<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the Quarterly Period Ended: August 31, 1999
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________________ to ____________________
Commission File Number 0-2733
AZTEC MANUFACTURING CO.
(Exact name of registrant as specified in its charter)
TEXAS 75-0948250
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
400 North Tarrant, Crowley, Texas 76036
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (817) 297-4361
-----------------------------
NONE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ______
-----
Indicate the number of outstanding of each of the issuer's classes of common
stock, as of the close of the period covered by this report.
Outstanding at August 31, 1999
Common Stock, $1.00 Par Value 4,748,944
----------------------------- ---------------------------
Class Number of Shares
<PAGE>
AZTEC MANUFACTURING CO.
INDEX
-----
PART I. Financial Information Page No.
--------------------- -------
Item 1. Financial Statements
Consolidated Condensed Balance Sheets at
August 31, 1999 and February 28, 1999 3
Consolidated Condensed Statements of Income for the
Periods Ended August 31, 1999 and August 31, 1998 4
Consolidated Condensed Statements of Cash Flow for the
Periods Ended August 31, 1999 and August 31, 1998 5
Notes to Consolidated Condensed Financial
Statements 6-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-10
PART II. Other Information
-----------------
Item 4. Submissions of Matters to a Vote of Security Holders 10-11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 11
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
AZTEC MANUFACTURING CO.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
08/31/99 02/28/99
ASSETS UNAUDITED AUDITED
- ------------------------- ----------------- ------------------
<S> <C> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 412,168 $ 800,183
ACCOUNTS RECEIVABLE (NET OF ALLOWANCE) 14,520,584 13,472,637
INVENTORIES:
RAW MATERIALS 6,828,776 7,306,510
WORK-IN-PROCESS 1,293,274 1,000,480
FINISHED GOODS 1,983,474 2,884,373
PREPAID EXPENSES AND OTHER 211,348 323,176
----------------- ------------------
TOTAL CURRENT ASSETS 25,249,624 25,787,359
LONG TERM INVESTMENT 200,000 200,000
PROPERTY, PLANT AND EQUIPMENT, NET 22,830,290 23,078,880
INTANGIBLE ASSETS, NET 8,678,017 8,989,573
OTHER ASSETS 337,049 343,149
----------------- ------------------
TOTAL ASSETS $ 57,294,980 $ 58,398,961
================= ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
LONG TERM DEBT DUE WITHIN ONE YEAR $ 3,135,238 $ 3,135,238
ACCOUNTS PAYABLE 5,227,516 3,826,238
ACCRUED LIABILITIES 4,793,535 3,792,596
----------------- ------------------
TOTAL CURRENT LIABILITIES 13,156,289 10,754,072
LONG-TERM DEBT DUE AFTER ONE YEAR 13,718,646 20,266,266
DEFERRED INCOME TAX 493,173 493,173
SHAREHOLDERS' EQUITY:
COMMON STOCK, $1 PAR VALUE
SHARES AUTHORIZED - 25,000,000
SHARES ISSUED - 6,304,580 6,304,580 6,304,580
CAPITAL IN EXCESS OF PAR VALUE 11,353,284 11,422,536
RETAINED EARNINGS 26,714,842 23,736,974
LESS COMMON STOCK HELD IN TREASURY
(1,555,636 AND 1,569,822 SHARES AT
COST RESPECTIVELY) (14,445,834) (14,578,640)
----------------- ------------------
TOTAL SHAREHOLDERS' EQUITY 29,926,872 26,885,450
----------------- ------------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 57,294,980 $ 58,398,961
================= ==================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
3
<PAGE>
AZTEC MANUFACTURING CO.
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
8/31/99 8/31/98 8/31/99 8/31/98
UNAUDITED UNAUDITED UNAUDITED UNAUDITED
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 20,986,466 $ 20,720,679 $ 41,657,087 $ 41,449,445
COSTS AND EXPENSES:
COST OF SALES 15,524,183 15,755,838 30,840,766 31,173,430
SELLING/G & A EXPENSE 2,637,142 2,465,495 5,347,352 4,986,845
INTEREST EXPENSE 321,838 231,889 674,933 459,997
OTHER (INCOME) EXPENSE (5,058) (44,890) 28,323 (4,592)
------------- ------------- ------------- -------------
18,478,105 18,408,332 36,891,374 36,615,680
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 2,508,361 2,312,347 4,765,713 4,833,765
PROVISION FOR INCOME TAXES 941,043 867,127 1,787,596 1,812,661
------------- ------------- ------------- -------------
NET INCOME $ 1,567,318 $ 1,445,220 $ 2,978,117 $ 3,021,104
============= ============= ============= =============
INCOME PER SHARE:
BASIC EARNINGS PER SHARE $ 0.33 $ 0.25 $ 0.63 $ 0.51
============= ============= ============= =============
DILUTED EARNINGS PER SHARE $ 0.33 $ 0.25 $ 0.63 $ 0.51
============= ============= ============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
4
<PAGE>
AZTEC MANUFACTURING CO.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS
ENDING
8/31/99 8/31/98
UNAUDITED UNAUDITED
------------- -------------
<S> <C> <C>
CASH FLOWS PROVIDED BY OPERATIONS:
NET INCOME $ 2,978,117 $ 3,021,104
ADJUSTMENTS TO RECONCILE NET INCOME TO
NET CASH PROVIDED BY OPERATIONS:
PROVISION FOR BAD DEBTS 83,581 74,909
AMORTIZATION AND DEPRECIATION 2,030,414 1,675,204
GAINS ON SALE OF PROPERTY (6,190) 0
INCREASE (DECREASE) FROM CHANGES IN ASSETS & LIABILITIES:
ACCOUNTS RECEIVABLE (1,131,528) 635,275
INVENTORIES 1,085,839 194,752
PREPAID EXPENSES 111,828 117,185
OTHER ASSETS 6,101 0
ACCOUNTS PAYABLE 1,401,278 (1,018,360)
ACCRUED LIABILITIES 1,000,939 (801,144)
------------- -------------
NET CASH PROVIDED BY OPERATIONS 7,560,379 3,898,925
------------- -------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
PURCHASE OF PROPERTY/PLANT/EQUIPMENT (1,464,078) (3,609,950)
------------- -------------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 63,553 34,903
NET CHANGES IN LONG TERM NOTES (6,547,620) 166,667
ADJUSTMENTS TO DIVIDENDS PAID (249) 1,050
PURCHASE OF TREASURY STOCK 0 (747,178)
------------- -------------
NET CASH USED FOR FINANCING ACTIVITIES (6,484,316) (544,558)
------------- -------------
DECREASE IN CASH & CASH EQUIVALENTS (388,015) (255,583)
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 800,183 765,912
------------- -------------
CASH & CASH EQUIVALENTS, END OF PERIOD $ 412,168 $ 510,329
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS.
5
<PAGE>
AZTEC MANUFACTURING CO.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
----------------------------------------------------
Summary of Significant Accounting Policies
------------------------------------------
1. A summary of the Company's significant accounting policies is presented on
Page 22, 23 and 24 of its 1999 Annual Shareholders' Report.
2. In the opinion of Management of the Company, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present fairly
the financial position of the Company as of August 31, 1999, and the
results of its operations and cash flows for the periods ended August 31,
1999 and 1998.
3. Earnings per share is based on the month-end average number of shares
outstanding during each year, adjusted for the dilutive effect of stock
options.
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three months ending August 31 Six months ending August 31
1999 1998 1999 1998
---------- ---------- ---------- ----------
(Dollars in thousands except earnings per share)
<S> <C> <C> <C> <C>
Numerator:
Net income for basic and diluted earnings
per common share $ 1,567 $ 1,445 $ 2,978 $ 3,021
Denominator:
Denominator for basic earnings per
common share -weighted average shares 4,744,941 5,904,850 4,741,853 5,915,266
Effect of dilutive securities:
Employee and Director stock options 29,951 24,374 18,476 62,762
---------- ---------- ---------- ----------
Denominator for diluted earnings per
common share -adjusted weighted-
average shares and assumed conversions 4,774,892 5,929,224 4,760,329 5,978,028
========== ========== ========== ==========
Basic earnings per common share $ .33 $ .25 $ .63 $ .51
========== ========== ========== ==========
Diluted earnings per common share $ .33 $ .25 $ .63 $ .51
========== ========== ========== ==========
</TABLE>
4. A summary of the Company's operating segments is defined on page 30 of its
1999 Annual Shareholders' Report.
6
<PAGE>
Information regarding operations and assets by segment in thousands is as
follows:
<TABLE>
<CAPTION>
Three Months Ended Aug 31, Six Months Ended Aug 31,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Sales:
Manufactured Products $11,165 $12,089 $22,112 $24,471
Services 9,821 8,632 19,545 16,978
------- ------- ------- -------
$20,986 $20,721 $41,657 $41,449
Operating Income (a):
Manufactured Products $ 1,582 $ 1,585 $ 2,653 $ 3,142
Services 2,194 1,760 4,671 3,792
------- ------- ------- -------
$ 3,776 $ 3,345 $ 7,324 $ 6,934
General Corporate Expense $ 937 $ 855 $ 1,863 $ 1,685
Interest Expense 322 232 675 460
Other (Income) Exp., Net (b) 9 (54) 20 (45)
------- ------- ------- -------
$ 1,268 $ 1,033 $ 2,558 $ 2,100
Income Before Income Taxes $ 2,508 $ 2,312 $ 4,766 $ 4,834
======= ======= ======= =======
Total Assets:
Manufactured Products $28,295 $29,858 $28,295 $29,858
Services 27,563 26,811 27,563 26,811
Corporate 1,437 1,890 1,437 1,890
------- ------- ------- -------
$57,295 $58,559 $57,295 $58,559
======= ======= ======= =======
</TABLE>
(a) Operating income consists of net sales less cost of sales, specifically
identifiable general and administrative expenses and selling expenses.
(b) Other (income) expense, net includes gains and losses on sale of property,
plant and equipment and other (income) expense not specifically
identifiable to a segment.
5. Impact of Recently Issued Accounting Standards
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in
years beginning after June 15, 2000. The Statement permits early adoption
as of the beginning of any fiscal quarter after its issuance. The expected
date of adoption by the Company is not yet known.
The Statement will require the Company to recognize all derivatives on the
balance sheet at fair value. Derivatives that are not hedges must be
adjusted to fair value through income. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of
derivatives will either be offset against the change in fair value of the
hedged assets, liabilities,
7
<PAGE>
or firm commitments through earnings or recognized in other comprehensive
income until the hedged item is recognized in earnings. The ineffective
portion of a derivative's change in fair value will be immediately
recognized in earnings. The Company has not yet determined what the effect
of Statement No. 133 will be on the earnings and financial position of the
Company.
6. Effective September 1, 1999, Aztec Manufacturing Co. acquired the operating
assets of ABB's Compressed Gas Insulation Transmission Bus Duct division.
The new entity will be known as CGIT Westboro, Inc. The assets of CGIT
were acquired for a consideration of approximately $9.9 million, which
resulted in approximately $6.9 million in goodwill.
Item 2. Management's Discussion and Analysis of Financial Condition and
- --------------------------------------------------------------------------
Results of Operations
- ---------------------
RESULTS OF OPERATIONS
---------------------
Consolidated net sales were up 1% for both the three-month and six-month periods
ending August 31, 1999 as compared to the same periods in 1998. Net sales in the
Manufactured Products Segment were down $922,000 or 8% for the three-month
period ending August 31, 1999, and $2,360,000 or 10% for the six-month period
ending August 31, 1999,as compared to the same periods in 1998. Sales of
electrical products in the Manufactured Products Segment were up by 1% for both
the three and six-month periods ending August 31,1999, while tubular products
sales were down 42% and 48% for the three and six-month periods. Backlog for the
segment was up by $4,159,000 or 25% for the period ended August 31, 1999, versus
the same period last year. Backlog for electrical products in this segment was
up $7,411,000 or 55% due primarily to the deregulation of the electrical
industry and the need for increased domestic power generation. Tubular products
backlog was down to $102,000 for the period ending August 31,1999, from
$3,354,000 the previous period ended August 31, 1998. Net sales in the Services
Segment, which is made up of galvanizing services, were up $1,189,000 or 14% and
$2,567,000 or 15% for the three and six-month periods ending August 31, 1999 as
compared to the same periods in 1998. Total pounds produced were 63,892,000 and
126,282,000 for the three and six month periods ending August 31, 1999 as
compared to 54,362,000 and 108,557,000 during the same periods in 1998. The
volume of steel processed increased 17.5% and 16.5% for the three and six-month
period ended August 31, 1999 versus the same periods last year. The year to date
average selling price was virtually the same for the two periods compared.
Consolidated operating income (net sales less operating expenses) was up 13% and
6% or $431,000 and $390,000 for the three and six-month periods ended August 31,
999 as compared to the prior year. Operating income in the Manufactured Products
Segment was flat for the three-month period and down 16% for the six-month
period as compared to 1998. Operating Income in our electrical products was up
9% and 6% for the three and six-month periods in 1999 as compared to prior year.
Our tubular products portion of this segment has not rebounded with current
improvement in oil and natural gas showing $120,000 and $385,000 loss for the
three and six month periods ended August 31, 1999, as compared to a $18,000 and
$123,000 profit for the same periods last year. In the Service Segment operating
income was up $434,000 or 25% and $878,000 or 23% for three and six-months
periods ended August 31, 1999, compared to the same periods in 1998. Increased
operating income was due to increased volumes coupled with flat spending for the
compared periods.
General corporate expenses (selling, G & A expense and other (income) expense)
as a percent of net sales were consistent for the three and six month periods
this year versus last year.
8
<PAGE>
Net interest expense for the three and six month periods ending August 31, 1999,
was $322,000 and $675,000 an increase of $90,000 and $215,000 over last year.
The additional interest expense is due to a higher outstanding loan balance
associated with the stock repurchase of Aztec common stock in fiscal 1999. With
reduced shares outstanding due to the stock repurchase, diluted earnings per
share increased to $.33 and $.63 per share for the three and six-month periods
ending August 31, 1999, versus $.25 and $.51 per share for the same period in
1998.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash provided by operations was $7.6 million for the first six months of
fiscal 2000 compared to $3.9 million for the same period in fiscal 1999. Net
cash provided by operations was generated by $3.0 million in net profits, $2
million in depreciation and amortization, and $2.6 million in other changes
which included a reduction in inventory of $1.1 million, primarily in tubular
products.
During the six month period ended August 31, 1999, proceeds from operating
activities of $7.6 million were used to repay debt in the amount of $6.5 million
and purchase plant equipment in the amount of $1.5 million.
The Company's current credit facility is made up of two term notes both in the
amount of $10 million each. The Company also has a revolving line of credit in
the amount of $15 million of which $11.8 million is available for future use.
Management believes that the credit facility and cash generated from operations
will be sufficient to accommodate the Company's current operations, internal
growth and possible acquisitions.
Year 2000 Compliance
- --------------------
The Company is in the process of reviewing and making necessary modifications to
its computer systems for year 2000 compliance. Costs incurred to date to modify
the Company's computer systems have not been material and future costs are not
expected to be material. Although the Company expects its modifications will be
successfully completed on a timely basis, there can be no assurance that it will
be completed on the time schedule anticipated. The Company is also communicating
with vendors and others with which it does business to coordinate Year 2000
compliance. There can be no assurance that the systems of other companies and
agencies on which the Company relies will be timely converted or that such
failure by other entities would not have an adverse impact on the Company's
operations.
Forward Looking Statements
- --------------------------
This Report contains, and from time to time the Company or certain of its
representatives may make, "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements are generally
identified by the use of words such as "anticipate," "expect," "estimate,"
"intend," "should," "may," "believe," and terms with similar meanings. Although
the Company believes that the current views and expectations reflected in these
forward-looking statements are reasonable, those views and expectations, and the
related statements, are inherently subject to risks, uncertainties, and other
factors, many of which are not under the Company's control. Those risks,
uncertainties, and other factors could cause the actual results to differ
materially from these in the forward-looking statements. Those risks,
uncertainties, and factors include, but are not limited to, many of the matters
described in this Report:
9
<PAGE>
change in demand, prices and raw material cost, including zinc which is used in
the hot dip galvanizing process; changes in the economic conditions of the
various markets the Company serves, foreign and domestic, including the market
price for oil and natural gas; acquisition opportunities, adequacy of financing,
and availability of experienced management employees to implement the Company's
growth strategy; and customer demand and response to products and services
offered by the Company. The Company expressly disclaims any obligations to
release publicly any updates or revisions to these forward-looking statements to
reflect any change in its views or expectations.
PART II. OTHER INFORMATION
AZTEC MANUFACTURING CO.
Item 4. Submissions of Matters to a Vote of Security Holders
- --------------------------------------------------------------
Shareholders at the Annual Meeting on July 13, 1999, and by proxy, elected from
incumbent directors, Martin C. Bowen, Kevern R. Joyce, Sam Rosen and David H.
Dingus. Of the 4,086,283 shares represented at the meeting, 3,632,502 shares
(88.9%) were voted for Mr. Bowen, 3,634,583 shares (89.0%) were voted for Mr.
Joyce, 3,634,853 shares (89.0%) were voted for Mr. Rosen, 3,634,853 shares
(89.0%) were voted for Mr. Dingus. Other directors continuing in office are
L.C. Martin, Robert Johnson, W.C. Walker, R.J. Schumacher and Dana Perry.
Four proposals by the Board of Directors were submitted to the stockholders at
the Annual Meeting, with the following vote tabulation.
<TABLE>
<CAPTION>
Amendment to the Articles of Incorporation on
Calling of a Special Meeting. Approved/Failed to Approve
--------------------------
<S> <C> <C> <C>
Shares for: 2,309,786 48.7%
Shares Against: 575,089 12.1% FAILED
Shares Abstained: 22,389 n/a
Approval of the Amendment to the Articles of Incorporation on
Indemnification of Directors, Advisory Directors and Officers.
Shares for: 3,979,234 83.9%
Shares Against: 75,135 1.6% PASSED
Shares Abstained: 31,914 .7%
Approval of the Ratification of Amended and Restated Bylaws.
Shares for: 2,783,183 68.1%
Shares Against: 89,967 1.9% PASSED
Shares Abstained: 34,114 n/a
Approval of Ratification of the Appointment of Ernst & Young LLP
as Auditors.
Shares for: 4,053,535 99.2%
Shares Against: 15,245 .4% PASSED
Shares Abstained: 17,503 n/a
</TABLE>
10
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
- ------------------------------------------
(A) Exhibits - Exhibit 3ii - New By-Laws of Aztec Manufacturing Co. approved at
the Company's July 13, 1999 Annual Meeting of Shareholders.
(B) Reports on Form 8-K - There were no reports on Form 8-K filed for the three
months ended August 31, 1999.
All other schedules and compliance information called for by the instructions
for Form 10-Q have been omitted since the required information is not present or
not present in amounts sufficient to require submission.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AZTEC MANUFACTURING CO.
----------------------------------------
(Registrant)
Date: 10/13/99 /s/ Dana Perry
-------- ----------------------------------------
Dana Perry, Vice President for Finance
Chief Financial Officer
11
<PAGE>
INDEX TO EXHIBITS
-----------------
EXHIBIT DESCRIPTION
- --------------------------------------------------------------------------------
3ii New ByLaws of Aztec Manufacturing Co. approved at the Company's July
13, 1999
Annual Meeting of Shareholders.
<PAGE>
EXHIBIT 3ii
BYLAWS OF AZTEC MANUFACTURING CO.
Contents
- -----------------
Art. 1: Offices
1.01 Principal Office
1.02 Registered Office
1.03 Other Offices
Art. 2: Meetings of Shareholders
2.01 Place of Meetings
2.02 Annual Meeting
2.03 Special Meetings
2.04 Notice of Meetings
2.05 Voting Lists
2.06 Quorum
2.07 Organization of Meetings
2.08 Business to be Conducted
2.09 Proxies
2.10 Voting of Shares
2.11 Voting of Shares by Certain Holders
2.12 Record Date; Closing Transfer Books
Art. 3: Directors
3.01 Management
3.02 Number; Qualification; Election; Term
3.03 Change in Number
3.04 Resignation
3.05 Removal
3.06 Vacancies
3.07 Election of Directors
3.08 Nomination of Directors
3.09 Place of Meetings
3.10 First Meetings
3.11 Regular Meetings
3.12 Special Meetings
3.13 Quorum; Majority Vote
3.14 Compensation
3.15 Procedure
3.16 Interested Directors, Officers and Shareholders
3.17 Committees of the Board
3.18 Advisory Directors
Art. 4: Notice and Attendance through Use of Electronic Equipment
4.01 Method
4.02 Waiver
4.03 Telephone and Similar Meetings
<PAGE>
Art. 5: Officers and Agents
5.01 Number; Qualification; Election; Term
5.02 Removal
5.03 Vacancies
5.04 Authority
5.05 Compensation
5.06 Chairman of the Board
5.07 Chief Executive Officer
5.08 President
5.09 Vice President
5.10 Secretary
5.11 Assistant Corporate Officers
5.12 Treasurer
Art. 6: Certificates and Shareholders
6.01 Certificates
6.02 Replacement of Lost or Destroyed Certificates
6.03 Transfer of Shares
6.04 Registered Shareholders
6.05 Pre-Emptive Rights
6.06 Treasury Stock
6.07 Dividends and Reserves
Art. 7: General Provisions
7.01 Books and Records
7.02 Annual Statement
7.03 Contracts
7.04 Loans
7.05 Checks, drafts, etc.
7.06 Deposits
7.07 Fiscal Year
7.08 Seal
7.09 Resignation
7.10 Amendment of Bylaws
7.11 Construction
7.12 Relation to Laws and Articles
Art. 8: Indemnification
8.01 Indemnification; Insurance
Art. 9: Transition Provisions
9.01 Prior Bylaws
9.02 Directors and Officers
9.03 Effect of Section 2.03
9.04 Effect of Article 9
<PAGE>
Article 1: Offices
Section 1.01. Principal Office. The principal office of Aztec
Manufacturing Co. (the "Corporation") shall be maintained in Tarrant County,
Texas.
Section 1.02. Registered Office. The registered office of the Corporation
shall be maintained in the State of Texas as required by law. The registered
office of the Corporation may be, but need not be, the same as the principal
office. The address of the registered office may be changed from time to time
by the Board of Directors of the Corporation (the "Board") in the manner
provided by law.
Section 1.03. Other Offices. The Corporation may also have offices at
such other places, both within and without the State of Texas, as the Board may
from time to time determine or the business of the Corporation may require.
Article 2: Meetings of Shareholders
Section 2.01. Place of Meetings. The Board may designate any place,
either within or without the State of Texas, as the place of meeting for any
annual meeting or for any special meeting called by the Board. If no
designation is made, or if a special meeting is called other than by the Board,
the place of meeting shall be the principal office of the Corporation.
Section 2.02. Annual Meeting. (a) The annual meeting of shareholders
shall be held each year at a time and on a day as may be selected by the Board.
At the meeting, the shareholders shall elect Directors and transact such other
business as may properly come before the meeting.
(b) If an annual meeting is omitted by oversight or otherwise and not
held as provided herein, an annual meeting may be called at a later date in the
manner provided for special meetings, and business transacted at such a meeting
shall be valid as if transacted at an annual meeting held as provided herein.
Section 2.03. Special Meetings. (a) Unless otherwise prescribed by law or
by the Articles of Incorporation of the Corporation (the "Articles") or these
Bylaws, special meetings of the shareholders may be called for any purpose by
(i) the Chairman of the Board (ii) the President, if no Chairman of the Board
has been elected, (iii) the Board, or (iv) the holders of at least fifteen
percent of all of the shares entitled to vote at the meetings.
(b) Business transacted at any special meetings shall be confined to
the purpose or purposes stated in the notice of the meeting.
Section 2.04. Notice of Meetings. (a) Written or printed notice of all
meetings of shareholders stating the place, day and hour thereof, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered by personal delivery or by mail, not less than ten
days nor more than 60 days before the date of the meeting, to each shareholder
entitled to vote at the meeting. If mailed, notice shall be deemed delivered
when deposited in the United States mail addressed to the shareholder at his
address as it appears on the share transfer records of the Corporation, with
postage thereon prepaid.
(b) Delivery of any notice of a shareholder meeting to any officer or
manager of a corporation, company or association, or to any member of a
partnership, shall constitute delivery of the notice to the corporation,
company, association or partnership.
Section 2.05. Voting Lists. (a) At least ten days before each meeting of
shareholders, the officer or agent having charge of the share transfer records
of the Corporation shall make a complete list of shareholders entitled to vote
at the meeting. The list shall be arranged in alphabetical order and show the
address of each shareholder and the number of shares held by each. For a period
of ten days prior to the meeting, the list shall be kept on file at the
registered office or principal place of business of the Corporation and shall be
subject to inspection by any shareholder at any time during usual business
hours. The list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any shareholder during the
whole time of the meeting. The original share transfer records shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
share transfer records or to vote at any meeting of shareholders.
(b) Failure to comply with the requirements of this Section 2.05 with
respect to any meeting of shareholders shall not affect the validity of any
action taken at such meeting.
<PAGE>
Section 2.06. Quorum. (a) The holders of a majority of the shares issued
and outstanding and entitled to vote, present in person or represented by proxy,
shall constitute a quorum for the transaction of business at any meeting of
shareholders except as otherwise provided by law, the Articles or these Bylaws.
Once a quorum is present, the shareholders may continue to transact business
properly brought before the meeting until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
(b) If a quorum is not present at any meeting of shareholders, the
shareholders entitled to vote at the meeting, present in person or represented
by proxy may, by majority vote, adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present. At an
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting under the notice of the meeting
as originally given.
(c) For the purposes of determining the presence of a quorum,
abstentions and broker non-votes, as defined in Section 2.10(c), shall be
treated as shares present and entitled to vote.
Section 2.07. Organization of Meetings. (a) The Chairman of the Board
shall preside at all meetings of the shareholders. In the absence of the
Chairman of the Board or if no Chairman has been elected, the President or, in
his absence, the Vice President shall preside. In the absence of all of these
officers, any shareholder or the duly appointed proxy of any shareholder may
call the meeting to order and a chairman shall be elected from among the
shareholders present.
(b) The Secretary of the Corporation shall act as secretary at all
meetings of the shareholders. In the absence of the Secretary, an Assistant
Secretary shall so act, or, in the absence of all of these officers, the person
presiding at a meeting may appoint any person to act as secretary of the
meeting.
Section 2.08. Business to be Conducted. (a) Only such business may be
conducted at an annual meeting of the shareholders as shall have been properly
brought before the meeting. To be properly brought before an annual meeting,
business must be (i) specified in the notice of meeting given by or at the
direction of the Board, or (ii) otherwise properly brought before the meeting by
or at the direction of the Board, or (iii) properly brought before the meeting
by a shareholder.
(b) In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a shareholder, the shareholder
must give the Secretary of the Corporation timely written notice as required by
this Section 2.08(b). To be timely, a shareholder's notice must be received at
the principal office of the Corporation not less than 50 days nor more than 75
days prior to the meeting; however, if less than 65 days' notice or prior public
disclosure of the date of the meeting is given or made to shareholders, notice
by a shareholder will be timely if received at the principal office of the
Corporation not later than the close of business on the 15th day following the
earlier of the day on which the notice of the date of the annual meeting was
mailed or public disclosure was made. A shareholder's notice to the Secretary
must set forth (i) a brief description of each business matter which the
shareholder proposed to bring before the annual meeting and the reasons for
bringing each such business matter before the annual meeting, (ii) the name and
record address of the shareholder proposing such business, (iii) the class and
number of shares of the Corporation which are beneficially owned by the
shareholder, and (iv) any material interest of the shareholder in such business.
(c) Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at an annual meeting unless properly brought before
the meeting in accordance with this Section 2.08. If the chairman of a meeting
should find that the facts warrant a determination that a business matter is not
properly brought before the meeting in accordance with this Section 2.08, he
shall so declare to the meeting, and the matter shall not be considered at the
meeting.
Section 2.09. Proxies. (a) At any meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote in person or by
proxy executed in writing by the shareholder or by his duly authorized attorney-
in-fact. No proxy shall be valid after eleven months from the date of its
execution unless otherwise provided in the proxy. Each proxy shall be revocable
unless the proxy form expressly and conspicuously states that the proxy is
irrevocable and the proxy is coupled with an interest. All proxies shall be
filed with the Secretary of the Corporation prior to or at the time of the
meeting at which they are to be voted.
(b) In the event that any instrument in writing shall designate two
or more persons to act as proxies, a majority of such persons present at the
meeting or, if only one shall be present, then that one, shall have and may
exercise all of the powers conferred by such written instrument upon all the
persons so designated unless the instrument shall otherwise provide.
<PAGE>
Section 2.10. Voting of Shares. (a) Subject to Section 2.12, each
shareholder, regardless of class, shall be entitled at each meeting of
shareholders to one vote on each matter submitted to a vote at the meeting.
Once a quorum is present at any meeting of shareholders, the vote of the holders
of a majority of shares entitled to vote and present in person or represented by
proxy shall decide any question brought before the meeting unless the question
is one upon which, by express provision of law or the Articles or these Bylaws,
a different vote is required in which case such express provision shall control
the decision of the question.
(b) For the purpose of determining whether a majority, or any
different required vote of shares present and entitled to vote, has voted
affirmatively on a particular question, only those shares voted "for" or
"against" such questions shall be included in the count. Abstentions and broker
non-votes shall not be counted even though such shares shall be considered
present and entitled to vote for the purposes of determining the presence of a
quorum under Section 2.06.
(c) As used in these Bylaws, the term "abstention" means shares which
are not voted "for" or "against" a question by a holder or holders present in
person or represented by proxy at the meeting and entitled to vote such shares
on the question, and the term "broker non-votes" means shares represented at a
meeting by proxies held by brokers or nominees as to which instructions have not
been received from the beneficial owner or persons entitled to vote and as to
which the broker or nominee does not have discretionary power to vote on the
question.
(d) Any vote at a shareholders meeting may be taken by voice vote or
by show of hands unless a shareholder or the duly appointed proxy of a
shareholder entitled to vote on the question objects in which case the vote
shall be taken by written ballets.
Section 2.11. Voting of Shares by Certain Holders. (a) Shares standing
in the name of another corporation 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.
(b) Shares held by an administrator, executor, guardian or
conservator may be voted by him so long as the shares are part of the estate
being served by him, either in person or by proxy, without a transfer of such
shares into his name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but no trustee shall be entitled to vote
shares held by him without a transfer of such shares into his name as trustee.
(c) Shares standing in the name of a receiver may be voted by the
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer into the receiver's name if authority to do
so has been given in an appropriate order of the court by which the receiver was
appointed.
(d) A shareholder whose shares are pledged may vote the shares until
the shares have been transferred into the name of the pledgee, and thereafter
the pledgee may vote the shares so transferred.
(e) Shares of the Corporation's stock either (i) owned by the
Corporation itself, (ii) owned by another corporation, the majority of the
voting stock of which is owned or controlled by the Corporation, or (iii) held
by the Corporation in a fiduciary capacity shall not be voted, directly or
indirectly, at any meeting, and shall not be counted in determining the total
number of outstanding shares at any given time.
Section 2.12. Record Date; Closing Transfer Books. (a) The Board may fix
in advance a record date for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of the shareholders, the record date to be not
less than ten nor more than 60 days prior to the meeting, or the Board may close
the stock transfer books for such purpose for a period of not less than ten nor
more than 60 days prior to such meeting.
(b) In the absence of action by the Board fixing a record date, the
date upon which the notice of the meeting is mailed shall be the record date for
the purpose of determining shareholders entitled to vote at the meeting.
Article 3: Directors
Section 3.01. Management. The business and affairs of the Corporation
shall be managed by the Board of Directors, which may exercise all such powers
of the Corporation and do all such lawful acts and things as are not, by law,
the Articles or these Bylaws, required to be exercised or done by the
shareholders.
<PAGE>
Section 3.02. Number; Qualification; Election; Term. (a) Subject to
Section 3.02(b), the Board of Directors shall consist of nine Directors, none of
whom need be shareholders of the Corporation or residents of the State of Texas.
The Directors shall be divided into three classes consisting of three Directors
each. At each annual shareholders meeting, Directors shall be elected for the
class whose term of office expires at that meeting, and the Directors so elected
shall hold office until the third succeeding annual shareholders meeting after
their election and until their successors are elected and qualified.
(b) Notwithstanding subsection (a) of Section 3.02, one Director in
addition to the nine provided by subsection (a) shall serve from April 20, 1999
to the 2000 annual shareholders meeting. At the 1999 annual shareholders
meeting, four Directors shall be elected, one who shall become a fourth member
of the class of Directors whose term of office expires at the 2000 annual
shareholders meeting and three who shall be elected for a three year term to
succeed that class of Directors whose term of office expires at the 1999 annual
meeting. The Board of Directors shall consist of ten Directors from April 20,
1999, until the 2000 annual shareholders meeting and until the successors of the
class of Directors whose term of office expires at the 2000 annual shareholders
meeting shall have been elected and qualified, after which the Board shall
consist of nine Directors.
Section 3.03. Change in Number. The number of Directors may be increased
or decreased from time to time by amendment to these Bylaws, but no decrease
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 the Board or by election at an annual meeting of shareholders
or at a special meeting of shareholders called for that purpose. Any Director
elected to the Board to fill a directorship resulting in an increase in the
number of Directors shall hold office for a term continuing only until the next
election of Directors by shareholders. The Board may not fill more than two
directorships resulting from an increase in the number of Directors between any
two successive annual meeting of shareholders.
Section 3.04. Resignation. Any Director may resign at any time by giving
written notice to the Chairman of the Board, the President or the Secretary. A
Director's resignation shall take effect at the time specified in the
resignation. Unless otherwise provided in the resignation, the acceptance of a
resignation shall not be necessary to make it effective.
Section 3.05. Removal. Any Director may be removed, either with or
without cause, at any meeting of shareholders expressly called for that purpose
by the affirmative vote of more than two-thirds in number of shares of the
shareholders present in person or represented by proxy at such meeting and
entitled to vote for the election of Directors.
Section 3.06. Vacancies. (a) Any vacancy occurring in the Board by
death, resignation or removal of a Director may be filled by an affirmative vote
of a majority of the remaining Directors though less than a quorum of the Board.
A Director elected to fill such a vacancy shall be elected for the unexpired
term of his predecessor in office.
(b) Any vacancy resulting from an increase in the number of directors
shall be filled as provided in Section 3.03.
Section 3.07. Election of Directors. Directors shall be elected by
plurality vote. Cumulative voting shall not be permitted.
Section 3.08. Nomination of Directors. (a) Only those persons who are
nominated in accordance with this Section 3.08 shall be eligible for election as
Directors. Nomination of persons for election to the Board of the Corporation
may be made at a meeting of shareholders (i) by or at the direction of the
Board, (ii) by a nominating committee appointed by the Board, or (iii) by any
shareholder of the Corporation entitled to vote at the meeting for the election
of Directors but only if the shareholder complies with this Section 3.08.
(b) In addition to other applicable requirements, for a nomination to
be made by a shareholder, the shareholder must give the Secretary of the
Corporation timely written notice as required by this Section 3.08(b). To be
timely, a shareholder's notice must be received at the principal office of the
Corporation, not less than 50 days nor more than 75 days prior to the meeting at
which the nomination is to be made; however, if less than 65 days' notice or
prior public disclosure of the date of the meeting is given or made to
shareholders, notice by a shareholder will be timely if received at the
principal office of the Corporation not later than the close of business on the
15th day following the earlier of the day on which the notice of the date of the
meeting was mailed or public disclosure was made. A shareholder's notice to the
Secretary must set forth as to each person whom the shareholder proposes to
nominate (i) the name, age, business address and residence address of the
person, (ii) the principal occupation or employment of the person, (iii) the
class and number of shares of the Corporation which are beneficially owned by
the person, and (iv) any other information relating to the person that is
required to be disclosed in solicitation for proxies for election of Directors
pursuant to Regulation 14A of the Securities Exchange Act of
<PAGE>
1934, as amended. A shareholder's notice to the Secretary must also set forth as
to the shareholder giving the notice (i) the name and record address of the
shareholder and (ii) the class and number of shares of the Corporation which are
beneficially owned by the shareholder. The Corporation may require any proposed
nominee to furnish such other information as may reasonably be required by the
Corporation to determine the eligibility of such proposed nominee to serve as a
Director of the Corporation.
(c) Notwithstanding anything in these Bylaws to the contrary, no
person shall be eligible for election as a Director unless nominated in
accordance with this Section 3.08. If the chairman of the meeting at which a
nomination is made should find that the facts warrant a determination that the
nomination is not made in accordance with this Section 3.08, he shall so declare
to the meeting, and the nomination shall be disregarded.
Section 3.09. Place of Meetings. Meetings of the Board, regular or
special, may be held either within or without the State of Texas.
Section 3.10. First Meetings. The first meeting of a Board after
Directors are elected at an annual meeting of shareholders shall be held,
without further notice, immediately following the annual meeting of
shareholders. The meeting shall be held at the same place as the annual
shareholders meeting unless by written unanimous consent the time or place for
the meeting shall be changed by the Directors serving after the shareholders
meeting.
Section 3.11. Regular Meetings. Regular meetings of the Board may be held
without notice at such time and place as shall, from time to time, be determined
by the Board.
Section 3.12. Special Meetings. (a) Special meetings of the Board may be
called by the Chairman of the Board, the President or the Secretary. Special
meetings shall be called by the Chairman, the President or the Secretary in like
manner and on like notice upon the written request of any Director.
(b) Written notice of the place, day and hour of any special meeting
of the Board shall be delivered to each Director not less than three days before
the date of the meeting, delivery to be by personal delivery, mail, telecopier,
or a national recognized overnight delivery service. If mailed or sent by
overnight delivery service, notice shall be deemed delivered when deposited in
the United States mail or given to the delivery service. Notice by telecopier
shall be deemed delivered when sent.
(c) Except as otherwise expressly provided by law or by the Articles
or these Bylaws, neither the business to be transacted at, nor the purpose of,
any special meeting of the Board need be specified in a notice or waiver of
notice.
Section 3.13. Quorum; Majority Vote. (a) At all meetings of the Board of
Directors, a majority of the Board fixed by these Bylaws shall constitute a
quorum for the transaction of business. The act of a majority of the Directors
present at any meeting at which a quorum is present shall be the act of the
Board, except as otherwise specifically provided by law or by the Articles or
these Bylaws.
(b) Anything herein to the contrary notwithstanding, any alteration,
amendment, or repeal of subsections (a), (b) or (c) of Section 2.10 or of
Sections 3.02, 3.03, 3.04, 3.07, 3.13 or 7.10 of these Bylaws, or adoption of
any bylaw provision inconsistent therewith, by the Board shall require the
affirmative vote of two-thirds of the full Board.
(c) If a quorum is not present at a meeting of the Board, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
Section 3.14. Compensation. By resolution of the Board, the Directors may
be paid their expenses, if any, of attendance at each meeting of the Board and
may be paid a fixed sum for attendance at each meeting of the Board or a stated
salary as Director. No such payment shall preclude any Director from serving the
Corporation in any other capacity and receiving compensation therefor.
Section 3.15. Procedure. (a) The Board shall cause regular minutes of
its proceedings to be kept. The minutes shall be placed in the minute book of
the Corporation.
<PAGE>
(b) A Director who is present at a meeting of the Board at which
action on any corporate 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 with the secretary of the meeting
before the adjournment thereof or send his dissent by registered or certified
mail to the Secretary of the Corporation immediately after adjournment of the
meeting. A Director who voted in favor of any action may not thereafter dissent
from such action.
Section 3.16. Interested Directors, Officers and Shareholders. (a) Any
contract or other transaction between the Corporation and any of its Directors,
officers or shareholders (or any corporation or firm which any of them are
directly or indirectly interested) shall be valid for all purposes
notwithstanding the presence of such Director, officer or shareholder at the
meeting at which such contract or transaction is authorized, or his
participation in such meeting or authorization.
(b) Subsection (a) of this Section 3.16 shall, however, apply only if
the interest of each Director, officer or shareholder is known or disclosed:
(1) to the Board of Directors and the Board, nevertheless,
authorizes or ratifies the contract or transaction by a majority of the
Directors present, each such interested person to be counted in determining
whether a quorum is present but not in calculating the majority necessary to
carry the vote; or
(2) to the shareholders and they, nevertheless, authorize or
ratify the contract or transaction by a majority of the shares present, each
such interested person to be counted for quorum and voting purposes.
(c) This Section 3.16 shall not be construed to invalidate any
contract or transaction which would be valid in the absence of this provision.
Section 3.17. Committees of the Board. (a) By resolution adopted by a
majority of the full Board of Directors, the Board may designate from among its
members one or more committees, each of which, to the extent provided in the
resolution, shall have and may exercise all of the authority of the Board in the
business and affairs of the Corporation except were action by the Board is
required by law, the Articles or these Bylaws.
(b) Each committee shall consist of one or more Directors appointed by
resolution adopted by a majority of the full Board. Each committee member shall
serve as such until the expiration of his term as a Director or his earlier
resignation unless sooner removed as a committee member or as a Director.
(c) The number of members of any committee may be increased or
decreased from time to time by resolution adopted by a majority of the full
Board. The Board shall have the power at any time to fill any vacancy in, to
change the membership of, or to dissolve, any committee.
(d) Regular meetings of any committee may be held without notice at
such time and place as may be designated from time to time by resolution of the
committee and communicated to all committee members.
(e) A special meeting of any committee may be held whenever called by
any committee member at such time and place that such committee member shall
designate in the notice of such special meeting. The committee member calling
any such special meeting shall cause notice of such special meeting to be given
to each committee member at least twelve hours before such special meeting.
Notice may be either written or oral. 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.
(f) At all meetings of any committee a majority of the number of
committee members designated by the Board of Directors shall constitute a quorum
for the transaction of business. The act of a majority of the committee members
present at any meeting at which a quorum is present shall be the act of the
committee, except as otherwise specifically provided by law, the Articles or
these Bylaws. If a quorum is not present at a meeting of any committee, the
members present may adjourn the meeting from time to time, without notice other
than an announcement at the meeting, until a quorum is present.
(g) Each committee shall keep regular minutes of its proceedings and
report the same to the Board of Directors upon the request of the Board. The
minutes of the proceedings of each committee shall be placed in the minute book
of the Corporation.
<PAGE>
(h) Any action required or permitted to be taken at any meeting of a
committee may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by all the members of the committee. Such
consent shall have the same force and effect as a unanimous vote at a meeting.
The signed consent shall be placed in the minute book.
(i) Members of any committee designated by the Board may participate
in or hold a meeting by use of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other.
(j) The designation of any committee and the delegation of authority
to it shall not operate to relieve the Board, or any member thereof, of any
responsibility imposed upon it or him by law.
Section 3.18. Advisory Directors. (a) The Board, by resolution adopted
by not less than a majority of the Directors then in office, may from time to
time appoint such number of individuals as it may deem appropriate to serve as
Advisory Directors at the pleasure of the Board. Advisory Directors may be
given such designations (including without limitation "Advisory Director,"
"Director Emeritus" or "Honorary Directors") as the Board may from time to time
designate. Advisory Directors are not, and shall not have the duties and
responsibilities of, Directors of the Corporation, and the terms "Directors" or
"members of the Board of Directors" as used in these Bylaws shall not be deemed
to mean or include Advisory Directors.
(b) Without limiting the generality of the foregoing, Advisory
Directors shall not be entitled (i) to receive any notice of any meeting of the
Board of Directors, (ii) to attend any meeting of the Board of Directors except
at the invitation of the Board, (iii) to vote on any matter presented for action
by the Board of Directors or, except at the invitation of the Board, to
participate in the consideration of any such matter or the formulation or
determination of corporate policy, (iv) to receive any non-public information
regarding the business or affairs of the Corporation or any matters presented
for action or consideration by the Board of Directors, or (v) to receive any
compensation for serving as an Advisory Director except as the Board of
Directors may otherwise determine by resolution.
(c) At the discretion of the Board of Directors, an Advisory Director
may be deemed a Director as that term is used in any stock option plan of the
Corporation, in order to qualify such Advisory Director for the continued
holding of stock options, the term of which would otherwise expire as a result
of the termination of Director status.
Article 4: Notice and Attendance through Use of Electronic Equipment
Section 4.01. Method. Whenever by law or the Articles or these Bylaws,
notice is required to be given to a Director, shareholder or committee member
and no provision is made as to how the notice shall be given, notice may be
given (i) in writing, by mail, postage prepaid, addressed to the Director,
committee member or shareholder at the address appearing on the books of the
Corporation, or (ii) in any other method permitted by law. Any notice given by
mail shall be deemed given at the time when the same is thus deposited in the
United States mails.
Section 4.02. Waiver. (a) Whenever, by law or the Articles or these
Bylaws, notice to a Director, committee member or shareholder is required, a
waiver thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated in such notice, shall be
equivalent to the giving of such notice.
(b) Attendance of a Director or committee member at a meeting shall
constitute a waiver of notice of such meeting, except where a Director or member
attends for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
Section 4.03. Telephone and Similar Meetings. Directors and committee
members may participate in and hold a meeting by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other. Participation in such meeting shall
constitute presence in person at the meeting except where a person participates
in the meeting for the express purpose of objecting to the transaction of any
business on the grounds that the meeting is not lawfully called or convened.
<PAGE>
Article 5: Officers and Agents
Section 5.01. Number; Qualification; Election; Term. (a) The Corporation
shall have:
(1) a President, a Vice President, a Secretary and a Treasurer,
and
(2) such other officers (including additional vice presidents)
and assistant officers and agents as the Board may think necessary.
(b) No officer or agent need be a shareholder or a Director of the
Corporation or a resident of Texas.
(c) Officers named in Section 5.0l(a)(l) shall be elected by the
Board on the expiration of an officer's term or whenever a vacancy exists.
Officers and agents named in Section 5.0l(a)(2) may be elected by the Board at
any meeting.
(d) Unless otherwise specified by the Board at the time of election
or appointment, or in an employment contract approved by the Board, each
officers term shall end at the first meeting of Directors after the next annual
meeting of shareholders. Each officer shall serve until the end of his term or
his earlier death, resignation or removal.
(e) Any two or more offices may be held by the same person, except
that the President and the Secretary shall not be the same person.
Section 5.02. Removal. Any officer or agent elected or appointed by the
Board may be removed by the Board whenever in its judgment the best interests of
the Corporation will be served thereby. 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.
Section 5.03. Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board.
Section 5.04. Authority. Officers and agents 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 not inconsistent
with these Bylaws.
Section 5.05. Compensation. The compensation of officers and agents shall
be fixed from time to time by the Board.
Section 5.06. Chairman of the Board. The Corporation may have a Chairman
of the Board. If a Chairman of the Board is elected, he shall be the
Corporation's principal planning and development officer and shall preside at
all meetings of the shareholders and the Board. The Chairman shall also perform
such other duties as may be prescribed by the Board from time to time. If no
Chairman is elected, the duties of that office shall be performed by the
President unless the Board provides otherwise.
Section 5.07. Chief Executive Officer. The Corporation may have a Chief
Executive Officer. If a Chief Executive Officer is elected, he shall supervise,
control and have general and active management of the day-to-day business and
affairs of the Corporation and shall perform such other duties as may be
prescribed by the Board from time to time. If no Chief Executive Officer is
elected, the duties of that office shall be performed by the President unless
the Board provides otherwise.
Section 5.08. President. The President shall have such powers and
responsibilities and shall perform such duties as delineated by the Board or the
Chief Executive Officer.
Section 5.09. Vice President. (a) The Vice President shall, in the
absence of the President, perform the duties and have the authority and exercise
the powers of the President. The Vice President shall perform such other duties
and have such other authority and powers as the Board may from time to time
prescribe or as the Chairman of the Board or Chief Executive Officer may from
time to time delegate.
(b) If the Corporation has more than one Vice President, each Vice
President shall have such duties and authorities as the Board may from time to
time prescribe or as the Chief Executive Officer or President may from time to
time delegate.
<PAGE>
Section 5.10. Secretary. (a) The Secretary shall attend all meetings of
the Board and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose.
(b) The Secretary shall give, or cause to be given, notice of all
meetings of the shareholders and special meetings of the Board.
(c) The Secretary shall keep in safe custody the seal of the
Corporation and, when authorized by the Board, affix the same to any instrument
requiring it and, when so affixed, it shall be attested by his signature or by
the signature of the Treasurer or an Assistant Secretary.
(d) The Secretary shall be under the supervision of the President. He
shall perform such other duties and have such other authority and powers as the
Board may from time to time prescribe or as the President may from time to time
delegate.
Section 5.11. Assistant Corporate Officers. (a) The Board may elect an
Assistant Secretary and Assistant Treasurer and such additional assistant
corporate officers as it may from time to time find necessary.
(b) Each assistant corporate officer shall perform the duties of the
principal officer to whom he is an assistant if the principal office is vacant
or if the principal officer is absent or unable to act, as well as such other
duties as the Board may from time to time prescribe.
Section 5.12. Treasurer. (a) The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements of the Corporation and shall deposit all monies and
other valuable effects in the name and to the credit of the Corporation in such
depositories as may be designated by the Board.
(b) The Treasurer shall disburse the funds of the Corporation as may
be ordered by the Board, taking proper vouchers for such disbursements, and
shall render to the President and Directors, at the regular meetings of the
Board, or whenever they may require it, an account of all his transactions as
treasurer and of the financial condition of the Corporation.
(c) If required by the Board, the Treasurer shall give the Corporation
a bond in such form, in such sum, and with such surety or sureties as shall be
satisfactory to the board for the faithful performance of the duties of his
office and for the restoration to the Corporation, in case of his death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in his possession or under his control
belonging to the corporation.
(d) The Treasurer shall perform such other duties and have such other
authority and powers as the Board may from time to time prescribe or as the
Chief Executive Officer or President may from time to time delegate.
Article 6: Certificates and Shareholders
Section 6.01. Certificates. Certificates in the form determined by the
Board shall be delivered representing all shares to which shareholders are
entitled. Certificates shall be consecutively numbered and shall be entered in
the books of the Corporation as they are issued. Each certificate shall state
on the face thereof the holder's name, the number and class of shares, the par
value of shares or a statement that such shares are without par value, and such
other matters as may be required by law. Certificates shall be signed by the
Chairman of the Board, the President or a Vice President and such other officer
or officers as the Board shall designate, and may be sealed with the seal of the
Corporation or a facsimile thereof. If any certificate is countersigned by a
transfer agent, or an assistant transfer agent or registered by a registrar
(either of which is other than the Corporation or an employee of the
Corporation), the signature of such officer may be a facsimile.
Section 6.02. Replacement of Lost or Destroyed Certificates. The Board
may direct a new certificate or certificates to be issued in place of any
certificate previously issued by the Corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the loss or destruction. In so doing the Board may, in its discretion and as a
condition precedent to the issuance, (i) require the owner of the lost or
destroyed certificate, or his legal representative, to advertise the same in
such manner as it shall require and/or (ii) to give the Corporation a bond (with
a surety or sureties satisfactory to the Corporation) in such sum as it may
direct, as indemnity against any claim, or expense resulting from any claim,
that may be made against the Corporation with respect to the certificate alleged
to have been lost or destroyed.
<PAGE>
Section 6.03. Transfer of Shares. Shares of the Corporation shall be
transferable only on the books of the Corporation by the holder thereof in
person or by his duly authorized attorney. Upon surrender to the Corporation or
its transfer agent of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation or its transfer agent shall issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
Section 6.04. Registered Shareholders. The Corporation shall be entitled
to treat the holder of record of any share or shares as the holder in fact
thereof and, accordingly, shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part of any other person,
whether or not it has express or other notice thereof, except as otherwise
provided by law.
Section 6.05. Pre-Emptive Rights. No shareholder shall have pre-emptive
rights.
Section 6.06. Treasury Stock. The Board shall be authorized at any time
to purchase any outstanding shares or bonds of the Corporation from the surplus
of the Corporation or from the net profits arising from its business, and the
stock so purchased shall constitute treasury stock of the corporation and may be
subject to resale by the board of directors upon such terms as the board in its
discretion may determine or to rateable distribution among the shareholders.
Section 6.07. Dividends and Reserves. (a) Subject to statute and the
Articles, dividends may be declared by the Board at any regular or special
meeting and may be paid in cash, in property, or in shares of the Corporation.
The declaration shall be at the discretion of the Board.
(b) The Board may fix in advance a record date for the purpose of
determining shareholders entitled to receive payment of any dividend, the record
date to be not more than 50 days prior to the payment date of such dividend, or
the Board may close the stock transfer books for such purpose for a period of
not more than 50 days prior to the payment date of such dividend. In the
absence of any action by the Board, the date upon which the Board adopts the
resolution declaring the dividend shall be the record date.
(c) By resolution the Board may create such reserve or reserves out of
the earned surplus of the Corporation as the Directors from time to time, in
their discretion, think proper to provide for contingencies, or to equalize
dividends, or to repair or maintain any property of the Corporation, or for any
other purpose they think beneficial to the Corporation. The Board may modify or
abolish any such reserve in the manner in which it was created.
Article 7: General Provisions
Section 7.01. Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of its shareholders and the Board of Directors, and shall keep at its registered
office or principal place of business, or at the office of its transfer agent or
registrar, a record of its shareholders, giving the names and addresses of all
shareholders and the number and class of the shares held by each.
Section 7.02. Annual Statement. The Board shall present at each annual
meeting of shareholders a full and clear statement of the business and condition
of the Corporation, including a reasonably detailed balance sheet, income
statement, and surplus statement.
Section 7.03. Contracts. The Board may authorize any officer or officers,
agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the Corporation, and such authority
may be general or confined to a specific instance.
Section 7.04. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board. Such authority may be general or
confined to a specific instance.
Section 7.05. Checks, drafts, etc. All checks, drafts or other orders for
the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board.
Section 7.06. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies, or other depositories as the Board may select.
<PAGE>
Section 7.07. Fiscal Year. The fiscal year of the Corporation shall be
fixed by resolution of the Board.
Section 7.08. Seal. The seal of the Corporation (of which there may be
one or more exemplars) shall contain the name of the Corporation and the name of
the state of incorporation. The seal may be used by impressing it or
reproducing a facsimile of it, or otherwise.
Section 7.09. Resignation. Any officer or agent may resign by giving
written notice to the President or the Secretary. The resignation shall take
effect at the time specified therein, or immediately if no time is specified
therein. Unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 7.10. Amendment to Bylaws. (a) Subject to Section 7.10(b), these
Bylaws may be altered, amended or repealed or new bylaws may be adopted (subject
to the shareholders repealing or changing the action of the Board, or making new
bylaws, at an annual or special meeting called and held as provided in these
Bylaws) at any meeting of the Board of Directors at which a quorum is present,
by the affirmative vote of a majority of the Directors present at such meeting,
provided notice of the proposed alteration, amendment or repeal is contained in
the notice of such meeting.
(b) The Board of Directors may not amend or repeal a particular Bylaw
if the shareholders, in amending, repealing or adopting that particular Bylaw,
expressly provide that the Directors may not amend or repeal that Bylaw.
Section 7.11. Construction. (a) Unless context requires otherwise, as
used in these Bylaws:
(1) words of the masculine gender include the feminine, and words
in the singular number include the plural and in the plural number include the
singular, and
(2) references to a "Section" or an "Article" are to the given
section or article of these Bylaws.
(b) Article and section headings are used in these Bylaws primarily
for convenience and shall not be construed as limiting the effect any provision
would otherwise have.
(c) If any provision of these Bylaws is held by a court of competent
jurisdiction to be invalid, such invalidity shall not impair or invalidate any
remaining provision of these Bylaws and, insofar as reasonable and possible,
effect shall be given to the intent manifested by the provision held to be
invalid.
Section 7.12. Relation to Laws and Articles. These Bylaws shall be
subject to all valid and applicable laws, including specifically (but without
limitations) the Texas Business Corporation Act, as now or hereafter amended,
and the Corporation's Articles of Incorporation.
Article 8: Indemnification
Section 8.01. Indemnification; Insurance. The Corporation shall indemnify
to the full extent permitted by law any person who is made or threatened to be
made a defendant or respondent in any action, suit or proceeding, whether civil,
criminal, administrative, arbitrative or investigative, or in any appeal in such
an action, suit or proceeding, by reason of the fact that he or she is or was a
Director, advisory director or officer of the Corporation or of any other
company at the request of the Corporation or is or was serving at the
Corporation's request as an officer, managing partner or in any other position
of authority in the operation of a partnership, limited partnership or joint
venture in which the Corporation has or had a substantial direct or indirect
interest (collectively referred to hereinafter as "Indemnified Persons"),
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such Indemnified Persons
in connection with any such action, suit or proceeding. The Corporation shall
advance, pay and reimburse (as applicable) expenses to Indemnified Persons to
the full extent permitted by law. The Corporation may, to the extent permitted
by law, purchase and maintain insurance, create a trust fund, establish any form
of self-insurance, secure its indemnity obligation by grant of a security
interest or other lien on the assets of the Corporation, establish a letter of
credit, guaranty or surety arrangement, or other arrangement on behalf of
Indemnified Persons against any liability asserted against such persons in
their capacities as described above, whether or not the Corporation would have
the power to indemnify such Indemnified Persons against such liability. No
amendment to or rescission of this Article shall affect the rights of any of the
Indemnified Persons to indemnification or the advancement, payment or
reimbursement of expenses required by this bylaw growing out of any act,
transaction, event or circumstance which occurred before such amendment or
rescission.
<PAGE>
Article 9: Transition Provisions
Section 9.01. Prior Bylaws. (a) The Bylaws of the Corporation (the
"Prior Bylaws") in effect upon adoption of these Bylaws are hereby amended and,
as amended, restated in their entirety by these Bylaws.
(b) Action validly taken under the Prior Bylaws remains valid.
Section 9.02. Directors and Officers. Each Director, officer and
committee member elected or appointed pursuant to the Prior Bylaws and in office
upon adoption of these Bylaws shall continue in office for the term to which
elected or appointed pursuant to the Prior Bylaws subject to resignation or
removal as provided by these Bylaws.
Section 9.03. Effect of Section 2.03. Until such time as the shareholders
adopt an amendment to the Corporation's Articles of Incorporation to provide
that action by the holders of at least fifteen percent of all of the shares
entitled to vote at the meeting will be required for shareholders to call a
special meeting of shareholders, clause (iv) of subsection (a) of Section 2.03
of these Bylaws shall be effective in the following terms: "(iv) the holders of
at least ten percent of all of the shares entitled to vote at the meeting."
After the shareholders shall have adopted such an amendment to the Corporation's
Articles, clause (iv) of subsection (a) of Section 2.03 shall be effective as
therein stated.
Section 9.04. Effect of Article 9. The provisions of this Article 9
control over any contrary provision of other Articles of these Bylaws.
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