions thereof.
Section 8. Assignment. This Agreement and all provisions
contained herein shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided, however, neither
this Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned (other than with respect to the rights and obligations of Baker
Capital, which may be assigned to any one or more of its principals or
affiliates) by either party without the prior written consent of the other.
Section 9. Independent Contractor. For all purposes of this
Agreement, Baker Capital shall be an independent contractor and not an employee
or dependent agent of the Company. Except as provided in this Agreement, Baker
Capital shall have no authority to bind, obligate or represent the Company.
Section 10. Amendment. Except as otherwise expressly
provided herein, this Agreement shall not be amended, nor shall any provision
of this Agreement be considered modified or waived, unless evidenced by a
writing signed by the parties hereto.
Section 11. Termination. The expiration, revocation or
termination of this Agreement shall not extinguish the obligations of the
Company for the payment of fees and expenses in respect of services for periods
prior to the effective date of such expiration, revocation or termination. The
indemnification and contribution obligations of the Company under Section 5
shall survive the expiration, revocation or termination of this Agreement.
Section 12. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument, and the signature
of any party to any counterpart shall be deemed a signature to, and may be
appended to, any other counterpart.
Section 13. Other Understanding. All discussions,
understandings, and agreements theretofore made between any of the parties
hereto with respect to the subject matter hereof are merged in this Agreement,
which alone fully and completely expresses the Agreement of the parties hereto.
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
FWT, INC.
By:
------------------------------------
Name:
Title:
BAKER CAPITAL CORP.
By:
------------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.14
FWT, INC.
FIRST AMENDMENT
TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated
as of February _, 1998, and entered into by and among FWT, Inc., a Texas
corporation ("COMPANY"), the financial institutions listed on the signature
pages hereof ("LENDERS") and BT Commercial Corporation, as agent for Lenders
("AGENT"), and is made with reference to that certain Credit Agreement dated as
of November 12, 1997 (the "CREDIT AGREEMENT"), by and among Company, Lenders and
Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.
RECITALS
WHEREAS, Company and Lenders desire to amend the Credit Agreement to
(i) permit Company to carry forward up to fifty percent of its unused
Consolidated Capital Expenditures to the succeeding fiscal year; (ii) to amend
the financial covenants for the period ending October 30, 1998; and (iii) make
certain other amendments as set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 7: COMPANY'S NEGATIVE COVENANTS
A. INDEBTEDNESS. Subsection 7.1(v) of the Credit Agreement is
hereby amended by deleting it in its entirety and substituting the following
therefor:
"(v) Company may become and remain liable with respect to up to
$100,000,000 in aggregate principal amount of Indebtedness evidenced by the
Bridge Notes (as well as any payment-in-kind Bridge Notes issued in lieu
of cash interest thereon) and (a) Indebtedness evidenced by the Conversion
Notes, to the extent such Indebtedness has been converted from Indebtedness
under the Bridge Notes in accordance with the terms of the Bridge Note
Agreement (as well as any payment-in-kind Bridge Notes issued in lieu of
cash interest thereon), (b) Up to $105,000,000 in aggregate principal
amount of indebtedness evidenced by the Takeout Securities issued pursuant
to the Takeout Securities Indenture, so long as all of the then outstanding
Bridge Notes, the Conversion Notes, or the Exchange Notes are refinanced in
their entirety from the net proceeds of such Takeout Securities, and (c)
Indebtedness
1
<PAGE> 2
evidenced by the Exchange Notes issued pursuant to the Exchange Note
Indenture to the extent such Indebtedness has been exchanged for an equal
principal amount of the Conversion Notes (as well as any payment-in-kind
Bridge Notes issued in lieu of cash interest thereon);"
B. MINIMUM INTEREST COVERAGE RATIO. Subsection 7.6A of the Credit
Agreement is hereby amended by deleting the first line of the table set forth
therein in its entirety and substituting the following therefor:
<TABLE>
<CAPTION>
" PERIOD INTEREST COVERAGE RATIO
--------------------- -----------------------
<S> <C>
Closing Date to October 30, 1998 1.10:1.00"
</TABLE>
C. MAXIMUM LEVERAGE RATIO. Subsection 7.6B of the Credit Agreement
is hereby amended by deleting the first line of the table set forth therein in
its entirety and substituting the following therefor:
<TABLE>
<CAPTION>
" PERIOD MAXIMUM LEVERAGE RATIO
--------------------- ----------------------
<S> <C>
Closing Date to October 30, 1998 10.85:1.00"
</TABLE>
D. MINIMUM CONSOLIDATED EBITDA. Subsection 7.6C of the Credit
Agreement is hereby amended by deleting the first line of the table set forth
therein in its entirety and substituting the following therefor:
<TABLE>
<CAPTION>
MINIMUM CONSOLIDATED
" PERIOD EBITDA
--------------------- ----------------------
<S> <C>
Closing Date to October 30,1998 $10,000,000"
</TABLE>
E. CONSOLIDATED CAPITAL EXPENDITURES. Subsection 7.8 of the Credit
Agreement is hereby amended by adding the following provision to subsection 7.8
immediately following the table contained in subsection 7.8:
", provided that such amount for any period set forth above may be increased by
an amount equal to fifty percent (50%) of the excess, if any, of the amount
permitted for the preceding period as set forth above over the actual amount of
Consolidated Capital Expenditures for such previous period."
Section 2. CONDITIONS TO EFFECTIVENESS
Section 1 of this Amendment shall become effective only upon the
satisfaction of all of the following conditions precedent (the date of
satisfaction of such conditions being referred to herein as the "FIRST AMENDMENT
EFFECTIVE DATE"):
2
<PAGE> 3
A. On or before the First Amendment Effective Date, Company shall
deliver to Lenders the following, each, unless otherwise noted, dated the First
Amendment Effective Date:
1. Signature and incumbency certificates of its officers executing
this Amendment; and
2. Executed copies of this Amendment.
B. Requisite Lenders shall have executed this Amendment.
C. On or before the First Amendment Effective Date, all corporate and
other proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
satisfactory in form and substance to Agent and such counsel, and Agent and such
counsel shall have received all such counterpart originals or certified copies
of such documents as Agent may reasonably request.
SECTION 3. COMPANY'S REPRESENTATIONS AND WARRANITIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Company represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY Company has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Company.
C. NO CONFLICT. The execution and delivery by Company of this
Amendment and the performance by Company of the Amended Agreement do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Company or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Company or any of its Subsidiaries or any
order, judgment or decree of any court or other agency of government binding on
Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition
3
<PAGE> 4
of any Lien upon any of the properties or assets of Company or any of its
Subsidiaries (other than Liens created under any of the Loan Documents in favor
of Agent on behalf of Lenders), or (iv) require any approval of stockholders or
any approval or consent of any Person under any Contractual Obligation of
Company or any of its Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Company of
this Amendment and the performance by Company of the Amended Agreement do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any federal, state or other governmental
authority or regulatory body
E. BINDING OBLIGATION. This Amendment and the Amended Agreement have
been duly executed and delivered by Company and are the legally valid and
binding obligations of Company, enforceable against Company in accordance with
their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the First Amendment Effective Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Potential Event of
Default.
Section 4. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
(i) On and after the First Amendment Effective Date, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import referring to the Credit Agreement, and
each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.
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<PAGE> 5
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Company acknowledges that all costs, fees and
expenses as described in subsection 10.2 of the Credit Agreement incurred by
Agent and its counsel with respect to this Amendment and the documents and
transactions contemplated hereby shall be for the account of Company.
C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. APPLICABLE LAW. THIS AMENDMENT 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.
E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any
number of 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]
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<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
FWT, Inc.
By:
---------------------------
Title:
------------------------
BT COMMERCIAL CORPORATION, INDIVIDUALLY
AND AS AGENT
By:
---------------------------
Title:
------------------------
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<PAGE> 1
EXHIBIT 10.15
VOLUNTARY RETIREMENT AGREEMENT
THIS VOLUNTARY RETIREMENT AGREEMENT ("Agreement") is made this 27th
day of February, 1998, by and between Thomas F. Moore ("Mr. Moore") and FWT,
Inc., a Texas corporation ("FWT").
RECITALS
WHEREAS, Mr. Moore and FWT have asserted certain claims against each
other, arising from Mr. Moore's former employment with FWT and the termination
of such employment;
WHEREAS, each party has denied the claims of the other party;
WHEREAS, with respect to any claim asserted or intended to be asserted
between the parties, bona fide disputes and controversies exist between the
parties regarding liability and the amount thereof, if any, and damages and the
amount thereof, if any;
WHEREAS, by reason of such disputes and controversies, the parties
and attorneys to this Agreement desire to compromise, settle, and release all
claims and causes of action of any kind whatsoever that each has or may have
against the other arising out of Mr. Moore's employment with FWT (both as an
officer and an employee of FWT) and his termination of employment; and
WHEREAS, the parties to this Agreement desire to set forth all terms
and conditions of the foregoing compromise, settlement, and release of such
claims in this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration for the promises contained in this
Agreement, all of the terms and conditions of this Agreement, and the agreement
of the parties hereto to execute this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Mr. Moore and FWT hereby agree as follows:
1. AGREEMENTS BY MR. MOORE: In consideration of the promises,
conditions, and covenants by FWT set forth below in this Agreement, and in
accordance with the recitals set forth above, Mr. Moore agrees as follows:
a. Effective as of the date hereof, Mr. Moore hereby
resigns any all positions that he holds with FWT and hereby voluntarily
retires.
b. With the exception of the Reserved Claims (as herein
defined), Mr. Moore hereby RELEASES AND FOREVER DISCHARGES FWT and each of its
stockholders, agents, directors, affiliates, employees, officers, attorneys, and
representatives, (collectively, the "Related Parties") of and from any and all
manner of action or actions, cause or causes of action, at law or in equity,
suits, debts, liens, contracts, agreements, promises, liability, claims,
demands, damages, loss,
<PAGE> 2
cost or expense, of any nature whatsoever, known or unknown, fixed or contingent
(hereinafter called "claims"), which Mr. Moore now has or may hereafter have
against any Related Party by reason of any matter, cause, or thing whatsoever
from the beginning of time to the date hereof arising out of Mr. Moore's
employment with FWT (both as an officer and an employee of FWT) or his
termination from such employment. Without limiting the generality of the
foregoing but subject in all respects to the reservation of the Reserved Claims;
the claims released herein include any claims arising out of, based upon, or in
any way related to:
(1) any claim of entitlement to present or future
employment or reemployment with FWT;
(2) any property, contract, or tort claims
arising out of Mr. Moore's employment with FWT or his termination from such
employment, including any and all claims of wrongful discharge, breach of
employment contract, breach of any covenant of good faith and fair dealing,
retaliation, intentional or negligent infliction of emotional distress,
tortious interference with existing or prospective economic advantage,
negligence, misrepresentations, breach of privacy, defamation, loss of
consortium, breach of fiduciary duty, violation of public policy, or any other
common law claim of any kind;
(3) any violation or alleged violation of Title
VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in
Employment Act, as amended, the Older Workers Benefit Protection Act of 1990,
the Equal Pay Act, as amended, the Fair Labor Standards Act, the Employee
Retirement Income Security Act, (except to the extent necessary to enforce Mr.
Moore's rights under Sections 2.h and 2.i below), the Americans With
Disabilities Act, the Texas Labor Code, the Texas Unemployment Insurance Act,
the Texas Worker's Compensation Act, the Civil Rights Act of 1866, the
Consolidated Omnibus Budget Reconciliation Act, or any other federal, state, or
local statute, regulation, or ordinance;
(4) any claims for severance pay, bonus, sick
leave, vacation or holiday pay, life insurance, health insurance, disability or
medical insurance, or any other employee benefit;
(5) any claim relating to or arising under any
other local, state, or federal statute or principle of common law (whether in
contract or in tort) governing the employment of individuals, discrimination in
employment and/or the payment of wages or benefits; and
(6) any claim that FWT has acted improperly,
illegally, or unconscionably in any manner whatsoever in connection with Mr.
Moore's employment with FWT or his termination from such employment at any time
prior to the execution of this Agreement.
c. Notwithstanding anything contained in Section 1.b
above to the contrary, Mr. Moore does not release or discharge the Released
Parties from, and Mr. Moore hereby expressly reserves, any and all claims (as
such term is defined in Section 1.b above), which in any way, by reason of any
matter, cause or thing whatsoever arise out of or relate to the following (the
"Reserved Claims"):
(1) That certain Stock Purchase and Redemption
Agreement dated November 12, 1997 by and among FWT, FWT Acquisition, Inc. ("FWT
Acquisition"), T.W. Moore, Betty Moore, Carl Moore, Roy J. Moore and Mr. Moore
(the "Purchase Agreement") and any document, instrument or agreement executed
in connection therewith, including, without limitation, each of the following
as defined in the Purchase Agreement: the Shareholders' Agreement, the
Registration Rights Agreement, the Escrow Agreement, the Working Capital Notes,
and the Tax Notes (the Purchase Agreement and such other documents, instruments
or agreements are referred to herein as the "Purchase Documents"); provided,
that the Purchase Documents shall not include, and the Reserved Claims do not
include claims arising under that certain Employment Agreement dated as of
November 12, 1997 by and between Mr. Moore and FWT (the "Employment Agreement")
except to the limited extent provided in Section 10 hereof;
(2) Any transaction contemplated by the Purchase
Documents;
(3) Mr. Moore's status as a shareholder of FWT;
(4) The liabilities and obligations of FWT
arising hereunder;
(5) The liabilities and obligations of FWT under
those provisions of the Employment Agreement which expressly survive this
Agreement as provided in Section 10 hereof; and
(6) any other actions, inactions, events,
conditions or circumstances of any type which do not arise out of or relate to
Mr. Moore's employment with FWT or the termination of such employment.
d. Mr. Moore agrees that he will never again seek
employment or reemployment with FWT or apply for a position of employment with
FWT.
e. Mr. Moore represents and warrants that he has not
assigned or conveyed to anyone else any part of or interest in the
claims against FWT released pursuant to paragraph 1.(b) above.
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f. Mr. Moore acknowledges that except as provided in
Sections 2.h and 2.i hereof he is no longer a party to any of the health plans
or other benefits that FWT heretofore provided to him or that FWT currently
provides to any of its employees, and Mr. Moore agrees that he will be
responsible for the payment of any and all fees or premiums with regard to any
continuation of such benefits that he may elect under the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA").
g. In consideration of the payments by FWT to Mr. Moore
provided by this Agreement, Mr. Moore acknowledges and affirms his continuing
obligations under Section 8 ("Noncompetition; Nondisclosure") of the Employment
Agreement and Article VI of the Purchase Agreement provided, however, that Mr.
Moore may terminate, by written notice thereof to FWT, his obligations under
Section 8 of the Employment Agreement and Article VI of the Purchase Agreement
by foregoing any right to receive payment by FWT of the amounts set forth in
Section 2.b below that would otherwise be payable to him pursuant hereto.
h. Mr. Moore expressly acknowledges and agrees that by
entering into this Agreement, he is waiving any and all claims under the Age
Discrimination in Employment Act of 1967, as amended, which have arisen on or
before the date of this Agreement. Mr. Moore further acknowledges and agrees:
(1) that this Agreement is written in a manner that
is understood by him;
(2) that among other things, this Agreement
specifically refers to rights under the Age Discrimination in Employment Act of
1967, 29 U.S.C. Section 621 et seq., as amended;
(3) that he does not waive rights or claims under the
Age Discrimination in Employment Act of 1967, 29 U.S.C. Section 621 et seq.,
as amended, that may arise after the date this Agreement is executed;
(4) that he knowingly and voluntarily has waived his
claims under the Age Discrimination in Employment Act of 1967, 29 U.S.C.
Section 621 et seq., as amended, for valid consideration that is in addition
to anything of value to which he already is entitled;
(5) that he has been advised in writing of his right
to consult with an attorney before signing this Agreement, and that he is in
fact represented by and has consulted with his attorney regarding this
Agreement;
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<PAGE> 4
(6) that he has been given a period of at least
twenty-one (21) days within which to consider the Agreement and that, after
consultation with his attorney, he waives his right to consider the Agreement
beyond the date hereof; and
(7) that for a period of seven (7) days following the
execution of this Agreement, he may revoke the Agreement, and the Agreement
shall not become effective or enforceable until such seven (7) day period has
expired. Such right of revocation constitutes a unilateral right afforded to
Mr. Moore, and FWT shall have no such right of revocation. At least seven (7)
days from the date hereof, Mr. Moore agrees to reaffirm in a written document
substantially in the form attached hereto as Exhibit A (the "Reaffirmation") his
agreement and acceptance of the terms of this Agreement.
i. Mr. Moore shall be responsible for the payment of all
federal, state and local income taxes and any and all FICA, Medicare and
similar taxes and assessments that may be payable in connection with the
payments made by FWT to him hereunder.
2. AGREEMENTS BY FWT: In consideration of the promises,
conditions, and covenants by Mr. Moore set forth above in this Agreement, and
in accordance with the recitals set forth above, FWT agrees as follows:
a. With the exception of the FWT Reserved Claims (as
herein defined), FWT hereby RELEASES AND FOREVER DISCHARGES Mr. Moore and each
of his agents, affiliates, attorneys and representatives
(collectively, the "Moore Released Parties") of and from any and all manner of
action or actions, cause or causes of action, at law or in equity, suits, debts,
liens, contracts, agreements, promises, liability, claims, demands, damages,
loss, cost or expense, of any nature whatsoever, known or unknown, fixed or
contingent (hereinafter called "claims"), which FWT now has or may hereafter
have against Mr. Moore by reason of any matter, cause, or thing whatsoever from
the beginning of time to the date hereof arising out of Mr. Moore's employment
with FWT both as an officer and employee of FWT. Without limiting the
generality of the foregoing, but subject in all respects to the FWT Reserved
Claims (as defined herein), the claims released herein include any claims
arising out of, based upon, or in any way related to, any action or inaction of
Mr. Moore whatsoever arising out of or related to his employment as an officer
or employee of FWT, including, without limitation, any action or inaction which
constitutes or is alleged to constitute misfeasance, malfeasance, negligence,
gross negligence, willful misconduct, fraud, bad faith, misrepresentation,
breach of employment contract, retaliation, intentional or negligent infliction
of emotional distress, tortious interference with existing or prospective
economic advantage, breach of privacy, defamation, breach of fiduciary duty,
violation of public policy, breach of any federal, state or local law, rule or
regulation, or common law claim of any kind. Notwithstanding anything contained
in this Section 2.a to the contrary, FWT does not release or discharge the Moore
Released Parties from, and FWT expressly reserves, any and all claims (as such
term is defined in this Section 2.a.), which in any way, by reason of any
matter, cause or thing whatsoever arise out of or relate to the following (the
"FWT Reserved Claims"):
(1) The Purchase Documents and any transaction
contemplated by the Purchase Documents; and
(2) The obligations of Mr. Moore arising hereunder.
b. FWT agrees to pay Mr. Moore the sum of $9,895.83 on
the date hereof and the sum of $19,791.67 per month on the final business day of
each month thereafter from and including March 1998 through December 2000. In
addition to such monthly payments, FWT agrees to pay Mr. Moore one half of the
Bonus (as such term is defined in the Employment Agreement), if any, that may
become payable to Mr. Moore under Section 5(b) of the Employment Agreement.
Said 1/2 Bonus shall be payable at the times and for the periods specified in
the Employment Agreement. Upon request by Mr. Moore, such payments shall be made
by direct deposit or wire transfer in an account designated by Mr. Moore.
c. Not later than the date any payment of Bonus is due
under paragraph 2.b above, FWT agrees to provide Mr. Moore a certificate from
its chief financial officer (or such other officer as the president of FWT may
designate) containing a detailed calculation of the amount of the Bonus, if
any, payable to Mr. Moore under the preceding paragraph.
d. FWT agrees to provide Mr. Moore copies of all
quarterly and annual reports filed by FWT with the Securities and Exchange
Commission; provided, however, that to the extent that FWT ceases to be a
reporting company under the Securities Exchange Act of 1934, FWT would continue
to provide Mr. Moore copies of quarterly and annual financial statements to the
extent such statements are prepared by FWT in the ordinary course of its
business.
e. The letter dated February 3, 1998, from FWT to Mr.
Moore is hereby retracted.
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<PAGE> 5
f. FWT agrees to exercise its reasonable efforts to
promptly cause the membership held by FWT in Woodhaven Country Club, Fort
Worth, Texas, for Mr. Moore's use to be transferred into Mr. Moore's name;
provided, however, that Mr. Moore shall be responsible for paying all costs and
expenses associated with such transfer.
g. FWT acknowledges and agrees that it has no right,
title or interest in any policy of life insurance insuring the life of Mr.
Moore or providing insurance with respect to any disability of Mr. Moore, or in
any proceeds, benefits, cash surrender value or other rights under any such
life insurance or disability policy. FWT agrees to take such actions as are
necessary or appropriate to fully vest in Mr. Moore or his designee all right,
title and interest in and to such policies, provided that FWT shall not be
responsible for the payment of any premiums or other costs associated with such
policies.
h. FWT acknowledges and agrees that Mr. Moore is
entitled to all benefits accrued to him or for his benefit as of the date hereof
under all profit sharing, retirement, pension or similar plans or arrangements
of every nature maintained by FWT as of date hereof or prior hereto, and FWT
agrees to take such actions as are necessary or appropriate to cause to be
distributed to Mr. Moore or his heirs or assigns all benefits and other amounts
attributable to Mr. Moore in accordance with the terms of such plans; provided,
that nothing contained herein shall require FWT to make any further contribution
to any such plan on behalf of Mr. Moore attributable to periods commencing after
the date hereof.
i. FWT agrees to deliver to Mr. Moore a "COBRA" notice
effective the date hereof and to fully comply with the provisions of Parts 6
and 7 of Subchapter B of Title I of ERISA with respect to Mr. Moore's rights to
coverage.
j. FWT hereby represents and warrants to Mr. Moore that
this Agreement (a) has been duly authorized by all requisite action of the
board of directors of FWT, (b) has been duly executed and delivered by an
authorized officer of FWT, and (c) represents a valid and binding obligation of
FWT, enforceable in accordance with its terms. Attached hereto as Exhibit B is
a true and correct copy of a unanimous consent of the directors of FWT which
has been duly adopted by the directors of FWT and which has not been repealed,
modified or revoked in any respect and which is in full force and effect on the
date hereof.
k. FWT shall indemnify Mr. Moore and hold Mr. Moore
harmless from any and all claims, losses, damages or demands of every type
asserted by any third party arising out of or in any way related to any actual
or alleged action or inaction of any type of Mr. Moore in any way related to his
employment as an officer or employee of FWT. FWT shall exercise its reasonable
efforts to maintain the officer and director insurance described in Section 9 of
the Employment Agreement until December 31, 2000, provided that FWT shall not be
responsible for the payment of any incremental premiums or other incremental
costs associated with maintaining such insurance for Mr. Moore's benefit. FWT
shall exercise its reasonable efforts to cause, at all times that FWT maintains
such insurance, Mr. Moore to be specified as a named insured thereunder. Mr.
Moore, at his option, may elect to decline such coverage in which event he will
not be responsible for the payment of such premiums.
l. FWT represents and warrants to Mr. Moore that each of the
following have been paid or will be paid by FWT, in each case on or before the
date due, with respect to all periods up to and including the date hereof:
(a) all premiums under the life and disability insurance policies described in
Section 2(g) above, (b) all dues and business expenses with respect to the
country club membership described in Section 2(f) above, and (c) all cellular
telephone charges with respect to the cellular telephone service previously
provided to Mr. Moore at FWT expense.
3. NON-DISPARAGEMENT: Mr. Moore agrees that he will not disclose
any information, report any information, or voice opinions or beliefs about FWT
that in any way disparage FWT's business operations or management, or that
reflect negatively on FWT's ability to deliver services or fulfill contractual
obligations. FWT agrees that it will not disparage Mr. Moore's character or
competence or make statements to any third parties that are calculated to harm
Mr. Moore's personal or professional reputation. The parties understand that
this Agreement shall not be interpreted to prevent either party from providing
truthful testimony in response to a valid subpoena. Each party hereto agrees to
publicly and privately describe the circumstances related to Mr. Moore's
employment termination as a voluntary retirement.
4. NO ADMISSION OF LIABILITY: The parties to this Agreement
understand and agree that nothing in this Agreement shall be construed as an
admission of liability, and that all allegations of liability are expressly
denied.
5. WAIVER OF ATTORNEYS' FEES; EXPENSES: Mr. Moore expressly
waives any and all claims that he may have now or in the future for attorneys'
fees in connection with any claim against FWT arising from his employment at
FWT, including but not limited to any fees to which Mr. Moore would otherwise be
entitled by statute but expressly excluding any claim for attorneys' fees under
Section 9 below or arising in connection with the prosecution of Reserved
Claims. Except as provided in Section 9, below, each party hereto shall be
responsible for the payment of any legal or other expenses incurred by it in
connection with the negotiation of this Agreement and any and all other matters
relating hereto.
6. HEADINGS AND CONSTRUCTION: The headings in this Agreement are
for convenience only and shall not be considered a part of or used in the
construction or interpretation of any provision of this Agreement.
7. GOVERNING LAW: This Agreement shall be construed and
interpreted according to the domestic laws of the State of Texas.
8. ENFORCEABILITY: This Agreement shall not be subject to attack
on the ground that any or all of the legal theories or factual assumptions used
for negotiating purposes are for any reason inaccurate or inappropriate.
9. ENFORCEMENT OF AGREEMENT: If either party to this Agreement
brings an action to enforce his or its rights hereunder, the prevailing party
shall be entitled to recover his or its costs and expenses, including court
costs and attorney's fees, incurred in connection with such suit.
10. ENTIRE AGREEMENT: The matters set forth in this Agreement
constitute the sole and entire agreement between Mr. Moore and FWT with respect
to the termination of Mr. Moore's employment, and except with regard to Sections
5(b) and 8 of the Employment Agreement which expressly survive as specifically
set
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forth herein, supersede all prior agreements, negotiations, and discussions
between the parties hereto and/or their respective counsel with respect to the
subject matter hereof. Except with regard to Sections 5(b) and 8 of the
Employment Agreement which expressly survive as specifically set forth herein,
no other representations, covenants, undertakings, or other prior or
contemporaneous agreements, oral or written, regarding the matters set forth in
this Agreement shall be deemed to exist or bind any of the parties hereto. Each
party understands and agrees that it has not relied on any statement or
representation by the other party or any of its representatives in entering into
this Agreement except as expressly set forth herein.
11. AMENDMENT TO THIS AGREEMENT: Any amendment to this Agreement
shall be in writing and signed by duly authorized representatives of the
parties hereto and stating the intent of the parties to amend this Agreement.
12. VOLUNTARY EXECUTION: This Agreement has been entered into as
a result of arms-length negotiations between counsel for the parties, and the
parties each represents that he or it is voluntarily executing this Agreement
after an adequate opportunity to consult with counsel regarding its meaning and
effect.
13. EXECUTION IN COUNTERPARTS: This Agreement may be executed in
counterparts with the same force and effective as if it were executed in one
complete document.
14. PARTIES IN INTEREST. This Agreement shall be binding on and
inure to the benefit of the parties hereto and their respective heirs,
representatives, successors and assigns. Section 1.b hereof shall inure to the
benefit of the Released Parties and their respective heirs, representatives,
successors and assigns. Section 2.a hereof shall inure to the benefit of the
Moore Released Parties and their respective heirs, representatives, successors
and assigns. Except as provided in this Section 14, there shall be no third
party beneficiaries of this Agreement.
THE SIGNATURE PAGE IMMEDIATELY FOLLOWS THIS PAGE.
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ACCEPTED AND AGREED:
/s/ THOMAS F. MOORE
-------------------------------------------
Thomas F. Moore
FWT, Inc.
By: /s/ WILLIAM R. ESTILL
---------------------------------------
Name: William R. Estill
--------------------------------------
Title: Vice President - Finance
-------------------------------------
This agreement is executed by FWT Acquisition, Inc. to evidence its
consent and agreement to the provisions of Section 1(g) hereof.
FWT Acquisition, Inc.
By: /s/ LAWRENCE A. BETTINO
---------------------------------------
Its: President
---------------------------------------
This agreement is approved as to its form and content by the
undersigned counsel representing their respective clients designated below:
/s/ WILLIAM D. YOUNG
-------------------------------------------
William D. Young
Gardere & Wynne, L.L.P.
3000 Thanksgiving Tower
1601 Elm Street
Dallas, Texas 75201-4761
(214) 999-3000
(214) 999-4667
ATTORNEYS FOR THOMAS F. MOORE
/s/ JOHN STRICKLAND
-------------------------------------------
John Strickland
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue, Suite 4100
Dallas, Texas 75201-4618
(214) 969-2800
(214) 969-4343 (fax)
ATTORNEYS FOR FWT, INC.
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EXHIBIT A
REAFFIRMATION
I, Thomas F. Moore, acknowledge that I signed the Voluntary Retirement
Agreement dated February 27, 1998, (the "Agreement") with FWT, Inc. (the
"Company"), and that during the seven-day period immediately following my
execution of the Agreement, I had the right to revoke the Agreement at any time.
I further understand that once such seven-day period expired, the Agreement
became irrevocable.
By executing this Reaffirmation, I now affirm and attest that I (a)
have not heretofore, or contemporaneously with the execution of this
Reaffirmation, revoked, or attempted to revoke the Agreement, either by notice
to the Company, or otherwise, and (b) am now, by virtue of my execution of this
Reaffirmation, fully bound by all of the terms and conditions of the Agreement.
EXECUTED in ____________, Texas, this ____ day of March, 1998.
THE STATE OF TEXAS
COUNTY OF DALLAS
BEFORE ME, the undersigned authority, on this day personally appeared
Thomas F. Moore, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he had executed the same for
the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this ______ day of March, 1998.
-------------------------------------------
Notary Public, State of Texas
<PAGE> 9
EXHIBIT B
FWT, INC.
UNANIMOUS CONSENT
OF THE BOARD OF DIRECTORS
The undersigned, being all the members of the board of directors (the
"Board") of FWT, Inc., a Texas corporation (the "Company"), do hereby consent
that when they have signed this Consent, or identical counterparts thereof, the
following resolutions (these "Resolutions") shall be deemed to be adopted, to
the same extent and with the same force and effect as if adopted by unanimous
vote at a formal meeting of the Board, duly called and held for the purpose of
acting upon the proposal to adopt such Resolutions, all in accordance with
Section 9.10B of the Texas Business Corporation Act:
WHEREAS, Thomas F. Moore ("Mr. Moore") has asserted certain claims against
the Company and the Company has denied such claims;
WHEREAS, in order to settle Mr. Moore's claims, the officers of the
Company have negotiated and caused to be prepared for execution a Voluntary
Retirement Agreement (the "Agreement");
WHEREAS, the Board deems it advisable and in the best interests of the
Company that the Company enter into the Agreement.
NOW, THEREFORE, BE IT RESOLVED, that the form of the Agreement be and it
hereby is approved and adopted in all respects, with such further changes,
revisions or modifications to the form thereof as the officer executing the
same shall deem appropriate, and that the President or any Vice President of the
Company shall have full authority, for and on behalf of the Company, to execute
and enter into, deliver and perform said Agreement and to negotiate, cause to
be prepared, execute and enter into, deliver and perform any amendments thereto.
This Consent may be executed in counterparts, each of which shall be
deemed an original but all of which together shall be deemed to be one and the
same instrument.
IN WITNESS WHEREOF, the undersigned have set their hands to be effective
the 27th day of February, 1998.
/s/ ROY J. MOORE
-------------------------------
Roy J. Moore, Director
/s/ JOHN C. BAKER
-------------------------------
John C. Baker, Director
/s/ EDWARD W. SCOTT
-------------------------------
Edward W. Scott, Director
/s/ LAWRENCE A. BETTINO
-------------------------------
Lawrence A. Bettino, Director
<PAGE> 1
EXHIBIT 10.16
STOCK APPRECIATION RIGHTS
AGREEMENT
THIS STOCK APPRECIATION RIGHTS AGREEMENT, effective the 14th day of
November, 1997, is made by FWT, Inc. (the "Company") to Douglas A. Standley (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive is Chief Operations and President, Ft.
Worth Division of the Company upon whose effort the continual successful and
profitable operation of the Company is dependent; and
WHEREAS, the Company wants to assure the continued availability of the
services of the Executive to the Company; and
WHEREAS, the Executive and the Company desire to grant to Executive
the right to participate in an increase in the value of the Company's Common
Stock, par value $10.00 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the Company hereby agrees with Executive as follows:
1. Defined Terms. As used herein, each of the following terms
shall have the following definitions:
"Affiliate" means any other Person that directly or indirectly
controls, is controlled by, or is under common control with such Person. For
the purposes of this definition, control means 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. Control shall be
presumed by an individual that is a director or executive officer of a Person,
or a Person that beneficially owns more than 10% of any class of securities of
such Person having general voting rights. During the period before the Closing
and at the Closing, Company shall be considered an Affiliate of each
Shareholder. During the period after the Closing, Purchaser and Baker
Communications Fund, L.P. shall be considered an Affiliate of Company for so
long as Purchaser controls Company.
"Appraisal Event" means a Dilution Adjustment Event or delivery of a
Payment Notice to the extent that, in either such case, Fair Market Value is to
be determined pursuant to clause (c) of the definition of Fair Market Value.
"Appraisal Procedure" shall mean the following procedure for
determining the Appraised Value of one share of Common Stock: (a) upon the
occurrence of any Appraisal Event, the Company and the Executive shall attempt
to agree on a mutually acceptable Qualified Appraiser to value the Common
Stock, and if such parties agree on a Qualified Appraiser within ten (10) days
following the occurrence of any Appraisal Event such Qualified Appraiser shall,
on or before twenty (20) days
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following the date it is appointed, determine the Appraised Value of the Common
Stock, and such determination shall be binding upon the Company and the
Executive: (b) in the event the Company and the Executive are unable to agree
on a mutually acceptable Qualified Appraiser within ten (10) days following the
occurrence of any Appraisal Event, on the expiration of such ten (10) day
period, the Company and the Executive shall each appoint a Qualified Appraiser
to value the Common Stock. Within twenty (20) days following the date they are
appointed, the Qualified Appraisers appointed by the Company and the Executive
shall determine the Appraised Value of the Common Stock. In the event the
Appraised Value determined by the Company's Qualified Appraiser is more than
95% of the Appraised Value determined by the Executive's Qualified Appraiser,
the Appraised Value for purposes of this Agreement shall be the average of the
values determined by such appraisers and such determination shall be binding
upon the Company and the Executive. In the event the Appraised Value
determined by the Company's Qualified Appraiser is equal to or less than 95%
of the value determined by the Executive's Qualified Appraiser, such appraisers
shall in turn promptly appoint a third Qualified Appraiser who shall, within
twenty (20) days following the date it is appointed, determine the Appraised
Value of the Common Stock. The value which is neither the lowest nor the
highest of the values determined by the three Qualified Appraisers shall be the
Appraised Value of the Common Stock for purposes of this Agreement and shall be
binding upon the Company and the Executive. In the event either the Company or
the Executive fails to timely appoint a Qualified Appraiser, such failing party
will be deemed to have waived its rights to appoint a Qualified Appraiser, and
the Qualified Appraiser appointed by the other party shall determine the
Appraised Value for purposes of this Agreement which determination shall be
binding upon the Executive and the Company. The costs of each Qualified
Appraiser referred to herein shall be paid by the Company.
"Appraised Value" has the meaning set forth in the definition of "Fair
Market Value."
"Base Numerator" initially means 2.7228; provided, that such amount is
subject to adjustment as provided in Section 3 hereof.
"Base Value" means $45,000,000.
"Current Market Value" means, with respect to a share of Common Stock,
the average of the daily closing prices for a share of Common Stock for the ten
(10) consecutive trading days before such date, excluding any trades which are
not bona fide arm's length transactions. The closing price for each day shall
be:
(i) if Common Stock is listed or admitted for trading on any
national securities exchange, the last sale price of such security, regular
way, or the mean of the closing bid and asked prices therefor if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which Common Stock is listed; or
(ii) if so quoted, the mean between the closing high bid and low
asked quotations of the Common Stock in the over-the-counter market as shown by
the National Association of Securities
2
<PAGE> 3
Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use in the
United States, as reported by any member firm of the New York Stock Exchange
selected by the Company; or
(iii) if not quoted as described in clauses (i) or (ii) above, the
mean between the high bid and low asked quotations for any such security as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, as reported by any member firm of the New York Stock
Exchange selected by the Company.
(iv) "Dilution Adjustment Event" has the meaning set forth in
Section 3(b) hereof.
"Fair Market Value" means, on any date of determination, (a) if the
Common Stock is listed or admitted for trading on any securities exchange or
subject to quotations in any quotation system described in the definition of
"Current Market Value," and has been so listed or subject to such quotations
for the preceding ten (10) consecutive trading days, the Current Market Value,
(b) if clause (a) preceding is not applicable, and Fair Market Value is being
determined in connection with any Liquidity Event or Dilution Adjustment Event
in which shares of Common Stock are being (or were) issued, sold, assigned,
transferred or otherwise disposed of (including any merger or consolidation)
for consideration consisting solely of cash in a transaction with a Person who
is not an Affiliate with respect to the Company, Purchaser or Baker
Communications Fund, L.P., the highest price per share at which a share of
Common Stock is being or was issued or disposed of in such Liquidity Event, and
(c) if neither clause (a) nor clause (b) preceding is applicable, the fair
market value of one share of Common Stock (determined without giving effect to
any minority discount and without giving effect to any restrictions imposed
pursuant to any shareholders agreement, voting agreements or similar
agreements) as determined pursuant to the Appraisal Procedure (the "Appraised
Value"). In the event Fair Market Value is being determined in connection with
a Liquidity Event or Dilution Adjustment Event under circumstances in which
clause (b) of this definition is applicable, Fair Market Value shall be
determined based on the cash consideration received in the most recent
Liquidity Event or Dilution Adjustment Event as of the date of such
determination of Fair Market Value.
"Liquidity Event" means the occurrence of any of the following events
(a) the completion by the Company of an initial public offering of Common Stock
pursuant to a registration statement under the Securities Act of 1933, (b)
Purchaser ceases, for any reason, to hold more than fifty percent (50%) of the
outstanding Common Stock of the Company on a fully diluted basis, (c) the sale,
assignment, transfer or other disposition by the Company and its subsidiaries
of substantially all of their assets considered as a whole, (d) a merger or
consolidation involving the Company in which the Company is not the surviving
entity, (e) Baker Communications Fund, L.P. or any Affiliate of Baker
Communications Fund, L.P. shall cease, for any reason to hold more than fifty
percent (50%) of the outstanding common stock of Purchaser on a fully diluted
basis, (f) a merger or consolidation involving Purchaser in any transaction in
which Purchaser is not the surviving entity, or (g) Purchaser issues any of its
capital stock in an initial public offering pursuant to a registration
statement under the Securities Act of 1933.
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<PAGE> 4
"Multiplier Fraction" means a fraction, the numerator of which is the
Base Numerator, and the denominator of which is the number of shares of Common
Stock of the Company calculated on a fully diluted basis at the time the
Multiplier Fraction is being determined.
"Payment Amount" means, as of any date, an amount equal to the
remainder of (a) the Total Common Equity Value on such date multiplied times
the Multiplier Fraction, minus (b) the Base Value.
"Payment Notice" has the meaning set forth in Section 2 hereof.
"Purchaser" means FWT Acquisition, Inc., a Delaware corporation.
"Qualified Appraiser" means an investment banking firm of national
recognition.
"Total Common Equity Value" means, on any date of determination, the
product of the Fair Market Value determined as of such date multiplied times
the total number of shares of Common Stock of the Company calculated on a fully
diluted basis.
2. Payment Obligation. Upon the occurrence of a Liquidity Event
or at any time thereafter, Executive, at its option, may deliver written notice
to the Company (the "Payment Notice") requiring the Company to pay to Executive
in cash the Payment Amount. The Payment Amount shall be determined as of the
date of delivery of the Payment Notice, and the Company shall pay to Executive
the Payment Amount (a) within ten (10) days following delivery of such Payment
Notice if the Payment Amount is based on Fair Market Value determined pursuant
to clauses (a) or (b) of the definition of "Fair Market Value," and (b) within
ten (10) days following final determination of Appraised Value pursuant to the
Appraisal Procedure if Fair Market Value is being determined pursuant to clause
(c) of the definition of "Fair Market Value."
3. Adjustment of Base Numerator. The Base Numerator is subject
to adjustment from time to time upon the occurrence of any of the events
enumerated in this Section 3.
(a) In the event that the Company shall at any time after
the date of this Agreement (i) declare a dividend on the Common Stock in shares
of its capital stock (whether in shares of such Common Stock or in capital
stock of any other class of the Company), (ii) split or subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, the Base Numerator after the time of the record date
for such dividend or of the effective date of such split, subdivision or
combination shall be adjusted to equal the number of shares of Common Stock
which a shareholder having a number of shares of Common Stock equal to the Base
Numerator immediately prior to such record date or effective date, as the case
may be, would own or be entitled to receive after such record date or effective
date.
(b) In the event that the Company shall at any time after
the date of this Agreement (i) issue any shares of Common Stock without
consideration or at a price per share less
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<PAGE> 5
than Fair Market Value, or (ii) issue options, rights or warrants to subscribe
for or purchase such Common Stock (or securities convertible into such Common
Stock) without consideration or at a price per share (or having a conversion
price per share, if a security convertible into such Common Stock) less than
Fair Market Value (a "Dilution Adjustment Event"), the Base Numerator shall be
adjusted to equal the product obtained by multiplying the Base Numerator
immediately prior to such Dilution Adjustment Event by a fraction, the
numerator shall be the number of shares of Common Stock outstanding immediately
after such Dilution Adjustment Event, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
Dilution Adjustment Event plus the number of shares of such Common Stock which
the aggregate offering price of the total number of shares of such Common Stock
so to be issued or to be offered for subscription or purchase (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at Fair Market Value immediately prior to such issuance. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined by a Qualified Appraiser mutually acceptable to the Executive of the
Company (the cost of the engagement of said Qualified Appraiser to be borne by
the Company). Shares of such Common Stock owned by or held for the account of
the Company or any Subsidiary thereof shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever the date of such issuance is fixed (which date of issuance shall be
the record date for such issuance if a record date therefor is fixed); and, in
the event that such shares or options, rights or warrants are not so issued,
the Base Numerator shall again be adjusted to be such number which would be in
effect if the date of such issuance had not been fixed.
(c) In case the Company shall make a distribution to all
holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the surviving
corporation) of evidences of its indebtedness or assets (whether a liquidating
dividend or distribution or otherwise), the Base Numerator after such date of
distribution shall be adjusted to equal the product obtained by multiplying the
Base Numerator immediately prior to such date by a fraction, the numerator of
which shall be the Fair Market Value immediately prior to such distribution,
and the denominator of which shall be the Fair Market Value immediately prior
to such distribution less the fair market value as determined by a Qualified
Appraiser mutually acceptable to the Executive and the Company (the cost of the
engagement of said Qualified Appraiser to be borne by the Company) of the
portion of the assets or evidences of indebtedness so to be distributed
applicable to one share of Common Stock. Such adjustment shall be made
successively whenever a date for such distribution is fixed (which date of
distribution shall be the record date for such issuance if a record date
therefor is fixed); and, if such distribution is not so made, the Base
Numerator shall again be adjusted to be such number which would then be in
effect if the date of such distribution had not been fixed.
(d) The Company shall not effect any consolidation,
merger or sale of the properties and assets of the Company as an entirety or
substantially as an entirety to any other person or entity, unless prior to or
simultaneously with the consummation thereof, the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation
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<PAGE> 6
purchasing such assets or the appropriate corporation or entity shall assume,
by written instrument, the obligations of the Company under this Agreement.
(e) If any question shall at any time arise with respect
to the adjusted Base Numerator, such question shall be determined by an
independent firm of certified public accountants of recognized national
standing mutually acceptable to the Company and Executive.
(f) Upon any adjustment of the Base Numerator pursuant to
this Section 3, the Company shall promptly, but in all events within thirty
(30) days thereafter, cause to be given to Executive a certificate signed by
the Company's Chief Financial Officer setting forth the Base Numerator as so
adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as part of the notice required
to be mailed under the other provisions of this Section 3(f).
In the event:
(i) that the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe for or purchase
capital stock of the Company or of any other subscription rights or warrants;
or
(ii) that the Company shall authorize the distribution to
holders of its Common Stock of evidences of its indebtedness or assets; or
(iii) of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets of the
Company substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination); or
(iv) of the voluntary dissolution, liquidation or winding
up of the Company; or
(v) that the Company proposes to take any other action
which would require an adjustment of the Base Numerator pursuant to this
Section 3;
then the Company shall deliver to Executive, at least twenty (20) days prior
notice stating (i) the date as of which the holders of record of Common Stock
to be entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that the holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up.
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<PAGE> 7
4. Limited Interest. The award of stock appreciation rights
pursuant to this Agreement shall not be construed as giving the Executive any
rights relating to the stock of the Company. Neither shall this Agreement be
construed as giving the Executive any interest in the Company other than as
provided pursuant to the terms of this Agreement. Further, this Agreement
shall not give the Executive any right to continue as an officer or Executive
of the Company or any subsidiary of the Company or affect the right of the
Company to dismiss the Executive to the extent permitted pursuant to the terms
of the Employment Agreement with the Company.
5. Notices. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Douglas A. Standley
c/o FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112-7899
If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, New York 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6. Assignment. The Company shall not assign, transfer or convey
its rights or delegate its duties under this Agreement. Any attempted
assignment or delegation shall be void. Executive shall not be permitted to
assign or otherwise transfer its rights under this Agreement.
7. Modification and Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and the Company's
duly authorized executive officer.
8. No Waiver. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed
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<PAGE> 8
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
10. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of any subject matter contained
herein and supersedes all prior severance or other agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, Executive or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By: /s/ WILLIAM R. ESTILL
-----------------------------------
Name: William R. Estill
---------------------------------
Title: Vice President
--------------------------------
DOUGLAS A. STANDLEY
/s/ DOUGLAS A. STANDLEY
--------------------------------------
Douglas A. Standley
9
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EXHIBIT A
STOCK APPRECIATION RIGHTS
AGREEMENT
THIS STOCK APPRECIATION RIGHTS AGREEMENT, effective the 14th day of
November, 1997, is made by FWT, Inc. (the "Company") to Douglas A. Standley (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive is Chief Operations and President, Ft.
Worth Division of the Company upon whose effort the continual successful and
profitable operation of the Company is dependent; and
WHEREAS, the Company wants to assure the continued availability of the
services of the Executive to the Company; and
WHEREAS, the Executive and the Company desire to grant to Executive
the right to participate in an increase in the value of the Company's Common
Stock, par value $10.00 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the Company hereby agrees with Executive as follows:
1. Defined Terms. As used herein, each of the following terms
shall have the following definitions:
"Affiliate" means any other Person that directly or indirectly
controls, is controlled by, or is under common control with such Person. For
the purposes of this definition, control means 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. Control shall be
presumed by an individual that is a director or executive officer of a Person,
or a Person that beneficially owns more than 10% of any class of securities of
such Person having general voting rights. During the period before the Closing
and at the Closing, Company shall be considered an Affiliate of each
Shareholder. During the period after the Closing, Purchaser and Baker
Communications Fund, L.P. shall be considered an Affiliate of Company for so
long as Purchaser controls Company.
"Appraisal Event" means a Dilution Adjustment Event or delivery of a
Payment Notice to the extent that, in either such case, Fair Market Value is to
be determined pursuant to clause (c) of the definition of Fair Market Value.
"Appraisal Procedure" shall mean the following procedure for
determining the Appraised Value of one share of Common Stock: (a) upon the
occurrence of any Appraisal Event, the Company and the Executive shall attempt
to agree on a mutually acceptable Qualified Appraiser to value the Common
Stock, and if such parties agree on a Qualified Appraiser within ten (10) days
following the occurrence of any Appraisal Event such Qualified Appraiser shall,
on or before twenty (20) days
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following the date it is appointed, determine the Appraised Value of the Common
Stock, and such determination shall be binding upon the Company and the
Executive: (b) in the event the Company and the Executive are unable to agree
on a mutually acceptable Qualified Appraiser within ten (10) days following the
occurrence of any Appraisal Event, on the expiration of such ten (10) day
period, the Company and the Executive shall each appoint a Qualified Appraiser
to value the Common Stock. Within twenty (20) days following the date they are
appointed, the Qualified Appraisers appointed by the Company and the Executive
shall determine the Appraised Value of the Common Stock. In the event the
Appraised Value determined by the Company's Qualified Appraiser is more than
95% of the Appraised Value determined by the Executive's Qualified Appraiser,
the Appraised Value for purposes of this Agreement shall be the average of the
values determined by such appraisers and such determination shall be binding
upon the Company and the Executive. In the event the Appraised Value
determined by the Company's Qualified Appraiser is equal to or less than 95%
of the value determined by the Executive's Qualified Appraiser, such appraisers
shall in turn promptly appoint a third Qualified Appraiser who shall, within
twenty (20) days following the date it is appointed, determine the Appraised
Value of the Common Stock. The value which is neither the lowest nor the
highest of the values determined by the three Qualified Appraisers shall be the
Appraised Value of the Common Stock for purposes of this Agreement and shall be
binding upon the Company and the Executive. In the event either the Company or
the Executive fails to timely appoint a Qualified Appraiser, such failing party
will be deemed to have waived its rights to appoint a Qualified Appraiser, and
the Qualified Appraiser appointed by the other party shall determine the
Appraised Value for purposes of this Agreement which determination shall be
binding upon the Executive and the Company. The costs of each Qualified
Appraiser referred to herein shall be paid by the Company.
"Appraised Value" has the meaning set forth in the definition of "Fair
Market Value."
"Base Numerator" initially means 6.8071; provided, that such amount is
subject to adjustment as provided in Section 3 hereof.
"Base Value" means $45,000,000.
"Current Market Value" means, with respect to a share of Common Stock,
the average of the daily closing prices for a share of Common Stock for the ten
(10) consecutive trading days before such date, excluding any trades which are
not bona fide arm's length transactions. The closing price for each day shall
be:
(i) if Common Stock is listed or admitted for trading on any
national securities exchange, the last sale price of such security, regular
way, or the mean of the closing bid and asked prices therefor if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which Common Stock is listed; or
(ii) if so quoted, the mean between the closing high bid and low
asked quotations of the Common Stock in the over-the-counter market as shown by
the National Association of Securities
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Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use in the
United States, as reported by any member firm of the New York Stock Exchange
selected by the Company; or
(iii) if not quoted as described in clauses (i) or (ii) above, the
mean between the high bid and low asked quotations for any such security as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, as reported by any member firm of the New York Stock
Exchange selected by the Company.
(iv) "Dilution Adjustment Event" has the meaning set forth in
Section 3(b) hereof.
"Fair Market Value" means, on any date of determination, (a) if the
Common Stock is listed or admitted for trading on any securities exchange or
subject to quotations in any quotation system described in the definition of
"Current Market Value," and has been so listed or subject to such quotations
for the preceding ten (10) consecutive trading days, the Current Market Value,
(b) if clause (a) preceding is not applicable, and Fair Market Value is being
determined in connection with any Liquidity Event or Dilution Adjustment Event
in which shares of Common Stock are being (or were) issued, sold, assigned,
transferred or otherwise disposed of (including any merger or consolidation)
for consideration consisting solely of cash in a transaction with a Person who
is not an Affiliate with respect to the Company, Purchaser or Baker
Communications Fund, L.P., the highest price per share at which a share of
Common Stock is being or was issued or disposed of in such Liquidity Event, and
(c) if neither clause (a) nor clause (b) preceding is applicable, the fair
market value of one share of Common Stock (determined without giving effect to
any minority discount and without giving effect to any restrictions imposed
pursuant to any shareholders agreement, voting agreements or similar
agreements) as determined pursuant to the Appraisal Procedure (the "Appraised
Value"). In the event Fair Market Value is being determined in connection with
a Liquidity Event or Dilution Adjustment Event under circumstances in which
clause (b) of this definition is applicable, Fair Market Value shall be
determined based on the cash consideration received in the most recent
Liquidity Event or Dilution Adjustment Event as of the date of such
determination of Fair Market Value.
"Liquidity Event" means the occurrence of any of the following events
(a) the completion by the Company of an initial public offering of Common Stock
pursuant to a registration statement under the Securities Act of 1933, (b)
Purchaser ceases, for any reason, to hold more than fifty percent (50%) of the
outstanding Common Stock of the Company on a fully diluted basis, (c) the sale,
assignment, transfer or other disposition by the Company and its subsidiaries
of substantially all of their assets considered as a whole, (d) a merger or
consolidation involving the Company in which the Company is not the surviving
entity, (e) Baker Communications Fund, L.P. or any Affiliate of Baker
Communications Fund, L.P. shall cease, for any reason to hold more than fifty
percent (50%) of the outstanding common stock of Purchaser on a fully diluted
basis, (f) a merger or consolidation involving Purchaser in any transaction in
which Purchaser is not the surviving entity, or (g) Purchaser issues any of its
capital stock in an initial public offering pursuant to a registration
statement under the Securities Act of 1933.
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"Multiplier Fraction" means a fraction, the numerator of which is the
Base Numerator, and the denominator of which is the number of shares of Common
Stock of the Company calculated on a fully diluted basis at the time the
Multiplier Fraction is being determined.
"Payment Amount" means, as of any date, an amount equal to the
remainder of (a) the Total Common Equity Value on such date multiplied times
the Multiplier Fraction, minus (b) the Base Value.
"Payment Notice" has the meaning set forth in Section 2 hereof.
"Purchaser" means FWT Acquisition, Inc., a Delaware corporation.
"Qualified Appraiser" means an investment banking firm of national
recognition.
"Total Common Equity Value" means, on any date of determination, the
product of the Fair Market Value determined as of such date multiplied times
the total number of shares of Common Stock of the Company calculated on a fully
diluted basis.
2. Payment Obligation. Upon the occurrence of a Liquidity Event
or at any time thereafter, Executive, at its option, may deliver written notice
to the Company (the "Payment Notice") requiring the Company to pay to Executive
in cash the Payment Amount. The Payment Amount shall be determined as of the
date of delivery of the Payment Notice, and the Company shall pay to Executive
the Payment Amount (a) within ten (10) days following delivery of such Payment
Notice if the Payment Amount is based on Fair Market Value determined pursuant
to clauses (a) or (b) of the definition of "Fair Market Value," and (b) within
ten (10) days following final determination of Appraised Value pursuant to the
Appraisal Procedure if Fair Market Value is being determined pursuant to clause
(c) of the definition of "Fair Market Value."
3. Adjustment of Base Numerator. The Base Numerator is subject
to adjustment from time to time upon the occurrence of any of the events
enumerated in this Section 3.
(a) In the event that the Company shall at any time after
the date of this Agreement (i) declare a dividend on the Common Stock in shares
of its capital stock (whether in shares of such Common Stock or in capital
stock of any other class of the Company), (ii) split or subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, the Base Numerator after the time of the record date
for such dividend or of the effective date of such split, subdivision or
combination shall be adjusted to equal the number of shares of Common Stock
which a shareholder having a number of shares of Common Stock equal to the Base
Numerator immediately prior to such record date or effective date, as the case
may be, would own or be entitled to receive after such record date or effective
date.
(b) In the event that the Company shall at any time after
the date of this Agreement (i) issue any shares of Common Stock without
consideration or at a price per share less
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than Fair Market Value, or (ii) issue options, rights or warrants to subscribe
for or purchase such Common Stock (or securities convertible into such Common
Stock) without consideration or at a price per share (or having a conversion
price per share, if a security convertible into such Common Stock) less than
Fair Market Value (a "Dilution Adjustment Event"), the Base Numerator shall be
adjusted to equal the product obtained by multiplying the Base Numerator
immediately prior to such Dilution Adjustment Event by a fraction, the
numerator shall be the number of shares of Common Stock outstanding immediately
after such Dilution Adjustment Event, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
Dilution Adjustment Event plus the number of shares of such Common Stock which
the aggregate offering price of the total number of shares of such Common Stock
so to be issued or to be offered for subscription or purchase (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at Fair Market Value immediately prior to such issuance. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined by a Qualified Appraiser mutually acceptable to the Executive of the
Company (the cost of the engagement of said Qualified Appraiser to be borne by
the Company). Shares of such Common Stock owned by or held for the account of
the Company or any Subsidiary thereof shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever the date of such issuance is fixed (which date of issuance shall be
the record date for such issuance if a record date therefor is fixed); and, in
the event that such shares or options, rights or warrants are not so issued,
the Base Numerator shall again be adjusted to be such number which would be in
effect if the date of such issuance had not been fixed.
(c) In case the Company shall make a distribution to all
holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the surviving
corporation) of evidences of its indebtedness or assets (whether a liquidating
dividend or distribution or otherwise), the Base Numerator after such date of
distribution shall be adjusted to equal the product obtained by multiplying the
Base Numerator immediately prior to such date by a fraction, the numerator of
which shall be the Fair Market Value immediately prior to such distribution,
and the denominator of which shall be the Fair Market Value immediately prior
to such distribution less the fair market value as determined by a Qualified
Appraiser mutually acceptable to the Executive and the Company (the cost of the
engagement of said Qualified Appraiser to be borne by the Company) of the
portion of the assets or evidences of indebtedness so to be distributed
applicable to one share of Common Stock. Such adjustment shall be made
successively whenever a date for such distribution is fixed (which date of
distribution shall be the record date for such issuance if a record date
therefor is fixed); and, if such distribution is not so made, the Base
Numerator shall again be adjusted to be such number which would then be in
effect if the date of such distribution had not been fixed.
(d) The Company shall not effect any consolidation,
merger or sale of the properties and assets of the Company as an entirety or
substantially as an entirety to any other person or entity, unless prior to or
simultaneously with the consummation thereof, the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation
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<PAGE> 15
purchasing such assets or the appropriate corporation or entity shall assume,
by written instrument, the obligations of the Company under this Agreement.
(e) If any question shall at any time arise with respect
to the adjusted Base Numerator, such question shall be determined by an
independent firm of certified public accountants of recognized national
standing mutually acceptable to the Company and Executive.
(f) Upon any adjustment of the Base Numerator pursuant to
this Section 3, the Company shall promptly, but in all events within thirty
(30) days thereafter, cause to be given to Executive a certificate signed by
the Company's Chief Financial Officer setting forth the Base Numerator as so
adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as part of the notice required
to be mailed under the other provisions of this Section 3(f).
In the event:
(i) that the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe for or purchase
capital stock of the Company or of any other subscription rights or warrants;
or
(ii) that the Company shall authorize the distribution to
holders of its Common Stock of evidences of its indebtedness or assets; or
(iii) of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets of the
Company substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination); or
(iv) of the voluntary dissolution, liquidation or winding
up of the Company; or
(v) that the Company proposes to take any other action
which would require an adjustment of the Base Numerator pursuant to this
Section 3;
then the Company shall deliver to Executive, at least twenty (20) days prior
notice stating (i) the date as of which the holders of record of Common Stock
to be entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that the holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up.
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4. Limited Interest. The award of stock appreciation rights
pursuant to this Agreement shall not be construed as giving the Executive any
rights relating to the stock of the Company. Neither shall this Agreement be
construed as giving the Executive any interest in the Company other than as
provided pursuant to the terms of this Agreement. Further, this Agreement
shall not give the Executive any right to continue as an officer or Executive
of the Company or any subsidiary of the Company or affect the right of the
Company to dismiss the Executive to the extent permitted pursuant to the terms
of the Employment Agreement with the Company.
5. Notices. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Douglas A. Standley
c/o FWT, Inc.
1901 East Loop 820 South
Fort Worth, Texas 76112-7899
If to the Company: FWT, Inc.
P.O. Box 8597
Ft. Worth, Texas 76124
Attn: Roy J. Moore and Edward W. Scott
With a copy to: Baker Communications Fund, L.P.
575 Madison Avenue, 10th Floor
New York, New York 10022
Attn: Edward W. Scott
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6. Assignment. The Company shall not assign, transfer or convey
its rights or delegate its duties under this Agreement. Any attempted
assignment or delegation shall be void. Executive shall not be permitted to
assign or otherwise transfer its rights under this Agreement.
7. Modification and Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and the Company's
duly authorized executive officer.
8. No Waiver. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed
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by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
10. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of any subject matter contained
herein and supersedes all prior severance or other agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, Executive or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By: /s/ WILLIAM R. ESTILL
-----------------------------------
Name: William R. Estill
---------------------------------
Title: Vice President
--------------------------------
DOUGLAS A. STANDLEY
/s/ DOUGLAS A. STANDLEY
--------------------------------------
Douglas A. Standley
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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,
February 27, 1998
