U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Southwest Manufacturing Corporation
(Name of Small Business Issuer in its charter)
Minnesota 75-2772930
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
580 Decker Drive, Suite 200
Irving, Texas 75062
(Address of principal executive office) (Zip Code)
Issuer's telephone number (972) 870-9591
Securities to be registered under Section 12(g) of the Act:
Common Shares
Shares Underlying the Options
Charles Clayton
527 Marquette
Minneapolis, Minnesota 55402
(612) 338-3738
(Agent for Service)
<PAGE>
ITEM 1. DESCRIPTION OF BUSINESS
Southwest Manufacturing Corporation was formed in Minnesota on April
23, 1998.
The Company has entered into a Letter of Intent to purchase Tyson Wood
Products, Inc. (Tyson) for a payment of $450,000, the execution of notes in the
amount of $250,000 and the issuance of 1,000,000 shares of common stock to the
sellers. Tyson owns real estate, equipment, inventory and receivables valued in
excess of $2,000,000 which the Company intends to pledge to borrow all or part
of the money to conclude the purchase.
Tyson is a manufacturer of wood moulding products and cabinet front
products.
Tyson operates out of a wholly owned facility in southern Dallas County
that is comprised of approximately 4,000 square feet of office space and
approximately 40,000 square feet of fully sprinkled manufacturing and warehouse
space. Tyson also has additional storage space for raw materials which is
covered but not fully enclosed. Tyson has approximately 30 full and part time
employees, all but two of which are involved in manufacturing and distribution.
Tyson has suffered for the last three years from a lack of attention to
sales. In the event the transaction is consummated the Company intends to
immediately hire one or more people to begin a concentrated sales effort.
The Company had entered into another Letter of Intent in May, 1998, and
had paid $10,000 as earnest money. The decision was made not to pursue the
company, and the earnest money was returned to the Company.
The Company is filing this form on a voluntary basis so that it may
become a reporting company.
ITEM 2. PLAN OF OPERATION
The Company operates as a holding company for acquired businesses. The
Company intends to continue looking for acquisitions, primarily of operating
companies or operating subsidiaries of other companies, which it can purchase,
and to which it can add value through increased sales, reduced expenses, reduced
debt or attentive and focused management. Once the Company acquires a position
in an industry it will look for ways to increase its presence, vertically and/or
horizontally in that same industry or industry segment. The Company believes
that it can magnify the effects of its management focus and other benefits by
such concentration. The Company believes that a significant source for
acquisitions is now and will in the future be troubled companies that are
experiencing operating
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cash flow and profitability problems, and may even have sought the protection of
the bankruptcy courts.
The Company has no specific targeted industries or industry segments.
However, the Company has determined that it prefers, primarily for management
simplicity, to focus on industries which manufacture basic products with a broad
utility. Furthermore, the Company has determined that it prefers to purchase
companies which are fully integrated with manufacturing and sales capacities. In
furtherance of this objective, the Company plans to seek additional
opportunities in an industry or industry segment once it locates and completes
an acquisition. This may involve horizontal expansion, for example, a company
with the same manufacturing and sales capabilities but in a different geographic
location; or this may involve a vertical expansion, for example, a company which
itself manufactures and supplies a product used by the initial acquisition in
its own process.
The Company's strategic plan for growth is focused on a two pronged
attack. First the Company intends to grow through acquisitions. The Company
believes that its contacts with lenders will be fruitful source of possible
future acquisitions. Purchases of companies found through lender sources will
most likely be companies which are experiencing difficulties repaying their debt
to the same lender source. In these situations this will provide an acquisition
for the Company as well as solve a potential problem for the lender. This may in
turn increase the likelihood that the lender will direct future acquisition
candidates to the Company. The Company also intends to look for additional
acquisitions within industries in which it has already completed a purchase. The
Company believes that once it is operating in an industry, there may be
opportunities available for follow-up purchases in the same industry. The second
prong of the Company's growth strategy is through internally generated growth.
The acquisitions of the size the Company will focus on tend to be
undercapitalized, especially those acquisitions which are currently experiencing
troubles of the same type with debt service or otherwise. Providing working
capital for the acquired companies should fuel internal growth of the acquired
companies.
Acquisitions of the size sought by the Company will many times be run
by a founder or a founder's family. A key component of the Company's due
diligence will be a determination of whether the founder's or selling
shareholder's continued participation is necessary or desirable for the acquired
companies ongoing operations and future success. If the selling shareholder's
continued participation is necessary, the Company will acquire the company only
if a satisfactory employment and non-compete agreements can be executed and a
significant portion of the purchase price is tied to these agreements. The more
desirable circumstance from the Company's perspective will be when the founder's
or selling shareholder's continued participation is not necessary. In this case
the Company will first look for current employees who are already performing
some management duties and who would be capable of expanding their duties and
responsibilities. If this is not possible
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then new outside management would be brought into the acquired company. The
management of the Company will in most circumstances not be involved in the day
to day management of the acquisitions but instead will perform management
oversight on as frequent a basis as is deemed necessary in each particular
circumstance. In most circumstances heavy management oversight will be required
immediately after the acquisition is made and will lessen over time. Initial
focus on management oversight will be beneficial to the overall objectives of
the Company as well because this will allow the Company's management the
opportunity to learn about each business and industry and increase the chances
for additional complimentary acquisitions.
The Company has had no discussions with, nor are there any agreements
or understandings with any consultant. The officer and director of the Company
has not in the past used any particular consultant or advisor, and there is no
intent to use any consultant or advisor.
The Company is fully aware of its periodic obligations of reporting
under the Securities Exchange Act of 1934, and that any merger candidate must
have certified financial statements.
Management of the Company does not intend to offer a controlling
interest in the Company in exchange for any acquisition.
Management of the Company will not pay any finders fee to any officer,
director, promoter or their affiliates or associates as the result of any
acquisition. In the event that a business broker is used to locate an
acquisition some part of the broker's fee may be paid by the Company. It is
anticipated that the maximum fee to a business broker will be 6%, of which the
Company may pay part of the fee. If the Company makes an acquisition for equity,
some or all of the fee may be paid in equity.
There is not a present potential that the Company would acquire or
merge with a company in which any of the Company's officers, directors,
promoters or other affiliates or associates have an ownership interest.
ITEM 3. DESCRIPTION OF PROPERTY
The Company maintains corporate offices at 580 Decker Drive, Suite 200,
Irving, Texas 75062. This facility is leased from Colonial Plaza and has 3,262
square feet of space. The lease term is for 78 months with rent of $18.00 per
square foot in months 1-18 and increasing $0.25 per square foot per year
thereafter.
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the information as to the ownership of
each person who owns of record, or is known by the Company to own beneficially,
more than five per cent of the Company's common stock, and the officers and
directors of the Company.
Name Shares Percent
---- ------ -------
Lindsey Vinson 11,620,000 77%
580 Decker Drive
Irving, Texas
Troy Vinson 1,000,000 7%
580 Decker Drive
Irving, Texas
Lindsey Vinson, Trustee 1,000,000 7%
580 Decker Drive
Irving, Texas
Directors and Officers as 11,620,000 77%
a group
Troy Vinson is the wife of Lindsey Vinson. Lindsey Vinson holds
1,000,000 shares in trust for his children.
There are options outstanding to purchase 3,000,000 shares of common
stock held by Lindsey Vinson. There are 500,000 options exercisable at $1.50,
500,000 exercisable at $2.00, 500,000 options exercisable at $2.50, 500,000
options exercisable at $3.00, 500,000 options exercisable at $3.50, and 500,000
options exercisable at $4.00. All of the options expire on December 31, 2003.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The executive officers and directors of the company, with a brief
description are as follows:
Name Age Position
- ---- --- --------
Lindsey Vinson 40 President and Director
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Lindsey Vinson, President and a Director. Mr. Vinson has a degree from
Drake University in Business Administration, and a J.D. degree from Ohio State
University. He has practised law in his own firm in Dallas, Texas since 1983.
Mr. Vinson will devote approximately 50% of his time to the Company.
ITEM 6. EXECUTIVE COMPENSATION
The Officers and Directors of the Company have not received any
compensation, and there are no employment agreements with any of them. They are,
however, reimbursed for expenses incurred, including travel.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
ITEM 8. LEGAL PROCEEDINGS
None
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The Company's common stock has been traded since August 4, 1998 on the
OTC Bulletin Board, before that time there was no activity. As of August 7, 1998
the following brokerage firms were making a market in the Company's common
stock: Protective Group Securities.
The following table sets forth for the periods indicated the range of
high and low closing bid quotations per share as reported by the
over-the-counter market. These quotations represent inter-dealer prices, without
retail markups, markdowns or commissions and may not necessarily represent
actual transactions.
Price per Share
---------------
High Low
----------------
Fiscal year 1997 $1.00 $.30
Third Quarter (July 1, 1998
through September 30, 1998)
There are 23 holders of the common stock of the Company. There have
never been any dividends, cash or otherwise, paid on the common shares of the
Company.
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It is not anticipated that the Company, or anyone acting on its behalf,
will take any affirmative steps to request or encourage any broker/dealer to act
as market maker, and there have been no preliminary discussions or
understandings between the Company, or anyone acting on its behalf, with any
market maker.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Name Date Shares Cost
Chris Ceynar 5/98 5,000 $5.00
Voni Chen 5/98 5,000 $5.00
Charles Clayton 5/98 5,000 $5.00
Linda Engle 5/98 15,000 $15.00
Robert Engle 5/98 5,000 $5.00
Steve Engle 5/98 5,000 $5.00
Patricia King 5/98 5,000 $5.00
Chaska Kuzecki 5/98 5,000 $5.00
William Lynton 5/98 333,000 $333.00
Jeff Moeller 5/98 5,000 $5.00
Tammy Moran 5/98 5,000 $5.00
Stephen Muncey 5/98 5,000 $5.00
Elizabeth Orme 5/98 5,000 $5.00
Clyde Parks 5/98 300,000 $300.00
John Picken 5/98 672,000 $10,662.00
Scott Seybold 5/98 10,000 $10.00
Sean Seybold 5/98 5,000 $5.00
Lindsey Vinson 5/98 11,620,000 $11,620.00
Troy Vinson 5/98 1,000,000 $1,000.00
Lindsey Vinson, Trustee 5/98 1,000,000 $1,000.00
Russell Vinson 7/98 100,000 $100,000.00
Frank Wolfe 5/98 5,000 $5.00
Frank Wong 5/98 5,000 $5.00
The registrant believes that all transactions were transactions not
involving any public offering within the meaning of Section 4(2) of the
Securities Act of 1933, since (a) each of the transactions involved the offering
of such securities to a substantially limited number of persons; (b) each person
took the securities as an investment for his own account and not with a view to
distribution; (c) each person had access to information equivalent to that which
would be included in a registration statement on the applicable form under the
Act; (d) each person had knowledge and experience in business and financial
matters to understand the merits and risk of the investment; therefore no
registration statement need be in effect prior to such issuances.
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ITEM 11. DESCRIPTION OF SECURITIES
The company has authorized 150,000,000 shares of common stock, no par
value, and 50,000,000 preferred stock, no par value. Each holder of common stock
has one vote per share on all matters voted upon by the shareholders. Such
voting rights are noncumulative so that shareholders holding more than 50% of
the outstanding shares of common stock are able to elect all members of the
Board of Directors. There are no preemptive rights or other rights of
subscription.
Each share of common stock is entitled to participate equally in
dividends as and when declared by the Board of Directors of the company out of
funds legally available, and is entitled to participate equally in the
distribution of assets in the event of liquidation. All shares, when issued and
fully paid, are nonassessable and are not subject to redemption or conversion
and have no conversion rights.
The preferred shares are convertible into 10 common shares at a price
of $.10 per share for a period of 10 years. The preferred shares have no voting
rights, unless converted into common shares. There are no other preferences.
Risk Factor - Penny Stock Regulation. Broker-dealer practices in
connection with transactions in "penny stocks" are regulated by certain penny
stock rules adopted by the Securities and Exchange Commission. Penny stock
generally are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system). The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document that provides information about penny stocks and the risks
in the penny stock market. The broker-dealer must also provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction, and monthly account
statements showing the market value of each penny stock held in the customer's
account. In addition, the penny stock rules generally require that prior to a
transaction in a penny stock the broker-dealer make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser's written agreement to the transaction. These
disclosure requirements may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject to the penny
stock rules. If the Company's securities become subject to the penny stock
rules, investors in this offering may find it more difficult to sell their
securities.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Minnesota Statutes, contain an extensive indemnification provision
which requires mandatory indemnification by a corporation of any officer,
director and
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affiliated person who was or is a party, or who is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
is or was a member, director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a member, director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses, including attorneys' fees, and
against judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted,
or failed to act, in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In some instances a court must approve such indemnification.
ITEM 13. FINANCIAL STATEMENTS
Please see the attached Financial Statements.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) Please see the attached Financial Statements
(b) Exhibits:
3. Articles of Incorporation and bylaws
5. Opinion of counsel
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<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this registration statement to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: August 10, 1998 Southwest Manufacturing Corporation
/s/ Lindsey Vinson
-----------------------------------------
Lindsey Vinson, President
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<PAGE>
SOUTHWEST MANUFACTURING CORPORATION
(A Development Stage Company)
FINANCIAL REPORT
MAY 31, 1998
<PAGE>
[LOGO] HNF
HOUSE, NEZERKA & FROELICH, P.A. LETTERHEAD
------------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
Southwest Manufacturing Corporation
We have audited the accompanying balance sheet of Southwest
Manufacturing Corporation, a Minnesota corporation, and a development stage
company, as of May 31, 1998, and the related statements of stockholders' equity
and cash flows for the period then ended. 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 audit.
We conducted our audit 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 overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all
material respects, the financial position of Southwest Manufacturing Corporation
as of May 31, 1998, and its cash flows for the period then ended, in conformity
with generally accepted accounting principles.
/s/ House, Nezerka & Froelich, P.A.
June 15, 1998, except for Note 2, as to
which the date is August 10, 1998
<PAGE>
SOUTHWEST MANUFACTURING CORPORATION
(A Development Stage Company)
BALANCE SHEET
May 31, 1998
ASSETS
Cash and cash equivalents $ 25,000
Refundable earnest money deposit 10,000
--------
$ 35,000
========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Stockholder advance (Note 2) $ 10,000
COMMITMENTS AND SUBSEQUENT EVENTS (Note 2)
STOCKHOLDERS' EQUITY (Note 3):
Preferred stock, no par value, 50,000,000 shares authorized,
none issued or outstanding --
Common stock, no par value, 100,000,000 shares authorized,
15,010,000 shares issued and outstanding 25,000
--------
$ 35,000
========
See Notes to Financial Statements.
2
<PAGE>
SOUTHWEST MANUFACTURING CORPORATION
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Period From Incorporation (April 21, 1998) through
May 31, 1998
<TABLE>
<CAPTION>
Common Stock Amount
Shares Amount Per Share Total
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Shares issued for cash, May 28, 1998 15,000,000 $ 15,000 $ .001 $ 15,000
Shares issued for cash, May 28, 1998 10,000 10,000 1.00 10,000
----------- ---------- -----------
Balance, May 31, 1998 15,010,000 $ 25,000 $ 25,000
=========== =========== ===========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
SOUTHWEST MANUFACTURING CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period From Incorporation (April 21, 1998) through
May 31, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Refundable earnest money deposit $ (10,000)
Stockholder advance 10,000
----------
--
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 25,000
Cash and cash equivalents:
Beginning --
----------
Ending $ 25,000
==========
See Notes to Financial Statements.
4
<PAGE>
SOUTHWEST MANUFACTURING CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Business and Summary of Significant Accounting Policies:
NATURE OF BUSINESS:
The Company was incorporated on April 21, 1998 in the state of
Minnesota. The Company was formed to act as a holding company for
manufacturing companies and since inception, has devoted its
efforts to raising capital.
The Company has not yet adopted a corporate year-end.
The Company is considered to be in the development stage and the
accompanying financial statements represent those of a development
stage enterprise, and therefore, is subject to the usual business
risks of development stage companies. The Company has had no
operations.
A summary of the Company's significant accounting policies
follows:
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
INCOME TAXES:
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax basis. Deferred
tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of the enactment.
ESTIMATES AND ASSUMPTIONS:
The preparation of the 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 disclosure of contingent assets and
liabilities at the date of the financial statements and revenues
and expenses during the reporting period. Significant estimates
include the valuation of stock issued. Actual results could differ
from these estimates.
RECENTLY ISSUED ACCOUNTING STANDARDS:
Statement of Financial Accounting Standards No. 128, "Earnings Per
Share (EPS)" effective for periods ending after December 31, 1997,
established new standards for computing and presenting earnings
per share. The Company has not computed the effect, if any, this
impending standard may have on EPS calculations.
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SOUTHWEST MANUFACTURING CORPORATION
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Note 2. Commitments and Subsequent Events:
The Company signed two letters of intent to purchase two Texas
operating companies and is presently performing the necessary due
diligence towards the final purchase. The first letter of intent
calls for the Company to pay $450,000, execute notes in the amount
of $250,000 and issue 1,000,000 shares of restricted stock to
purchase the real estate, equipment inventory and receivables of a
wood products company. Additional shares will be required to be
issued if two years from the date of closing the Southwest bid
price does not exceed $1.15. The letter of intent also provides
for a four year employment and non-compete agreement with one of
the owners. Completion of the merger may be subject to various
securities requirements including obtaining audited financial
statements of the acquired company. The second letter of intent
calls for the Company to pay $100,000, execute a note in the
amount of $450,000 and assume debt of approximately $498,000 to
purchase the non real estate assets of a plastics manufacturer. As
part of this agreement, the Company would also enter into a
three-year lease agreement to rent the existing real estate.
Earnest money of $10,000 was advanced by a stockholder pursuant to
the plastics manufacturer's letter of intent. Subsequent to May
31, the second letter of intent was terminated.
Subsequent to year-end, the Company granted options to its chief
executive officer to purchase 3,000,000 shares of common stock. A
total of 500,000 options each are exercisable at $1.50, $2.00,
$2.50, $3.00, $3.50 and $4.00 per share. These options are fully
vested and may be exercised anytime prior to December 31, 2003, at
which time they expire.
Effective July 1, 1998, the Company entered into a lease for
corporate offices for a term of 78 months. Future minimum lease
payments for noncancelable operating leases are as follows:
1998 $ 15,377
1999 58,716
2000 59,532
2001 60,347
2002 61,163
2003 61,978
2004 62,793
----------
$ 379,906
==========
Note 3. Stockholders' Equity:
The Board of Directors have the power and authority to fix by
resolution any designation, class, series, voting power,
preference, right, qualification, limitation, restriction,
dividend, time and place of redemption, and conversion right with
respect to any stock of the corporation.
Preferred shares are convertible into 10 common shares at a price
of $.10 per share for a period of 10 years. The preferred shares
have no voting rights, unless converted into common shares. There
are no other current preferences.
The Company is currently in the process of raising additional
capital pursuant to a 504 offering circular dated May 26, 1998.
The securities offered in the circular are 385,000 common shares
at $1 per share.
6
EXHIBIT 3.(I)
ARTICLES OF INCORPORATION
OF
SOUTHWEST MANUFACTURING CORPORATION
The undersigned incorporator, being a natural person, 18 years of age
or older, in order to form a corporate entity under Minnesota Statutes, Chapter
302A, hereby adopts the following Articles of Incorporation:
ARTICLE I
The name of the corporation is Southwest Manufacturing Corporation.
ARTICLE II
The registered office of the corporation is located at 527 Marquette,
Minneapolis, Minnesota 55402, and the registered agent at that address is
Charles Clayton.
ARTICLE III
The name and address of the incorporator is Charles Clayton, 527
Marquette, Minneapolis, Minnesota 55402.
ARTICLE IV
The corporation is authorized to issue an aggregate total of
100,000,000 common shares and 50,000,000 preferred shares.
ARTICLE V
In addition to the powers granted to the Board of Directors by
Minnesota Statutes, Chapter 302A, the Board of Directors of this corporation
shall have the power and authority to fix by resolution any designation, class,
series, voting power, preference, right, qualification, limitation, restriction,
dividend, time and place of redemption, and conversion right with respect to any
stock of the corporation.
ARTICLE VI
Any action required or permitted to be taken at any meeting of the
Board of Directors may be taken without a meeting by written action signed by a
majority of the Board of Directors then in office, except as to those matters
which require
<PAGE>
shareholder approval, in which case the written action shall be signed by all
members of the Board of Directors then in office.
ARTICLE VII
No holder of stock of this corporation shall be entitled to any
cumulative voting rights.
ARTICLE VIII
No holder of stock of this corporation shall have any preferential,
pre-emptive, or other rights of subscription to any shares of any class or
series of stock of this corporation allotted or sold or to be allotted or sold
and now or hereafter authorized, or to any obligations or securities convertible
into any class or series of stock of this corporation, nor any right of
subscription to any part thereof.
ARTICLE IX
Minnesota Statutes sections 302A.671 (Control share acquisitions),
302A.673 (Business combinations) and 302A.675 (Takeover offer; fair price) shall
not apply to this corporation.
IN WITNESS WHEREOF, the Incorporator has executed these Articles of
Incorporation, this 21st day of April, 1998.
/s/ Charles Clayton
----------------------------------------
Charles Clayton
EXHIBIT 3.(II)
BY-LAWS
OF
SOUTHWEST MANUFACTURING CORPORATION
ARTICLE I
MEETINGS OF SHAREHOLDERS
1.1 Regular Meetings. Regular meetings of shareholders may be called by the
Chief Executive Officer, the Secretary, the Board of Directors, or by
shareholder demanded in accordance with Minnesota Statutes Section
302A.431, subdivision 2. No meeting shall be designated a regular
meeting unless specifically described as such in the notice of meeting
or unless all the shareholders are present in person or by proxy, and
none of them objects to this designation.
1.2 Special Meetings. Special meetings of the shareholders may be called
for any purpose or purposes at any time by the Chief Executive Officer,
Chief Financial Officer, two or more directors, or by shareholder
demand in accordance with Minnesota Statutes, Section 203A.433,
subdivision 2.
1.3 Time and Place of Shareholder Meeting. Except as otherwise provided by
statute, any meeting of shareholders shall be held on the date and at
the time and place fixed by the Chief Executive Officer or the Board of
Directors of the corporation.
1.4 Notice of Shareholder Meeting. Except as otherwise provided by statute,
written notice of the date, time, and place of any meeting of
shareholders shall be given to every holder of voting shares at such
address as appears on the stock book of the corporation at least five
days prior to the meeting if by mail, or two days prior to the meeting
if by telex, telegram, or in person.
1.5 Voting. Except where a greater percentage is required by statute, the
shareholders shall take action by the affirmative vote of the holders
of a majority of the votes of the shares present.
<PAGE>
ARTICLE II
DIRECTORS
2.1 Number, Term of Office. The number of directors of the corporation
shall be as determined from time to time by the shareholders. Directors
need not be shareholders. Each director shall hold office for an
indefinite term, not to exceed five years, that expires at the regular
meeting of shareholders next held after the director's election and
until a successor is elected and has qualified, or until the earlier
death, resignation, removal, or disqualification of the director.
2.2 Removal. The Board of Directors or the shareholders may remove any
director of the corporation at any time, for cause or without cause.
New directors may be elected at a meeting at which directors are
removed.
2.3 Board Meetings, Notice. The Chief Executive Officer (if a director),
the Chairman of the Board of Directors (if one is elected) or Directors
comprising at least one third of the number of directors then in office
may call a Board meeting by giving five days notice if by mail, or two
days notice if by telephone, telex, telegram, or in person, to all
directors of the day or date and time of the meeting. Meetings of the
Board of Directors may be held at the day or date, time, and place, as
shall be determined by the Board. If the day or date, time, and place
have been announced at a previous meeting of the Board, or if a meeting
schedule is adopted by the Board, no notice is required. In absence of
a designation by the Board of Directors, Board meetings shall be held
at the principal executive offices of the corporation.
2.4 (a) Advance Written Consent or Opposition. Any member of the Board or a
committee thereof, as the case may be, may give advance written consent
or opposition to a proposal to be acted on at a Board or committee
meeting. If a director or committee member is not present at the
meeting, advance written consent or opposition to a proposal does not
constitute presence for the purpose of determining whether a quorum
exists, but such advance written consent or opposition shall be a vote
in favor of or against the proposal or resolution acted upon at the
meeting is substantially the same or has substantially the same effect
as the proposal or resolution to which the member of the Board or
committee has consented or objected.
(b) Action Without Meeting. Any action, other than an action requiring
shareholder approval, may be taken by written action signed by the
number of directors that would be required to take the same action at a
meeting of the Board at which all directors were present. An action
<PAGE>
requiring shareholder approval required or permitted to be taken at a
board meeting may be taken by written action signed by all the
directors. Any such written action is effective when signed by the
required number of directors, unless a different effective time is
provided in the written action. When written action is taken by less
than all directors, all directors shall be notified immediately of its
text and effective date. Failure to provide the notice does not
invalidate the written action. A director who does not sign or consent
to the written action has no liability for the action or actions taken.
ARTICLE III
OFFICERS
3.1 Election; Term of Office; Removal. The Board of Directors shall elect a
Chief Executive Officer and Chief Financial Officer, and may elect such
other officers as it may deem necessary for the operation and
management of the corporation, each of whom shall have the duties and
responsibilities incident to the offices which they hold or as
determined by the Board. Officers need not be directors or
shareholders. Without limiting the foregoing, the Board may elect a
Chairman of the Board, President, one or more Vice Presidents, a
Treasurer, a Secretary and such assistant officers as it may designate
with titles to describe their duties, functions or special
responsibilities. Officers shall hold office at the will of the Board
for an indefinite term until their successors are elected and
qualified. Any officer elected or appointed by the Board of Directors
may be removed by the Board at any time with or without cause.
ARTICLE IV
AMENDMENTS
4.1 Subject to the power of shareholders to adopt, amend, or repeal these
Bylaws as provided in Minnesota Statutes, Section 302A.181, Subdivision
3, any Bylaw may be amended or repealed by the Board of Directors at
any meeting, provided that, after adoption of the initial Bylaws, the
Board shall not adopt, amend, or repeal a Bylaw fixing a quorum for
meetings of shareholders, prescribing procedures for removing directors
or filling vacancies in the Board, or fixing the number of directors or
their classifications, qualifications, or terms of office. The Board
may adopt or amend a Bylaw to increase the number of directors.
<PAGE>
ARTICLE V
INDEMNIFICATION
5.1 The corporation shall indemnify persons for such expenses and
liabilities in such manner, under such circumstances, and to the extent
required by Minnesota Statutes, Section 302A.521.
EXHIBIT 5
August 11, 1998
Southwest Manufacturing Corporation
580 Decker Drive
Irving, Texas
Gentlemen:
I have acted as counsel for the company in connection with the
preparation of the Registration Statement, and, based on this, I am of the
opinion that:
1. The company is a corporation, duly organized, validly existing, and
in good standing under the laws of the State of Minnesota, with corporate
authority to conduct the business in which it is now engaged, and as described
in the Registration Statement.
2. The shares have been duly authorized, and, when issued and delivered
against payment, will be validly issued, fully paid and nonassessable and free
from preemptive rights, will be without cumulative voting rights and will
conform to the description in the Prospectus.
3. There is not pending, or to the knowledge of counsel, threatened,
any action, suit, or proceeding before or by any court or governmental agency or
body to which the company is a party, or to which any property of the company is
subject, and which, in the opinion of counsel, could result in a material
adverse change in the business, business prospects, financial position or
results of operations, present or prospective, of the company or of its
properties or assets.
I consent that this opinion be filed as an exhibit to the registration
statement, and to the use of my name in the registration statement under the
caption "Legal Matters."
Cordially,
/s/ Charles Clayton
Charles Clayton
