As filed with the Securities and Exchange Commission on February 4, 1999.
Registration No.
----------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS Under Section 12(b) or (g) of the
Securities Exchange Act of 1934
--------------------------
ALFORD REFRIGERATED WAREHOUSES, INC.
(Name of small business issuer in its charter)
Texas 75-2695621
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
318 Cadiz Street
Dallas, Texas 75207
(214) 426-5151
(Address, including zip code, and telephone number,
including area code, of Issuer's principal executive offices)
--------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of class)
--------------------------
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<TABLE>
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<S> <C> <C>
TABLE OF CONTENTS
Page
ITEM 1. DESCRIPTION OF BUSINESS.........................................................................1
The Company.....................................................................................1
Transaction with Hilltop Acquisition Corporation..............................1
Merger with Alford............................................................2
The Business....................................................................................2
The Industry..................................................................3
Customers.....................................................................3
Competition; Growth Potential.................................................3
Sales and Marketing...........................................................4
Suppliers.....................................................................4
Employees.....................................................................4
Government Regulation.........................................................4
Research......................................................................5
Licenses, Permits and Product Registrations...................................5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.............................................................6
ITEM 3. DESCRIPTION OF PROPERTY.........................................................................6
Dallas, Texas.................................................................6
La Porte, Texas...............................................................7
Richardson, Texas.............................................................7
Fort Worth, Texas.............................................................7
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT..................................................................................7
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.........................................................................................8
Committees of the Board of Directors............................................................9
ITEM 6. EXECUTIVE COMPENSATION..........................................................................9
Executive Compensation..........................................................................9
Director Compensation..........................................................................10
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................................................10
ITEM 8. LEGAL PROCEEDINGS..............................................................................11
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS .......................................................................................11
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES........................................................12
ITEM 11. DESCRIPTION OF SECURITIES......................................................................12
General ......................................................................................12
<PAGE>
Common Stock...................................................................................12
Preferred Stock................................................................................13
Provisions Having a Possible Anti-takeover Effect .............................................13
Limitation of Liability of Directors...........................................................13
Bylaw Provisions and Amendment of Bylaws.......................................................14
Transfer Agent.................................................................................14
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS......................................................14
ITEM 13. FINANCIAL STATEMENTS...........................................................................18
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE............................................................36
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS..............................................................36
</TABLE>
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
The Company
Alford Refrigerated Warehouses, Inc., a Texas corporation formerly
known as Hilltop Acquisition Holding Corporation, and prior to that, as Optical
Acquisition Corp. (the "Company"), was originally incorporated in October 1992
under the laws of the state of Delaware for the purpose of acquiring certain
assets comprised of optical dispensaries and an optical laboratory from a
company engaged in bankruptcy proceedings. In 1994, the Company had 132 optical
dispensaries and retail stores located in 26 states as well as an optical
laboratory. However, in 1995, as a result of a weakened retail optical market,
the Company experienced decreased sales and a limited cash flow and, as a
result, filed a bankruptcy petition (the "Petition") on September 21, 1995 (the
"Petition Date"). The Company filed the First Amended Joint Plan of
Reorganization (the "Plan") on July 9, 1996. The United States Bankruptcy Court
for the Northern District of Texas, Dallas Division (the "Court") entered an
order approving the Plan on August 9, 1996. The Plan was modified pursuant to an
order of the Court on February 28, 1997.
The Plan provided for the liquidation of the Company's assets and
distribution of the proceeds to secured, priority and unsecured creditors. The
Plan further provided that the Company would remain in existence, although all
capital stock outstanding as of the Petition Date was canceled. Under the Plan,
the Company secured post Petition financing in the amount of $17,500 from Halter
Financial Group, Inc., a Texas corporation ("HFG"), to meet the costs and
expenses of the reorganization effort. In satisfaction of HFG's administrative
claim for such amount and for the services rendered and expenses incurred in
connection with an anticipated acquisition or merger transaction between the
Company and a privately held operating company, HFG received 62.5% of the
newly-issued shares of common stock of the reorganized Company pursuant to
Section 1145 of the United States Bankruptcy Code. Creditors with allowed
unsecured claims received a pro rata distribution of 37.5% of such newly issued
shares. The Company was reincorporated in the State of Texas in September 1997.
Transaction with Hilltop Acquisition Corporation
As contemplated in the Plan, the Company, which had no operations or
significant assets at the time, had undertaken a business strategy to seek out
and consummate an acquisition or merger transaction with an operating business
which the Company believed had growth potential. The Company believed that such
a strategy would provide its shareholders the benefit of owning an interest in a
viable business enterprise. The Company believed that its widely held
shareholder base made it an attractive acquisition or merger candidate to a
privately held corporation seeking to become a publicly held company. The
Company believed that Hilltop Acquisition Corporation ("Hilltop") was a viable
acquisition target.
Hilltop was incorporated in the State of Texas in February 1998 for the
purpose of acquiring overriding royalty interests in certain producing oil and
natural gas properties. In this regard, Hilltop entered into an asset purchase
and sale agreement on February 5, 1998 with Magnum Hunter Production, Inc. (the
"Magnum Hunter Agreement") in order to acquire such interests in properties
located in Texas, Oklahoma or New Mexico having an aggregate fair market value
of approximately $500,000. The Magnum Hunter Agreement contained various
conditions to its consummation, including the completion of the Company's
acquisition of Hilltop.
On February 18, 1998, the Company completed its acquisition of all of
the outstanding common stock of Hilltop in exchange for 600,000 shares of
Company Common Stock. In connection with this acquisition, the Company changed
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its name to Hilltop Acquisition Holding Corporation. However, the parties were
unable to consummate the transaction contemplated by the Magnum Hunter
Agreement.
After the termination of the Magnum Hunter Agreement, the Company
located another acquisition target, Alford Refrigerated Warehouses, Inc., a
privately held Texas corporation ("Alford"). Alford was established as a
family-held and operated corporation in 1946. In the late 1940's, Alford
constructed a public warehousing operation located in Dallas, Texas. Following a
lengthy illness and subsequent death of its president and principal owner,
Alford defaulted on a bank loan and was forced to file a bankruptcy petition in
July 1993. A plan of reorganization was confirmed by the bankruptcy court in
February 1994. In December 1997, Alford became a 100% subsidiary of Castor
Capital Corporation, a Canadian corporation.
Merger with Alford
On or about December 15, 1998, the Company merged with Alford pursuant
to an Agreement and Plan of Merger dated November 23, 1998 by and among Hilltop
Acquisition Holding Corporation, Womack Gilman Investment Services, L.C., HFG
and Alford (the "Merger Agreement"). In accordance with the terms of the Merger
Agreement, the Company was the surviving corporation. Immediately prior to the
merger, Hilltop amended its Articles of Incorporation to effect a reverse stock
split so that each share of Hilltop's issued and outstanding common stock was
automatically converted into .625 of a fully paid and nonassessable share of
Hilltop's common stock. Pursuant to the terms of the Merger Agreement, each
share of common stock of Alford was automatically converted into the right to
receive 655.1372 shares of the common stock of the Company. In addition, the
Articles of Incorporation and the Bylaws of Alford became the Articles of
Incorporation and Bylaws of the Company, the directors and officers of Alford
became the directors and officers of the Company, and the Company changed its
name to Alford Refrigerated Warehouses, Inc.
The Business
The Company believes that it is the largest public refrigerated ware-
housing operation in the southwest United States. The Company operates a network
of four strategically located refrigerated warehouse facilities in Texas, with a
total area of 1,500,000 sq. ft. or 32,000,000 cu. ft. of storage space. The
Company's principal executive office is located at 318 Cadiz Street, Dallas,
Texas 75207 and its telephone number is (214) 426-5151.
The Company's public warehouse business consists of providing
customers, which include food processors, distributors, wholesalers and
retailers, with temperature controlled storage services and a full range of
logistics management and other value-added services such as (i) blast freezing
of fresh products, (ii) repackaging and labeling of food products, (iii) order
picking and load consolidation, (iv) cross-docking, (v) container handling, (vi)
importing and exporting services, (vii) USDA approved storage and inspection
services, and (viii) Federal Government inspected facility for export.
The Company is a third party service provider and as such does not
purchase the inventory that it stores. When the Company receives products for
storage, it provides the customer with a nonnegotiable warehouse receipt. At
that time, the customer pays for one month of storage and handling based upon
the type and amount of product accepted at the beginning of the 30 day period.
The Company's inventory control system monitors the product by type of product
and by lot number. In order to remove any product from storage, the customer
places an order with the Company, the Company removes the product from the
warehouse for the customer and provides the customer with a bill of lading. If
there is any product remaining in storage at the end of the 30 day period, the
Company bills the customer for an additional 30 days of storage.
2
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In addition to its public warehouse business, the Company leases
refrigerated space to approximately 28 tenants who manage their own inventory
and logistics functions and utilize their own equipment and personnel. In almost
all cases, the tenant pays all of the expenses, except for utilities and
property taxes which are included in the rent. The terms of the leases may be
month to month or as long as five years. The Company does not allow tenants to
make any special modifications to the leased space without the Company's prior
approval. For the year ended December 31, 1998, public warehouse customers
represented over 93% of the Company's revenue, the remainder of which was
attributable to leased space.
The Company is designing and planning the construction of a 4,000,000
cubic foot addition to its Cadiz Street facility in Dallas, Texas. The Company
anticipates that the new addition will contain a blast freezing capacity of
400,000 lbs. per day and storage at -20(degree)F.
The Industry
The public refrigerated warehousing industry provides refrigerated
warehousing, inventory management and logistics services to food processors,
distributors and retailers of frozen and chilled foods during the period between
production and consumption. In the food industry, there is a period between
production and consumption as well as a continuing shift by individual food
processors, distributors and retailers from owning their refrigerated storage
facilities to outsourcing their warehousing requirements, inventory management
and logistics functions to operators of public refrigerated warehousing
businesses who are generally more economical providers of such services.
Historically, public refrigerated warehousing growth has been steady
and non-cyclical. Although the overall U.S. food industry has been growing at
the rate of population growth, the public refrigerated warehousing industry has
been growing more rapidly than the population, at an average compound annual
growth rate of 4.5% per year over the past 10 years.
Customers
The Company had approximately 600 customers during the 12 months ended
December 31, 1998 including a broad base of national, regional and local food
processors, distributors, wholesalers and retailers. The Company's customer base
includes Pilgrim's Pride, Nabisco Food, M & M Mars, Kroger Co., Maple Leaf
Foods, Borden Dairy, Chef America, Dairy Farmers of America and many others.
During the twelve months ended December 31, 1998, no customer accounted for more
than 10% of the Company's revenues.
Competition; Growth Potential
The United States public refrigerated warehousing market is highly
fragmented with the 10 largest firms representing less than 40% of the available
public refrigerated warehousing space. Public refrigerated warehousing
facilities in the United States are typically owned by strong local or regional
operators with one to four facilities representing two to 14 million cubic feet
of public refrigerated warehousing space which, on average, generate direct
profit contribution margins of 40%. Many of these companies are family-owned
businesses without successors active in the management of the business. Based
3
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past experience with such owners and the dynamics of the industry, the Company
believes that many of these businesses can be acquired at attractive cash flow
multiples.
Sales and Marketing
The Company's marketing and sales efforts are integrated across all
levels of management. Senior management has the responsibility for major
customers, including all national accounts. In addition, customers in each
region are serviced by regional general managers who work with sales and
marketing professionals to plan and execute regional business development
strategies. At the local level, individual facility managers are responsible for
developing and maintaining long-term relationships with customers.
The Company's management and sales professionals are aggressively
pursuing business development opportunities that arise from natural market
growth as sales of frozen foods increase and the trend towards the use of public
refrigerated warehouse services continues. Management believes that by taking an
active role in the management and coordination of its customers' inventories and
by providing a broader range of logistics services, the Company will maintain
its competitive advantage over the long term.
Suppliers
The Company's largest expenses are labor and utilities. It is not
dependent upon any one supplier for raw materials. The majority of the Company's
maintenance services are provided primarily by its own employees.
Employees
As of December 31, 1998, the Company had a total of 188 employees, all
of whom are full-time employees. Of these employees, approximately 136 were
employed at the Dallas, Texas facility which includes its corporate offices, 28
were employed at the La Porte facility, 17 were employed at the Richardson
facility and seven were employed at the Fort Worth facility. None of the
employees are represented by a labor union.
Government Regulation
The Company's operations are subject to federal, state and local laws,
regulations and ordinances relating to the storage, handling, emission,
transportation and discharge of certain materials and various other health and
safety matters. These laws include the Clean Air Act, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, and the Resource
Conservation and Recovery Act. For example, the Company uses anhydrous ammonia
in its operations. In addition, the Company uses a type of refrigerant which is
no longer being produced because of government regulations. The Company is in
the process of modifying its equipment and believes that all of its equipment
will be able to use a new type of refrigerant by the end of 1999. The Company's
operations also are governed by laws and regulations relating to workplace
safety and worker health, principally the Occupational Safety and Health Act and
the regulations thereunder.
Governmental authorities have the power to enforce compliance with
their regulations, and violators may be subject to fines, injunctions or both.
The Company believes that it is currently in substantial compliance with all
such applicable laws and regulations. The Company cannot at this time estimate
4
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the impact of any increased regulation on the Company's operations, future
capital expenditure requirements or the cost of compliance.
In addition to regulating the Company directly, the Company's customers
are subject to certain regulations relating to the import and export of food
products. The Company maintains an approved USDA inspection room on site at
three of its four facilities for the benefit of its customers.
Research
The Company generally does not spend any material amount of its
resources on research and development. Rather, it is a member of the
Refrigeration Research and Education Foundation which is an organization that
was founded in 1943 as a scientific and educational foundation for the following
purposes:
o to advance the application of refrigeration technology for better
preservation of food and commodities;
o develop and support research in the science of refrigeration;
o cooperate with government and private institutions in research
activities;
o train and educate refrigerated warehouse/distribution personnel;
and
o establish and make available a repository of scientific
information specific to the industry.
Licenses, Permits and Product Registrations
The Company uses certain licenses and registrations in its operations.
For example, the Company has a perpetual license for the use of certain software
from Maves International Software, Inc. The Company uses this software for
inventory control and financial reporting. The Company is not required to pay
any additional royalties on the software, however, the Company periodically
purchases upgrades to the software.
In addition, Alford Distribution Services, Inc. ("ADS"), a wholly owned
subsidiary of the Company, is licensed by the Texas Alcoholic Beverages
Commission to store products containing alcohol. ADS is required to post a bond
each year to maintain this license which is subject to revocation, modification
and renewal each year by the commission.
For the benefit of its customers, the Company maintains a room at three
of its four facilities that is approved by the USDA for use in connection with
the inspection of food products.
The Company's trademark, a penguin, is registered with the patent
trademark office. This registration is periodically subject to renewal.
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company has included 1997 audited financial information for Hilltop
and for Alford as independent entities. Prior to the effective date of this
registration statement, the Company will amend the registration statement to
include combined audited information for both Hilltop and Alford for the fiscal
years ended December 31, 1997 and December 31, 1998 including management's
discussion and analysis of that information.
ITEM 3. DESCRIPTION OF PROPERTY
Set forth below is information with respect to certain of the Company's
properties. The industry measures space in cubic feet instead of square feet
because cost projections include facility height to account for refrigeration
and stacked cooled product. The Company believes that all of these properties
are adequately insured, in good condition and suitable for their anticipated
future use.
<TABLE>
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Lease
Location Primary Use Approximate Size Owned/Lease Expiration Date
- -------- ----------- ---------------- -----------
Dallas, Texas Corporate office 24,000,000 cubic Owned N/A
& Warehouse feet on 52 acres
La Porte, Texas Warehouse 4,500,000 cubic feet Owned N/A
on 32.3 acres
Richardson, Texas Warehouse 3,200,000 cubic feet Leased Dec. 31,2007
on 12.4 acres
Fort Worth, Texas Warehouse 1,550,000 cubic feet Leased Jan. 31, 2000
on 13.5 acres
</TABLE>
Dallas, Texas
The Company has 18 tenants at its Dallas, Texas facility. Of these, no
tenant occupies ten percent or more of the rentable cubic footage of the
facility. The Company itself uses a majority of the total cubic feet of the
facility as a public refrigerated warehouse. A majority of the Dallas, Texas
facility is used for refrigerated warehousing purposes. The remainder is used
for public dry storage and for the Company's corporate offices.
The Dallas, Texas facility is subject to a 10 year fixed rate mortgage
in the original principal amount of $8,100,000 which accrues interest at 8.4%
per year. As of January 20, 1999, the Company owed approximately $7,893,859 on
the mortgage which matures on or about October 1, 2007. At that time, assuming
no prepayments, the Company will owe approximately $5,682,578.
The Company currently plans to construct a 4,000,000 cubic-foot
addition to its facility in Dallas, Texas. The estimated cost of the
improvements is approximately $8,000,000 which amount most likely will be
financed by a conventional mortgage or sale of convertible debentures in
addition to cash flow and the issuance of the Company's common shares.
6
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La Porte, Texas
The Company has three tenants at its La Porte facility. Of these, no
tenant occupies ten percent or more of the rentable cubic footage of the
facility. The Company itself uses a majority of the total cubic feet of the
facility as a public refrigerated warehouse.
This property is subject to a 10 year fixed rate mortgage in the
original principal amount of $5,400,000 which accrues interest at 8.36% per
year. As of January 20, 1999, the Company owed approximately $5,352,494 on the
mortgage which matures on or about March 1, 2008. At that time, assuming no
prepayments, the Company will owe approximately $4,511,799.
Richardson, Texas
The Company has three subtenants at its Richardson facility. The
Company has made a formal offer to purchase this property for $6,000,000 in
cash. The Company has received a term sheet from a bank, subject to due
diligence, to finance the purchase of the property in an amount up to 80% of the
property's appraised value. The Company hopes to close this transaction by the
end of April 1999.
Fort Worth, Texas
As of December 31, 1998, the Company had four tenants at its Ft. Worth
facility. Of these, Kroger Co. accounted for 28.8% of the space in the facility.
The lease between the Company and Kroger Co. is for a one year term with
provisions for annual renewal.
The Company has entered into a purchase and sale agreement to purchase
this property for $3,000,0000 in cash. The Company has received a term sheet
from a bank, subject to due diligence, to finance the purchase of the property
in an amount up to 80% of the property's appraised value.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information as of December 31,
1998 with regard to the beneficial ownership of Common Stock by (i) each person
known to the Company to be the beneficial owner of 5% or more of its outstanding
Common Stock, (ii) the officers and directors of the Company individually, and
(iii) the officers and directors of the Company as a group. All addresses are in
care of the Company, 318 Cadiz Street, Dallas, Texas 75207.
<TABLE>
<CAPTION>
<S> <C> <C>
Number of
Name Shares Owned Percent
---- ------------ -------
Joseph Y. Robichaud(1) 6,551,372 93.6%
Castor Capital Corporation 6,551,372 93.6%
Directors and executive 6,551,372 93.6%
officers as a group (5 persons)
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<FN>
- ----------------------------
(1) All of these shares are held by Castor Capital Corporation. The sole
shareholder of Castor is the Robichaud Family Trust, of which Mr.
Robichaud is the trustee. Mr. Robichaud is also the chairman and chief
executive officer of Castor.
</FN>
</TABLE>
Castor Capital Corporation is the owner of approximately 93.6% of the
outstanding shares of the Common Stock and as such is able to elect the board of
directors and determine the outcome of other matters requiring shareholder
action without the concurrence of any other shareholder. The sole shareholder of
Castor Capital Corporation is the Robichaud Family Trust, of which Mr. Robichaud
is trustee. Mr. Robichaud is also the chairman and chief executive officer of
Castor.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Set forth below is certain information regarding the directors,
executive officers and significant employees of the Company. Each of the
directors of the Company will serve until the next annual meeting of
shareholders or until his successor is elected and qualified. Executive officers
of the Company are elected by the Board of Directors to hold office until their
respective successors are elected and qualified.
<TABLE>
<CAPTION>
<S> <C> <C>
Name Age Position(s)
---- --- -----------
Alton M. Adams 60 Chief Executive Officer
Michael A. Oros 63 President
James C. Williams 41 Vice President, Chief Financial Officer, Secretary,
Treasurer and Director
Joseph Y. Robichaud 71 Director
Kenneth M. Tomilson 65 Director
</TABLE>
Set forth below is a description of the backgrounds of the directors,
executive officers and significant employees of the Company.
Joseph Y. Robichaud has served as a Director of the Company since its
acquisition of Alford in December 1998. Mr. Robichaud served as a director of
Alford from March 1994 to July 1995, and from December 1996 to December 1998
when Alford merged with and into the Company. Mr. Robichaud is also on the board
of directors and serves as the chairman and chief executive officer of Castor
Capital Corporation. From 1966 to 1995, Mr. Robichaud was chairman and,
indirectly, principal shareholder of Odyssey Industries, Inc., which was the
sole shareholder of Associated Freezers of Canada, Inc., an operating company in
the business of owning and operating frozen food warehousing facilities in
Canada and Australia. In 1994, a dispute arose between Odyssey and its bank
lender concerning currency exchange rates affecting the repayment of Odyssey's
loan. At the request of the bank, a receiver was appointed for Odyssey and the
receiver subsequently placed Odyssey into bankruptcy and sold the profitable
operations of Associated Freezers of Canada, Inc. Mr. Robichaud received his
Bachelor of Science degree in Civil Engineering from the University of New
Brunswick in 1950. Mr. Robichaud is the brother-in-law of Mr. Tomilson.
Kenneth M. Tomilson has served as a Director of the Company since its
acquisition of Alford in December 1998 and served as a director of Alford from
December 1996 to December 1998 when Alford merged with and into the Company. Mr.
Tomilson is also the president of Castor Capital Corporation and has served in
that position since 1995. From 1964 to the present, Mr. Tomilson has served as
president of Engineering Design & Construction Managers Ltd. which provides
design services, engineering, construction supervision and management for low
and high-rise residential, commercial and industrial buildings, food processing
and refrigerated warehousing. Prior to 1995, Mr. Tomilson was vice president and
a director of Odyssey Industries, Inc. In 1994 a dispute arose between Odyssey
and its bank lender concerning currency exchange rates affecting the repayment
of Odyssey's loan. At the request of the bank, a receiver was appointed for
Odyssey and the receiver subsequently placed Odyssey into bankruptcy. Mr.
Tomilson is a member of The Canadian Standards Association Technical Committee
responsible for setting standards and formulating codes for mechanical
refrigeration in Canada. Mr. Tomilson graduated
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from the University of New Brunswick with a Bachelor of Science degree in Civil
Engineering in 1958. Mr. Tomilson is the brother-in-law of Mr. Robichaud and is
also the brother-in-law of Mr. Adams.
Alton M. Adams has served as the Chief Executive Officer of the Company
since its acquisition of Alford in December 1998. Mr. Adams served as chief
executive officer of Alford from January 1997 to December 1998 when Alford
merged with and into the Company. Mr. Adams also currently serves as vice
president of Castor Capital Corporation, a position which he has held since
September 1995. From April 1995 to April 1996, Mr. Adams served as president of
Polar Corp International. From 1984 to 1995, he served as president of
Associated Freezers of Canada, Inc. and during that time was also a director of
Odyssey Industries, Inc., which was the sole shareholder of Associated Freezers
of Canada, Inc. In 1994, a dispute arose between Odyssey and its bank lender
concerning currency exchange rates affecting the repayment of Odyssey's loan.
At the request of the bank, a receiver was appointed for Odyssey and the
receiver subsequently placed Odyssey into bankruptcy and sold the profitable
operations of Associated Freezers of Canada, Inc. Mr. Adams graduated from the
University of New Brunswick with a Bachelor of Science degree in Electrical
Engineering in 1960, earned a master of science degree in 1963 in Electrical
Engineering from Queen's University and a master of arts degree in Political
Science from Canadian Forces Staff College in 1968.
Michael A. Oros has served as President of the Company since its
acquisition of Alford in December 1998. Mr. Oros served as president and chief
operating officer of Alford from January 1997 until December 1998 when Alford
merged with and into the Company. From 1986 until 1996, Mr. Oros served as
president and chief operating officer of Associated Freezers, Inc. Mr. Oros is a
member of International Association of Refrigerated Warehousemen, the North
Texas Warehouse Association, the American Frozen Food Institute, the Meat
Importers Council, the Southwest Meat Association and the National Frozen Food
Association.
James C. Williams has served as Vice President, Chief Financial
Officer, Secretary and Treasurer of the Company since its acquisition of Alford
in December 1998. Mr. Williams served in these same positions for Alford from
December 1996 to December 1998 when Alford merged with and into the Company.
Prior to that time, from October 1995 until April 1997, Mr. Williams served as
vice president of finance for Castor Capital Corporation and from June 1987
until October 1995 as the controller for Associated Freezers of Canada, Inc. Mr.
Williams is on the Maves Advisory Board. He graduated from the University of
Waterloo Co-op Program in 1982 with a bachelor of mathematics degree. Mr.
William's degree included a major in mathematics and minors in computer science
and accounting.
Due to the broad experience of the Company's executive officers,
directors and key personnel in the refrigerated warehousing industry, the
Company does not believe that the loss of any one of them would have a material
adverse effect on its business. None of the executive officers currently have an
employment agreement with the Company, however, Mr. Adams has a consulting
contract with the Company which automatically renews on an annual basis and
provides for a fee of $8,000 per month for services rendered.
Committees of the Board of Directors
The Board of Directors does not have any committees at this time.
ITEM 6. EXECUTIVE COMPENSATION
Executive Compensation
The following table sets forth the cash and non-cash compensation paid
by the Company to its chief executive officer and its two other most highly
compensated executive officers for the fiscal years ended December 31, 1998,
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1997 and 1996. None of the Company's other officers or directors received cash
or non-cash compensation in excess of $100,000 for the fiscal year ended
December 31, 1998.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Name and ---------------------- ------------- All Other
Principal Position Year Salary Bonus Options Compensation(1)
- ------------------ ------ -------- ----- ---------- ----------------
Mr. Adams 1998 96,000
Chief Executive Officer 1997 96,000
1996 N/A
Mr. Oros 1998 100,000 25,000
President 1997 100,000 25,000
1996 N/A
<FN>
- ------------------------------------------------------------------------------------------
(1) These amounts were paid pursuant to a consulting contract and were paid by
the Company directly to Mr. Adams in 1997 and to Castor Capital Corporation
which paid Mr. Adams in 1998.
</FN>
</TABLE>
In addition to the officers listed above, Mr. George Gilman served as
the president and secretary of Hilltop Acquisition Holding Corporation from
February 18, 1998 until December 15, 1998 when it merged with Alford. Mr.
Timothy T. Halter served as president and secretary of Hilltop Acquisition
Holding Corporation prior to Mr. Gilman. Neither Mr. Gilman nor Mr. Halter
received any compensation for services rendered to Hilltop from 1996 through
1998.
Director Compensation
Directors who are employees of the Company will not receive additional
compensation for serving as directors. Independent directors will receive an
annual fee to be established by the Board of Directors and a fee of $500 for
attending each meeting of the Board of Directors or any committee of the Board
of Directors. All directors will be reimbursed for out-of-pocket expenses
incurred in attending meetings and for other expenses incurred in performing in
their capacity as directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On or about December 1, 1996, Alford entered into an agreement with
Canfina AG, a company organized under the laws of Switzerland, and J. Eichmann
to repay existing loans to Canfina AG in the original principal amount of
$6,700,000 and to purchase all of the shares of stock of Alford owned by Mr. J.
Eichmann in exchange for $2,000,000. As of December 1, 1996, Mr. Eichmann owned
5,000 shares or 50% of the issued and outstanding capital stock of Alford (the
"Eichmann Shares"). On or about December 4, 1997, Alford paid to Mr. Eichmann
$2,000,000 in exchange for rights to the Eichmann Shares using funds obtained
through a term note and line of credit. Alford's rights to the Eichmann Shares
were subsequently transferred by Alford to Alford's parent, Castor Capital
Corporation, in exchange for a $2,000,000 note receivable. On or about
10
<PAGE>
December 15, 1998, in connection with the merger of Alford with and into the
Company, the Eichmann Shares were converted into 3,275,686 shares of the
Company, all of which are being held in escrow pending the final payment due to
Mr. Eichmann in December 2001. As of December 31, 1998, the outstanding
principal balance on the note was $2,350,000. Castor Capital Corporation has
assumed the liability for this note.
On or about February 6, 1998, Alford leased a warehouse facility in La
Porte, Texas from La Porte Properties, LLC, a Texas limited liability company
("La Porte"), which was a wholly owned subsidiary of Alltemp Logistical
Services, L.L.C., a Texas limited liability company ("Alltemp"). At that time,
Alltemp was a wholly owned subsidiary of Castor Capital Corporation. Effective
November 30, 1998, Alltemp was merged with and into Alford.
In 1997, Alford made two loans to its parent, Castor Capital
Corporation. On or about September 17, 1997, Alford loaned Castor $1,500,000,
and on or about December 4, 1997, Alford loaned Castor $2,000,000. Each of these
loans is evidenced by a promissory note bearing interest at a rate of eight
percent per annum. The notes are due December 31, 2000 and December 31, 2002. As
of December 31, 1998, the total amount of principal and interest payable to the
Company by Castor pursuant to these two notes was $1,676,655. Mr. Robichaud, a
Director of the Company, is the trustee of the Robichaud Family Trust which is
the sole shareholder of Castor Capital Corporation.
In 1997 and 1998, Alford paid to Associated Freezers, Inc. an aggregate
of $475,903 for the rights to certain trademarks consisting of a penguin and the
name Associated Freezers, Inc. At that time, Associated Freezers, Inc. was
indirectly owned 100% by Mr. Robichaud. Effective November 30, 1998, Associated
Freezers, Inc. was merged with and into its parent which was then merged with
and into Alford.
Engineering Design & Construction Managers Ltd. ("EDCM") is a company
which specializes in the design, construction and maintenance of refrigerated
warehouse facilities. EDCM is owned in equal proportions by Mr. Robichaud, Mr.
Tomilson, Mr. Adams and Mr. Paul Haines. EDCM has provided maintenance services
to the Company for which it billed the Company on a per diem basis. The Company
and EDCM are in the process of formalizing a new agreement which they tend to
make effective as of January 1, 1999. Pursuant to this new five year maintenance
contract, EDCM will provide professional engineering and maintenance services
for Alford's four facilities for a fee of $200,000 per year.
Castor Capital Corporation owns approximately 93.6% of the Company's
issued and outstanding Common Stock. Mr. Robichaud, a director of the Company,
is the trustee of the Robichaud Family Trust which owns all of the issued and
outstanding stock of Castor Capital Corporation.
ITEM 8. LEGAL PROCEEDINGS
The Company is a not a party to any legal actions or proceedings that
it believes will have a material adverse effect on its business, results of
operations or financial position.
ITEM 9. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
There is no public trading market for the Company's securities.
11
<PAGE>
None of the Company's securities are subject to outstanding options or
warrants to purchase, or securities convertible into common stock of the
Company. As of January 28, 1999, 357,343 shares of Common Stock of the Company
could be sold pursuant to Rule 144 under the Securities Act, the offering of
which could have a material effect on the market price of the Common Stock.
As of January 28, 1999, there were 7,000,715 shares of Common Stock
issued and outstanding held by 899 holders of record.
The Company has not paid dividends on its Common Stock and anticipates
that in 1999 all earnings will be retained to finance the continuing development
of its business. The Company does not anticipate paying dividends on the Common
Stock in 1999 but may consider paying dividends thereafter. The Company's
current bank loan agreement requires the bank's prior written consent for the
payment of dividends.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
Pursuant to the First Amended Joint Plan of Reorganization entered into
on July 9, 1996, as modified, the Company issued an aggregate of 187,701 shares
of Common Stock to certain of its creditors on various dates in 1996. Such
shares were issued in accordance with Section 1145 under the United States
Bankruptcy Code and the transaction was thus exempt from the registration
requirements of Section 5 of the Securities Act of 1933 (the "Securities Act").
Effective December 15, 1998, the Company issued to Castor Capital
Corporation, the sole stockholder of Alford, an aggregate of 6,551,372 shares of
Common Stock in exchange for an aggregate of 10,000 shares of common stock of
Alford pursuant to the Merger Agreement. Castor Capital Corporation is a
sophisticated, knowledgeable investor able to bear the economic risk of an
investment in these shares of Common Stock. The Company relied on Section 4(2)
of the Securities Act because the transaction did not involve a public offering
and was thus exempt from the registration requirements of the Securities Act. No
underwriters were used in connection this transaction.
Effective in December 1998, the Company issued to Mr. Art Beroff 92,000
shares of Common Stock as a finders fee. Mr. Art Beroff is a sophisticated,
knowledgeable investor able to bear the economic risk of an investment in these
shares of Common Stock. The Company relied on Section 4(2) of the Securities Act
because the transaction did not involve a public offering and was thus exempt
from the registration requirements of the Securities Act. No underwriters were
used in connection with this transaction.
ITEM 11. DESCRIPTION OF SECURITIES
General
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock and 5,000,000 shares of preferred stock, par value $.01 per share
(the "Preferred Stock").
Common Stock
Each share of Common Stock entitles the holder thereof to one vote on
all matters on which holders are permitted to vote. No shareholder has any
preemptive right or other similar right to purchase or subscribe for any
12
<PAGE>
additional securities issued by the Company, and no shareholder has any right to
convert Common Stock into other securities. No shares of Common Stock are
subject to redemption or to any sinking fund provisions. All of the outstanding
shares of Common Stock are fully paid and nonassessable.
Subject to rights of holders of Preferred Stock, if any, the holders of
shares of Common Stock are entitled to dividends when, as and if declared by the
Board of Directors from funds legally available therefor and, upon liquidation,
to a pro rata share in any distribution to shareholders. The Company does not
anticipate declaring or paying any cash dividends on the Common Stock in 1999.
The Company's current bank loan agreement requires the bank's prior written
consent for the payment of dividends.
Preferred Stock
Pursuant to the Company's Amended and Restated Articles of
Incorporation, the Board of Directors has the authority, without further
shareholder approval, to provide for the issuance of up to 5,000,000 shares of
Preferred Stock in one or more series and to determine the dividend rights,
conversion rights, voting rights, rights and terms of redemption, liquidation
preferences, the number of shares constituting any such series and the
designation of such series. Because the Board of Directors has the power to
establish the preferences and rights of each series, it may afford the holders
of any Preferred Stock preferences, powers and rights (including voting rights)
senior to the rights of the holders of Common Stock. No shares of Preferred
Stock are currently outstanding. Although the Company has no present intention
to issue shares of Preferred Stock, the issuance of shares of Preferred Stock,
or the issuance of rights to purchase such shares, may have the effect of
delaying, deferring or preventing a change in control of the Company.
Provisions Having a Possible Anti-takeover Effect
The Company's Articles of Incorporation and Bylaws contain certain
provisions that are intended to enhance the likelihood of continuity and
stability in the composition of the Board of Directors of the Company and in the
policies formulated by the Board and to discourage certain types of transactions
which may involve an actual or threatened change of control of the Company. The
provisions are designed to reduce the vulnerability of the Company to an
unsolicited proposal for a takeover of the Company or an unsolicited proposal
for the restructuring or sale of all or part of the Company. The provisions also
are intended to discourage certain tactics that may be used in proxy fights.
The Board will have the authority, without further action by the
shareholders, to issue up to 5,000,000 shares of the Company's preferred stock
in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, and to issue over 42,999,285 additional shares of Common
Stock. The issuance of the Company's preferred stock or additional shares of
Common Stock could adversely affect the voting power of the holders of Common
Stock and could have the effect of delaying, deferring or preventing a change in
control of the Company.
Limitation of Liability of Directors
The Articles of Incorporation provide that, to the fullest extent
permitted by applicable law, a director of the Company shall not be liable to
the Company or its shareholders for monetary damages for an act or omission in
the director's capacity as a director. This provision does not eliminate the
duty of care, and, in appropriate circumstances, equitable remedies such as
injunctive or other forms of non-monetary relief will remain available under
Texas law. In addition, each director will continue to be subject to liability
for breach of the director's duty of loyalty to the Company, for acts or
omissions not in good faith or involving intentional misconduct, for knowing
13
<PAGE>
violations of law, for actions leading to improper personal benefit to a
director and for acts or omissions for which a director is made expressly liable
by applicable statute, such as the improper payment of dividends. The
limitations on liability provided for in the Articles of Incorporation do not
restrict the availability of non-monetary remedies and do not affect a
director's responsibility under any other law, such as the federal securities
laws or state or federal environmental laws. The Company believes that these
provisions will assist the Company in attracting and retaining qualified
individuals to serve as executive officers and directors.
The inclusion of these provision in the Articles of Incorporation, may
have the effect of reducing the likelihood of derivative litigation against
directors and may discourage or deter shareholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefitted the Company and its
shareholders.
Bylaw Provisions and Amendment of Bylaws
The Board of Directors of the Company, acting by a majority of
directors then in office, may fill any vacancy or newly created directorship,
provided that the Board of Directors may not fill more than two such
directorships between successive annual meetings of the shareholders. The Bylaws
provide that a special meeting of the shareholders may be called only by the
President, the Chairman of the Board of Directors, or the holders of not less
than ten percent of all shares entitled to vote at such meeting. The Bylaws
provide that the power to amend or repeal the Bylaws or to adopt new Bylaws is
vested in the Board of Directors, but is subject to the right of the
shareholders to amend or repeal the Bylaws or to adopt new Bylaws.
Transfer Agent
The Company's transfer agent is Securities Transfer Corporation, 16910
Dallas Parkway, Suite 100, Dallas, Texas 75248.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation provide that the Company shall indemnify
any person who was, is or is threatened to be made a named defendant in a
proceeding because the person (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving as a director, officer, partner, or other functionary of another
corporation, partnership or other enterprise, to the fullest extent that a
corporation may grant indemnification to a director under the Texas Business
Corporation Act. Article 2.01-1 of the Texas Business Corporation Act (the
"TBCA") provides that a corporation may indemnify any director or officer
provided that the director or officer (i) conducted himself in good faith, (ii)
reasonably believed (a) in the case of conduct in his official capacity, that
his conduct was in the corporation's best interests or (b) in all other cases,
that his conduct was at least not opposed to the corporation's best interests
and (iii) in the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful. Subject to certain exceptions, a director or
officer may not be indemnified if the person is found liable to the corporation
or if the person is found liable on the basis that he improperly received a
personal benefit. Under Texas law, reasonable expenses incurred by a director or
officer may be paid or reimbursed by the corporation in advance of a final
disposition of the proceeding after the corporation receives a written
affirmation by the director or officer of his good faith belief that he has met
the standard of conduct necessary for indemnification and a written undertaking
by or on behalf of the director or officer to repay the amount if it is
ultimately determined that the director or officer is not entitled to
14
<PAGE>
indemnification by the corporation. Texas law requires a corporation to
indemnify an officer or director against reasonable expenses incurred in
connection with a proceeding in which he is named a defendant or respondent
because he is or was a director or officer if he is wholly successful in defense
of the proceeding.
Texas law permits a corporation to purchase and maintain insurance or
another arrangement on behalf of any person who is or was a director or officer
against any liability asserted against him and incurred by him in such a
capacity or arising out of his status as such a person, whether or not the
corporation would have the power to indemnify him against that liability under
Article 2.02-1 of the TBCA. The Company has directors' and officers' liability
insurance policies to cover certain liabilities of directors and officers
arising out of claims based on certain acts or omissions by them in their
capacity as directors or officers.
The above discussion of the TBCA and the Bylaws is not intended to be
exhaustive and is qualified in its entirety by such statute and Bylaws,
respectively.
15
<PAGE>
ITEM 13. FINANCIAL STATEMENTS
TABLE OF CONTENTS
-----------------
Independent Auditors' report .................................................17
Consolidated financial statements
Balance sheet............................................................18
Statement of operations..................................................19
Statement of cash flows..................................................20
Summary of significant...................................................21
Notes to consolidated financial statements............................22-26
16
<PAGE>
BDO BDO Siedman, LLP 2323 Bryan Street, Suite 1800
Accountants and Consultants Dallas, Texas 75201-2628
Telephone: (214) 880-3700 Fax: (214) 880-3701
INDEPENDENT AUDITORS' REPORT
Alford Refrigerated Warehouses, Inc.
Dallas, Texas
We have audited the accompanying consolidated balance sheet of Alford
Refrigerated Warehouses, Inc. as of December 31, 1997, and the related
statements of operations and cash flows for the year 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 accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statements presentation.
We believe that our audit provides 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 Alford Refrigerated Warehouses,
Inc. as of December 31, 1997, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.
/s/ BDO Siedman, LLP
- --------------------
March 13, 1998
17
<PAGE>
ITEM 13. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
ALFORD REFRIGERATED WAREHOUSES, INC.
Consolidated Balance Sheet
December 31, 1997
- ------------------------------------------------------------------------------------------------------------------
Assets
Current
Cash and cash equivalents (Note 6) $ 446,179
Accounts receivable 1,394,287
Prepaid expense 284,742
Income tax receivable (Note 3) 133,629
Escrows 436,741
- ------------------------------------------------------------------------------------------------------------------
Total current assets 2,695,578
- ------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net (Note2) 11,344,231
Other receivables 10,000
Due from affiliate (Note 1) 3,541,973
Other assets 432,357
Deferred tax asset (Note 3) 236,000
Deposits, including $628,128 deposits with affiliates (Note 1) 682,094
-------
Total assets $ 18,942,233
==================================================================================================================
Liabilities and Stockholder's Equity
Current
Accounts payable $ 398,056
Accrued charges 883,738
Notes payable (Note 4) 124,535
Current maturities of long-term debt (Note 4) 688,130
- ------------------------------------------------------------------------------------------------------------------
Total current liabilities 2,094,459
- ------------------------------------------------------------------------------------------------------------------
Deferred revenue 157,059
Long-term debt (Notes 1 and 4) 11,759,883
Line of credit (Note 4) 728,164
Deferred taxes (Note 3) 1,042,286
- ------------------------------------------------------------------------------------------------------------------
Total liabilities 15,781,851
- ------------------------------------------------------------------------------------------------------------------
Commitments (Note 5)
Stockholder's equity:
Common stock, no par value, 10,000 shares authorized,
issued and outstanding 3,360,000
Retained deficit (199,618)
- ------------------------------------------------------------------------------------------------------------------
Total stockholder's equity 3,160,382
- ------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $ 18,942,233
==================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ALFORD REFRIGERATED WAREHOUSES, INC.
Consolidated Statement of Operations
Year ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------
Revenues:
Warehouse revenues $ 12,561,259
Other revenues 395,634
- ------------------------------------------------------------------------------------------------------------------
Total Revenue 12,956,893
- ------------------------------------------------------------------------------------------------------------------
Operating Costs and Expenses:
Operating costs 8,375,734
General and administrative expenses 1,365,765
- ------------------------------------------------------------------------------------------------------------------
Total Operating Costs and Expenses 9,741,499
- ------------------------------------------------------------------------------------------------------------------
Income from Operations 3,215,394
- ------------------------------------------------------------------------------------------------------------------
Depreciation, Rent and Interest Expenses:
Depreciation 396,422
Rent 1,297,117
Interest 828,866
- ------------------------------------------------------------------------------------------------------------------
Total Depreciation, Rent and Interest Expenses 2,522,405
- ------------------------------------------------------------------------------------------------------------------
Income Before Other Expenses and Income Taxes 692,989
Other Expenses:
Special charges for -
Legal and professional fees 267,875
Other revenues (150,109)
Gain on dispositions, net (5,749)
- ------------------------------------------------------------------------------------------------------------------
Total Other Expenses 112,017
- ------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 580,972
Income Tax Expense (Note 3) 14,000
- ------------------------------------------------------------------------------------------------------------------
Net Income 566,972
Retained Deficit, beginning of year (766,590)
- ------------------------------------------------------------------------------------------------------------------
Retained Deficit, end of year (199,618)
==================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ALFORD REFRIGERATED WAREHOUSES, INC.
Consolidated Statement of Cash Flows
Year ended December 31, 1997
- -------------------------------------------------------------------------------------------------------------------
Operating Activities:
Net income $ 566,972
Adjustments to reconcile net income to
net cash provided by operation activities:
Depreciation expense 396,422
Bad debt expense 9,440
Deferred income taxes (62,000)
Other (124,968)
Changes in operating assets and liabilities:
Accounts receivable (159,162)
Prepaid expenses 202,756
Deposits and escrows (1,017,718)
Income tax receivable 97,047
Other assets (427,705)
Accounts payable (10,404)
Accrued charges 480,243
Deferred revenue 93,437
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 44,360
- ------------------------------------------------------------------------------------------------------------------
Investing Activities -
Capital expenditures (984,383)
- ------------------------------------------------------------------------------------------------------------------
Financing Activities:
Due from affiliate (3,541,973)
Funds borrowed 10,222,021
Principal payments on debt (5,758,195)
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 921,853
- ------------------------------------------------------------------------------------------------------------------
Net decrease in cash (18,170)
Cash and cash equivalents, beginning of period 464,349
- ------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 446,179
==================================================================================================================
</TABLE>
See accompanying summary of accounting policies and notes to consolidated
financial statements.
20
<PAGE>
ALFORD REFRIGERATED WAREHOUSES, INC.
Summary of Significant Accounting Policies
Business The consolidated financial statements include the accounts
of Alford Refrigerated Warehouses, Inc. (the Company) and
its wholly owned subsidiaries: Alford Logistical Services,
Inc. (ALS), Cadiz Properties, Inc. (Cadiz), Thermix
Corporation (Thermix), Specialty Processing Corporation
(SPC), Alford Terminal Warehouses, Inc. (ATW), and Alford
Distribution Services, Inc. (ADS). All significant
intercompany transactions and balances have been eliminated.
The Company provides public warehousing space and related
services, primarily to large wholesale food and grocer
suppliers. Revenues are recognized as services are provided.
Cash and Cash For purposes of reporting the statements of cash flows, the
Equivalents Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less
to be cash equivalents.
Property, Plant Property, plant and equipment are stated at cost, less
and Equipment accumulated depreciation. The cost of additions and
improvements are capitalized, while maintenance and repairs
are charged to expense when incurred.
Depreciation of the warehouse is provided by the
straight-line method for financial statement purposes over
31.5 years. Accelerated depreciation methods are used for
machinery and equipment over the estimated useful lives of
the respective assets.
Leased property meeting certain criteria is capitalized and
the present value of the related lease payments is recorded
as a liability. Amortization of capitalized leased assets is
computed on the straight-line method over the term of the
lease.
Income Taxes Income taxes are provided based on the results of operations
as reported for financial reporting purposes and, when
appropriate, include deferred income taxes applicable to
temporary differences between financial and taxable income.
The Company has adopted Financial Accounting Standards
Statement No. 109 which required a change from the deferred
method of accounting for income taxes to the asset and
liability method.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principals (GAAP) 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 the reported amounts of revenues
and expenses during the reported period. Actual results
could differ from these estimates.
21
<PAGE>
ALFORD REFRIGERATED WAREHOUSES, INC.
Notes to Consolidated Financial Statements
1. Related Party On December 1, 1996, the Company entered into an agreement
Transactions ("the Agreement") with Canfina AG and J. Eichmann to repay
existing loans and to purchase Mr. Eichmann's Company stock.
The Agreement terms consisted of the following:
$1,700,000 loan repayment to Canfina AG on December 31, 1996
$3,000,000 loan repayment to Canfina AG on June 11, 1997
$2,000,000 payment to Mr. Eichmann no later than December
13, 1997 in consideration for his Company stock (see below).
$2,600,000 term note due December 2001 secured by common
stock held in escrow (Note 4).
The Company made the first payment of $1,700,000 on December
13, 1996 as scheduled. On September 15, 1997, the Company
modified the Agreement with Mr. Eichmann whereby the
interest rate on the $2,600,000 note increased from 8
percent to 9 percent in exchange for an extension on the due
date of the $3,000,000 payment. On the same date, the
Company made the second payment of $3,000,000 due to Mr.
Eichmann using proceeds from an $8,100,000 loan from Morgan
Guaranty Trust Company of New York. On December 4, 1997, the
Company paid Mr. Eichmann $2,000,000 in exchange for rights
to his shares in accordance with the Agreement using funds
obtained through a term note and line of credit with Nations
Credit Commercial Corporation (Note 4). These rights were
assigned to the Company's parent, Castor Capital Corporation
("Castor") in exchange for a $2,000,000 note receivable (see
below). The shares are currently held in escrow for the
Company's parent pending the final payment of $2,600,000 in
December 2001.
On February 26, 1997, the Company paid $250,000 to Alltemp
Logistical Services, L.L.C. (Alltemp) as a deposit to be
applied towards the purchase price of a warehouse facility
in LaPorte, Texas. The Company and Alltemp did not finalize
the purchase during the year ended December 31, 1997, and
the Company expects to receive the benefit from deposited
funds in 1998. The amount is included in deposits in the
accompanying balance sheet.
22
<PAGE>
The Company loaned its parent company Castor $1,500,000 on
September 17, 1997 and $2,000,000 on December 4, 1997 as
evidenced by two promissory notes payable to the Company at
the rate of 8 percent per annum due December 31, 2000 and
December 31, 2002, respectively. The notes and accrued
interest income of $41,973 are included in due from
affiliate in the accompanying balance sheet.
During the year the Company made initial payments totaling
$378,128 to Associates Freezers, Inc. in order to purchase
the rights to the penguin trademark and the name Associated
Freezers, Inc. The amount is included in other assets in the
accompanying balance sheet. 2. Property, Plant and Equipment
2. Property, Plant Property, plant and equipment at December 31, 1997 consisted
and Equipment of the following:
Land $ 4,265,389
Building 7,183,415
Machinery and equipment 567,083
Machinery and equipment under capital lease 403,812
------------------------------------------------------------
12,419,699
Less accumulated depreciation 1,075,468
------------------------------------------------------------
Total $11,344,231
------------------------------------------------------------
3. Income Taxes Net operating loss carryforwards, after taking into
consideration certain limitations created by the change in
capital structure, result in a maximum deferred tax asset of
$236,000.
The deferred tax liability was calculated on the expected
temporary differences between the reorganized fair value and
the tax basis of the Company. The deferred tax liability was
calculated at the federal tax rate of 34 percent.
A reconciliation between the actual income tax expense and
income taxes computed by applying the statutory federal
income tax rate to earnings before income taxes at December
31, 1997 is as follows:
Computed income taxes, at 34 percent $ 198,000
Utilization of net operating loss carryforwards (198,000)
Alternative minimum tax 14,000
------------------------------------------------------------
$ 14,000
------------------------------------------------------------
23
<PAGE>
4. Notes Payable, Notes payable consist of various notes due to insurers with
Long-Term Debt, principal totaling $124,535 at December 31, 1997. The notes
and accrue interest at various rates; principal and interest are
Line of Credit due monthly.
Long-term debt at December 31, 1997 consists of the
following:
<TABLE>
<CAPTION>
<S> <C> <C>
Description Amount
---------------------------------------------------------------------------------
9% J. Eichmann note, quarterly principal payments from
second to fifth year of $62,500, remaining principal
and unpaid but accrued interest due December 2001,
secured by common stock held in escrow (Note 1). 2,600,000
8.4% Morgan Guaranty Trust Company of New York note, monthly
payments of $69,782, remaining balance of principal and
accrued but unpaid interest due October, 2007, secured
by the land and improvements and certain other property
and equipment at the Company's Cadiz Street facility. 8,073,745
Nations Credit Commercial Corporation term note, prime plus
5%, monthly principal payments of $20,119 plus accrued
interest, remaining principal and unpaid but accrued
interest due December 3, 2001, secured by selected
equipment and guaranties from Castor, ALS, Thermix,
SPC, ATW, and ADS. 1,207,160
7% advalorem taxes note, payable semi-annually
through 1999 238,843
Obligations under capital leases, maturity dates
ranging form 1999 through 2002. 328,265
---------------------------------------------------------------------------------
12,448,013
Current maturities (688,130)
---------------------------------------------------------------------------------
$11,759,883
---------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Maturities of long-term debt are as follows:
Year ended December 31,
------------------------------------------------------------
1998 $ 688,130
1999 589,328
2000 499,160
2001 3,336,506
2002 246,323
Thereafter 7,088,566
------------------------------------------------------------
$12,448,013
The Company has a line of credit with Nations Credit
Commercial Corporation which provides up to $2,500,000
through December 3, 2001 at prime (8.5 percent at December
31, 1997) plus 5 percent. Interest is payable monthly, and
all unpaid but accrued interest and principal is due at
maturity. The line of credit is secured by guaranties from
Castor, ALS, Thermix, SPC, ATW, and ADS.
The Morgan Guaranty Trust Company of New York ("Morgan")
note requires the establishment of certain escrow accounts.
Morgan restricts the use of the funds to the designated
purpose of the accounts in accordance with the terms of the
note.
5. Commitments The Company rents certain real estate and equipment under
and operating leases. The leases do not provide for any
Contingencies significant renewals; and, except for insignificant leases,
there are no existing purchase options. Rent expense was
$25,616 for the year ended December 31, 1997.
Future minimum rental payments required under operating
leases that have initial or remaining noncancelable lease
terms in excess of one year at December 31, 1997, were:
Year ended December 31,
------------------------------------------------------------
1998 $ 11,130
1999 11,130
2000 7,884
------------------------------------------------------------
$30,144
------------------------------------------------------------
From time to time, in the normal course of business, the
Company is a party to various matters of litigation.
Management is of the opinion that the eventual resolution of
these matters will not have a material adverse effect on the
Company.
25
<PAGE>
6. Concentration At December 31, 1997, the Company had bank deposits in
of Credit Risk excess of insured limits by approximately $134,000.
The Company derived 12 and 10 percent of its revenue from
two customers, respectively, in 1997. The Company closely
monitors the creditworthiness of its customers and does not
believe that it is dependent upon any single customer.
7. Supplemental Cash paid for interest during the year ended December 31,
Cash Flow 1997 was approximately $800,000.
Information
Non-cash investing and financing activity curing 1997
consisted of the following:
Financing of various insurance policies (Note 4) $ 418,022
Capitalization of lease
assets and obligations (Notes 2 and 4) 403,812
8. Subsequent On February 5, 1998, the Company loaned its parent company,
Event Castor, $714,362 as evidenced by a promissory note payable
to the Company at the rate of 8 percent per annum due
December 31, 1999.
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
HILLTOP ACQUISITION HOLDING CORPORATION
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Certified Public Accountants 28
Financial Statements
Balance Sheet as of December 31, 1997 and 1996 29
Statements of Operations for the year ended December 31, 1997 and the
period from August 9, 1996 (date of bankruptcy
settlement) through December 31, 1996 30
Statement of Changes in Shareholders' Equity for the year ended
December 31, 1997 and the period from August 9, 1996 (date of
bankruptcy
settlement) through December 31, 1996 31
Statements of Cash Flows for the year ended December 31, 1997 and the
period from August 9, 1996 (date of bankruptcy
settlement) through December 31, 1996 32
Notes to Financial Statements 33
</TABLE>
27
<PAGE>
S. W. HATFIELD + ASSOCIATES
certified public accountants
Members: American Institute of Certified Public Accounts
SEC Practice Section
Information Technology Section
Texas Society of Certified Public Accountants
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------
Board of Directors
Hilltop Acquisition Holding Corporation
(formerly Optical Acquisition Corp.)
We have audited the accompanying balance sheets of Hilltop Acquisition Holding
Corporation (formerly Optical Acquisition Corp. and/or Optical Corporation of
America) as of December 31, 1997 and 1996, and the related statements of
operations, changes in shareholders' equity and cash flows for the year ended
December 31, 1997 and for the period from August 9, 1996 (date of bankruptcy
settlement) through December 31, 1996, respectively. 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 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 Hilltop Acquisition Holding
Corporation (formerly Optical Acquisition Corp. and/or Optical Corporation of
America) as of December 31, 197 and 196 and the results of its operations and
its cash flows for the year ended December 31, 1997 and for the period from
August 9, 1996 (date of bankruptcy settlement) through December 31, 1996,
respectively, in conformity with generally accepted accounting principles.
S. W. HATFIELD + ASSOCIATES
Dallas, Texas
November 23, 1998
Use our past to assist your future(sm)
P.O. Box 82095 9002 Green Oaks Circle, 2nd Floor
Dallas, Texas 75382-0395 Dallas, Texas 75243-7912
214-342-9635 (voice) (fax) 214-342-9601
800-244-0639 [email protected]
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
HILLTOP ACQUISITION HOLDING CORPORATION
BALANCE SHEETS
December 31, 1997 and 1996
ASSETS
------
1997 1996
------- -------
Current Assets
Cash in bank $ 248 $ -
Due from bankrputcy - 2,500
trust
Due from shareholder - 2,502
------- -------
TOTAL ASSETS $ 248 $ 5,002
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Accounts payable-trade $16,563 $ -
Shareholders' equity
Preferred stock - $0.01 par value. 10,000 shares
authorized. None issued and oustanding - -
Common stock - $0.01 par value. 40,000,000 shares
authorized. 500,201 shares issued and outstanding 5,002 5,002
Accumulated deficit (21,317) -
------- ------
Total shareholders' equity (16,315) 5,002
------- ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 248 $5,002
======= ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
HILLTOP ACQUISITION HOLDING CORPORATION
STATEMENTS OF OPERATIONS
Year ended December 31, 1997 and
Period from August 9, 1996 (date of bankruptcy settlement) through December 31, 1996
Year ended Period from
December 31, August 9, 1996
1997 through December 31,
1996
Revenues $ - $ -
---------- ----------
Operating expenses
General and administrative costs 135 -
Reorganization expenses 21,182 -
---------- ----------
Total expenses 21,317 -
---------- ----------
Loss from operations (21,317) -
Income taxes - -
---------- ----------
Net loss $ (21,317) $ -
========== ==========
Net loss per weighted-average
share of common stock outstanding $ 0.04 nil
========== ==========
Weighted-average number of shares
of common stock outstanding 500,201 500,201
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HILLTOP ACQUISITION HOLDING CORPORATION
STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
Year ended December 31, 1997 and
Period from August 9, 1996 (date of bankruptcy settlement) through December 31, 1996
Common stock Additional
------------ paid-in Accumulated
#shares Amount capital deficit Totals
------- ------ ---------- ----------- ------
Stock issued through
bankruptcy settlement
on August 9, 1996 500,201 $5,002 $ - $ - $ 5,002
Net loss for the period - - - - -
------- ------ ------- -------- --------
Balances at December 31, 1996 500,201 5,002 - - 5,002
Net loss for the period - - - (21,317) (21,317)
------- ------ ------- -------- --------
Balances at December 31, 1997 500,201 $5,002 $ - $(21,317) $(16,315)
======= ====== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
HILLTOP ACQUISITION HOLDING CORPORATION
STATEMENTS OF CASH FLOWS
Year ended December 31, 1997 and
Period from August 9, 1996 (date of bankruptcy settlement) through December 31, 1996
Period from
August 9, 1996
Year ended through
December 31, 1997 December 31, 1996
----------------- -----------------
Cash Flows from Operating Activities
Net loss for the period $(21,317) $ -
Adjustments to reconcile net loss
to net cash provided by operating
activities
Increase in accounts payable-trade 16,563 -
-------- ---------
Net cash used in operating activities (4,754) -
-------- ---------
Cash Flows from Investing Activities - -
-------- ---------
Cash Flows from Financing Activities
Funding from bankruptcy trust and majority shareholder 5,002 -
-------- ---------
Net cash provided by financing activities 5,002 -
-------- ---------
Increase (Decrease) in Cash 248 -
Cash at beginning of period - -
-------- ---------
CASH at end of period $ 248 $ -
======== =========
Supplemental Disclosure of Interest
and Income Taxes Paid
Interest paid during the period $ - $ -
======== =========
Income taxes paid during the period $ - $ -
======== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
HILLTOP ACQUISITION HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE A - BACKGROUND AND DESCRIPTION OF BUSINESS
Hilltop Acquisition Holding Corporation (formerly Optical Acquisition Corp.)
(Company) was initially incorporated on November 20, 1992 as Optical Corporation
of America under the laws of the State of Delaware. On February 18, 1997, the
Company's Certificate of Incorporation was amended and restated pursuant to the
plan of reorganization discussed below. The Amended and Restated Certificate of
Incorporation changed the Company's name to Optical Acquisition Corp. and
modified the Company's capital structure to allow for the issuance of 50,000,000
total equity shares consisting of 10,000,000 shares of preferred stock and
40,000,000 shares of common stock. Both classes of stock have a par value of
$0.01 per share.
On September 26, 197, the Company changed its state of Incorporation from
Delaware to Texas by means of a merger with and into a Texas corporation formed
solely for the purpose of effecting the reincorporation. The Articles of
Incorporation and Bylaws of the Texas corporation are the Articles of
Incorporation and Bylaws of the surviving corporation. Such Articles of
Incorporation did not change the capital structure of the Company.
On February 17, 1998, the Company's shareholders approved, at a special meeting
of the Company's shareholders, the consummation of an acquisition or merger with
Hilltop Acquisition Corporation, a Texas corporation, in the business of
acquiring overriding royalty interests in oil and natural gas properties and to
change the name of the Company to Hilltop Acquisition Holding Corporation.
On September 21, 1995, the Company filed for protection under Chapter 11 of the
Federal Bankruptcy Act. The Company's bankruptcy action was combined with a
similarly filed action of two related entities. All assets, liabilities and
other claims against the Company were combined with those of its affiliate and
were liquidated through a single combined Creditors Trust. The combined
Creditors Trust was operated by an independent Trustee under the supervision of
the Bankruptcy Court from September 21, 1995 through August 9, 1996. All secured
claims and/or administrative claims during this period were satisfied through
either direct payment or negotiation by the Creditors Trust. A plan of
reorganization was approved by the United States Bankruptcy Court, Northern
District of Texas, Dallas Division on August 9, 196 and was subsequently
modified effective February 28, 1997. The plan of reorganization provided that
all unsecured creditors, holders of unpaid administrative claims or fees and
pre-bankruptcy shareholders would receive "new" shares of the Company's
post-reorganization common stock, pursuant to Section 1145(d) of the Bankruptcy
Code. As a result of this approval, the Company was discharged from bankruptcy
and all liens, security interests, encumbrances and other interests, as defined
in the plan of reorganization, were extinguished and expunged.
The issuance of "new" shares of the reorganized entity caused an issuance of
shares of common stock and a related change of control of the Company with more
than 50.0% of the "new" shares being held by persons and/or entities which were
not pre-bankruptcy shareholders. Accordingly, per American Institute of
Certified Public Accountants' Statement of Position 90-7, "Financial Reporting
by Entities in Reorganization Under the Bankruptcy Code," the company adopted
"fresh-start" accounting as of the bankruptcy discharge date whereby all
continuing assets and liabilities of the Company were restated to the fair
market value. As of August 9, 1996, by Order of the Bankruptcy Court, the only
asset of the Company was approximately $2,500 cash due from the Creditors Trust.
33
<PAGE>
HILLTOP ACQUISITION HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE A - BACKGROUND AND DESCRIPTION OF BUSINESS - Continued
The Company follows the accrual basis of accounting in accordance with generally
accepted accounting principles and has a year-end of December 31.
The Company's former majority stockholder, Halter Financial Group, Inc.,
maintained the corporate status of the Company and provided all working capital
support on the Company's behalf since the bankruptcy discharge date through
February 198. Because of the Company's lack of operating assets during this
reorganization period, its continuance was fully dependent upon the majority
stockholder's continuing support.
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 at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts
in book overdraft positions, certificates of deposit and other
highly-liquid investments with maturities of three months or less, when
purchased, to be cash and cash equivalents.
2. Income taxes
------------
The Company files a separate Federal Income Tax Return. Due to the
provisions of Internal Revenue Code Section 338, the Company will have
no net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods as a result of
a change in control involving 50 percentage points or more of the
issued and outstanding securities of the Company.
NOTE C - RELATED PARTY TRANSACTIONS
In connection with the issuance of "new" shares of the Company's
post-reorganization common stock under the plan of reorganization, the Company
elected to utilize the stock transfer services of an entity controlled by
relatives of post-bankruptcy senior management of the Company. Approximately
$11,200 was paid or accrued for stock transfer, initial securities issuances and
registrar services.
NOTE D - CAPITAL STOCK TRANSACTIONS
All unsecured creditors and holders of unpaid administrative claims, including
Halter Financial Group, Inc. received an aggregate of approximately 500,000
"new" shares in settlement of all unpaid obligations of the Company and/or the
consolidated bankruptcy trust.
34
<PAGE>
HILLTOP ACQUISITION HOLDING CORPORATION
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE A - BACKGROUND AND DESCRIPTION OF BUSINESS - Continued
NOTE E - SUBSEQUENT EVENT
On February 17, 198, the Company's shareholders approved, at a special meeting
of the Company's shareholders, the consummation of an acquisition o merger with
Hilltop Acquisition Corporation, a Texas corporation, in the business of
acquiring overriding royalty interests in oil and natural gas properties and to
change the name of the Company to Hilltop Acquisition Holding Corporation.
35
<PAGE>
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) The financial statements filed as part of this Registration Statement
in Item 13 are listed in the Index to Financial Statements contained in such
Item.
(b) The following documents are filed as exhibits to this Registration
Statement:
*2.1 First Amended Joint Plan of Reorganization dated July 9, 1996 as
modified and clarified to date.
*2.2 Agreement and Plan of Merger dated November 23, 1998 by and
between Hilltop Acquisition Holding Corporation, Womack Gilman
Investment Services, L.C., Halter Financial Group, Inc. and
Alford Refrigerated Warehouses, Inc.
3(i) Restated Articles of Incorporation (with amendments)
3(ii)Amended and Restated Bylaws
*4.1 Form of Common Stock Certificate
*10.1 Fixed Rate Note dated September 15, 1997 between Cadiz
Properties, Inc., and Morgan Guaranty Trust Company of New York
*10.2 Fixed Rate Note dated February 6, 1998 between LaPorte
Properties, L.L.C., and Amresco Capital, L.P.
*10.3 Consulting Agreement dated January 1, 1997 between Alford Refrig-
erated Warehouses, Inc. and Alton M. Adams, P.Eng.
*10.4 Purchase and Sale Agreement executed on or about January 19, 1999
between Alford Refrigerated Warehouses, Inc. and Fort Worth Cold
Storage Holdings, Inc.
*11.1 Statement re: computation of per share earnings
*21.1 Subsidiaries of the Company.
*to be filed by amendment
36
<PAGE>
SIGNATURE
In accordance with Section 12 of the Securities Act of 1934, the
Company caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALFORD REFRIGERATED WAREHOUSES, INC.
By: /s/ James Williams Date: February 3, 1999
---------------------------------
James C. Williams
Chief Financial Officer
37
RESTATED ARTICLES OF INCORPORATION
OF
ALFORD REFRIGERATED WAREHOUSES, INC.
(With Amendments)
Pursuant to the provisions of the Texas Business Corporation Act,
Alford Refrigerated Warehouses, Inc., a Texas corporation (the "Corporation"),
hereby adopts these Restated Articles of Incorporation (the "Restated
Articles"), which accurately reflect the original Articles of Incorporation and
all amendments thereto that are in effect to date (collectively, the "Original
Articles") and as further amended by such Restated Articles as hereinafter set
forth and which contain no other change in any provision thereof.
ARTICLE I
---------
The name of the Corporation is Alford Refrigerated Warehouses, Inc.
ARTICLE II
----------
The Original Articles of the Corporation are amended by these Restated
Articles as follows: (a) ARTICLE THREE is deleted in its entirety and restated
to provide for less than unanimous consent of shareholders; (b) ARTICLE FIVE is
amended to reflect the current directors of the Corporation; (c) ARTICLE SIX is
amended and restated in its entirety to increase the number of authorized shares
of Common Stock, provide for blank check Preferred Stock and to change the par
value of shares; (d) ARTICLE SEVEN is deleted in its entirety and restated to
provide for majority voting on all matters; (e) ARTICLE TWELVE is amended and
restated in its entirety to address director liability; (f) a new ARTICLE
THIRTEEN is added to address interested directors; and (g) a new ARTICLE
FOURTEEN is added to set forth indemnification provisions.
ARTICLE III
-----------
Each such amendment and addition made by these Restated Articles has
been effected in conformity with the provisions of the Texas Business
Corporation Act, and these Restated Articles and each such amendment made by
these Restated Articles were duly adopted and approved by the Board of Directors
of the Corporation as of November 23, 1998.
ARTICLE IV
----------
The number of shares of capital stock of the Corporation outstanding
and entitled to vote at the time of such adoption was 10,000 shares of Common
Stock, no par value per share.
1
<PAGE>
ARTICLE V
---------
The holder of all of the issued and outstanding shares of Common Stock
of the Corporation entitled to vote on the foregoing amendments approved and
adopted such amendments by written consent dated November 23, 1998.
ARTICLE VI
----------
Each share of Common Stock, no par value per share, issued and
outstanding immediately prior to effecting the change in par value, will be
automatically converted into one share of Common Stock, $0.01 par value per
share, upon effecting the change in par value.
ARTICLE VII
-----------
Due to the change in par value of Common Stock of the Corporation from
no par value per share to $0.01 par value per share, the stated capital of the
Corporation shall be changed from $3,360,000.00 to $100.00.
ARTICLE VIII
------------
The Original Articles are hereby superseded by the following Restated
Articles, which accurately copy the entire text thereof as amended as set forth
above:
2
<PAGE>
RESTATED ARTICLES OF INCORPORATION
OF
ALFORD REFRIGERATED WAREHOUSES, INC.
ARTICLE ONE
-----------
The name of the Corporation is Alford Refrigerated Warehouses, Inc.
ARTICLE TWO
-----------
The purposes for which the Corporation is organized is to transact any
and all lawful business for which corporations may be incorporated under the
Texas Business Corporation Act.
ARTICLE THREE
-------------
Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting, without prior notice, and without a
vote if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holder or holders of shares having not less than the
minimum number of votes that would be necessary to take such action at a meeting
at which the holders of all shares entitled to vote on the action were present
and voted. Prompt notice of the taking of any action by shareholders without a
meeting by less than unanimous written consent shall be given to those
shareholders who did not consent in writing to the action.
ARTICLE FOUR
------------
The period of the Corporation's duration is perpetual.
ARTICLE FIVE
------------
The number of directors constituting the current Board of Directors is
three, and the name and address of each person who is to serve as a director
until the next annual meeting of the shareholders or until his successor is
elected and qualified are:
Name Address
---- -------
Joseph Y. Robichaud 318 Cadiz Street
Dallas, Texas 75207
Kenneth N. Tomilson 318 Cadiz Street
Dallas, Texas 75207
James C. Williams 318 Cadiz Street
Dallas, Texas 75207
3
<PAGE>
ARTICLE SIX
-----------
The total number of shares of all classes of capital stock which the
Corporation shall have authority to issue is Fifty-Five Million (55,000,000), of
which (a) Fifty Million (50,000,000) shares shall be designated as Common Stock,
par value $0.01 per share and (b) Five Million (5,000,000) shares shall be
undesignated Preferred Stock, par value $0.01 per share.
The following is a statement of the designations, preferences,
limitations, and relative rights, including voting rights, in respect of the
classes of stock of the Corporation and of the authority with respect thereto
expressly vested in the Board of Directors of the Corporation:
COMMON STOCK
(1) Each share of Common Stock of the Corporation shall have identical
rights and privileges in every respect. The holders of shares of Common Stock
shall be entitled to vote upon all matters submitted to a vote of the
shareholders of the Corporation and shall be entitled to one vote for each share
of Common Stock held.
(2) Subject to the prior rights and preferences, if any, applicable to
shares of the Preferred Stock or any series thereof, the holders of shares of
the Common Stock shall be entitled to receive such dividends (payable in cash,
stock, or otherwise) as may be declared thereon by the Board of Directors at any
time and from time to time out of any funds of the Corporation legally available
therefor.
(3) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation, after distribution in full of the
preferential amounts, if any, to be distributed to the holders of shares of the
Preferred Stock or any series thereof, the holders of shares of the Common Stock
and, if and to the extent specified in the designations of preferred stock, the
holders of Preferred Stock shall be entitled to receive all of the remaining
assets of the Corporation available for distribution to its shareholders,
ratably in proportion to the number of shares of the Common Stock held by them
plus the number of shares of Common Stock into which their Preferred Stock is
convertible. A liquidation, dissolution, or winding-up of the Corporation, as
such terms are used in this Paragraph (3), shall not be deemed to be occasioned
by or to include any merger of the Corporation with or into one or more
corporations or other entities, any acquisition or exchange of the outstanding
shares of one or more classes or series of the Corporation, or any sale, lease,
exchange, or other disposition of all or a part of the assets of the
Corporation; provided, however, the foregoing shall not affect the rights of the
holders of Preferred Stock to receive any liquidation preference or other amount
to which they are entitled under the designations of Preferred Stock.
PREFERRED STOCK
(4) Shares of the Preferred Stock may be issued from time to time in
one or more series, the shares of each series to have such designations,
preferences, limitations, and relative rights, including voting rights, as shall
4
<PAGE>
be stated and expressed herein or in a resolution or resolutions providing for
the issue of such series adopted by the Board of Directors of the Corporation.
Each such series of Preferred Stock shall be designated so as to distinguish the
shares thereof from the shares of all other series and classes. The Board of
Directors of the Corporation is hereby expressly authorized, subject to the
limitations provided by law and provided by the applicable protective provisions
contained in these Articles of Incorporation, to establish and designate series
of the Preferred Stock, to fix the number of shares constituting each such
series, and to fix the designations and the preferences, limitations, and
relative rights, including voting rights, of the shares of each such series and
the variations of the relative rights and preferences as between such series,
and to increase and to decrease the number of shares constituting each such
series, provided that the Board of Directors may not decrease the number of
shares within a series to less than the number of shares within such series that
are then issued. The relative powers, rights, preferences, and limitations may
vary between and among series of Preferred Stock in any and all respects so long
as all shares of the same series are identical in all respects, except that
shares of any such series issued at different times may have different dates
from which dividends thereon cumulate. The authority of the Board of Directors
of the Corporation with respect to each such series shall include, but shall not
be limited to, the authority to determine the following:
(a) The designation of such series;
(b) The number of shares initially constituting such series;
(c) The rate or rates and the times at which dividends on the
shares of such series shall be paid, the periods in respect of which dividends
are payable, the conditions upon such dividends, the relationship and
preferences, if any, of such dividends to dividends payable on any other class
or series of shares, whether or not such dividends shall be cumulative,
partially cumulative, or noncumulative, if such dividends shall be cumulative or
partially cumulative, the date or dates from and after which, and the amounts in
which, they shall accumulate, whether such dividends shall be share dividends,
cash or other dividends, or any combination thereof, and if such dividends shall
include share dividends, whether such share dividends shall be payable in shares
of the same or any other class or series of shares of the Corporation (whether
now or hereafter authorized), or any combination thereof and the other terms and
conditions, if any, applicable to dividends on shares of such series;
(d) Whether or not the shares of such series shall be
redeemable or subject to repurchase at the option of the Corporation or the
holder thereof or upon the happening of a specified event, if such shares shall
be redeemable, the terms and conditions of such redemption, including but not
limited to the date or dates upon or after which such shares shall be
redeemable, the amount per share which shall be payable upon such redemption,
which amount may vary under different conditions and at different redemption
dates, and whether such amount shall be payable in cash, property, or rights,
including securities of the Corporation or another corporation;
5
<PAGE>
(e) The rights of the holders of shares of such series (which
may vary depending upon the circumstances or nature of such liquidation,
dissolution, or winding up) in the event of the voluntary or involuntary
liquidation, dissolution, or winding up of the Corporation and the relationship
or preference, if any, of such rights to rights of holders of stock of any other
class or series. A liquidation, dissolution, or winding up of the Corporation,
as such terms are used in this subparagraph (e), shall not be deemed to be
occasioned by or to include any merger of the Corporation with or into one or
more corporations or other entities, any acquisition or exchange of the
outstanding shares of one or more classes or series of the Corporation, or any
sale, lease, exchange, or other disposition of all or a part of the assets of
the Corporation unless otherwise expressly provided in the designation of such
series;
(f) Whether or not the shares of such series shall have voting
powers and, if such shares shall have such voting powers, the terms and
conditions thereof, including, but not limited to, the right of the holders of
such shares to vote as a separate class either alone or with the holders of
shares of one or more other classes or series of stock and the right to have
more (or less) than one vote per share; provided, however, that the right to
cumulate votes for the election of directors is expressly denied and prohibited;
(g) Whether or not a sinking fund shall be provided for the
redemption of the shares of such series and, if such a sinking fund shall be
provided, the terms and conditions thereof;
(h) Whether or not a purchase fund shall be provided for the
shares of such series and, if such a purchase fund shall be provided, the terms
and conditions thereof;
(i) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a specified event,
shall be convertible into stock of any other class or series and, if such shares
shall be so convertible, the terms and conditions of conversion, including, but
not limited to, any provision for the adjustment of the conversion rate or the
conversion price;
(j) Whether or not the shares of such series, at the option of
either the Corporation or the holder or upon the happening of a specified event,
shall be exchangeable for securities, indebtedness, or property of the
Corporation and, if such shares shall be so exchangeable, the terms and
conditions of exchange, including, but not limited to, any provision for the
adjustment of the exchange rate or the exchange price; and
(k) Any other preferences, limitations, and relative rights as
shall not be inconsistent with the provisions of this Article Six or the
limitations provided by law.
(5) Except as otherwise required by law or in any resolution of the
Board of Directors creating any series of Preferred Stock, the holders of shares
of Preferred Stock and all series thereof who are entitled to vote shall vote
together with the holders of shares of Common Stock, and not separately by
class.
6
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GENERAL
(6) The Board of Directors of the Corporation is hereby expressly
empowered, subject to the limitations provided by law, to authorize the
Corporation to pay share dividends on any class or series of capital stock of
the Corporation (whether now or hereafter authorized) payable in shares of the
same or any other class or series of capital stock of the Corporation (whether
now or hereafter authorized) or any combination thereof.
ARTICLE SEVEN
-------------
Any action of the Corporation which, under the provisions of the Texas
Business Corporation Act or any other applicable law, is required to be
authorized or approved by the holders of any specified fraction which is in
excess of one-half or any specified percentage which is in excess of 50% of the
outstanding shares (or of any class or series thereof) of the Corporation shall,
notwithstanding any law, be deemed effectively and properly authorized or
approved if authorized or approved by the vote of the holders of more than 50%
of the outstanding shares entitled to vote thereon (or, if the holders of any
class or series of the Corporation's shares shall be entitled by the Texas
Business Corporation Act or any other applicable law to vote thereon separately
as a class, by the vote of the holders of more than 50% of the outstanding
shares of each such class or series). Without limiting the generality of the
foregoing, the foregoing provisions of this Article Seven shall be applicable to
any required shareholder authorization or approval of: (a) any amendment to
these Articles of Incorporation; (b) any plan of merger, share exchange, or
reorganization involving the Corporation; (c) any sale, lease, exchange, or
other disposition of all, or substantially all, the property and assets of the
Corporation; and (d) any voluntary dissolution of the Corporation.
Directors of the Corporation shall be elected by a plurality of the
votes cast by the holders of shares entitled to vote in the election of
directors of the Corporation at a meeting of shareholders at which a quorum is
present.
Except as otherwise provided in this Article Seven or as otherwise
required by the Texas Business Corporation Act or other applicable law, with
respect to any matter, the affirmative vote of the holders of a majority of the
Corporation's shares entitled to vote on that matter and represented in person
or by proxy at a meeting of shareholders at which a quorum is present shall be
the act of the shareholders.
Nothing contained in this Article Seven is intended to require
shareholder authorization or approval of any action of the Corporation
whatsoever unless such approval is specifically required by the other provisions
of these Articles of Incorporation, the bylaws of the Corporation, or by the
Texas Business Corporation Act or other applicable law.
ARTICLE EIGHT
-------------
The street office address of the Corporation's registered office is 318
Cadiz Street, Dallas, Texas 75207, and the name of its registered agent at such
address is James C. Williams.
7
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ARTICLE NINE
------------
Cumulative voting in the election of directors is expressly prohibited.
ARTICLE TEN
-----------
No shareholder of the Corporation will by reason of his holding shares
of stock of the Corporation have any preemptive rights to purchase or subscribe
to any shares of any class of stock of the Corporation, or any notes,
debentures, bonds, warrants, options or other securities of the Corporation, now
or hereafter to be authorized.
ARTICLE ELEVEN
--------------
The Corporation will not commence business until it has received for
the issuance of its shares consideration of the value of One Thousand Dollars
($1,000.00).
ARTICLE TWELVE
--------------
To the fullest extent permitted by applicable law, a director of the
Corporation shall not be liable to the Corporation or its shareholders for
monetary damages for an act or omission in the director's capacity as a
director, except that this Article Twelve does not eliminate or limit the
liability of a director of the Corporation to the extent the director is found
liable for:
(1) a breach of the director's duty of loyalty to the Corporation or its
shareholders;
(2) an act or omission not in good faith that constitutes a breach of duty
of the director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law;
(3) a transaction from which the director received an improper benefit,
whether or not the benefit resulted from an action taken within the scope of the
director's office; or
(4) an act or omission for which the liability of a director is expressly
provided by an applicable statute.
Any repeal or amendment of this Article Twelve by the shareholders of
the Corporation shall be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the Corporation arising
from an act or omission occurring prior to the time of such repeal or amendment.
In addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Twelve, a director shall not be liable to the Corporation or its shareholders to
such further extent as permitted by any law hereafter enacted, including without
limitation any subsequent amendment to the Texas Miscellaneous Corporation Laws
Act or the Texas Business Corporation Act.
8
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ARTICLE THIRTEEN
----------------
No contract or transaction between the Corporation and one or more of
its directors or officers, or between the Corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers or have a financial interest,
shall be void or voidable solely for this reason, solely because the director or
officer is present at or participates in the meeting of the Board of Directors
or committee thereof which authorizes the contract or transaction, or solely
because his or their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the Board of Directors or
the committee, and the Board of Directors or committee in good faith authorizes
the contract or transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or
(2) The material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the shareholders entitled
to vote thereon, and the contract or transaction is specifically approved in
good faith by vote of the shareholders; or
(3) The contract or transaction is fair as to the Corporation as of the
time it is authorized, approved, or ratified by the Board of Directors, a
committee thereof, or the shareholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of a committee
which authorizes the contract or transaction.
This provision shall not be construed to invalidate a contract or
transaction which would be valid in the absence of this provision or to subject
any director or officer to any liability that he would not be subject to in the
absence of this provision.
ARTICLE FOURTEEN
----------------
The Corporation shall indemnify any person who was, is, or is
threatened to be made a named defendant or respondent in a proceeding (as
hereinafter defined) because the person (i) is or was a director or officer of
the Corporation or (ii) while a director or officer of the Corporation, is or
was serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent that a corporation may grant indemnification to a director under
the Texas Business Corporation Act, as the same exists or may hereafter be
amended. Such right shall be a contract right and as such shall run to the
benefit of any director or officer who is elected and accepts the position of
director or officer of the Corporation or elects to continue to serve as a
director or officer of the Corporation while this Article Fourteen is in effect.
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Any repeal or amendment of this Article Fourteen shall be prospective only and
shall not limit the rights of any such director or officer or the obligations of
the Corporation with respect to any claim arising from or related to the
services of such director or officer in any of the foregoing capacities prior to
any such repeal or amendment of this Article Fourteen. Such right shall include
the right to be paid or reimbursed by the Corporation for expenses incurred in
defending any such proceeding in advance of its final disposition to the maximum
extent permitted under the Texas Business Corporation Act, as the same exists or
may hereafter be amended. If a claim for indemnification or advancement of
expenses hereunder is not paid in full by the Corporation within 90 days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense are not permitted under the Texas Business Corporation Act, but the
burden of proving such defense shall be on the Corporation. Neither the failure
of the Corporation (including its Board of Directors or any committee thereof,
special legal counsel, or shareholders) to have made its determination prior to
the commencement of such action that indemnification of, or advancement of costs
of defense to, the claimant is permissible in the circumstances nor an actual
determination by the Corporation (including its Board of Directors or any
committee thereof, special legal counsel, or shareholders) that such
indemnification or advancement is not permissible, shall be a defense to the
action or create a presumption that such indemnification or advancement is not
permissible. In the event of the death of any person having a right of
indemnification under the foregoing provisions, such right shall inure to the
benefit of his heirs, executors, administrators, and personal representatives.
The rights conferred above shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, bylaw, resolution of
shareholders or directors, agreement, or otherwise.
The Corporation may additionally indemnify any person covered by the
grant of mandatory indemnification contained above to such further extent as is
permitted by law and may indemnify any other person to the fullest extent
permitted by law.
To the extent permitted by then applicable law, the grant of mandatory
indemnification to any person pursuant to this Article Fourteen shall extend to
proceedings involving the negligence of such person.
As used herein, the term "proceeding" means any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an action,
suit, or proceeding.
10
<PAGE>
EXECUTED this ______ day of _________________, 1998.
ALFORD REFRIGERATED WAREHOUSES, INC.
By:
---------------------------------
James C. Williams, Vice President
11
AMENDED AND RESTATED BYLAWS
OF
ALFORD REFRIGERATED WAREHOUSES, INC.
November 23, 1998
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
TABLE OF CONTENTS
Page
PREAMBLE
ARTICLE ONE: OFFICES
1.01 Registered Office and Agent........................................................................ 1
1.02 Other Offices...................................................................................... 1
ARTICLE TWO: SHAREHOLDERS
2.01 Annual Meetings.................................................................................... 1
2.02 Special Meetings................................................................................... 1
2.03 Place of Meetings.................................................................................. 2
2.04 Notice............................................................................................. 2
2.05 Voting List........................................................................................ 2
2.06 Voting of Shares................................................................................... 2
2.07 Quorum............................................................................................. 2
2.08 Majority Vote; Withdrawal of Quorum................................................................ 3
2.09 Method of Voting; Proxies.......................................................................... 3
2.10 Closing of Transfer Books; Record Date............................................................. 3
2.11 Officers Duties at Meeting......................................................................... 4
ARTICLE THREE: DIRECTORS
3.01 Management......................................................................................... 4
3.02 Number; Election; Term; Qualification.............................................................. 4
3.03 Changes in Number.................................................................................. 4
3.04 Removal............................................................................................ 5
3.05 Vacancies.......................................................................................... 5
3.06 Place of Meetings.................................................................................. 5
3.07 First Meeting...................................................................................... 5
3.08 Regular Meetings................................................................................... 5
3.09 Special Meetings; Notice........................................................................... 5
3.10 Quorum; Majority Vote.............................................................................. 5
3.11 Procedure; Minutes................................................................................. 6
3.12 Presumption of Assent.............................................................................. 6
3.13 Compensation....................................................................................... 6
ARTICLE FOUR: COMMITTEES
4.01 Designation........................................................................................ 6
4.02 Number; Qualification; Term........................................................................ 6
4.03 Authority.......................................................................................... 6
4.04 Committee Changes; Removal......................................................................... 7
4.05 Regular Meetings................................................................................... 7
4.06 Special Meetings................................................................................... 7
4.07 Quorum; Majority Vote.............................................................................. 7
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4.08 Minutes............................................................................................ 8
4.09 Compensation....................................................................................... 8
4.10 Responsibility..................................................................................... 8
ARTICLE FIVE: GENERAL PROVISIONS RELATING TO MEETINGS
5.01 Notice............................................................................................. 8
5.02 Waiver of Notice.................................................................................... 8
5.03 Telephone and Similar Meetings...................................................................... 8
5.04 Action Without Meeting.............................................................................. 9
ARTICLE SIX: OFFICERS AND OTHER AGENTS
6.01 Number; Titles; Election; Term; Qualification....................................................... 9
6.02 Removal............................................................................................. 9
6.03 Vacancies........................................................................................... 9
6.04 Authority........................................................................................... 9
6.05 Compensation........................................................................................10
6.06 Chairman of the Board.............................................................................. 10
6.07 President.......................................................................................... 10
6.08 Vice Presidents.................................................................................... 10
6.09 Treasurer.......................................................................................... 10
6.10 Assistant Treasurers............................................................................... 10
6.11 Secretary.......................................................................................... 11
6.12 Assistant Secretaries.............................................................................. 11
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.01 Certificated and Uncertificated Shares............................................................. 11
7.02 Certificates for Certificated Shares............................................................... 11
7.03 Issuance........................................................................................... 12
7.04 Consideration for Shares........................................................................... 12
7.05 Lost, Stolen, or Destroyed Certificates............................................................ 12
7.06 Transfer of Shares................................................................................. 13
7.07 Registered Shareholders............................................................................ 13
7.08 Legends............................................................................................ 13
7.09 Regulations........................................................................................ 13
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.01 Dividends.......................................................................................... 14
8.02 Reserves........................................................................................... 14
8.03 Books and Records.................................................................................. 14
8.04 Fiscal Year........................................................................................ 14
8.05 Seal............................................................................................... 14
8.06 Attestation by the Secretary....................................................................... 14
8.07 Resignation........................................................................................ 14
8.08 Securities of Other Corporations................................................................... 15
8.09 Amendment of Bylaws................................................................................ 15
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8.10 Invalid Provisions................................................................................. 15
8.11 Headings; Table of Contents........................................................................ 15
</TABLE>
iii
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
ALFORD REFRIGERATED WAREHOUSES, INC.
A Texas Corporation
PREAMBLE
These amended and restated bylaws (these "bylaws") are subject to, and
governed by, the Texas Business Corporation Act and the articles of
incorporation of Alford Refrigerated Warehouses, Inc. (the "Corporation"). In
the event of a direct conflict between the provisions of these bylaws and the
mandatory provisions of the Texas Business Corporation Act or the provisions of
the articles of incorporation of the Corporation, such provisions of the Texas
Business Corporation Act or the articles of incorporation of the Corporation, as
the case may be, will be controlling.
ARTICLE ONE: OFFICES
1.01 Registered Office and Agent. The registered office and registered
agent of the Corporation shall be as designated from time to time by the
appropriate filing by the Corporation in the office of the Secretary of State of
Texas.
1.02 Other Offices. The Corporation may also have offices at such other
places, both within and without the State of Texas, as the board of directors
may from time to time determine or the business of the Corporation may require.
ARTICLE TWO: SHAREHOLDERS
2.01 Annual Meetings. An annual meeting of shareholders of the
Corporation shall be held during each calendar year on such date and at such
time as shall be designated from time to time by the board of directors and
stated in the notice of the meeting, if not a legal holiday in the place where
the meeting is to be held, and, if a legal holiday in such place, then on the
next business day following, at the time specified in the notice of the meeting.
At such meeting, the shareholders shall elect directors and transact such other
business as may properly be brought before the meeting.
2.02 Special Meetings. A special meeting of the shareholders may be
called at any time by the president, the board of directors, or the holders of
not less than ten percent of all shares entitled to vote at such meeting. Only
business within the purpose or purposes described in the notice of special
meeting may be conducted at such special meeting.
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2.03 Place of Meetings. The annual meeting of shareholders may be held
at any place within or without the State of Texas designated by the board of
directors. Special meetings of shareholders may be held at any place within or
without the State of Texas designated by the person or persons calling such
special meeting as provided in Section 2.02 above. Meetings of shareholders
shall be held at the principal office of the Corporation unless another place is
designated for meetings in the manner provided herein.
2.04 Notice. Except as otherwise provided by law, written or printed
notice stating the place, day, and hour of each meeting of the shareholders and,
in case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten nor more than sixty days before the
date of the meeting by or at the direction of the president, the secretary, or
the person calling the meeting, to each shareholder of record entitled to vote
at such meeting.
2.05 Voting List. At least ten days before each meeting of
shareholders, the secretary shall prepare a complete list of shareholders
entitled to vote at such meeting, arranged in alphabetical order, including the
address of each shareholder and the number of voting shares held by each
shareholder. For a period of ten days prior to such meeting, such list shall be
kept on file at the registered office of the Corporation and shall be subject to
inspection by any shareholder during usual business hours. Such list shall be
produced at such meeting, and at all times during such meeting shall be subject
to inspection by any shareholder. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to examine such
list.
2.06 Voting of Shares. Treasury shares, shares of the Corporation's own
stock owned by another corporation the majority of the voting stock of which is
owned or controlled by the Corporation, and shares of the Corporation's own
stock held by the Corporation in a fiduciary capacity shall not be shares
entitled to vote or to be counted in determining the total number of outstanding
shares. Shares standing in the name of another domestic or foreign corporation
of any type or kind may be voted by such officer, agent, or proxy as the bylaws
of such corporation may authorize or, in the absence of such authorization, as
the board of directors of such corporation may determine. Shares held by an
administrator, executor, guardian, or conservator may be voted by him, either in
person or by proxy, without transfer of such shares into his name so long as
such shares form a part of the estate served by him and are in the possession of
such estate. Shares held by a trustee may be voted by him, either in person or
by proxy, only after the shares have been transferred into his name as trustee.
Shares standing in the name of a receiver may be voted by such receiver, and
shares held by or under the control of a receiver may be voted by such receiver
without transfer of such shares into his name if authority to do so is contained
in the court order by which such receiver was appointed. A shareholder whose
shares are pledged shall be entitled to vote such shares until they have been
transferred into the name of the pledgee, and thereafter, the pledgee shall be
entitled to vote such shares.
2.07 Quorum. The holders of a majority of the outstanding shares
entitled to vote, present in person or represented by proxy, shall constitute a
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quorum at any meeting of notice of special meeting may be conducted at such
special meeting. shareholders, except as otherwise provided by law, the articles
of incorporation, or these bylaws. If a quorum shall not be present or
represented at any meeting of shareholders, a majority of the shareholders
entitled to vote at the meeting, who are present in person or represented by
proxy, may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
any reconvening of an adjourned meeting at which a quorum shall be present or
represented by proxy, any business may be transacted which could have been
transacted at the original meeting, if a quorum had been present or represented.
2.08 Majority Vote; Withdrawal of Quorum. If a quorum is present in
person or represented by proxy at any meeting, the vote of the holders of a
majority of the outstanding shares entitled to vote, present in person or
represented by proxy, shall decide any question brought before such meeting,
unless the question is one on which, by express provision of law, the articles
of incorporation, or these bylaws, a different vote is required, in which event
such express provision shall govern and control the decision of such question.
The shareholders present at a duly convened meeting may continue to transact
business until adjournment, notwithstanding any withdrawal of shareholders which
may leave less than a quorum remaining.
2.09 Method of Voting; Proxies. Every shareholder of record shall be
entitled at every meeting of shareholders to one vote on each matter submitted
to a vote, for every share standing in his name on the original stock transfer
books of the Corporation except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the articles of
incorporation. Such stock transfer books shall be prima facie evidence as to the
identity of shareholders entitled to vote. At any meeting of shareholders, every
shareholder having the right to vote may vote either in person or by a proxy
executed in writing by the shareholder or by his duly authorized
attorney-in-fact. Each such proxy shall be filed with the secretary of the
Corporation before, or at the time of, the meeting. No proxy shall be valid
after eleven months from the date of its execution, unless otherwise provided in
the proxy. If no date is stated on a proxy, such proxy shall be presumed to have
been executed on the date of the meeting at which it is to be voted. Each proxy
shall be revocable unless the proxy form conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest.
2.10 Closing of Transfer Books; Record Date. For the purpose of
determining shareholders entitled to notice of, or to vote at, any meeting of
shareholders or any reconvening thereof, or entitled to receive a distribution
(other than a distribution involving a purchase or redemption by the Corporation
of any of its own shares) or a share dividend, or in order to make a
determination of shareholders for any other proper purpose, the board of
directors may provide that the stock transfer books of the Corporation shall be
closed for a stated period but not to exceed in any event sixty days. If the
stock transfer books are closed for the purpose of determining shareholders
entitled to notice of, or to vote at, a meeting of shareholders, such books
shall be closed for at least ten days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
3
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If the stock transfer books are not closed and if no record date is fixed for
the determination of shareholders entitled to notice of, or to vote at, a
meeting of shareholders or entitled to receive a distribution (other than a
distribution involving a purchase or redemption by the Corporation of any of its
own shares) or a share dividend, the date on which the notice of the meeting is
mailed or the date on which the resolution of the board of directors declaring
such distribution or share dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders.
2.11 Officers Duties at Meetings. The president shall preside at, and
the secretary shall prepare minutes of, each meeting of shareholders, and in the
absence of either such officer, his duties shall be performed by some person or
persons elected by the vote of the holders of a majority of the outstanding
shares entitled to vote, present in person or represented by proxy.
ARTICLE THREE: DIRECTORS
3.01 Management. The business and property of the Corporation shall be
managed by the board of directors, and subject to the restrictions imposed by
law, the articles of incorporation, or these bylaws, the board of directors may
exercise all the powers of the Corporation.
3.02 Number; Election; Term; Qualification. The number of directors
which shall constitute the board of directors shall be not less than one. The
first board of directors shall consist of the number of directors named in the
articles of incorporation. Thereafter, the number of directors which shall
constitute the entire board of directors shall be determined by resolution of
the board of directors at any meeting thereof or by the shareholders at any
meeting thereof, but shall never be less than one. At each annual meeting of
shareholders, directors shall be elected to hold office until the next annual
meeting of shareholders and until their successors are elected and qualified. No
director need be a shareholder, a resident of the State of Texas, or a citizen
of the United States.
3.03 Changes in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director. Any directorship to be filled by reason of
an increase in the number of directors may be filled by (i) the shareholders at
any annual or special meeting of shareholders called for that purpose or (ii)
the board of directors for a term of office continuing only until the next
election of one or more directors by the shareholders; provided that the board
of directors may not fill more than two such directorships during the period
between any two successive annual meetings of shareholders. Notwithstanding the
foregoing, whenever the holders of any class or series of shares are entitled to
elect one or more directors by the provisions of the articles of incorporation,
any newly created directorship(s) of such class or series to be filled by reason
of an increase in the number of such directors may be filled by the affirmative
vote of a majority of the directors elected by such class or series then in
office or by a sole remaining director so elected or by the vote of the holders
of the outstanding shares of such class or series, and such directorship(s)
shall not in any case be filled by the vote of the remaining directors or by the
holders of the outstanding shares of the Corporation as a whole unless otherwise
provided in the articles of incorporation.
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3.04 Removal. At any meeting of shareholders called expressly for that
purpose, any director or the entire board of directors may be removed, with or
without cause, by a vote of the holders of a majority of the shares then
entitled to vote on the election of directors.
3.05 Vacancies. Any vacancy occurring in the board of directors may be
filled by (i) the shareholders at any annual or special meeting of shareholders
called for that purpose or (ii) the affirmative vote of a majority of the
remaining directors though less than a quorum of the board of directors. A
director elected to fill a vacancy shall be elected to serve for the unexpired
term of his predecessor in office. Notwithstanding the foregoing, whenever the
holders of any class or series of shares are entitled to elect one or more
directors by the provisions of the articles of incorporation, any vacancies in
such directorship(s) may be filled by the affirmative vote of a majority of the
directors elected by such class or series then in office or by a sole remaining
director so elected or by the vote of the holders of the outstanding shares of
such class or series, and such directorship(s) shall not in any case be filled
by the vote of the remaining directors or the holders of the outstanding shares
of the Corporation as a whole unless otherwise provided in the articles of
incorporation.
3.06 Place of Meetings. The board of directors may hold its meetings
and may have an office and keep the books of the Corporation, except as
otherwise provided by law, in such place or places within or without the State
of Texas as the board of directors may from time to time determine.
3.07 First Meeting. Each newly elected board of directors may hold its
first meeting for the purpose of organization and the transaction of business,
if a quorum is present, immediately after and at the same place as the annual
meeting of shareholders, and notice of such meeting shall not be necessary.
3.08 Regular Meetings. Regular meetings of the board of directors may
be held without notice at such times and places as may be designated from time
to time by resolution of the board of directors and communicated to all
directors.
3.09 Special Meetings; Notice. Special meetings of the board of
directors shall be held whenever called by the president or by any director. The
person calling any special meeting shall cause notice of such special meeting,
including therein the time and place of such special meeting, to be given to
each director at least two days before such special meeting. Neither the
business to be transacted at, nor the purpose of, any special meeting of the
board of directors need be specified in the notice or waiver of notice of any
special meeting.
3.10 Quorum; Majority Vote. At all meetings of the board of directors,
a majority of the directors, fixed in the manner provided in these bylaws, shall
constitute a quorum for the transaction of business. If a quorum is not present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the directors present at a meeting
at which a quorum is in attendance shall be the act of the board of directors,
unless the act of a greater number is required by law, the articles of
incorporation, or these bylaws.
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3.11 Procedure; Minutes. At meetings of the board of directors,
business shall be transacted in such order as the board of directors may
determine from time to time. The board of directors shall appoint at each
meeting a person to preside at the meeting and a person to act as secretary of
the meeting. The secretary of the meeting shall prepare minutes of the meeting
which shall be delivered to the secretary of the Corporation for placement in
the minute books of the Corporation.
3.12 Presumption of Assent. A director of the Corporation who is
present at any meeting of the board of directors at which action on any matter
is taken shall be presumed to have assented to the action unless his dissent
shall be entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as secretary of the
meeting before the adjournment thereof or shall forward any dissent by certified
or registered mail to the secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
3.13 Compensation. Directors, in their capacity as directors, may
receive, by resolution of the board of directors, a fixed sum and expenses of
attendance, if any, for attending meetings of the board of directors or a stated
salary. No director shall be precluded from serving the Corporation in any other
capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.01 Designation. The board of directors may, by resolution adopted by
a majority of the entire board of directors, designate executive and other
committees.
4.02 Number; Qualification; Term. Each committee shall consist of one
or more directors appointed by resolution adopted by a majority of the entire
board of directors. The number of committee members may be increased or
decreased from time to time by resolution adopted by a majority of the entire
board of directors. Each committee member shall serve as such until the earliest
of (i) the expiration of his term as director, (ii) his resignation as a
committee member or as a director, or (iii) his removal, as a committee member
or as a director.
4.03 Authority. Each committee, to the extent expressly provided in the
resolution establishing such committee, shall have and may exercise all of the
authority of the board of directors in the management of the business and
property of the Corporation, including, without limitation, the power and
authority to declare a dividend and to authorize the issuance of shares of the
Corporation. Notwithstanding the foregoing, however, no committee shall have the
authority of the board of directors in reference to:
(a) amending the articles of incorporation;
(b) approving a plan of merger or consolidation;
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(c) recommending to the shareholders the sale, lease, or
exchange of all or substantially all of the property
and assets of the Corporation otherwise than in the
usual and regular course of its business;
(d) recommending to the shareholders a voluntary dissolu-
tion of the Corporation or a revocation thereof;
(e) amending, altering, or repealing these bylaws or
adopting new bylaws;
(f) filling vacancies in the board of directors or of any
committee;
(g) filling any directorship to be filled by reason of an
increase in the number of directors;
(h) electing or removing officers or committee members;
(i) fixing the compensation of any committee member; or
(j) altering or repealing any resolution of the board of
directors which by its terms provides that it shall
not be amendable or repealable.
4.04 Committee Changes; Removal. The board of directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee. However, a committee member may be removed by the board
of directors, only if, in the judgment of the board of directors, the best
interests of the Corporation will be served thereby.
4.05 Regular Meetings. Regular meetings of any committee may be held
without notice at such time and place as may be designated from time to time by
the committee and communicated to all members thereof.
4.06 Special Meetings. Special meetings of any committee may be held
whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee member
at least two days before such special meeting. Neither the business to be
transacted at, nor the purpose of, any special meeting of any committee need be
specified in the notice or waiver of notice of any special meeting.
4.07 Quorum; Majority Vote. At meetings of any committee, a majority of
the number of members designated by the board of directors shall constitute a
quorum for the transaction of business. If a quorum is not present at a meeting
of any committee, a majority of the members present may adjourn the meeting from
time to time, without notice other than an announcement at the meeting, until a
quorum is present. The act of a majority of the members present at any meeting
at which a quorum is in attendance shall be the act of a committee, unless the
act of a greater number is required by law, the articles of incorporation, or
these bylaws.
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4.08 Minutes. Each committee shall cause minutes of its proceedings to
be prepared and shall report the same to the board of directors upon the request
of the board of directors. The minutes of the proceedings of each committee
shall be delivered to the secretary of the Corporation for placement in the
minute books of the Corporation.
4.09 Compensation. Committee members may, by resolution of the board of
directors, be allowed a fixed sum and expenses of attendance, if any, for
attending any committee meetings or a stated salary.
4.10 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such director
by law.
ARTICLE FIVE: GENERAL PROVISIONS RELATING TO MEETINGS
5.01 Notice. Whenever by law, the articles of incorporation, or these
bylaws, notice is required to be given to any committee member, director, or
shareholder and no provision is made as to how such notice shall be given, it
shall be construed to mean that any such notice may be given (a) in person, (b)
in writing, by mail, postage prepaid, addressed to such committee member,
director, or shareholder at his address as it appears on the books of the
Corporation or, in the case of a shareholder, the stock transfer records of the
Corporation, or (c) by any other method permitted by law. Any notice required or
permitted to be given by mail shall be deemed to be delivered and given at the
time when the same is deposited in the United States mail, postage prepaid, and
addressed as aforesaid. Any notice required or permitted to be given by
telegram, telex, cable, telecopier, or similar means shall be deemed to be
delivered and given at the time transmitted with all charges prepaid and
addressed as aforesaid.
5.02 Waiver of Notice. Whenever by law, the articles of incorporation,
or these bylaws, any notice is required to be given to any committee member,
shareholder, or director of the Corporation, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the
time notice should have been given, shall be equivalent to the giving of such
notice. Attendance of a committee member, shareholder, or director at a meeting
shall constitute a waiver of notice of such meeting, except where such person
attends for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
5.03 Telephone and Similar Meetings. Shareholders, directors, or
committee members may participate in and hold a meeting by means of a conference
telephone or similar communications equipment by means of which persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
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5.04 Action Without Meeting. Any action which may be taken, or is
required by law, the articles of incorporation, or these bylaws to be taken, at
a meeting of shareholders, the directors, or any committee members may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders, directors, or committee members, as
the case may be, entitled to vote with respect to the subject matter thereof,
and such consent shall have the same force and effect, as of the date stated
therein, as a unanimous vote of such shareholders, directors, or committee
members, as the case may be, and may be stated as such in any document filed
with the Secretary of State of Texas or in any certificate or other document
delivered to any person. The consent may be in one or more counterparts so long
as each shareholder, director, or committee member signs one of the
counterparts. The signed consent shall be placed in the minute books of the
Corporation.
ARTICLE SIX: OFFICERS AND OTHER AGENTS
6.01 Number; Titles; Election; Term; Qualification. The officers of the
Corporation shall be a president and secretary, and if the board of directors
determines appropriate, one or more vice presidents (and, in the case of each
vice president, with such descriptive title, if any, as the board of directors
shall determine), and a treasurer. The Corporation may also have a chairman of
the board, one or more assistant treasurers, one or more assistant secretaries,
and such other officers and such agents as the board of directors may from time
to time elect or appoint. The board of directors shall elect a president and
secretary and such other officers as it deems appropriate at its first meeting
at which a quorum shall be present after the annual meeting of shareholders or
whenever a vacancy exists. The board of directors then, or from time to time,
may also elect or appoint one or more other officers or agents as it shall deem
advisable. Each officer and agent shall hold office for the term for which he is
elected or appointed and until his successor has been elected or appointed and
qualified. Any person may hold any number of offices. No officer or agent need
be a shareholder, a director, a resident of the State of Texas, or a citizen of
the United States.
6.02 Removal. Any officer or agent elected or appointed by the board of
directors may be removed by the board of directors whenever in its judgment the
best interest of the Corporation will be served thereby, but such removal shall
be without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.
6.03 Vacancies. Any vacancy occurring in any office of the Corporation
may be filled by the board of directors.
6.04 Authority. Officers shall have such authority and perform such
duties in the management of the Corporation as are provided in these bylaws or
as may be determined by resolution of the board of directors not inconsistent
with these bylaws.
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6.05 Compensation. The compensation, if any, of officers and agents
shall be fixed from time to time by the board of directors; provided, that the
board of directors may by resolution delegate to any one or more officers of the
Corporation the authority to fix such compensation.
6.06 Chairman of the Board. The chairman of the board shall have such
powers and duties as may be prescribed by the board of directors.
6.07 President. Unless and to the extent that such powers and duties
are expressly delegated to a chairman of the board by the board of directors,
the president shall be the chief executive officer of the Corporation and,
subject to the supervision of the board of directors, shall have general
management and control of the business and property of the Corporation in the
ordinary course of its business with all such powers with respect to such
general management and control as may be reasonably incident to such
responsibilities, including, but not limited to, the power to employ, discharge,
or suspend employees and agents of the Corporation, to fix the compensation of
employees and agents, and to suspend, with or without cause, any officer of the
Corporation pending final action by the board of directors with respect to
continued suspension, removal, or reinstatement of such officer. The president
may, without limitation, agree upon and execute all division and transfer
orders, bonds, contracts, and other obligations in the name of the Corporation.
6.08 Vice Presidents. Each vice president shall have such powers and
duties as may be prescribed by the board of directors or as may be delegated
from time to time by the president and (in the order as designated by the board
of directors, or in the absence of such designation, as determined by the length
of time each has held the office of vice president continuously) shall exercise
the powers of the president during that officer's absence or inability to act.
As between the Corporation and third parties, any action taken by a vice
president in the performance of the duties of the president shall be conclusive
evidence of the absence or inability to act of the president at the time such
action was taken.
6.09 Treasurer. The treasurer shall have custody of the Corporation's
funds and securities, shall keep full and accurate accounts of receipts and
disbursements, and shall deposit all moneys and valuable effects in the name and
to the credit of the Corporation in such depository or depositories as may be
designated by the board of directors. The treasurer shall audit all payrolls and
vouchers of the Corporation, receive, audit, and consolidate all operating and
financial statements of the Corporation and its various departments, shall
supervise the accounting and auditing practices of the Corporation, and shall
have charge of matters relating to taxation. Additionally, the treasurer shall
have the power to endorse for deposit, collection, or otherwise all checks,
drafts, notes, bills of exchange, and other commercial paper payable to the
Corporation and to give proper receipts and discharges for all payments to the
Corporation. The treasurer shall perform such other duties as may be prescribed
by the board of directors or as may be delegated from time to time by the
president.
6.10 Assistant Treasurers. Each assistant treasurer shall have such
powers and duties as may be prescribed by the board of directors or as may be
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delegated from time to time by the president. The assistant treasurers (in the
order as designated by the board of directors or, in the absence of such
designation, as determined by the length of time each has held the office of
assistant treasurer continuously) shall exercise the powers of the treasurer
during that officer's absence or inability to act. As between the Corporation
and third parties, any action taken by an assistant treasurer in the performance
of the duties of the treasurer shall be conclusive evidence of the absence or
inability to act of the treasurer at the time such action was taken.
6.11 Secretary. The secretary shall maintain minutes of all meetings of
the board of directors, of any committee, and of the shareholders or consents in
lieu of such minutes in the Corporation's minute books, and shall cause notice
of such meetings to be given when requested by any person authorized to call
such meetings. The secretary may sign with the president, in the name of the
Corporation, all contracts of the Corporation and affix the seal of the
Corporation thereto. The secretary shall have charge of the certificate books,
stock transfer books, stock ledgers, and such other stock books and papers as
the board of directors may direct, all of which shall at all reasonable times be
open to inspection by any director at the office of the Corporation during
business hours. The secretary shall perform such other duties as may be
prescribed by the board of directors or as may be delegated from time to time by
the president.
6.12 Assistant Secretaries. Each assistant secretary shall have such
powers and duties as may be prescribed by the board of directors or as may be
delegated from time to time by the president. The assistant secretaries (in the
order designated by the board of directors or, in the absence of such
designation, as determined by the length of time each has held the office of
assistant secretary continuously) shall exercise the powers of the secretary
during that officer's absence or inability to act. As between the Corporation
and third parties, any action taken by an assistant secretary in the performance
of the duties of the secretary shall be conclusive evidence of the absence or
inability to act of the secretary at the time such action was taken.
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.01 Certificated and Uncertificated Shares. The shares of the
Corporation may be either certificated shares or uncertificated shares. As used
herein, the term "certificated shares" means shares represented by instruments
in bearer or registered form, and the term "uncertificated shares" means shares
not represented by instruments and the transfers of which are registered upon
books maintained for that purpose by or on behalf of the Corporation.
7.02 Certificates for Certificated Shares. The certificates
representing certificated shares of stock of the Corporation shall be in such
form as shall be approved by the board of directors in conformity with law. The
certificates shall be consecutively numbered, shall be entered as they are
issued in the books of the Corporation or in the records of the Corporation's
designated transfer agent, if any, and shall state upon the face thereof: (a)
that the Corporation is organized under the laws of the State of Texas; (b) the
name of the person to whom issued; (c) the number and class of shares and the
designation of the series, if any, which such certificate represents; (d) the
par value of each share represented by such certificate, or a statement that the
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shares are without par value; and (e) such other matters as may be required by
law. The certificates shall be signed by the president or any vice president and
also by the secretary, an assistant secretary, or any other officer; however,
the signatures of any of such officers may be facsimiles. The certificates may
be sealed with the seal of the Corporation or a facsimile thereof.
7.03 Issuance. Shares with or without par value may be issued for such
consideration and to such persons as the board of directors may from time to
time determine, except in the case of shares with par value the consideration
must be at least equal to the par value of such shares. Shares may not be issued
until the full amount of the consideration has been paid. After the issuance of
uncertificated shares, the Corporation or the transfer agent of the Corporation
shall send to the registered owner of such uncertificated shares a written
notice containing the information required to be stated on certificates
representing shares of stock as set forth in Section 7.02 above and such
additional information as may be required by Article 2.19 of the Texas Business
Corporation Act as currently in effect and as the same may be amended from time
to time hereafter.
7.04 Consideration for Shares. The consideration for the issuance of
shares shall consist of money paid, labor done (including services actually
performed for the Corporation), or property (tangible or intangible) actually
received. Neither promissory notes nor the promise of future services shall
constitute payment or part payment for the issuance of shares. In the absence of
fraud in the transaction, the judgment of the board of directors as to the value
of consideration received shall be conclusive. When consideration, fixed as
provided by law, has been paid, the shares shall be deemed to have been issued
and shall be considered fully paid and nonassessable. The consideration received
for shares shall be allocated by the board of directors, in accordance with law,
between stated capital and capital surplus accounts.
7.05 Lost, Stolen, or Destroyed Certificates. The Corporation shall
issue a new certificate or certificates in place of any certificate representing
shares previously issued if the registered owner of the certificate:
(a) Claim. Makes proof by affidavit, in form and
substance satisfactory to the board of directors,
that a previously issued certificate representing
shares has been lost, destroyed, or stolen;
(b) Timely Request. Requests the issuance of a new
certificate before the Corporation has notice that
the certificate has been acquired by a purchaser for
value in good faith and without notice of an adverse
claim;
(c) Bond. Delivers to the Corporation a bond in such
form, with such surety or sureties, and with such
fixed or open penalty, as the board of directors may
direct, in its discretion, to indemnify the
Corporation (and its transfer agent and registrar, if
any) against any claim that may be made on account of
the alleged loss, destruction, or theft of the
certificate; and
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(d) Other Requirements. Satisfies any other reasonable
requirements imposed by the board of directors.
7.06 Transfer of Shares. Shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the shareholders thereof in
person or by their duly authorized attorneys or legal representatives. With
respect to certificated shares, upon surrender to the Corporation or the
transfer agent of the Corporation for transfer of a certificate representing
shares duly endorsed and accompanied by any reasonable assurances that such
endorsements are genuine and effective as the Corporation may require and after
compliance with any applicable law relating to the collection of taxes, the
Corporation or its transfer agent shall, if it has no notice of an adverse claim
or if it has discharged any duty with respect to any adverse claim, issue one or
more new certificates to the person entitled thereto, cancel the old
certificate, and record the transaction upon its books. With respect to
uncertificated shares, upon delivery to the Corporation or the transfer agent of
the Corporation of an instruction originated by an appropriate person (as
prescribed by ss.8.107 of the Texas Uniform Commercial Code as currently in
effect and as the same may be amended from time to time hereafter) and
accompanied by any reasonable assurances that such instruction is genuine and
effective as the Corporation may require and after compliance with any
applicable law relating to the collection of taxes, the Corporation or its
transfer agent shall, if it has no notice of an adverse claim or has discharged
any duty with respect to any adverse claim, record the transaction upon its
books, and shall send to the new registered owner of such uncertificated shares,
and, if the shares have been transferred subject to a registered pledge, to the
registered pledgee, a written notice containing the information required to be
stated on certificates representing shares of stock set forth in Section 7.02
above and such additional information as may be required by Article 2.19 of the
Texas Business Corporation Act as currently in effect and as the same may be
amended from time to time hereafter.
7.07 Registered Shareholders. The Corporation shall be entitled to
treat the shareholder of record as the shareholder in fact of any shares and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall
have actual or other notice thereof, except as otherwise provided by law.
7.08 Legends. The board of directors shall cause an appropriate legend
to be placed on certificates representing shares of stock as may be deemed
necessary or desirable by the board of directors in order for the Corporation to
comply with applicable federal or state securities or other laws.
7.09 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as it may deem expedient
concerning the issue, transfer, registration, or replacement of certificates
representing shares of stock of the Corporation.
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ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.01 Dividends. Subject to provisions of applicable statutes and the
articles of incorporation, dividends may be declared by and at the discretion of
the board of directors at any meeting and may be paid in cash, in property, or
in shares of stock of the Corporation.
8.02 Reserves. The board of directors may create out of funds of the
Corporation legally available therefor such reserve or reserves out of the
Corporation's surplus as the board of directors from time to time, in its
discretion, considers proper to provide for contingencies, to equalize
dividends, to repair or maintain any property of the Corporation, or for such
other purpose as the board of directors shall consider beneficial to the
Corporation. The board of directors may modify or abolish any such reserve.
8.03 Books and Records. The Corporation shall keep correct and complete
books and records of account, shall keep minutes of the proceedings of its
shareholders, board of directors, and any committee, and shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its shareholders, giving the names and
addresses of all shareholders and the number and class of the shares held by
each shareholder.
8.04 Fiscal Year. The fiscal year of the Corporation shall be fixed by
the board of directors; provided, that if such fiscal year is not fixed by the
board of directors and the board of directors does not defer its determination
of the fiscal year, the fiscal year shall be the calendar year.
8.05 Seal. The seal, if any, of the Corporation shall be in such form
as may be approved from time to time by the board of directors. If the board of
directors approves a seal, the affixation of such seal shall not be required to
create a valid and binding obligation against the Corporation.
8.06 Attestation by the Secretary. With respect to any deed, deed of
trust, mortgage, or other instrument executed by the Corporation through its
duly authorized officer or officers, the attestation to such execution by the
secretary of the Corporation shall not be necessary to constitute such deed,
deed of trust, mortgage, or other instrument a valid and binding obligation
against the Corporation unless the resolutions, if any, of the board of
directors authorizing such execution expressly state that such attestation is
necessary.
8.07 Resignation. Any director, committee member, officer, or agent may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the president, or the secretary. Such
resignation shall take effect at the time specified in the statement at the
board of directors' meeting or in the written notice, but in no event may the
effective time of such resignation be prior to the time such statement is made
or such notice is given. If no effective time is specified in the resignation,
the resignation shall be effective immediately. Unless a resignation specifies
otherwise, it shall be effective without being accepted.
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8.08 Securities of Other Corporations. The president or any vice
president of the Corporation shall have the power and authority to transfer,
endorse for transfer, vote, consent, or take any other action with respect to
any securities of another issuer which may be held or owned by the Corporation
and to make, execute, and deliver any waiver, proxy, or consent with respect to
any such securities.
8.09 Amendment of Bylaws. The power to amend or repeal these bylaws or
to adopt new bylaws is vested in the board of directors, but is subject to the
right of the shareholders to amend or repeal these bylaws or to adopt new
bylaws.
8.10 Invalid Provisions. If any part of these bylaws is held invalid or
inoperative for any reason, the remaining parts, so far as is possible and
reasonable, shall remain valid and operative.
8.11 Headings; Table of Contents. The headings and table of contents
used in these bylaws are for convenience only and do not constitute matter to be
construed in the interpretation of these bylaws.
The undersigned, the secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by the board of directors of the
Corporation as of November 23, 1998.
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James C. Williams, Secretary
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