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EXHIBIT 10.12
STOCK APPRECIATION RIGHTS
AGREEMENT
THIS STOCK APPRECIATION RIGHTS AGREEMENT, effective the 12th day of
November, 1997, is made by FWT, Inc. (the "Company") to Xxx Xxxxx (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive is Chief Executive Officer and President of the
Company upon whose effort the continual successful and profitable operation of
the Company is dependent; and
WHEREAS, the Company wants to assure the continued availability of the
services of the Executive to the Company; and
WHEREAS, the Executive and the Company desire to grant to Executive
the right to participate in an increase in the value of the Company's Common
Stock, par value $10.00 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the premises and the covenants
herein contained, the Company hereby agrees with Executive as follows:
1. Defined Terms. As used herein, each of the following terms
shall have the following definitions:
"Affiliate" means any other Person that directly or indirectly
controls, is controlled by, or is under common control with such Person. For
the purposes of this definition, control means the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by Contract, or otherwise. Control shall be
presumed by an individual that is a director or executive officer of a Person,
or a Person that beneficially owns more than 10% of any class of securities of
such Person having general voting rights. During the period before the Closing
and at the Closing, Company shall be considered an Affiliate of each
Shareholder. During the period after the Closing, Purchaser and Xxxxx
Communications Fund, L.P. shall be considered an Affiliate of Company for so
long as Purchaser controls Company.
"Appraisal Event" means a Dilution Adjustment Event or delivery of a
Payment Notice to the extent that, in either such case, Fair Market Value is to
be determined pursuant to clause (c) of the definition of Fair Market Value.
"Appraisal Procedure" shall mean the following procedure for
determining the Appraised Value of one share of Common Stock: (a) upon the
occurrence of any Appraisal Event, the Company and the Executive shall attempt
to agree on a mutually acceptable Qualified Appraiser to value the Common
Stock, and if such parties agree on a Qualified Appraiser within ten (10) days
following the occurrence of any Appraisal Event such Qualified Appraiser shall,
on or before twenty (20) days
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following the date it is appointed, determine the Appraised Value of the Common
Stock, and such determination shall be binding upon the Company and the
Executive: (b) in the event the Company and the Executive are unable to agree
on a mutually acceptable Qualified Appraiser within ten (10) days following the
occurrence of any Appraisal Event, on the expiration of such ten (10) day
period, the Company and the Executive shall each appoint a Qualified Appraiser
to value the Common Stock. Within twenty (20) days following the date they are
appointed, the Qualified Appraisers appointed by the Company and the Executive
shall determine the Appraised Value of the Common Stock. In the event the
Appraised Value determined by the Company's Qualified Appraiser is more than
95% of the Appraised Value determined by the Executive's Qualified Appraiser,
the Appraised Value for purposes of this Agreement shall be the average of the
values determined by such appraisers and such determination shall be binding
upon the Company and the Executive. In the event the Appraised Value
determined by the Company's Qualified Appraiser is equal to or less than 95%
of the value determined by the Executive's Qualified Appraiser, such appraisers
shall in turn promptly appoint a third Qualified Appraiser who shall, within
twenty (20) days following the date it is appointed, determine the Appraised
Value of the Common Stock. The value which is neither the lowest nor the
highest of the values determined by the three Qualified Appraisers shall be the
Appraised Value of the Common Stock for purposes of this Agreement and shall be
binding upon the Company and the Executive. In the event either the Company or
the Executive fails to timely appoint a Qualified Appraiser, such failing party
will be deemed to have waived its rights to appoint a Qualified Appraiser, and
the Qualified Appraiser appointed by the other party shall determine the
Appraised Value for purposes of this Agreement which determination shall be
binding upon the Executive and the Company. The costs of each Qualified
Appraiser referred to herein shall be paid by the Company.
"Appraised Value" has the meaning set forth in the definition of "Fair
Market Value."
"Base Numerator" initially means 6.8071; provided, that such amount is
subject to adjustment as provided in Section 3 hereof.
"Base Value" means $45,000,000.
"Current Market Value" means, with respect to a share of Common Stock,
the average of the daily closing prices for a share of Common Stock for the ten
(10) consecutive trading days before such date, excluding any trades which are
not bona fide arm's length transactions. The closing price for each day shall
be:
(i) if Common Stock is listed or admitted for trading on any
national securities exchange, the last sale price of such security, regular
way, or the mean of the closing bid and asked prices therefor if no such sale
occurred, in each case as officially reported on the principal securities
exchange on which Common Stock is listed; or
(ii) if so quoted, the mean between the closing high bid and low
asked quotations of the Common Stock in the over-the-counter market as shown by
the National Association of Securities
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Dealers, Inc. Automated Quotation System, or any similar system of automated
dissemination of quotations of securities prices then in common use in the
United States, as reported by any member firm of the New York Stock Exchange
selected by the Company; or
(iii) if not quoted as described in clauses (i) or (ii) above, the
mean between the high bid and low asked quotations for any such security as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, as reported by any member firm of the New York Stock
Exchange selected by the Company.
(iv) "Dilution Adjustment Event" has the meaning set forth in
Section 3(b) hereof.
"Fair Market Value" means, on any date of determination, (a) if the
Common Stock is listed or admitted for trading on any securities exchange or
subject to quotations in any quotation system described in the definition of
"Current Market Value," and has been so listed or subject to such quotations
for the preceding ten (10) consecutive trading days, the Current Market Value,
(b) if clause (a) preceding is not applicable, and Fair Market Value is being
determined in connection with any Liquidity Event or Dilution Adjustment Event
in which shares of Common Stock are being (or were) issued, sold, assigned,
transferred or otherwise disposed of (including any merger or consolidation)
for consideration consisting solely of cash in a transaction with a Person who
is not an Affiliate with respect to the Company, Purchaser or Xxxxx
Communications Fund, L.P., the highest price per share at which a share of
Common Stock is being or was issued or disposed of in such Liquidity Event, and
(c) if neither clause (a) nor clause (b) preceding is applicable, the fair
market value of one share of Common Stock (determined without giving effect to
any minority discount and without giving effect to any restrictions imposed
pursuant to any shareholders agreement, voting agreements or similar
agreements) as determined pursuant to the Appraisal Procedure (the "Appraised
Value"). In the event Fair Market Value is being determined in connection with
a Liquidity Event or Dilution Adjustment Event under circumstances in which
clause (b) of this definition is applicable, Fair Market Value shall be
determined based on the cash consideration received in the most recent
Liquidity Event or Dilution Adjustment Event as of the date of such
determination of Fair Market Value.
"Liquidity Event" means the occurrence of any of the following events
(a) the completion by the Company of an initial public offering of Common Stock
pursuant to a registration statement under the Securities Act of 1933, (b)
Purchaser ceases, for any reason, to hold more than fifty percent (50%) of the
outstanding Common Stock of the Company on a fully diluted basis, (c) the sale,
assignment, transfer or other disposition by the Company and its subsidiaries
of substantially all of their assets considered as a whole, (d) a merger or
consolidation involving the Company in which the Company is not the surviving
entity, (e) Xxxxx Communications Fund, L.P. or any Affiliate of Xxxxx
Communications Fund, L.P. shall cease, for any reason to hold more than fifty
percent (50%) of the outstanding common stock of Purchaser on a fully diluted
basis, (f) a merger or consolidation involving Purchaser in any transaction in
which Purchaser is not the surviving entity, or (g) Purchaser issues any of its
capital stock in an initial public offering pursuant to a registration
statement under the Securities Act of 1933.
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"Multiplier Fraction" means a fraction, the numerator of which is the
Base Numerator, and the denominator of which is the number of shares of Common
Stock of the Company calculated on a fully diluted basis at the time the
Multiplier Fraction is being determined.
"Payment Amount" means, as of any date, an amount equal to the
remainder of (a) the Total Common Equity Value on such date multiplied times
the Multiplier Fraction, minus (b) the Base Value.
"Payment Notice" has the meaning set forth in Section 2 hereof.
"Purchaser" means FWT Acquisition, Inc., a Delaware corporation.
"Qualified Appraiser" means an investment banking firm of national
recognition.
"Total Common Equity Value" means, on any date of determination, the
product of the Fair Market Value determined as of such date multiplied times
the total number of shares of Common Stock of the Company calculated on a fully
diluted basis.
2. Payment Obligation. Upon the occurrence of a Liquidity Event
or at any time thereafter, Executive, at its option, may deliver written notice
to the Company (the "Payment Notice") requiring the Company to pay to Executive
in cash the Payment Amount. The Payment Amount shall be determined as of the
date of delivery of the Payment Notice, and the Company shall pay to Executive
the Payment Amount (a) within ten (10) days following delivery of such Payment
Notice if the Payment Amount is based on Fair Market Value determined pursuant
to clauses (a) or (b) of the definition of "Fair Market Value," and (b) within
ten (10) days following final determination of Appraised Value pursuant to the
Appraisal Procedure if Fair Market Value is being determined pursuant to clause
(c) of the definition of "Fair Market Value."
3. Adjustment of Base Numerator. The Base Numerator is subject
to adjustment from time to time upon the occurrence of any of the events
enumerated in this Section 3.
(a) In the event that the Company shall at any time after
the date of this Agreement (i) declare a dividend on the Common Stock in shares
of its capital stock (whether in shares of such Common Stock or in capital
stock of any other class of the Company), (ii) split or subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, the Base Numerator after the time of the record date
for such dividend or of the effective date of such split, subdivision or
combination shall be adjusted to equal the number of shares of Common Stock
which a shareholder having a number of shares of Common Stock equal to the Base
Numerator immediately prior to such record date or effective date, as the case
may be, would own or be entitled to receive after such record date or effective
date.
(b) In the event that the Company shall at any time after
the date of this Agreement (i) issue any shares of Common Stock without
consideration or at a price per share less
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than Fair Market Value, or (ii) issue options, rights or warrants to subscribe
for or purchase such Common Stock (or securities convertible into such Common
Stock) without consideration or at a price per share (or having a conversion
price per share, if a security convertible into such Common Stock) less than
Fair Market Value (a "Dilution Adjustment Event"), the Base Numerator shall be
adjusted to equal the product obtained by multiplying the Base Numerator
immediately prior to such Dilution Adjustment Event by a fraction, the
numerator shall be the number of shares of Common Stock outstanding immediately
after such Dilution Adjustment Event, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately prior to such
Dilution Adjustment Event plus the number of shares of such Common Stock which
the aggregate offering price of the total number of shares of such Common Stock
so to be issued or to be offered for subscription or purchase (or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at Fair Market Value immediately prior to such issuance. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined by a Qualified Appraiser mutually acceptable to the Executive of the
Company (the cost of the engagement of said Qualified Appraiser to be borne by
the Company). Shares of such Common Stock owned by or held for the account of
the Company or any Subsidiary thereof shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever the date of such issuance is fixed (which date of issuance shall be
the record date for such issuance if a record date therefor is fixed); and, in
the event that such shares or options, rights or warrants are not so issued,
the Base Numerator shall again be adjusted to be such number which would be in
effect if the date of such issuance had not been fixed.
(c) In case the Company shall make a distribution to all
holders of Common Stock (including any such distribution made in connection
with a consolidation or merger in which the Company is the surviving
corporation) of evidences of its indebtedness or assets (whether a liquidating
dividend or distribution or otherwise), the Base Numerator after such date of
distribution shall be adjusted to equal the product obtained by multiplying the
Base Numerator immediately prior to such date by a fraction, the numerator of
which shall be the Fair Market Value immediately prior to such distribution,
and the denominator of which shall be the Fair Market Value immediately prior
to such distribution less the fair market value as determined by a Qualified
Appraiser mutually acceptable to the Executive and the Company (the cost of the
engagement of said Qualified Appraiser to be borne by the Company) of the
portion of the assets or evidences of indebtedness so to be distributed
applicable to one share of Common Stock. Such adjustment shall be made
successively whenever a date for such distribution is fixed (which date of
distribution shall be the record date for such issuance if a record date
therefor is fixed); and, if such distribution is not so made, the Base
Numerator shall again be adjusted to be such number which would then be in
effect if the date of such distribution had not been fixed.
(d) The Company shall not effect any consolidation,
merger or sale of the properties and assets of the Company as an entirety or
substantially as an entirety to any other person or entity, unless prior to or
simultaneously with the consummation thereof, the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation
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purchasing such assets or the appropriate corporation or entity shall assume,
by written instrument, the obligations of the Company under this Agreement.
(e) If any question shall at any time arise with respect
to the adjusted Base Numerator, such question shall be determined by an
independent firm of certified public accountants of recognized national
standing mutually acceptable to the Company and Executive.
(f) Upon any adjustment of the Base Numerator pursuant to
this Section 3, the Company shall promptly, but in all events within thirty
(30) days thereafter, cause to be given to Executive a certificate signed by
the Company's Chief Financial Officer setting forth the Base Numerator as so
adjusted and describing in reasonable detail the facts accounting for such
adjustment and the method of calculation used. Where appropriate, such
certificate may be given in advance and included as part of the notice required
to be mailed under the other provisions of this Section 3(f).
In the event:
(i) that the Company shall authorize the issuance to all
holders of its Common Stock of rights or warrants to subscribe for or purchase
capital stock of the Company or of any other subscription rights or warrants;
or
(ii) that the Company shall authorize the distribution to
holders of its Common Stock of evidences of its indebtedness or assets; or
(iii) of any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or of the conveyance or transfer of the properties and assets of the
Company substantially as an entirety, or of any capital reorganization or
reclassification or change of the Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination); or
(iv) of the voluntary dissolution, liquidation or winding
up of the Company; or
(v) that the Company proposes to take any other action
which would require an adjustment of the Base Numerator pursuant to this
Section 3;
then the Company shall deliver to Executive, at least twenty (20) days prior
notice stating (i) the date as of which the holders of record of Common Stock
to be entitled to receive any such rights, warrants or distribution are to be
determined, or (ii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that the holders of
record of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up.
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4. Limited Interest. The award of stock appreciation rights
pursuant to this Agreement shall not be construed as giving the Executive any
rights relating to the stock of the Company. Neither shall this Agreement be
construed as giving the Executive any interest in the Company other than as
provided pursuant to the terms of this Agreement. Further, this Agreement
shall not give the Executive any right to continue as an officer or Executive
of the Company or any subsidiary of the Company or affect the right of the
Company to dismiss the Executive to the extent permitted pursuant to the terms
of the Employment Agreement with the Company.
5. Notices. For the purposes of this Agreement, notices, demands
and all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive: Xxx X. Xxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
If to the Company: FWT, Inc.
X.X. Xxx 0000
Xx. Xxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxx and Xxxxxx X. Xxxxx
With a copy to: Xxxxx Communications Fund, L.P.
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxx
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
6. Assignment. The Company shall not assign, transfer or convey
its rights or delegate its duties under this Agreement. Any attempted
assignment or delegation shall be void. Executive shall not be permitted to
assign or otherwise transfer its rights under this Agreement.
7. Modification and Amendments. No provision of this Agreement
may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by the Executive and the Company's
duly authorized executive officer.
8. No Waiver. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed
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by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
Texas without regard to its conflicts of law principles.
10. Validity. The invalidity or unenforceability of any provision
or provisions of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto in respect of any subject matter contained
herein and supersedes all prior severance or other agreements, promises,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any officer, Executive or representative of any party
hereto; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date and year first above written.
FWT, INC.
By: /s/ XXXXXXXX X. XXXXXXX
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Name: Xxxxxxxx X. Xxxxxxx
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Title: Vice President
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XXX X. XXXXX
/s/ XXX X. XXXXX
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Xxx X. Xxxxx
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