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As filed with the Securities and Exchange Commission on January 8, 1997
REGISTRATION NO. 333-18439
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pre-Effective Amendment No. 1 to
Form SB-2/A
Registration Statement Under the Securities Act of 1933
MOBILE AREA NETWORKS, INC.
(Name of small business issuer in its charter)
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<S> <C> <C>
Texas 4813 75-2654110
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of incorporation or organization) Classification Code Number)
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George E. Wimbish, Chairman
120 International Parkway, Suite 220
Heathrow, Florida 32746
(407-741-9116)
(Address and telephone of principal
executive offices and principal place of business)
James R. Leone
James R. Leone & Assoc., P.A.
452 Osceola Street, Suite 211
Altamonte Springs, Florida 32701
(407-831-1255)
(Name, address and telephone of agent for service)
Approximate date of Proposed sales to the public: As soon as practicable after
the Registration Statement becomes effective.
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CALCULATION OF REGISTRATION FEE
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Amount Proposed Proposed
Title of Each Class of to be Maximum Maximum Amount of
Securities to be Registered Registered Offering Price Aggregate Registration Fee
Per Unit Offering Price
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Common Stock, no par value. 1,000,000 $14.50 $14,500,000 $ 4,393.94
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Total $4,393.94
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The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that the registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Subject To Completion, Dated January 8, 1997
MOBILE AREA NETWORKS, INC.
A Texas Corporation
1,000,000 Common Shares (maximum) at $14.50 for $14,500,000
Mobile Area Networks, Inc. (the "Company") offers the users of laptop computers
and handheld digital communication devices its exclusive, very low cost, very
fast, encrypted (private) wireless communication service called mobiLAN(R). This
system uses a unique combination of exclusive second generation megabit
transceiver PC Card, patented encryption and billing software, local relays, and
fiber optics transmission for clean, fast, LAN access to main computer groups,
including the Internet and the Intranet. Digital, audio, and video live
interaction is available on a real-time basis, at a small fraction of the cost
of telephone modem usage.
To buy the stock, read the Prospectus and send the Subscription Agreement with
your check to the Company, or wire it and your funds as described in it and on
the Internet.
CONTACT: GEORGE E. WIMBISH, CHAIRMAN
120 INTERNATIONAL PARKWAY, SUITE 220
HEATHROW, FLORIDA 32746
407-741-9116
(HTTP://WWW.MOBILEAREA.NET)
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Pricing Table Price Sales Proceeds to
to public(1) commission (2) Company(3)
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Per Share $14.50 $1.45 $13.05
Total Maximum $14,500,000 $1,450,000 $13,050,000
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1. The offering price may be changed at the Company's discretion.
2. The Company's officers and directors are selling the shares without
compensation. However, this column reflects the fact that the Company may
engage one or more licensed broker dealers as selling agents for agreed
upon commissions not to exceed ten percent (10%), who may allot a portion
thereof to other licensed broker dealers assisting in the sales. The
Company and broker dealers will mutually indemnify and defend each other
for securities law claims attributable to the indemnifying party. Persons
selling or assisting, may be deemed to be underwriters under securities
laws.
3. Before deducting offering expenses payable by the Company estimated to
total $145,000 in the case of the Maximum Offering (1% of gross proceeds).
(See "Use of Proceeds", herein.) The proceeds from the sale of Shares will
be transmitted by noon of the business day following receipt to the
Company's bank account in Heathrow, Florida.
These securities are being sold on a best efforts, no minimum amount basis. The
offering will expire nine months after the effective date of the registration
statement for the securities, if not terminated sooner. The shares are offered
subject to prior sale, and the Company reserves the right to reject any offer in
whole or in part. The Company will send by U.S. mail to subscribers within
thirty (30) days, signed copies of their Subscription Agreement and Common Stock
certificates.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY
AUTHORITY, NOR HAVE THEY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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IMPORTANT INFORMATION
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INVESTMENT IN SMALL BUSINESSES INVOLVES A HIGH DEGREE OF RISK, AND
INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFERING UNLESS THEY CAN AFFORD TO
LOSE THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS" HEREIN FOR WHAT MANAGEMENT
BELIEVES ARE THE MOST SUBSTANTIAL RISKS TO AN INVESTOR IN THIS OFFERING.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED.
MOBILE AREA NETWORKS, INC. IS A DEVELOPMENT STAGE COMPANY AS DESCRIBED
HEREIN.
THIS OFFERING IS INTENDED TO BE FILED FOR OFFER AND SALE IN ALL STATES
OF THE UNITED STATES. FILING FOR OFFER OR SALE IN STATES IS INTENDED TO BE AS
DEFINED IN PUBLIC LAW 104-290.
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SUMMARY
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The following summary information is qualified in its entirety by the
detailed information and financial statements appearing elsewhere herein. See
"Risk Factors" for a discussion of certain factors that should be considered in
connection with an investment in the stock.
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FAST, LOW COST WIRELESS SERVICE
Mobile Area Networks, Inc., (the "Company") provides its mobiLAN(R)
communication service for laptop computers and handheld communication devices
through a secure, very low cost, very fast wireless connection to remote
home-office network services and to the Internet. Unlike a telephone modem
connection no cord or phone line connection is necessary for this service. The
Company will charge a user fee for this communication service. The user's
hardware ( PC Card) and software for the mobiLAN(R) service will be paid for by
such user or by the user's employer as a setup fee, or as negotiated with the
user's employer.
The telephone modem was created to convert digital computer data to
analog data so that an analog phone line could carry digital information. The
millions of miles of phone wiring and millions of phone jacks support the modem
strategy. The laptop modem market (PC Card modems that fit in laptop PCMCIA
slots) totaled $3,000,000,000 (3 billion) in modem equipment sales in 1995(1).
The usage fees paid to telephone companies for line access and long distance
charges probably were much greater than that amount.
FIBER OPTIC PORTION OF MOBILAN(R)
There are now millions of miles of fiber optic cable for digital
information transport installed in the U.S. These fiber network installations
(Points of Presence - POPs) are within miles of nearly every major corporation
office, hotel, and airline club in the U.S. Local Exchange carriers (LECs) can
provide a high-speed local data connection from these POPs to any building site
in the U.S. The Company will use a high-speed, open-standard, short-range
wireless technology to reach this high-speed wired data connection inside every
relay wired building and a modem-speed, open-standard, long-range wireless
technology from outside locations. The WLAN (Wireless Local Area Networks)
relays are low cost, small, easily installed, and use little power. With these
two technologies laptop users can communicate from nearly any location and be
securely connected to their home office Local Area Network (LAN) or the
Internet.
MASSIVE COST ADVANTAGES
The Company's exclusive mobiLAN(R) wireless communication service will
have uniquely significant economic advantage over a telephone modem connection
because it is uniquely based on the unregulated digital data network and not on
the highly regulated and tariffed public voice ( analog) phone system. The
underlying cost per bit on the fiber optic data network is about 1/100th the
cost of carrying a bit on the public voice telephone network. The Company has a
unique method of connecting to the data network the users of laptop PCs and
handheld digital communication devices.
There were 17,000,000 (17 million) business users of laptop computers
at the end of 1995(2). Nearly 3,000,000 (3 million) of these laptop users travel
an average of 3 (three) times per month to interstate destinations. BIS
Strategic Decisions estimated that these mobile professionals are spending over
$50,000,000 ($50-million) per month or $600,000,000 ( $600 million) per year in
long distance charges and surcharges to check e-mail and send faxes from hotels.
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(1) AP Research Corporation, International Data Corporation.
(2) Ablonci, Wm.F., and Elliot, Thomas R.: Mobile Professional Market
Segmentation Study, March 1995, BIS Strategic Decisions, 1-617-982-9500
2
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HOW MOBILAN(R) WORKS
THE COMPANY HAS INTEGRATED A NUMBER OF KEY EXISTING TECHNOLOGIES TO
CREATE THIS MOBILE DATA COMMUNICATION SERVICE, AND HAS ADDED KEY PROPRIETARY
CONTENT NECESSARY TO MAKE THE NETWORK FULLY FUNCTIONAL AND MORE COST EFFECTIVE.
The Company has established the mobiLAN(R) communication network by
joining wireless/wired public networks on a nationwide basis. Laptops are the
lifeblood of the business traveling roadwarriors. With the two PC Card expansion
slots in laptops and the Company's service called mobiLAN(R)(3) they can connect
to the corporate networks from nearly anywhere, without hooking up to a
telephone line.
One PC Card is a high-speed, short range wireless card. The cards are
known as WLAN (Wireless Local Area Networks) cards. The mobiLAN(R) WLAN cards
can communicate above 1 Mbps (Megabit per second) and are used inside buildings.
Initial target areas are airports, convention centers, hotels and resorts,
restaurants, and major office buildings. The Company has an exclusive contract
with the developer of a new generation gallium arsenide WLAN PC Card with
advanced speed and low "noise" capabilities. No other such card is on the market
or known to be available in 1997. This card is about 100 times faster than
telephone modems (at high speed).
The second PC Card is a wireless wide-area data networking card using
the CDPD (Cellular Data Packet Delivery) network. CDPD is a digital extension to
the existing cellular phone network. CDPD can communicate wirelessly at about 10
Kbps, or about the actual speed of a wired modem, from nearly anywhere. CDPD
service is deployed in over 100 metropolitan areas throughout the U.S. So,
anywhere in these communities, outdoors or indoors, full access to the home
office network LAN or to the Internet using the Company's mobiLAN(R) encrypted
(fully private) connection is available to a laptop user.
A user in a mobiLAN(R) equipped hotel simply opens a laptop anywhere in
the hotel room, the club or the bar, and is automatically logged on to the home
office network at megabit speeds. All network resources are available as if the
user were sitting at a desk in the home office with a direct Ethernet
connection. In fact, even when in the home office the WLAN card will provide
performance comparable to a direct Ethernet connection, but gives a user the
freedom to roam throughout the facilities without a telephone cord connection to
the laptop.
So, with a laptop equipped with two PC Cards from the Company, and the
mobiLAN(R) network a user can connect to the home LAN or the Internet in home
office facilities, in hotels, in airline clubs, in a car, in an airplane, at
home, in a park, in the airport and in a customer's location.
COMMUNICATION NETWORK VIA INTRANET (NOT INTERNET)
mobiLAN(R) provides both high-speed and modem-speed data communication
connections between the wireless public network node and the end-user private
network through a high-speed private Intranet backbone of fiber optic cables. It
is a separate IP (Internet Protocol) network dedicated exclusively to corporate
communication, not the public Internet.
SECURITY
mobiLAN(R) achieves the industry's highest level of security, thanks to
the most comprehensive security software available. This encryption software
sets up impenetrable "tunnels" through which data can travel safely.
Authenticated, encrypted tunnels keep data from being accessed or modified as it
passes from a remote wireless client to the home LAN.
MOBILAN(R) ECONOMICS
mobiLAN(R) WLAN service provides reliable, very high-speed encrypted
communications at specific locations such as hotels and airline clubs. WLAN
service is priced at approximately $50 per month for an unlimited amount of
data. No comparable service is available at any price.
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(3) Service Mark was registered with the U.S. Patent and Trademark Office on
10/21/96
3
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mobiLAN(R) CDPD service is a wireless and encrypted (totally private)
form of the cellular modem's non-secure (non-private), reliable, slow-speed
communications across most major metropolitan areas. This service is ideal for
providing short, rapid and timely data exchanges. CDPD service is priced at
approximately $50 per month for a total of 1 Mbyte of data communication. Over a
21 day working month that is about 50,000 bytes per day or approximately 20
e-mail messages per day at $0.12 each. This is much less than many laptop users
pay for telephone modem access and long distance fees.
MOBILE COMPUTING COMMUNICATIONS
Mobile computing is booming(4):
- In the U.S. alone, more than 4,600,000 (4.6-million)
portable PCs were sold in 1995, an increase of 23% over 1994.
- Research indicates that at the end of 1995, there were
nearly 17,000,000 (17 million) portables in use in the U.S.
- Airline and other research data show that 27,300,000 (27.3
million) professionals travel; at the end of 1994 approximately 20
percent, or 5,500,000 (5.5 million), of these were using a
portable PC from a remote location.
However, in spite of the fact that these 5,500,000 mobile professionals
travel with a laptop computer, they are almost always limited to a data
connection of between 2400 and 28,800 baud (500 to 10,000 bits per second)
through a modem and phone line connection, when and if they can find access to a
phone jack connection.
Because the modem uses a public access telephone network, the lack of
security and the slow transmission rate both prevent direct network connection.
Thus, the use of a remote modem connection is limited to low volume data
transactions, such as messaging or e-mail applications that are on servers
outside the normal in-house network (LAN or Mainframe CPU). The remote use and
benefit of a laptop is significantly less than the power of the same laptop when
connected directly to the business' network, thus reducing productivity.
mobiLAN(R) allows 100 times faster data transfer on an encrypted (totally
private) basis at far lower cost.
Mobile professionals are not the only remote-computer users. Other
users include telecommuters (some with portables, but most with deskbound PCs),
workers operating from remote sites, and the millions of workers in the other 70
percent of the work force who are not classified as professionals, but who use
computers or digital communication devices (meter readers, inventory clerks,
rental car return verifiers, parking enforcement personnel, etc.)
THE COMPANY'S PEOPLE
WILLIAM J. REID is founder, President and CEO of Mobile Area Networks,
Inc. Mr. Reid was previously President and COO of Plancom, Inc., a
communications planning company specializing in large distributed communication
network installation and support. Mr. Reid was President of Management Sciences
Co., a company that specializes in competitive business improvement in sales and
marketing operations and driving that improvement into corporate strategic
initiatives. Mr. Reid was President of Mizar, Inc. a Dallas company that
manufactured and sold specialized high-speed computer engines for communication
and control systems. He was General Manager for the Data Communication Division
of Harris Corporation ($2.2B) and was responsible for all Harris data
communication equipment sold to Fortune 1000 companies world-wide.
GEORGE E. WIMBISH, Board Chairman, is a founder of Mobile Area
Networks, Inc. He is a successful private investor with over 20 years of
experience in acquisitions/mergers and company startups. He has operated 5
companies as CEO in wholesaling, manufacturing, and direct marketing. Most
recent position was CEO of a financial services company. In 1984 he was a
qualified candidate for the U.S. senate and has personally lobbied the U.S.
Senate. He has experience with regulatory agencies including Underwriters
Laboratory and the Nuclear Regulatory Agency.
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(4) Computer Retailer News 12/8/95
4
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DR. ROBERT M. GOOD, Director, is a founder of Mobile Area Networks,
Inc. He has been a successful private investor and entrepreneur for the past 15
years. He is a licensed stock broker. He had a successful dental practice in
Long Island, New York. Dr. Good has been President and Vice President of
numerous companies. He was an Army Officer.
JAMES R. LEONE, Director, is a practicing attorney and has had his own
law firm, James R. Leone & Assoc., P.A. since 1985 concentrating in the fields
of securities and corporate law. Previously, Mr. Leone was with Gray, Harris &
Robinson in Orlando, FL., and with Quinn, Jacobs, Barry and Miller in Chicago,
IL. Until 1981 Mr. Leone was a financial attorney and financial analyst with the
Securities and Exchange Commission in Washington, DC.
The Company has a contract for services from one of the largest
installation, integration and leasing companies to install and service the
Company's mobiLAN(R) relay and communication services. This partner makes
available to the Company over 150 support people.
The Company also has a working agreement with a Big Six Accounting firm
for the implementation and support of the in-house installation and support of
the Company's mobiLAN(R) network. This partner makes available to the Company
300 support people.
A leading software development firm is a contract vendor to Mobile Area
Networks, Inc. and has perfected the billing software concept. This firm is a
technical contractor to the Company in the areas of billing, security,
authentication, help desk development, and network performance.
5
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NOTE: THIS PROSPECTUS IS PART 1 OF AND OMITS CERTAIN INFORMATION CONTAINED IN
PART 2 OF THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH OMITTED INFORMATION INCLUDES, BUT IS NOT LIMITED TO THE
FOLLOWING: Charter and By-laws and amendments thereto, certain material
contracts, consents of experts, opinion of legal counsel re: legality. Such
information is available on request, for which there may be reasonable charges
for copying.
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RISK FACTORS
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AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND SHOULD BE REGARDED AS SPECULATIVE. AS A RESULT, THE PURCHASE OF SHARES
SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD A LOSS OF THEIR ENTIRE
INVESTMENT. IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
PROSPECTIVE PURCHASERS SHOULD CAREFULLY CONSIDER THE FOLLOWING:
A. LIMITED OPERATING HISTORY;
The Company is newly organized, and is dependent upon the proceeds of
this offering to implement its plan to develop and operate its proposed
business. Accordingly, an investment in the Company's shares is highly
speculative and is only a suitable investment for an investor who recognizes the
high risks involved, has no need for liquidity in the investment and who can
afford a total loss of the investment. There cannot be any guarantee that the
Company will be profitable or that additional capital will not be required.
B. ILLIQUID INVESTMENT; RISK OF LOSS.
This investment is not recommended for investors who do not have
adequate additional liquid assets such that they can afford a long-term
non-liquid investment and the risk of complete loss of the investment.
C. DEPENDENCE ON MANAGEMENT.
The Company is dependent on the services of the Company's Founders, who
are the Company's principal officers and Directors. The loss of their management
services would have a materially adverse impact on the Company. The Company does
not currently maintain any key man life insurance policy. The Company plans to
acquire key man insurance from the proceeds of this offering.
D. REGULATORY RISKS.
At the present time, no regulations exist which would materially
adversely impact the Company's contemplated operations. However, future
government regulation with respect to applications permitted for certain radio
wave frequencies could have an adverse impact on the Company.
E. CONTROL BY MANAGEMENT.
Upon completion of this offering, the officers and directors of the
Company will own, in the aggregate, approximately 85% of the outstanding shares
of the Company's common stock, assuming the maximum shares (1,000,000) are sold.
Accordingly, the Company's management will continue to be able to elect a
majority of the directors and thus control the management and affairs of the
Company.
F. COMPETITION.
The communications industry is a highly competitive business, and the
Company will be competing with numerous other companies, both privately and
publicly owned, which have substantially more resources and expe-
6
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rience available to them than the Company, including major telephone companies,
regional telephone companies and existing wireless technology suppliers.
G. ARBITRARY OFFERING PRICE.
The initial price at which the shares are offered hereby has been
arbitrarily set by the Company's management on a non arm's length basis, and has
no relationship to the book value per share, current earnings of the Company,
there having been none because of business development expenses, or other
generally accepted measurement of value. Investors in the Offering will incur
immediate and substantial dilution in net tangible book value of their shares.
See "Dilution".
H. LACK OF PUBLIC MARKET.
Prior to this Offering, there has been no public market for the shares
offered, and none is anticipated to develop in the near future. In the event a
regular public trading market does not develop, or is not sustained, any
investment in the Company's Common Stock would be highly illiquid. Accordingly,
an investor in the Shares may not be able to sell the shares readily, if at all.
Consequently, if as a result of some change in the circumstances arising from an
event not now contemplated, an investor wishes to transfer the shares owned, the
investor may find he or she has only a limited or no ability to transfer or
market the shares.
I. SUBSTANTIAL DILUTION.
Purchasers of the shares offered hereby will suffer an immediate and
substantial dilution of their investment. Specifically, in the case of the
maximum offering, dilution will be $12.37 per share, or 85%. (See
Section 2, "Dilution", where the dilution is illustrated by charts).
J. POSSIBLE NEED FOR ADDITIONAL FINANCING.
The Company cannot guarantee that sufficient funding will be available
from Common Stock sales of this offering to fund all its development and
operational needs. In the event the Company requires additional financing, the
Company may seek such financing through bank borrowing, debt, or other equity
financing, or otherwise. There can be no assurance that such financing will be
available to the Company on acceptable terms, if at all. The Company does not
presently have a credit line available with any lending institution. Any
additional equity financing may involve the sale of additional shares of the
Company's Common Stock on terms that have not yet been established. These terms
may (or may not) be more favorable than those contained herein. Any future sales
of securities might (or might not) result in dilution to the investors herein.
K. PENNY STOCK REGULATION.
Broker-dealer practices in connection with transactions in "penny
stocks" (also referred to as "designated securities") are regulated by certain
penny stock rules adopted by the Securities and Exchange Commission. Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system). The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the broker-dealer must make a special written determination that the penny stock
is a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These requirements may have the effect of reducing
the level of trading activity, if any, in the secondary market for a security
that becomes subject to the penny stock rules. If the Company's common stock
becomes subject to the penny stock rules, investors in this offering may find it
more difficult to sell their shares.
7
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L. ADVERSE EFFECT ON MARKET PRICE OF FUTURE SALE OF SHARES.
All 5,189,700 shares of Common Stock issued by the Company prior to
this Offering were offered and sold by the Company in private transactions in
reliance on an exemption from registration under the Act. Accordingly, all of
such securities are "restricted securities" within the meaning of Rule 144 and
cannot be resold without registration, or except in reliance on Rule 144 or
another applicable exemption from registration.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are required to be aggregated), including any affiliate of the
Company, who beneficially owns "restricted shares" for a period of at least two
years is entitled to sell within any three-month period, shares equal in number
to the greater of (i) 1% of the then outstanding shares of Common Stock (61,897)
shares of Common Stock after this offering if the maximum shares are sold under
this offering or (ii) the average weekly trading volume of the same class of
shares during the four calendar weeks preceding the filing of the required
notice of sale with the Securities and Exchange Commission. The seller also must
comply with the notice and manner of sale Form 144 requirements of Rule 144, and
there must be current public information available about the Company. In
addition, any person (or persons whose shares are aggregated) who is not, at the
time of the sale, nor during the preceding three months, an affiliate of the
Company, and who has beneficially owned restricted shares for at least three
years, can sell such shares under Rule 144 without regard to notice, manner of
sale, public information or the volume limitations described above.
Future sales of shares of Common Stock (or securities convertible into
Common Stock) by the Company or as stated above could adversely affect the
prevailing market price, if any, of the Company's Common Stock.
M. DIVIDENDS NOT LIKELY.
No dividends on this Company's Common Stock have been declared or paid
by the Company to date. The Company does not presently intend to pay dividends
for the foreseeable future, but intends to retain all earnings, if any, for use
in the Company's business. There can be no assurance that dividends will ever be
paid on the Common Stock. Investors who anticipate the need for dividends from
their investment in the Company should not purchase the shares offered hereby.
N. EFFECT AS ANTI-TAKEOVER PROVISIONS
The shareholders have authorized Preferred Stock in the Articles of
Incorporation, and the Board of Directors may issue Preferred Stock with rights
that could adversely affect the rights of the holders of the Common Stock. No
shares of Preferred Stock are presently issued or outstanding and the Company
has no plans to issue shares of Preferred Stock. The issuance of shares of
Preferred Stock under certain circumstances could have the effect of delaying or
preventing a change of control of the Company or other corporate action.
Although the Company has no present intentions to issue shares of Preferred
Stock, such issuance, while providing flexibility in connection with possible
acquisition and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company.
O. DEPENDENCE ON PROPRIETARY TECHNOLOGY
The Company relies on a combination of patents, trade secrets,
copyright laws, non-disclosure, non-circumvention and other contractual and
technical measures to protect its proprietary technology. There can be no
assurance that these provisions will be adequate to protect its proprietary
rights. Although the Company believes that its products and services do not
infringe upon the proprietary rights of third parties; there can be no assurance
that third parties will not assert infringement claims against the Company, or
the Company's clients. See description of "Business-Intellectual Property."
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DILUTION
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Private investors have provided the Company with $136,700 in cash in
order to finance the Company's working capital needs to develop the working
relationships and contractual agreements that contribute to the mobiLAN(R)
communication system. As of December 12, 1996, the aggregate net tangible book
value of the Company's Common Stock was $131,154 (See "Financial Statements").
The net tangible book value per share as of December 12, 1996 was $0.025. Net
tangible book value per share is calculated by dividing the tangible net worth
of the Company (total tangible assets less total liabilities) by the number of
shares of Common Stock outstanding.
Giving effect to the sale by the Company of 1,000,000 shares of Common
stock offered hereby (at the offering price of $14.50 per share and after
deducting offering expenses), the pro forma net tangible book value of the
Company as of December 12, 1996, would have been $13,181,154 or $ 2.13 per
share. This represents an immediate increase in the net tangible book value of
$2.11 to existing stockholders and an immediate dilution of $12.37 per share to
the persons purchasing the shares offered hereby at the initial public offering
price ("New Investors").
The following table illustrates the per share dilution to the new
investors:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
@Maximum
Subscriptions
- --------------------------------------------------------------------------------------------------
<S> <C>
Initial offering price per share $ 14.50
Net tangible book value before offering $ 131,154
Net tangible book value per share before the offering $ 0.025
Increase in net tangible book value per share $ 2.11
attributable to the cash payment by new investors
Pro forma net tangible book value per share after offering $ 2.13
Dilution per share to New Investors $ 12.37
- --------------------------------------------------------------------------------------------------
</TABLE>
The following tables summarize on a pro forma basis as of December 12,
1996, the number of shares of Common Stock purchased from the Company and the
total consideration paid by existing stockholders and by new investors in the
offering being made hereby (based on, in the case of new investors, an offering
price of $14.50 per share).
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
At Maximum Subscriptions Shares Purchased Total Net Consideration
Number Percent Amount Percent
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Officers and Directors 5,101,000 82.4% $ 51,300 0.39%
Private Investors 88,700 1.4% $ 88,700 0.67%
New Investors 1,000,000 16.2% $13,050,000 98.94%
Total 6,189,700 100% $13,190,000 100%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
- --------------------------------------------------------------------------------
PLAN OF DISTRIBUTION
- --------------------------------------------------------------------------------
The shares are being offered by the Company through its officers and
directors (i.e. William Reid, George Wimbish, Robert Good and James Leone) who
will not receive any compensation therefor.
The Company plans to aggressively seek the support of NASD member firms
which are recognized market makers with the intention of obtaining their
assistance with the creation of a viable market in the Company's securities for
the benefit of its shareholders. In this regard, the Company may employ one or
more finders to assist with introductions to appropriate market makers, for
which such finders would be paid finders fees commensurate with current market
practices.
Under Rule 15c2-11 under the Securities Exchange Act of 1934,
broker-dealers acting as market makers are required to have certain current
information about the Company before they can make a market and thereafter as
they continue making a market in its common stock. The Company plans to furnish
periodically to broker-dealers the information specified in Rule 15c2-11 in
order to enhance such firms' ability to make a market in the Company's stock.
The price at which the shares are offered hereby has been arbitrarily
set by the Company's management, and has no relationship to the book value per
share, current earnings of the Company, or other generally accepted measurement
of value. No securities are to be offered for the account of any existing share
holder.
The purchase price paid by investors must be sent directly to the
company by check, or money order, payable only to: "MOBILE AREA NETWORKS, INC.".
The proceeds from the sale of the shares will be transmitted by noon of the
business day following receipt to the Company bank account. The shares are
offered subject to prior sale and the Company reserves the right to reject any
offer in whole or in part. The Company will send by U.S. mail to subscribers
with ten (10) days, signed copies of the subscription agreement. Common Stock
certificates will be mailed within two weeks thereafter, and within thirty (30)
days of acceptance of the subscription by the Company.
10
<PAGE> 13
- --------------------------------------------------------------------------------
USE OF PROCEEDS
- --------------------------------------------------------------------------------
The Company will use the maximum proceeds primarily for
commercialization of its mobiLAN(R) service that includes completion of billing
software and putting in demonstration systems for high profile accounts. The
following table illustrates the use of maximum proceeds. This summary table is a
compilation of the three (3) year financial projections illustrated near the end
of this Prospectus.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------
Maximum Footnote
CATEGORY Subscriptions Percentage
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Gross Offering Proceeds $14,500,000 100.0% (1)
- --------------------------------------------------------------------------
Sales commission 1,450,000 10.0% (2)
- --------------------------------------------------------------------------
Offering Expenses 145,000 1.0% (3)
- --------------------------------------------------------------------------
Network Operating Costs 8,050,000 55.5% (4)
- --------------------------------------------------------------------------
Network Installation Costs 1,455,000 10.0% (5)
- --------------------------------------------------------------------------
Management 1,560,000 10.7% (6)
- --------------------------------------------------------------------------
Sales and Promotion 550,000 3.8% (7)
- --------------------------------------------------------------------------
Engineering 750,000 5.3% (8)
- --------------------------------------------------------------------------
Administration 540,000 3.7% (9)
- --------------------------------------------------------------------------
Total $14,500,000 100.0% (10)
==========================================================================
</TABLE>
Footnotes
(1) Same as Prospectus Cover Page Pricing table footnote (1).
(2) Same as Prospectus Cover Page Pricing table footnote (2).
(3) Other offering expenses; filing, accounting and legal fees $11,393.94;
printing $30,000; travel, postage, delivery misc. $40,000; lodging, phone,
promotion $28,000; blue sky $20,000;. internet development $14,106.56;
edgarizing 1,500.
(4) Recurring network connection costs for installed hotel and club sites,
over three (3) years.
(5) One time installation costs at hotels and clubs.
(6) Executive and senior management salary (three years).
(7) Non-management sales salary and promotional expense. Most sales expense is
shown in item (5) because senior sales people are required in these early
years.
(8) Network support in help desk activities and new feature development and
testing.
(9) Finance, accounting and employee benefits.
To the extent revenues may cover certain of the expenses shown, then such
amounts will be utilized to increase marketing and order fullfillment by
installation of expanded relay sites (in more airports, hotels, etc., if not
paid by the building owners to compete with travelers, or by traveler's
employees), and financing of PC cards and software for repayment from monthly
user fees.
11
<PAGE> 14
- --------------------------------------------------------------------------------
DESCRIPTION OF BUSINESS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FAST, LOW COST WIRELESS COMMUNICATIONS
Mobile Area Networks, Inc. provides traveling business people with
laptop computers and hand held digital communication devices (roadwarriors), a
very fast, very low cost, secure, totally private, wireless data communications
service to remote home-office network services, and to the Internet. Unlike a
modem attachment no cord or phone line connection is necessary for this service,
which includes both modem-speed connectivity and high-speed wireless
connectivity.
A telephone modem does allow limited but critical connectivity, but
slow speed disenfranchises the mobile user from most of the productivity
benefits enjoyed by in-house computer users.
Millions of miles of fiber optic cable for digital information
transport are installed in the U.S. These fiber network transceiver switch or
junction installations (Points of Presence - POPs) are within miles of nearly
every major corporate location, hotel and airline club. Local Exchange Carriers
(LECs) can provide a high-speed local data connection from these POPs to any
building site in the U.S.. The Company will use a low-speed, open-standard
wireless capability device (a CDPD PC Card for a laptop) outside of buildings,
and a high-speed, open-standard, wireless technology PC Card to reach this
high-speed data connection inside the building.
The Company's mobiLAN(R) system will have significant economic
advantage over a modem telephone cord connection because it is built from the
unregulated data network, not on the highly regulated and tariffed public phone
system. The underlying cost per bit on the fiber data network is about 1/100th
the cost of carrying a bit on the public voice network.
- --------------------------------------------------------------------------------
LAPTOPS EXPLODING(5)
There were 17,000,000 (17 million) business users of laptop computers
at the end of 1995(6). Nearly 3,000,000 (3 million) of these laptop users travel
an average of three times per month to interstate destinations. BIS Strategic
Decisions estimated that these mobile professionals are spending over
$50,000,000 ($50 million) per month or $600,000,000 ($600 million) per year in
long distance charges and surcharges to check e-mail and send faxes from hotels.
The Company's mobiLAN(R) high-speed connectivity will reduce this cost
substantially, and new applications giving greater productivity from existing
resources, people and equipment will grow the market larger per year rapidly.
THE COMPANY HAS INTEGRATED A NUMBER OF KEY EXISTING TECHNOLOGIES TO
CREATE THIS MOBILE DATA COMMUNICATION SERVICE AND HAS ADDED KEY PROPRIETARY
CONTENT TO MAKE THE NETWORK FUNCTIONAL AND MORE COST EFFECTIVE.
Today's laptops are the lifeblood of the business traveling
roadwarriors. With the two PC Card expansion slots in laptops and this service
called mobiLAN(R)(7) they can connect to the corporate computer network from
nearly anywhere for full bore, real-time interaction, without hooking up to a
telephone line.
- -----------------------------
(5) Computer Dealer News 12/5/1995
(6) Ablonci, Wm. F., and Elliot, Thomas R.: Mobile Professional Market
Segmentation Study, March 1995, BIS Strategic Decisions, 1-617-982-9500
(7) Service Mark was registered with the Patent and Trademark office on
10/21/96
12
<PAGE> 15
- --------------------------------------------------------------------------------
PC CARD APPLICATION
FAST WLAN PC CARD
One PC Card is a high-speed, short-range wireless card. These cards are
known as WLAN cards. The mobiLAN(R) WLAN cards can communicate at over 1 Mbps,
and are used inside buildings. Initial target areas are airports, convention
centers, hotels and resorts, restaurants and major office buildings.
Wireless LANs consist of a PC Card that goes into the laptop PCMCIA
slot and transmits to an Access Point relay. Most laptops can support both PC
Cards at the same time. The Access Point is about the size of a hardcover book
and looks much like a smoke alarm or thermostat and mounts on the ceiling or the
wall. The high-speed, short-range LAN wireless technology is developed under the
IEEE 802.11 standard.
Normally, good wireless 802.11 communications from the laptops to the
Access Point can be established within a range of 600 feet. Two Access Points
will cover about 785,000 square feet of space. For a hotel two Access Points
would cover two or three floors. In an airline club one Access Point would cover
the space but three Access Points may be needed for problem free through-put in
this dense user environment. Current retail price of the 802.11 PC Cards is
about $550 (about 1/2 the cost of CDPD modems and about 2 times the cost of a
high-speed telephone line modem) and the retail price of the 802.11 Access Point
is about $1,400 which can serve up to 58 simultaneous PC Cards so the total cost
is much less than CDPD PC Cards, and the data capacity is virtually infinite,
with the data bit utilized under tariffed cost at 1/100 the telephone line cost.
Wide area network (WAN) communication suppliers are AT&T, Sprint, MCI,
WorldCom, and MFS Datanet. This WAN data communication market was about
$2,000,000,000 ($2-billion) in 1995.
SLOW CDPD CARD
The second PC Card is a wireless wide-area data networking card using
the CDPD network. CDPD is a digital extension to the existing cellular phone
network. CDPD can communicate wirelessly at about 10 Kbps, or about the actual
speed of a wired modem, from nearly anywhere. CDPD service is deployed in over
100 metropolitan areas throughout the U.S. So, anywhere in these communities,
outdoors or indoors, a laptop user can connect, with total security and full
access to a home office network. Its slow speed (10,000 bits per second) is
equivalent to telephone line modem speed, but mobiLAN(R) offers both line-free
mobility plus fully encrypted privacy.
A CDPD modem connection consists of a PC Card that goes into the laptop
PCMCIA slot and transmits to the existing CDPD network. This PC Card is about
50% larger than a credit card and about the thickness of four credit cards. This
wireless modem functions under the CDPD protocols and is the digital extension
of the cellular phone network.
CDPD transmission is good in most weather conditions up to 3.5 miles.
Over 100 cities have CDPD service across their metropolitan areas. This is
expected to grow to over 200 cities by year end 1997. Current prices of CDPD
modems are approximately $1,000.
- --------------------------------------------------------------------------------
INTRANET INFRASTRUCTURE
Mobile Area Networks, Inc. will use an Intranet TCP/IP WAN fiber optic
long distance service for fast problem free transmission for both WLAN and WAN
data. Intranet uses the same Internet Protocol concepts as Internet but is a
private network so it does not have the slow response times and the lack of
security of the Internet. The key technical features of a "connectionless"
network needed to make Mobile Area Networks, Inc. successful require an
excellent fit to an Intranet service, which the Company has selected.
13
<PAGE> 16
Local high-speed lines will be utilized, and the data capacity is
virtually infinite, with the bit cost at 1/100 the telephone line and modem
cost.
The short-range 802.11 wireless technology, the high-speed local loop
connections and the WAN data carriage form the data infrastructure of
mobiLAN(R). These costs and the encryption software costs will be amortized into
monthly user fees or possibly fairly modest up front payment by a user's
employer for a specific home office.
- --------------------------------------------------------------------------------
COMPANY ENCRYPTION AND BILLING SOFTWARE
Two additional key technologies are required to make mobiLAN(R)
functional:
1. Authentication, Privacy and Security
2. Billing
Authentication, Privacy and Security will be implemented using Internet
tunnel software for both the laptop client agent and the tunnel server agent at
the corporate site. Tunnel software encapsulates the initial information from
the laptop to the server in a secure IP datagram. The tunnel software at the
server uses both public key and private key authentication to establish a secure
tunnel for all further communication with the laptop. All information inside the
datagram is encrypted for totally secure communications.
Billing for this unique, high-speed data service is a proprietary
concept of Mobile Area Networks, Inc. and is being implemented internally by the
Company. Public individual user billing for a data network concept like the
Company's mobiLAN(R) does not exist. Current data network billing is on a
point-to-point basis for a specific bandwidth data line. For example, a T-1 line
(1.544Mbps) from Southwestern Bell to connect two points in Dallas County would
cost about $2,600 per month. In discussions with Sprint and AT&T technical
representatives with broad industry knowledge it became clear that public
network individual user billing was not a capability any supplier in the
industry had developed or was developing.
- --------------------------------------------------------------------------------
COMPETITION
Mobile Area Networks, Inc.'s. value proposition (dual-speed, low cost,
hybrid wireless/wired connectivity to a nation-wide "connectionless" WAN) will
be uniquely implemented. That means there currently exists no announced direct
competitors. Implied competition exists in both the wired and wireless market.
Eventually, perhaps within a year or two, the vast cost savings of the
mobiLAN(R) services will demand and force competition to emerge, but the Company
expects to have a substantial, highly profitable market share and will be able
to maintain that market share against likely competition.
WIRED
The largest current competition is remote connectivity using a modem
connection. The laptop modem market (PC Cards that fit in laptop PCMCIA slots)
totaled $3,000,000,000 ($3.0 billion) in sales in 1995(8). However, the modem
has now reached the maximum speed the voice network can support (33.6 Kbps)(9).
That modem speed has proved acceptable for short message information, such as
e-mail and is marginally acceptable for small record data-base applications such
as Lotus Notes. The low security and lack of privacy of phone connections has
required most companies to put a firewall system between remote connection and
LAN connectivity. Thus, remote users may get to e-mail or to Notes but cannot
break through to the network. These modem companies are manufacturing firms and
consequently are not expected to enter the service business like Mobile Area
Networks.
- ------------------------
(8) AP Research Corporation, International Data Corporation.
(9) Blankenhorn, Dana: ISDN to the Net - U.S. Robotics sets its modem
strategy, Interactive Age, August 19, 1995
14
<PAGE> 17
Connectivity of remote users with modems can be made through the public
phone network, the Internet, or leased lines. The public phone network is the
most widely available for connectivity but often has high surcharges from public
places even for credit card calls. Internet connectivity is the least secure and
has serious performance and connectivity problems. Dedicated leased lines are
the highest performance but are prohibitively expensive. Leased lines are most
often used for remote branch offices with multiple users sharing the cost.
ISDN (Integrated Services Data Network) connection is the next push for
remote connectivity. By the end of 1995, Datapro(10) reports a total of 431,105
lines were installed. ISDN connections, like analog POTS (Plain Old Telephone
Service) links, can be either dial-up or dedicated. Pricing is highly variable,
availability is spotty, and installation and service have been poor. Application
of ISDN has been to replace leased lines for small satellite offices and as
dedicated connections for highly computer literate telecommuters (engineers,
network technicians, travel agents). ISDN is a dedicated line, or a
point-to-point connection, and it will be unlikely that ISDN to every room in a
hotel will be available before an even higher speed alternative, like Mobile
Area Networks, Inc. will offer higher speeds at much lower cost.
WIRELESS
In the existing wireless network market, it is important to point out
that every competitive solution has a slower data rate, costs much more,
requires massive capital for infrastructure deployment, and requires the use of
an expensive, non-standard connection device. Many competitors are seeking to
optimize their infrastructure investment, but in doing so they are forcing the
end user to embrace unacceptably high levels of change in user habits and
unacceptably poor network performance.
Wireless to space will be reaching the masses in 1998 and 1999 with
bi-directional satellite service coming of age. At $3 per minute and low
bandwidth these services will be targeted at emerging countries and very remote
location users. They may, however, offer an alternative to private radio
networks in the U.S.. Modems for these services are not yet available. Satellite
service will always be slow communication to a broad audience so they will not
be competition.
Ardis and RAM rely on radio frequencies to transmit packet data over
their proprietary nationwide networks. Ardis offers service in 410 MSAs; RAM
offers it in 266. Like CDPD, a packet radio is best suited for short, bursty
data transfers. RAM's network operates at 8 kbp/s, with actual throughput of 2.4
to 4.8 kbp/s. These services require proprietary modems for connection. These
companies have built a proprietary infrastructure and will not be competition.
CDPD and PCS is expected to effectively compete with these companies.
PCS is short for Personal Communication Services, and in its simplest
terms, is a combination of current devices: a cellular phone, a pager, and a
small message screen with two-way communications in a small single device. The
frequency spectrum for narrow-band PCS was bid in 1995, with Sprint, AT&T and
AirTouch being the major winners. PCS is all digital, and requires about three
times the number of towers as cellular. The PCS data rate is 7.2 kbp/s so it is
targeted at a short messaging and voice marketplace. Broadband PCS ( intended to
compete against cable) spectrum auctions will start later in 1996(11). The
system requires a transmitter/receiver ground station, a roof-top antenna ,
interface electronics , and a set-top terminal, this very slow service will not
be competition to mobiLAN(R).
Wireless within a building is developed under the IEEE 802.11 standard.
Basic rates are 1 and 2 Mbps with actual throughputs from 350 kbp/s to 1.2 Mbps.
- -------------------------
(10) DataPro is a Boston based research firm specializing on data communication
products and services.
(11) Schneiderman, Ron: Wireless Broad Market Awaits FCC Action, Wireless System
Design July, 1996
15
<PAGE> 18
The following table compares the overall and per data bit costs of
currently and planned telecommunication services. The massive cost savings
offered by the Company's mobiLAN(R) system is dramatic. This offers a
great opportunity for the Company to gain market share before competition can
get into the market with comparable systems and services.
The "New Infrastructure cost" column is the infrastructure cost
developed in the reference to reach 5,000,000 (5 million) users. For mobiLAN(R)
the cost estimate was developed by the Company.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Wireless Connection New Infrastructure Data Speed(13) Application(14) Consumer cost for
cost(12) 1 megabyte file(15)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Wireless to Space
[GRAPHIC OMITTED]
- - Motorola Iridium $3.4B 6.4 Kbps Voice N/A
- - Teledisic $ 40B 16 Kbps 5-10 Kbytes $120
- ----------------------------------------------------------------------------------------------------------------
Wireless to a Tower
[GRAPHIC OMITTED]
- - Ardis $700M 4.8 Kbps 2-5 Kbytes $125
- - RAM $400M 4.8 Kbps 2-5 Kbytes $180
- - CDPD $440M 10 Kbps 2-5 Kbytes $ 60
- - PCS $ 20B 4.8 Kbps (Less than)140 bytes $250
- ----------------------------------------------------------------------------------------------------------------
Wireless to a WAN
- - mobiLAN(R) $ 10M 1.5MBPS LAN extension $0.12
[GRAPHIC OMITTED]
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
DATA CARRIAGE
Mobile Area Networks, Inc. has a major economic advantage because the
mobiLAN(R) system is built on the unregulated structure of the data network (the
private Intranet), not the regulated and tariffed public voice telephone
network. The voice network is a multi-tiered regulated market and pricing
structure. The local voice call is generally a fixed cost but varies by region,
based mainly on competition. Legislation sets the rates at each hand-off between
the Local Exchange Carriers (LECs) and the InterExchange Carriers (IXE or long
distance). The hand-off cost from LEC to IXE and from IXE to LEC is about $0.05
on each call. The long distance (IXE) varies by distance, time of day, and
competition. Currently voice connection costs for long distance calls range from
$0.12 to $0.42 per minute. Surcharges are also added in public places to share
revenue on public calls.
- --------------------------------------
(12) Fowler, Joe: The Race to Global Information Super-Skyway. Pacific
Electric, Wire and Cable Industry Report, January 6, 1996
(13) Gilder, George: ETHERSPHERE, Forbes Magazine, October 10, 1994
(14) Gareiss, Robin: Special Report/Wireless Data Services, Data Communication
Magazine, March 21, 1995
(15) Mobile Area Networks, Inc.: Calculated from published pricing and published
data rates.
16
<PAGE> 19
Much of the news media coverage in 1996 has been about the growing
market for Competitive Access Providers (CAPs) that connect fiber optics
directly to large buildings or institutions, and directly connect that fiber
into the wide-area network. With this connection CAPS are able to eliminate the
$0.05 charge on one end of the call and can thereby price under the LECs in
their market. MFS Datanet is the largest CAP with local connection rights in
Texas and many mid-western states. MFS Datanet now has over 5,000 buildings on
their network.
Data communications networks that are the infrastructure backbone of
the Company's mobiLAN(R) service have a similar structure to the voice network.
LECs provide a local data circuit to a wide-area network Point-of-Presence (POP)
of the fiber based data network. The local hard wired connection is offered in
discrete sizes: 64Kbps; 128Kbps; 256Kbps; 512Kbps; 896Kbps; 1024Kbps; 1.544Mbps;
45Mbps. The 1.544Mbps service is termed T-1 or DS1 and the 45Mbps service is
termed DS3. DS is a data service classification.
Comparing the Sprint DS1 data service versus a $0.20 per minute voice
service shows that the cost on a per bit basis is about 1/250th in the data
service versus the voice service.
For example, if a user was spending $250 per month on data
communications over conventional voice grade telephone circuits, the DS1 data
communication cost to the Company to provide that service would be about $1.00.
The Company may price that service to the user at $2.50 for a 99% savings to the
user, and the Company would realize a gross profit of $1.50 (60% gross margin).
In addition, the Company will realize a profit on the hardware (PC Card) and
software sales, or lease to the user / employer, or add to the data transmission
fee to amortize such costs or profits, and the Company would retain ownership of
the equipment and software.
- --------------------------------------------------------------------------------
MARKETING
There are two basics concepts developed for the early marketing plan
for Mobile Area Networks, Inc.. First is a concept termed "Customer Specified
Relay Locations". Second is the early customer "self referencing", "small pond"
concept.
CUSTOMER SPECIFIED RELAY LOCATIONS
The Company will develop early customers with large mobile workforces.
These customers will define the locations of mobiLAN(R) relays for data service
they require to support their workforce and to justify deployment. For example,
the first large customer may require coverage in six major cities at one or more
of its offices and at either Hyatt or Hilton hotels and the American Airline
clubs in those cities. The second customer may require three additional cities
and a different hotel chain. The third customer may require two additional
cities and stay at the same hotel as customer one or two.
The cost and risk of infrastructure deployment is in small incremental
steps, about $5,000 per hotel and $8,000 per airline club. So, unlike
competition, who spends millions of dollars to get the first customer, the
Company can grow incrementally in small steps.
It is important to note that the hospitality traveler residence is well
defined. By penetrating five major hotel chains, and two airline clubs, the
Company can meet 75% of business travelers' laptop communications requirements.
The estimated cost to do this is $10,000,000 ($10 million).
EARLY CUSTOMERS
Early customers will be technologists looking for a jump on
competition, but also will include those who also appreciate new technology for
its own sake. They are "self-referencing" and believe they know enough about
technology, and don't depend on other reference points or outside influence. If
they do reference, they reference horizontally in their industry segment rather
than vertically in their own company. These technology visionaries will begin
with a pilot or beta test, which makes sense to them as they venture where no
other has gone before.
17
<PAGE> 20
These visionary technologists generally are a "small pond" of
customers. The early market customers for Mobile Area Networks, Inc. (having
these two criteria, a large mobile workforce and visionary technologists), has
focused attention on the Big Six accounting firms. Almost 100% of their
workforce is mobile and they have pioneered new software technology (i.e. Price
Waterhouse pioneered Lotus Notes, Deloitte & Touche pioneered audit software,
Coopers & Lybrand developed TeleSim for the telecommunications industry, and
KPMG has teamed with Integral and Hyperion for client server software).
The Company has a unique benefit to the Big Six type accounting firms.
Besides communicating from the laptop to an Access Point, mobiLAN(R) wireless
technology will communicate peer-to-peer, or from laptop to laptop. Four tax
auditors in a client conference room or in different remote file rooms could
network among themselves wirelessly between laptops. This is very important to
these firms and is a key part of a Big Six demonstration test. Because the Big
Six firms want and can have wireless communication at the multiple offices of
the client, at the hotel, at the airline club, and at home, mobiLAN(R) is
everywhere they want to be.
For companies who spend time at client sites for consulting work or
vendor service, or installation of equipment or services, mobiLAN(R) allows
users with the wireless cards the opportunity to establish peer-to-peer local
area networks among small groups of people on site. This is a tremendous time
and money saver in passing information and in printing. A printer can be
attached to anyone's laptop and everyone can print.
The Big Six firms combined have over 400,000 mobile workers.
Penetrating these six firms could produce substantial annual revenue for Mobile
Area Networks, Inc. while having those firms realize substantial savings.
Through the audit, tax, accounting, and consulting services of these
Big Six firms their clients will also become knowledgeable of the mobiLAN(R)
service. It is believed that through the Big Six firms many additional customers
will be captured.
- --------------------------------------------------------------------------------
BUSINESS RELATIONSHIPS
The Company has a contract for services from one of the largest
installation, integration and leasing companies to install and service relay and
communication services. This partner makes available to the Company and its
customers over 150 support people.
The Company also has a working agreement with a Big Six Accounting firm
for the implementation and support of in-house installation and support of the
Company's mobiLAN(R) network. This partner makes available to the Company and
its customers , 300 support people.
A leading software development firm is a contract vendor to Mobile Area
Networks, Inc. and has perfected the billing software concept. This firm is a
technical contractor to Mobile Area Networks, Inc. in the areas of billing,
security, authentication, help desk development and network performance.
- --------------------------------------------------------------------------------
INTELLECTUAL PROPERTY
Mobile Area Networks, Inc. has integrated existing technologies of
wireless communication, wide-area data networks, and security software products
to develop a communication infrastructure. It is well known in the
communications industry that one of the most difficult areas of technical
competence (if not the most difficult) is billing for the service.
Mobile Area Networks, Inc. has acquired a proprietary billing software
capability consisting of:
18
<PAGE> 21
Method and means of billing for individuals sharing a public data
service. Data service providers like Sprint, AT&T, MCI, WorldCom, and MFS can
provide point-to-point data service and bill for the connection to that service.
The connection price normally depends on the speed of the connection desired.
That point-to-point connection charge and WAN connection charge is the only
billing capability available from these carriers. mobiLAN(R) can provide an
individual bill to a mobile user sharing a data service connection with many
other users from many different data service connections during travel.
- --------------------------------------------------------------------------------
REGULATORY AFFAIRS
After careful review and research into the regulatory issues involved,
The Company believes that its service offering will not be subject to regulatory
review and FCC oversight.
There are two regulatory areas that relate to the mobiLAN(R) operation:
- - Use of radio spectrum
- - Provision of telecommunications service
The FCC has proactively continued to affirm that the 2.4GHz spectrum
will not be regulated or the spectrum auctioned. The 2.4GHz spectrum is unique
in that this frequency wavelength is 1/2 dipole length of the water molecule,
and consequently the frequency of every microwave oven on the planet. (The
microwave shakes and thereby heats the water molecules in food and
beverage).There are already over 330,000 wireless LANs installed using the
frequency (not to mention millions of microwaves), so the industry (and the
public) would very much oppose any change in the regulation of this frequency.
Calls that start and end locally are regulated by the state public
utility commissions; calls that cross state lines are regulated by the
Interstate Commerce Clause of the Constitution. CompuServe is in a similar
position as Mobile Area Networks, Inc. in regulation, and has not attracted
regulation. However, It does not provide communication services on a large scale
and as a primary business, as the Company intends to do. The exploding Internet
growth is in a similar area of regulation and is being promoted by the Federal
Government without regulation. The Company can therefore cite strong precedence
against regulation.
- --------------------------------------------------------------------------------
PRICING
Pricing of the Mobile Area Networks, Inc. service is expected to be a
dynamic issue. The initial rate will be $50 per month per user which compares
very favorably with the much slower speed service (telephone line modems)
presently widely used in the market.
Fixed rate billing was selected for two reasons. First, Internet
Service Providers (ISPs) did not experience explosive growth under variable rate
billing (i.e. $ per hour of use). Only after fixed rate pricing was introduced
did the Internet service explode. Secondly, Intranet cannot provide detailed
billing information. Intranet pricing is simply based on the speed of the
connection port selected so no time or data volume billing information is
available per user. The Company has acquired a proprietary billing concept that
will be protected by the company. It will allow further reduction in fees (or
credit for other services or hardware/software services) for low volume users
until they are only amortizing the cost of their hardware and software plus a
profit to the Company.
19
<PAGE> 22
- --------------------------------------------------------------------------------
DESCRIPTION OF PROPERTY
- --------------------------------------------------------------------------------
The Company plans to conduct its operations through offices leased in
Dallas, Texas and Heathrow, Florida. The Company's requirements for physical
facilities are minimal.
- --------------------------------------------------------------------------------
MANAGEMENT
- --------------------------------------------------------------------------------
(A) DIRECTORS:
At the present time, the Company's Board of Directors consists of four
members:
WILLIAM J. REID, age 56, a founder, has been a Director of the Company
since its incorporation in May 22, 1996. Mr. Reid was President and a Director
of Plancom (1994-1996), a network and communications consulting company. Mr.
Reid was President of Management Sciences Co., a company that specializes in
competitive business improvement in sales and marketing operations and driving
that improvement into corporate strategic initiatives. Mr. Reid was President of
Mizar, Inc. a Dallas company that manufactured and sold specialized high-speed
computer engines for communication and control systems. He was General Manager
for the Data Communication Division of Harris Corporation ($2.2B) and was
responsible for all Harris data communication equipment sold to Fortune 1000
companies world-wide. He resides in Dallas, Texas.
GEORGE E. WIMBISH, age 52 is a founder and has been a Director of the
Company since November 3, 1996. He is a successful private investor with over 20
years of experience in acquisitions/mergers and company startups. He has
operated 5 companies as CEO in wholesaling, manufacturing, and direct marketing.
His most recent position was CEO of a financial services company. In 1984 he was
a qualified candidate for the U.S. Senate and has personally lobbied the U.S.
Senate. He has experience with regulatory agencies including Underwriters
Laboratory and the Nuclear Regulatory Agency. He resides in Heathrow, Florida.
DR. ROBERT M. GOOD, age 59, is a founder and has been a Director of the
Company since November 3, 1996. He has been a successful private investor and
entrepreneur for the past 8 years. He is licensed stock broker. He had a
successful dental practice in Long Island, New York. Dr. Good has been President
and Vice President of numerous companies. He was an Army Officer. Dr. Good
resides in Heathrow, Florida.
JAMES R. LEONE, age 53, is a practicing attorney and has had his own
law firm, James R. Leone & Assoc.,P.A. since 1985, concentrating in the fields
of securities and corporate law. Previously, Mr. Leone was briefly with Gray,
Harris & Robinson in Orlando, FL (1984-1985) and with Quinn, Jacobs, Barry and
Miller in Chicago, IL. Until 1981 Mr. Leone was a financial attorney and
financial analyst with the Securities and Exchange Commission in Washington,
D.C.. Mr. Leone resides in Longwood, Florida.
(B) PERSONS NOMINATED OR CHOSEN TO BECOME DIRECTORS:
At the present time, no other person, other than those listed above,
has been chosen or nominated to become a Director of the Company; however, the
Company is constantly looking for qualified individuals to serve on the Board.
(C) EXECUTIVE OFFICERS AND PERSONS CHOSEN TO BECOME EXECUTIVE OFFICERS:
At present, the Company's Executive Officers consist of its Directors,
mentioned above, Mr. William Reid as President and CEO, Mr. George E. Wimbish as
Chairman, Dr. Robert M. Good as Treasurer and James R. Leone as Secretary. It is
anticipated that additional officers will be added, including a Chief Financial
Officer and General Sales Manager.
20
<PAGE> 23
(D) CERTAIN LEGAL PROCEEDINGS:
The Company is not aware of any legal proceedings within the last five
years against any Director, Officer, Significant Employee, or Candidate for any
such position involving a petition under the Bankruptcy Act or any State
insolvency law or of any receiver, fiscal agent or similar officer appointed by
a court for the business or property of such person or any partnership in which
he was general partner or within 2 years before the time of such filing, or any
corporation or business association of which he was an executive officer at or
within two years before the time of such filing; nor is the Company aware of any
of the above-mentioned persons being convicted in a criminal proceeding, except
as follows:
On August 14, 1995 James R. Leone & Assoc., P.A., a Florida
professional corporation, filed a Chapter 13 reorganization petition in the
Bankruptcy Court in Orlando, Florida. Its Plan of Reorganization is scheduled
for a confirmation hearing on January 14, 1997. A director of the company, James
R. Leone, is the sole shareholder, officer and director of the corporation.
On June 18, 1996 in a negotiated settlement to leave the employment of
Plancom, Inc., William J. Reid agreed to a permanent restraining order of the
14th District Court, Dallas County, Texas for one (1) year not to call on the
suppliers and investors of Plancom, Inc. None of the Company's suppliers or
investors violate this restraining order. The Agreed Permanent Injunction and
Release of Bond dated June 18, 1996 and the attached Intellectual Property
Rights Assignment dated May 1, 1996, provide that (1) all mobile area network
inventions, improvements, procedure and techniques conceived by Mr. Reid through
May 15, 1997 belong to Plancom, Inc., his former employer; and (2) he is
prohibited from interfering in any way with his intellectual property assigned
to Plancom Inc., which includes the foregoing and certain materials be returned
to Plancom, namely all business plans, operating plans, financial information
and presentations relating to Plancom Inc. and its affiliate Launch Tech
existing on June 18, 1996. Mr. Reid has advised the Company that he has not
interfered and that virtually all such materials were in the public domain and
not subject to trade secret restrictions.
- --------------------------------------------------------------------------------
REMUNERATION OF MANAGEMENT
- --------------------------------------------------------------------------------
(a) The Company's current policy is that Directors serve without
compensation; however, in the future, it may be in the Company's best interests
to compensate Directors in a manner that will attract the most qualified people
to serve on the Company's Board. The Officers of the Company also serve at the
present time without compensation, except as follows: William J. Reid, President
and CEO, will be paid $11,000 per month ($132,000 per year) beginning January 1,
1997.
21
<PAGE> 24
- --------------------------------------------------------------------------------
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITY
HOLDERS
- --------------------------------------------------------------------------------
(a) The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of December 15, 1996, with
respect to each director and officer and any person who is known to the Company
to be the beneficial owner of 5% or more of the Company's outstanding Common
Stock. Also set forth in the table is the beneficial ownership of all shares
held by all directors and officers, individually and as a group.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(1) (2) (3) (4)
<S> <C> <C> <C>
Name and address Amount owned Percent Percent after
of owner Maximum
</TABLE>
<TABLE>
<CAPTION>
Offering
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
William J. Reid 2,300,000 45.1% 36.5%
7819 Pencross Lane
Dallas, Texas 75248
George E. Wimbish 2,300,000 45.1% 36.5%
1279 Regency Place
Heathrow, Fl 32746
Dr. Robert M. Good 500,000 9.8% 7.9%
1282 Regency Place
Heathrow, Fl 32746
James R. Leone 1,000 .002% .002%
452 Osceola Street, Suite 211
Altamonte Springs, FL 32701
- -------------------------------------------------------------------------------
</TABLE>
(b) To the knowledge of the issuer, no other person holds or shares the
power to vote or direct the voting of securities described pursuant to
subsection (a) above. No other person holds shares or the power to vote 5% or
more of the issuer's voting securities. However, see part (d) below as to voting
restrictions/supermajority vote requirements and as to purchase options.
(c) The issuer has no outstanding non-voting securities. The Company is
authorized to issue up to 10,000,000 (10 million) shares of non-voting preferred
stock.
(d) Messrs. Reid, Wimbish and Good on December 26, 1996 rescinded and
cancelled a November 8, 1996 Stock Transfer Restriction and Shareholder
Agreement with the Company. It had restricted stock transfers, charter
amendments, mergers, stock issuance, dissolution, change of officer or
director, or compensation, without unanimous (100%) consent.
22
<PAGE> 25
- --------------------------------------------------------------------------------
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
- --------------------------------------------------------------------------------
All transactions during the previous two years and any presently
proposed transaction to which the issuer is a party in which any person having a
relationship with the issuer has a direct or indirect material interest are the
following transactions, and no others: none.
- --------------------------------------------------------------------------------
SECURITIES DESCRIPTION
- --------------------------------------------------------------------------------
The Company is offering only common stock in this offering.
- --------------------------------------------------------------------------------
COMMON STOCK
The Company is authorized to issue up to 10,000,000 (ten million)
shares of Common Stock no par value. Approximately 5,300,000 shares have been
issued to 10 persons as of the date of this Prospectus. Each holder of Common
Stock is entitled to one vote for each share held of record on each matter to be
voted on by stockholders except as may otherwise be provided by law.
Subject to any preferences which may be granted to the holders of
Preferred Stock issued in the future, each holder of Common Stock is entitled to
receive ratably such dividends as may be declared by the Board of Directors from
funds legally available. Upon liquidation or dissolution of the Company, the
holders of Common Stock are entitled to share ratability in all the assets after
payment of all creditors, subject to the rights of any Preferred Stock then
outstanding. The Common Stock does not have cumulative voting rights or
preemptive purchase rights.
- --------------------------------------------------------------------------------
PREFERRED STOCK
The Company is authorized to issue up to 10,000,000 (ten million)
shares of Preferred Stock, no par value, with terms determined by the Board of
Directors in such matters as preference (if any), in dividends, or liquidation,
voting, redemption, or other preferential rights. The Company currently has no
plans to issue shares of Preferred Stock. The issuance of shares of Preferred
stock under certain circumstances could have the effect of delaying or
preventing a change of control of the Company or other corporate action.
- --------------------------------------------------------------------------------
TRANSFER AGENT AND REGISTRAR
The Company currently acts as its own Transfer Agent and Registrar for
its Common Stock.
- --------------------------------------------------------------------------------
LEGAL MATTERS
- --------------------------------------------------------------------------------
The law firm of JAMES R. LEONE & ASSOC., P.A. has provided its legal
opinion as to certain matters relating to the issuance of the shares pursuant to
applicable securities laws. This Prospectus has been prepared by the Company's
management and its advisers and has been reviewed by the law firm of JAMES R.
LEONE & ASSOC., P.A. The law firm's sole shareholder, director and officer,
James R. Leone, is a Director of the Company. Neither he nor the Company's
management believes there is a significant conflict of interest in having all
such positions, in regard to his integrity and lack of bias in issuing the
opinion letter referred to above.
- --------------------------------------------------------------------------------
EXPERTS
- --------------------------------------------------------------------------------
The Financial Statements included in this Prospectus and Registration
Statement, to the extent and for the period indicated in the accompanying
auditors report thereon, have been examined by James, Parks, Tschopp &
Whitcomb, P.A., certified public accountants, and are included herein in
reliance on their authority as experts in accounting and auditing.
23
<PAGE> 26
INDEX TO FINANCIAL STATEMENTS OF
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
<TABLE>
<S> <C>
Independent Auditors' Report F-2
Financial Statements:
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
</TABLE>
F-1
<PAGE> 27
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mobile Area Networks, Inc.:
We have audited the accompanying balance sheet of Mobile Area Networks, Inc. (a
development stage company) as of December 12, 1996, and the related statements
of operations, stockholders' equity, and cash flows for the period from May 23,
1996 (date of inception) through December 12, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mobile Area Networks, Inc. (a
development stage company) as of December 12, 1996, and the results of its
operations and its cash flows for the period from May 23, 1996 (date of
inception) through December 12, 1996, in conformity with generally accepted
accounting principles.
/S/ James, Parks, Tshopp & Whitcomb, P.A.
December 13, 1996
F-2
<PAGE> 28
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
BALANCE SHEET
December 12, 1996
<TABLE>
ASSETS
<S> <C>
Current assets:
Cash $ 133,364
------------
Total current assets 133,364
------------
Intangible assets 15,258
------------
$ 148,622
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,468
------------
Total current liabilities 17,468
------------
Stockholders' Equity:
Common stock, no par value, authorized 10,000,000 shares, issued and outstanding
5,189,700. 140,000
Stock subscription receivable (2,300)
Deficit accumulated during the development stage (6,546)
------------
Total stockholders' equity 131,154
------------
$ 148,622
============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 29
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
Period from May 23, 1996 (date of inception) through December 12, 1996
<TABLE>
<S> <C>
Revenues $ -
----------
Costs and expenses:
Product development and marketing 1,546
General and administrative 5,000
----------
Total costs and expenses $ 6,546
----------
Net loss $ 6,546
==========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 30
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Period from May 23, 1996 (date of inception) through December 12, 1996
<TABLE>
<CAPTION>
COMMON STOCK STOCK TOTAL
------------- SUBSCRIPTION ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT RECEIVABLE DEFICIT EQUITY
------ ------ ---------- ------- ------
<S> <C> <C> <C> <C> <C>
Common stock issued in exchange for
services 1,000 $ 1,000 - - 1,000
Common stock issued for cash 5,188,700 139,000 (2,300) - 136,700
Net loss - - - (6,546) (6,546)
--------- ---------- ------ ------ -------
Balances at December 12, 1996 5,189,700 $ 140,000 (2,300) (6,546) 131,154
========= ========== ====== ====== =======
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 31
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
Period from May 23, 1996 (date of inception) through December 12, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (6,546)
Adjustments to reconcile net loss to net cash
used in operating activities:
Change in operating assets and liabilities:
Accounts payable 17,468
----------
Net cash used in operating activities 10,922
----------
Cash flows from investing activities:
Patent acquisition costs (15,258)
----------
Net cash used in investing activities (15,258)
----------
Cash flows from financial activities:
Proceeds from issuance of common stock 137,700
----------
Net cash provided by financing activities 137,700
----------
Net increase in cash 133,364
Cash at May 23, 1996 (date of inception)
-
----------
Cash at December 12, 1996 $ 133,364
==========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE> 32
MOBILE AREA NETWORKS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Period from May 23, 1996 (date of inception) to December 12, 1996
(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) NATURE OF DEVELOPMENT STAGE OPERATIONS
Mobile Area Networks (the Company) was incorporated on May 23, 1996
in the state of Texas for the purpose of providing all aspects of data
communication including LAN-speed data connectivity service to remote
home-office network services and to the Internet from frequently traveled
routes and places such as hotels and airports. Unlike a modem connection,
no cord or phone line connection is necessary.
Operations of the Company through the date of these financial statements
have been devoted primarily to product development and marketing, raising
capital, and administrative activities.
(B) INTANGIBLE ASSETS
Intangible assets consist of patents which will be amortized over their
estimated useful life, not to exceed seventeen years, using the
straight-line method once planned principal operations have commenced.
(C) INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Changes in tax rates
are recognized in the period that includes the enactment date.
Development stage operations for the period ended December 12, 1996
resulted in a net operating loss. It is uncertain whether any tax benefit
of net operating loss will be realized in future periods. Accordingly, no
income tax provision has been recognized in the accompanying financial
statements.
(D) USE OF ESTIMATES
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure
of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
F-7
<PAGE> 33
- --------------------------------------------------------------------------------
PROJECTIONS
- --------------------------------------------------------------------------------
The following projected financial statements are forward-looking
statements and are subject to Section 13(a) and Section 15(d) of the Securities
Exchange Act of 1934. These statements were prepared to qualify under the
applicable Safe Harbor provisions of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
Mobile Area Networks, Inc. is a communication service provider for
traveling professionals and as such has some of the characteristics of a
traditional communication service providers like AT&T, MCI and Sprint in that
certain investments in infrastructure development have to be made before the
service has enough coverage to be of value to users of the service. Mobile Area
Networks, Inc. overlays a significant existing infrastructure of fiber optic
networks and copper wire networks but has to establish the last 600 feet of
connectivity. Mobile Area Networks, Inc. believes that this 600 feet
infrastructure development can be matched to the specific requirements of large
customers as described in Description of Business --Marketing, page 18.
Two factors in this infrastructure development are the most significant
factors in the financial needs and results of the Company; as follows:
1. The initial installation of hardware and software will
constitute the 600 feet infrastructure to sell the large customers. The
financial forecast shown has the assumption that four (4) sites (hotels
and airline clubs) are the required marketing threshold. This
assumption has not been tested.
2. The Company believes that the 600 feet infrastructure
deployment can be matched to the requirements of the increasing
customer base. For example, the assumption is made that Mobile Area
Networks, Inc. can justify its value to 1,500 users with 28 sites
installed and can justify its value to 10,000 users with 265 sites
installed, and can justify its value to 514,000 users with 3,726 sites
installed. This assumption has not been tested.
If these assumptions are accurate, modest infrastructure development
(less than $10 million) is required over a three (3) year period. If a much
larger infrastructure development is required, additional capital may be needed.
Some infrastructure development could be handled by debt financing or by
customers pre-payments against expected massive cost savings (i.e., repayment in
months, not years) but this is not assumed in these forwarding-looking
statements.
The Year 1, Year 2, Year 3, projected financial results are in line
with customer development. It may be desirable to develop infrastructure earlier
to attract more customers. Earlier infrastructure development will require
substantially more capital than illustrated in the next pages.
F-8
<PAGE> 34
- --------------------------------------------------------------------------------
SUMMARY PROJECTED FINANCIAL STATEMENTS
The following table summarizes a set of forward-looking market and
financial results based on the financial assumptions discussed in this section.
<TABLE>
<CAPTION>
Year 1 Year 2 Year 3
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Network Users 100 1,500 6,575 10,000 11,500 23,131 35,179 59,127 102,171 176,551 305,081 514,000
Network Sites 4 28 115 265 329 754 1,093 1,495 1,953 2,481 3,072 3,726
Revenue ($000's) 29 763 2,443 3,742 4,797 5,733 7,157 9,698 14,622 23,083 37,703 62,374
Profit ($000's) -329 -535 -335 -455 -1,122 -1,869 -2,463 -2,579 -982 3,784 14,128 33,665
</TABLE>
Other Financial assumptions:
Network Services net revenue at $45 per user.
No significant user churn in the three year period.
Product resale of cards and Access Points at $550 and $1495 respectively per
user.
Network costs: $492 T-1 LEC; $1360 WAN Port; $189 CPE; $200 Maintenance;
Declines 20% over three years.
Product resale has a 20% margin.
Network Installation labor and material $1500 per site.
Hardware installation per site is $2800 (2 Access Points).
Billing Development is a quote from Software Developer
F-9
<PAGE> 35
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR 1 PROJECTIONS
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
<S> <C> <C> <C> <C> <C> <C>
Revenue
Network Services 0 0 4,500 6,750 9,000 67,500
Product Resale 4,000 0 20,000 40,000 240,000 400,000
Cost of Goods Sold
Network 8,964 8,964 8,964 11,205 29,133 62,748
Products 3,200 0 16,000 32,000 192,000 320,000
Network Installation 6,000 0 0 1,500 12,000 22,500
Hardware 0 11,200 0 0 2,800 22,400
Gross Profit -8,164 -8,964 -464 3,545 27,867 84,752
Expenses
Sales
Hospitality Sales 29,000 29,000 29,000 29,000
Information Tech Sales 29,000 29,000 29,000
Travel 31,900 31,900 31,900
Engineering
Billing Development 15,000 15,000
Technical Support 2,500 5,000 5,000 10,000 30,000 30,000
Installation Support 6,000 0 0 1,500 12,000 22,500
Hardware 15,000 12,000 12,000 2,500 1,500 1,500
G&A
Mgmt Salaries 32,500 32,500 32,500 32,500 32,500 32,500
Administration 3,200 3,200 3,200 3,200 3,200 3,200
Benefits 14,245 15,120 25,270 37,170 45,045 45,045
Rent 3,600 3,600 3,600 3,600 3,600 3,600
Promotion 3,000 0 0 90 135
Travel 3,500 3,500 3,500 3,500 3,500 3,500
Utilities 300 300 300 300 300 300
Phone 250 250 250 250 250 250
Finance
Accounting 2,500 2,500 2,500 2,500 5,000 5,000
Total Expenses 83,595 95,970 132,120 186,920 226,885 237,430
Net Profit -91,759 -104,934 -132,584 -183,375 -199,018 -152,678
Cum Profit -91,759 -196,693 -329,277 -512,652 -711,670 -864,348
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR 1 PROJECTIONS
Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Total
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Network Services 90,000 257,289 295,882 340,265 391,304 450,000 1,912,490
Product Resale 480,000 600,000 720,000 800,000 880,000 880,000 5,064,000
Cost of Goods Sold
Network 112,050 177,039 257,715 354,078 466,128 593,865 2,090,853
Products 384,000 480,000 576,000 640,000 704,000 704,000 4,051,200
Network Installation 33,000 43,500 54,000 64,500 75,000 85,500 397,500
Hardware 42,000 61,600 81,200 100,800 120,400 140,000 582,400
Gross Profit 73,950 200,250 182,167 146,187 101,176 32,135 834,437
Expenses
Sales
Hospitality Sales 29,000 29,000 29,000 29,000 7,083 7,083 246,167
Information Tech Sales 29,000 29,000 29,000 29,000 7,083 7,083 217,167
Travel 31,900 31,900 31,900 31,900 7,792 7,792 238,883
Engineering
Billing Development 30,000
Technical Support 30,000 30,000 30,000 30,000 30,000 30,000 262,500
Installation Support 33,000 43,500 54,000 64,500 75,000 85,500 397,500
Hardware 1,500 1,500 1,500 1,500 1,500 1,500 53,500
G&A
Mgmt Salaries 32,500 32,500 32,500 32,500 32,500 32,500 390,000
Administration 6,500 6,500 6,500 6,500 6,500 6,500 58,200
Benefits 46,200 46,200 46,200 46,200 30,858 30,858 428,412
Rent 3,600 3,600 3,600 3,600 3,600 3,600 43,200
Promotion 180 1,350 1,800 5,146 5,918 6,805 24,424
Travel 3,500 3,500 3,500 3,500 3,500 3,500 42,000
Utilities 300 300 300 300 300 300 3,600
Phone 250 250 250 250 250 250 3,000
Finance
Accounting 5,000 5,000 5,000 5,000 5,000 5,000 50,000
Total Expenses 252,430 264,100 275,050 288,896 216,884 228,272 2,488,552
Net Profit -178,480 -63,850 -92,883 -142,709 -115,708 -196,137 -1,654,115
Cum Profit -1,042,828 -1,106,678 -1,199,561 -1,342,270 -1,457,978 -1,654,115
====================================================================================================================================
</TABLE>
F-10
<PAGE> 36
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR 2 PROJECTIONS
Month 13 Month 14 Month 15 Month 16 Month 17 Month 18
<S> <C> <C> <C> <C> <C> <C>
Revenue
Network Services 517,500 595,125 684,394 787,053 905,111 1,040,877
Product Resale 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Cost of Goods Sold
Network 658,000 800,000 956,000 1,126,000 1,310,000 1,508,000
Products 800,000 800,000 800,000 800,000 800,000 800,000
Network Installation 96,000 106,500 117,000 127,500 138,000 148,500
Hardware 179,200 198,800 218,400 238,000 257,600 277,200
Gross Profit 59,500 -4,875 -71,606 -138,947 -204,889 -267,123
Expenses
Sales
Hospitality Sales 29,000 29,000 29,000 29,000 29,000 29,000
Information Tech 29,000 29,000 29,000 29,000 29,000 29,000
Sales
Travel 31,900 31,900 31,900 31,900 31,900 31,900
Engineering
Billing
Development
Technical Support 30,000 45,000 45,000 45,000 45,000 45,000
Installation Support 96,000 106,500 117,000 127,500 138,000 148,500
Hardware 1,500 1,500 1,500 1,500 1,500 1,500
G&A
Mgmt Salaries 32,500 59,000 59,000 59,000 59,000 59,000
Administration 6,500 6,500 6,500 6,500 6,500 6,500
Benefits 44,867 58,941 58,474 58,002 57,541 57,105
Rent 3,600 3,600 3,600 3,600 3,600 3,600
Promotion 10,350 11,903 13,688 15,741 18,102 20,818
Travel 3,500 3,500 3,500 3,500 3,500 3,500
Utilities 300 300 300 300 300 300
Phone 250 250 250 250 250 250
Finance
Accounting 1,190 -98 -1,432 -2,779 -4,098 -5,342
Total Expenses 320,457 386,796 397,280 408,014 419,095 430,630
Net Profit -260,957 -391,671 -468,886 -546,962 -623,984 -697,753
Cum Profit -1,915,071 -2,306,742 -2,775,628 -3,322,590 -3,946,574 -4,644,327
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR 2 PROJECTIONS
Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Total
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Network Services 1,197,009 1,376,560 1,583,044 1,820,501 2,217,251 2,660,701 15,385,126
Product Resale 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 12,000,000
Cost of Goods Sold
Network 1,720,000 1,946,000 2,186,000 2,440,000 2,708,000 2,990,000 20,348,000
Products 800,000 800,000 800,000 800,000 800,000 800,000 9,600,000
Network Installation 159,000 169,500 180,000 190,500 201,000 211,500 1,845,000
Hardware 296,800 316,400 336,000 355,600 375,200 394,800 3,444,000
Gross Profit -322,991 -369,440 -402,956 -419,499 -290,749 -129,299 -2,562,874
Expenses
Sales
Hospitality Sales 29,000 29,000 29,000 29,000 29,000 29,000 348,000
Information Tech 29,000 29,000 29,000 29,000 29,000 29,000 348,000
Sales
Travel 31,900 31,900 31,900 31,900 31,900 31,900 382,800
Engineering
Billing
Development
Technical Support 45,000 45,000 45,000 45,000 45,000 45,000 525,000
Installation Support 159,000 169,500 180,000 190,500 201,000 211,500 1,845,000
Hardware 1,500 1,500 1,500 1,500 1,500 1,500 18,000
G&A
Mgmt Salaries 59,000 59,000 59,000 59,000 59,000 59,000 681,500
Administration 6,500 6,500 6,500 8,750 8,750 8,750 84,750
Benefits 56,714 56,389 56,154 56,826 57,727 58,857 677,597
Rent 3,600 3,600 3,600 3,600 3,600 3,600 43,200
Promotion 23,940 27,531 31,661 36,410 44,345 53,214 307,703
Travel 3,500 3,500 3,500 3,500 3,500 3,500 42,000
Utilities 300 300 300 300 300 300 3,600
Phone 250 250 250 250 250 250 3,000
Finance
Accounting -6,460 -7,389 -8,059 -8,390 -5,815 -2,586 -51,257
Total Expenses 442,744 455,581 469,306 487,146 509,057 532,785 5,258,892
Net Profit -765,735 -825,021 -872,262 -906,645 -799,806 -662,084 -7,821,766
Cum Profit -5,410,062 -6,235,083 -7,107,345 -8,013,990 -8,813,797 -9,475,881
====================================================================================================================================
</TABLE>
F-11
<PAGE> 37
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR 3 PROJECTIONS
Month 25 Month 26 Month 27 Month 28 Month 29 Month 30
<S> <C> <C> <C> <C> <C> <C>
Revenue
Network Services 3,192,841 3,831,409 4,597,691 5,517,229 6,620,675 7,944,810
Product Resale 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Cost of Goods Sold
Network 3,450,300 3,761,100 4,101,300 4,456,200 4,825,800 5,210,100
Products 800,000 800,000 800,000 800,000 800,000 800,000
Network Installation 222,000 232,500 243,000 253,500 264,000 274,500
Hardware 414,400 434,000 453,600 473,200 492,800 512,400
Gross Profit -57,459 270,309 696,391 1,261,029 1,994,875 2,934,710
Expenses
Sales
Hospitality Sales 29,000 44,000 44,000 44,000 44,000 44,000
Information Tech 29,000 44,000 44,000 44,000 44,000 44,000
Sales
Travel 31,900 48,400 48,400 48,400 48,400 48,400
Engineering
Billing
Development
Technical Support 45,000 58,000 58,000 58,000 58,000 58,000
Installation Support 222,000 232,500 243,000 253,500 264,000 274,500
Hardware 1,500 1,500 1,500 1,500 1,500 1,500
G&A
Mgmt Salaries 32,500 58,000 58,000 58,000 58,000 58,000
Administration 11,667 11,667 11,667 11,667 11,667 11,667
Benefits 51,106 77,375 80,358 84,311 89,447 96,026
Rent 3,600 3,600 3,600 3,600 3,600 3,600
Promotion 63,857 76,628 91,954 110,345 132,414 158,896
Travel 3,500 3,500 3,500 3,500 3,500 3,500
Utilities 300 300 300 300 300 300
Phone 250 250 250 250 250 250
Finance
Accounting -1,149 5,406 13,928 25,221 39,898 58,694
Total Expenses 524,030 665,127 702,456 746,592 798,975 861,333
Net Profit -581,489 -394,817 -6,065 514,437 1,195,900 2,073,377
Cum Profit -10,057,371 -10,452,188 -10,458,253 -9,943,816 -8,747,916 -6,674,538
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
YEAR 3 PROJECTIONS
Month 31 Month 32 Month 33 Month 34 Month 35 Month 36 Total
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue
Network Services 9,533,773 11,440,527 13,728,632 16,474,359 19,769,231 23,130,000 125,781,179
Product Resale 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 12,000,000
Cost of Goods Sold
Network 5,609,100 6,022,800 6,451,200 6,894,300 7,352,100 7,824,600 65,958,900
Products 800,000 800,000 800,000 800,000 800,000 800,000 9,600,000
Network Installation 285,000 295,500 306,000 316,500 327,000 337,500 3,357,000
Hardware 532,000 551,600 571,200 590,800 610,400 630,000 6,266,400
Gross Profit 4,124,673 5,617,727 7,477,432 9,780,059 12,617,131 15,505,400 62,222,279
Expenses
Sales
Hospitality Sales 44,000 44,000 44,000 44,000 44,000 44,000 513,000
Information Tech 44,000 44,000 44,000 44,000 44,000 44,000 513,000
Sales
Travel 48,400 48,400 48,400 48,400 48,400 48,400 564,300
Engineering
Billing Development
Technical Support 58,000 58,000 58,000 58,000 58,000 58,000 683,000
Installation Support 285,000 295,500 306,000 316,500 327,000 337,500 3,357,000
Hardware 1,500 1,500 1,500 1,500 1,500 1,500 18,000
G&A
Mgmt Salaries 58,000 58,000 58,000 58,000 58,000 58,000 670,500
Administration 11,667 11,667 11,667 11,667 11,667 11,667 140,000
Benefits 104,356 114,807 127,825 143,944 163,803 184,021 1,317,381
Rent 3,600 3,600 3,600 3,600 3,600 3,600 43,200
Promotion 190,675 228,811 274,573 329,487 395,385 462,600 2,515,624
Travel 3,500 3,500 3,500 3,500 3,500 3,500 42,000
Utilities 300 300 300 300 300 300 3,600
Phone 250 250 250 250 250 250 3,000
Finance
Accounting 82,493 112,355 149,549 195,601 252,343 310,108 1,244,446
Total Expenses 935,742 1,024,689 1,131,163 1,258,749 1,411,747 1,567,446 11,628,050
Net Profit 3,188,931 4,593,038 6,346,269 8,521,310 11,205,384 13,937,954 50,594,229
Cum Profit -3,485,608 1,107,430 7,453,700 15,975,010 27,180,393 41,118,348
====================================================================================================================================
</TABLE>
F-12
<PAGE> 38
- --------------------------------------------------------------------------------
SUBSCRIPTION AGREEMENT
- --------------------------------------------------------------------------------
INVESTOR SUBSCRIPTION AGREEMENT FOR MOBILE AREA NETWORKS, INC.
Persons interested in purchasing shares of the Common Stock of MOBILE AREA
NETWORKS, INC. must return this completed Subscription Agreement along with
their wire transfer, check or money order for their total payment, payable only
to: MOBILE AREA NETWORKS, INC., 120 INTERNATIONAL PARKWAY, SUITE 220, HEATHROW,
FLORIDA 32746. (http://www.mobilearea.net).
If and when accepted by MOBILE AREA NETWORKS, INC., a Texas corporation (the
"Company"), this Subscription Agreement shall constitute a subscription for
shares of Common Stock, no par value per share, of the Company. The minimum
investment is $1,450 (100 shares). An accepted copy of this Agreement will be
returned to you as your receipt, and a stock certificate will be issued to you
shortly thereafter.
Method of Payment: (CIRCLE ONE ) Check , Money Order or Wire ( fax for
instructions) payable only to: "MOBILE AREA NETWORKS, INC.".
- --------------------------------------------------------------------------------
I hereby irrevocably tender this Subscription Agreement for the purchase of
_______ shares at $14.50 per share. With this subscription Agreement, I tender
payment in the amount of $ _______ ($14.50 per share) for the shares subscribed.
In connection with this investment in the Company, I represent and warrant as
follows:
(a) Prior to tendering payment for the shares, I received the Company's
Prospectus dated December 20, 1996.
(b) I am a bona fide resident of the state of ________________________.
Please register the shares which I am purchasing as follows:
1. INDIVIDUAL(S) -- if more than one owner, please issue as follows:
<TABLE>
<S> <C>
/ / Tenants-in-Common (all parties must sign -- each investor has an undivided interest)
/ / Joint Tenants with Right of Survivorship (all parties must sign Joint ownership)
/ / Minor with adult custodian under the Uniform Gift to Minors Act in your state
(the minor will have sole beneficial ownership)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
- ----------------------------------------- -----------------------------------------
INVESTOR NO. 1 (print name above) INVESTOR NO. 2 (print name above)
- ----------------------------------------- -----------------------------------------
Street (residence address) Street (residence address)
- ----------------------------------------- -----------------------------------------
City State Zip City State Zip
( ) ( ) ( ) ( ) ( ) ( )
- ----------------------------------------- -----------------------------------------
Phones: Home Business Fax Phones: Home Business Fax
- ----------------------------------------- -----------------------------------------
Social Security Number Social Security Number
- ----------------------------------------- -----------------------------------------
Signature Signature
- ----------------------------------------- -----------------------------------------
Date Date
</TABLE>
A-1
<PAGE> 39
<TABLE>
<CAPTION>
2. ENTITY 3. TRUST
<S> <C>
/ / Corporation (authorized agent of cor- / / Trust (all trustees must sign)
poration must sign)
/ / Existing Partnership (at least one -------------------------------------------------------
partner must sign) Trustee (print name above)
- ---------------------------------------------------- -------------------------------------------------------
Name of Corporation or Partnership Trust (print name above)
- ---------------------------------------------------- -------------------------------------------------------
Authorized Agent (print name above) Date of Trust Agreement
- ---------------------------------------------------- -------------------------------------------------------
Title of Authorized Agent Street Address
- ---------------------------------------------------- -------------------------------------------------------
Street (business address) City State Zip
- ---------------------------------------------------- -------------------------------------------------------
City State Zip Social Security Number or Federal Identification Number
- ---------------------------------------------------- -------------------------------------------------------
Federal Identification Number Phone /Fax (Business) Phone/Fax (Home)
- ---------------------------------------------------- The undersigned acknowledges under the penalties
Business Phone and Fax of perjury that the foregoing information is true,
accurate and complete.
The undersigned acknowledges under the penalties -------------------------------------------------------
of perjury that the foregoing information is Signature
true, accurate and complete.
-------------------------------------------------------
- ---------------------------------------------------- Signature
Signature of Authorized Agent
-------------------------------------------------------
- ---------------------------------------------------- Date
Date
ACCEPTED BY: MOBILE AREA NETWORKS, INC.
By:
--------------------------------------------------
Name:
--------------------------------------------------
Title:
-------------------------------------------------
Date:
--------------------------------------------------
</TABLE>
A-2
<PAGE> 40
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.
--------------------------------------
<TABLE>
<CAPTION>
SUMMARY OF CONTENTS
<S> <C>
SUMMARY 2
RISK FACTORS 6
DILUTION 9
PLAN OF DISTRIBUTION 10
USE OF PROCEEDS 11
DESCRIPTION OF BUSINESS 12
DESCRIPTION OF PROPERTY 20
MANAGEMENT 20
REMUNERATION OF MANAGEMENT 21
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITY HOLDERS 22
INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS 23
SECURITIES DESCRIPTION 23
LEGAL MATTERS 23
EXPERTS 23
FINANCIAL STATEMENTS F-1
PROJECTIONS F-8
SUBSCRIPTION AGREEMENT A-1
</TABLE>
- --------------------------------------------------------------------------------
Date of Issuance:
, 1997
--------------------------------------
Mobile Area Networks
Boundary-Free LAN Connectivity
1,000,000 (MAXIMUM)
SHARES OF COMMON STOCK
--------------------------
PROSPECTUS
--------------------------
MOBILE AREA NETWORKS, INC.
120 INTERNATIONAL PARKWAY, SUITE 220
HEATHROW, FL 32746
1-407-741-9116
- --------------------------------------------------------------------------------
<PAGE> 41
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 25. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
Filing Fee -- SEC $4,393.94
Listing Fee -- Stock Exchange N/A
Transfer Agent & Registrar's Fees N/A
Engineering Fees N/A
Accounting Fees $2,000
Legal Fees $5,000
Printing Expense $30,000 E
Indemnification Insurance Premium N/A
Miscellaneous $15,000 E
Travel $15,000 E
Postage & Delivery $10,000 E
Lodging $3,000 E
Telephone $10,000 E
Internet Development $14,106.56 E
Edgarizing $1,500 E
Blue Sky Preparation and Filing Fees $20,000 E
Promotion and Advertising $15,000 E
Total $145,000.00
</TABLE>
Item 24. Indemnification of Directors and Officers
Article 2.024 of the Texas Business Corporation Act (The "Act") provides that a
corporation may indemnify a director, officer, employees or agent of the
corporation and may purchase and maintain insurance on behalf of such persons as
permitted by the Act.
The Company's Articles of Incorporation and Bylaws contain provisions
indemnifying its directors and officers to the extent permitted by the Act.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "1933 Act"), as amended, may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the 1933 Act and, therefore, is unenforceable. In the event that a
claim for indemnification against such liability (other than the payment by the
Company of the expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
will submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-1
<PAGE> 42
Item 26. Recent Sales of Unregistered Securities
In the past three (3) years the Company's sales of securities not registered
under the Securities Act of 1933 were as follows:
(a) Amount Sold, Title and Date. The amount of common stock sold is the
amount set forth below, since the May 22, 1996 date of
incorporation.
(b) Underwriter; Non-Public Transferees. No underwriters. Four officers
and directors, 12 private investors.
(c) Cash Offering Price, Commission.
$1.00 per share to private investors, no commission paid,
cash sales (107,700 shares). $0.01 per share to officers and
directors, no commission paid, cash sales (5,101,000 shares).
<TABLE>
<CAPTION>
d)DIRECTORS/OFFICERS PURCHASES (4 persons, cash and/or services)
DATE SHARES S/SH TOTAL
- ---- ------ ---- -----
<S> <C> <C> <C> <C>
11/2/96 2,300,000 $.001 $ 2,300 +prior
services
11/2/96 2,300,000 $ .01 $23,000 +prior
services
11/2/96 500,000 $ .05 $25,000 +prior
services
12/2/96 1,000 $1.00 $ 1,000 of services
5,101,000 $51,300 Total D/O
Purchases
</TABLE>
<TABLE>
<CAPTION>
PRIVATE INVESTOR PURCHASES (13 persons, all cash,
all $1/share)
DATE SHARES TOTAL
- ---- -------- --------
<S> <C> <C>
11/6/96 30,000 30,000
11/11/96 10,000 10,000
11/14/96 10,000 10,000
11/15/96 5,000 5,000
11/26/96 5,000 5,000
12/4/96 10,000 10,000
12/9/96 5,000 5,000
12/11/96 5,000 5,000
12/11/96 8,700 8,700
-------- --------
88,700 88,700 Subtotal
======== ========
12/16/96 5,000 5,000
12/16/96 5,000 5,000
12/23/96 6,000 6,000
12/30/96 3,000 3,000
-------- --------
19,000 19,000 Subtotal
======== ========
$107,000 $107,000 Total P.I.
======== ======== Purchases
</TABLE>
Item 27 Exhibits
1. Underwriters Agreement A/
3i. Articles of Incorporation D/
3ii. Bylaws, as amended C/
4. Common Stock voting rights per Articles of Incorporation Page 1,
incorporated by reference from Exhibit 3i. A/
4a. Stock Transfer Restriction and Shareholders Agreement (11/8/96) D/
5. Opinion of JAMES R. LEONE as to the legality and non-assessability of the
securities being distributed C/
8. Opinion as to tax matters A/
9. Voting Trust Agreement A/
10. Material Contracts A/
11. Computation of per share earnings A/
13. Annual / Quarterly reports, Form 10-Q A/
15. Letter on audited interim financial information A/
16. Letter on change in certifying accountant A/
21. Subsidiaries A/
23a. Consent of JAMES, PARKS, TSCHOPP & WHITCOMB, P.A. C/
23b. Consent of James R. Leone (filed as part of Exhibit 5 A/
24. Power of Attorney A/
25. Eligibility of trustees A/
26. Invitation for competitive bids A/
27. Financial Data (SEC use only) D/
99. Additional exhibits A/
II-2
<PAGE> 43
24. Power of Attorney A/
25. Eligibility of trustees A/
26. Invitation for competitive bids A/
27. Financial Data (SEC use only) D/
99. Additional exhibits A/
Footnotes:
A/ Not Applicable
B/ To be filed by Amendment
C/ Filed herein
D/ Previously filed with original Registration Statement No. 333-18439
Item 28. Undertakings
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "1933 Act"), as amended, may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the 1933 Act and, therefore, is unenforceable. In the event that
claims for indemnification against such liability (other than the payment by the
Company of the expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any such action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
will submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 44
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements of filing on Form SB-2/A and authorized this Amended
Registration Statement to be signed on its behalf by the undersigned in the
Town of Heathrow, State of Florida on January 8, 1997.
MOBILE AREA NETWORKS, INC.
/s/ William J. Reid
-----------------------------------
BY: William J. Reid
President & CEO
Pursuant to the Securities Act of 1933, this Amended Registration Statement was
signed by the following persons in the capacities and on the dates stated
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
Director, President, Chief January 8, 1997
Executive Officer,
/s/ William J. Reid (Principal Executive Officer)
- -------------------------------------------
William J. Reid
Director, Treasurer, January 8, 1997
Financial Officer, Principal
/s/ Robert M. Good (Principal Accounting Officer)
- -------------------------------------------
Robert M. Good
/s/ George E. Wimbish Director, Chairman January 8, 1997
- -------------------------------------------
George E. Wimbish
/s/ James R. Leone Director, Secretary January 8, 1997
- -------------------------------------------
James R. Leone
</TABLE>
II-4
<PAGE> 45
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Title of Exhibit Footnotes &
Number Page #
<S> <C>
1. Underwriters Agreement A/
3i. Articles of Incorporation D/
3ii. Bylaws, as amended C/
4. Common Stock voting rights per Articles of Incorporation A/
Page 1, incorporated by reference from Exhibit 3i.
4a. Stock Transfer Restriction and Shareholders Agreement (11/8/96) D/
5. Opinion of JAMES R. LEONE as to the legality and non- C/
accessibility of the securities being distributed
8. Opinion as to tax matters A/
9. Voting Trust Agreement A/
10. Material Contracts A/
11. Computation of per share earnings A/
13. Annual / Quarterly reports, Form 10-Q A/
15. Letter on audited interim financial information A/
16. Letter on change in certifying accountant A/
21. Subsidiaries A/
23a. Consent of JAMES, PARKS, TSCHOPP & WHITCOMB, P.A. C/
23b. Consent of James R. Leone (filed as part of Exhibit 5) A/
24. Power of Attorney A/
25. Eligibility of trustees A/
26. Invitation for competitive bids A/
27. Financial Data (SEC use only) D/
99. Additional exhibits A/
</TABLE>
Footnotes:
A/ Not Applicable
B/ To be filed by Amendment
C/ Filed herein
D/ Previously filed with original Registration Statement No. 333-18439
<PAGE> 1
EXHIBIT 3 (ii)
AMENDED
BYLAWS
OF THE
MOBILE AREA NETWORKS, INC.
1
<PAGE> 2
<TABLE>
<S> <C> <C>
ARTICLES I . . . . . . . . 1
OFFICES . . . . . . . . . 1
Section 1. Principal Office . . . . . . . . . . . 1
Section 2. Other Offices. . . . . . . . . . . . . 1
ARTICLE II . . . . . . . . 1
SHAREHOLDERS. . . . . . . 1
Section 1. Time and Place of Meetings . . . . . . 1
Section 2. Annual Meetings . . . . . . . . . . . 1
Section 3. Special Meetings . . . . . . . . . . . 1
Section 4. Notice . . . . . . . . . . . . . . . . 1
Section 5. Closing of Share Transfer Records and
Fixing Record Dates for Matters other than
Consents to Action . . . . . . . . . . . . . 1
Section 6. Fixing Record Dates for Consents to
Action . . . . . . . . . . . . . . . . . . . 2
Section 7. List of shareholders . . . . . . . . . 2
Section 8. Quorum . . . . . . . . . . . . . . . . 3
Section 9. Voting . . . . . . . . . . . . . . . . 3
Section 10. Action to Consent. . . . . . . . . . . 4
Section 11. Presence at Meetings by Means of
Communications equipment . . . . . . . . . . 5
ARTICLES III . . . . . . . 5
DIRECTORS . . . . . . . . 5
Section 1. Number of Directors . . . . . . . . . 5
Section 2. Vacancies . . . . . . . . . . . . . . 5
Section 3. General Powers . . . . . . . . . . . . 6
Section 4. Place of Meetings. . . . . . . . . . . 6
Section 5. Annual Meetings . . . . . . . . . . . 6
Section 6. Regular Meetings . . . . . . . . . . . 6
Section 7. Special Meetings . . . . . . . . . . . 6
Section 8. Quorum Voting . . . . . . . . . . . . 7
Section 9. Committees of the Board of Directors . 7
Section 10. Compensation of Directors . . . . . . 7
Section 11. Action By Unanimous Vote . . . . . . 7
Section 12. Presence at Meetings by Means of
Communications Equipment . . . . . . . . . . 8
ARTICLE IV . . . . . . . . 8
NOTICES . . . . . . . . 8
Section 1. Form of Notice . . . . . . . . . . . . 8
Section 2. Waiver . . . . . . . . . . . . . . . . 8
Section 3. When Notice Unnecessary . . . . . . . 18
</TABLE>
2
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE V . . . . . . . . . 9
OFFICERS . . . . . . . . . 9
Section 1. General . . . . . . . . . . . . . . . 9
Section 2. Election . . . . . . . . . . . . . . . 9
Section 3. Chairman of the Board . . . . . . . . 9
Section 4. President . . . . . . . . . . . . . . 9
Section 5. Vice Presidents . . . . . . . . . . . 9
Section 6. Assistant Vice Presidents . . . . . . 10
Section 7. Secretary . . . . . . . . . . . . . . 10
Section 8. Assistant Secretaries . . . . . . . . 10
Section 9. Treasurer . . . . . . . . . . . . . . 10
Section 10. Assistant Treasurers . . . . . . . . . 11
Section 11. Bonding . . . . . . . . . . . . . . . 11
ARTICLE VI . . . . . . . . 11
CERTIFICATES REPRESENTING SHARES . . . . 11
Section 1. Form of Certificates . . . . . . . . 11
Section 2. Lost Certificates . . . . . . . . . . 12
Section 3. Transfer of Shares . . . . . . . . . . 12
Section 4. Registered Shareholders. . . . . . . . 12
ARTICLE VII . . . . . . . . 12
INDEMNIFICATION OF OFFICERS AND DIRECTOR. . 12
Section 1. General. . . . . . . . . . . . . . . . 12
Section 2. Insurance. . . . . . . . . . . . . . . 13
ARTICLE VIII . . . . . . . 13
GENERAL PROVISIONS . . . . . . . 13
Section 1. Distributions and Share Dividends. . . 13
Section 3. Reserves . . . . . . . . . . . . . . . 13
Section 3. Fiscal Year. . . . . . . . . . . . . . 14
Section 4. Seal . . . . . . . . . . . . . . . . . 14
Section 5. Resignation. . . . . . . . . . . . . . 14
ARTICLE IX . . . . . . . . 14
AMENDMENTS TO BYLAWS . . . . . . . . 14
</TABLE>
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ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the Corporation
shall be determined by the Board of Directors.
SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Texas as the Board of
Directors may from time to time determine or the business of the Corporation may
require.
ARTICLE II
SHAREHOLDERS
SECTION 1. TIME AND PLACE OF MEETINGS. Meetings of the shareholders
shall be held at such time and at such place, within or without the State of
Texas, as shall be determined by the Board of Directors.
SECTION 2. ANNUAL MEETINGS. Annual meetings of shareholders shall be
held on such date and at such time as shall be determined by the Board of
Directors. At each annual meeting the shareholders shall elect a Board of
Directors and transact such other business as may properly be brought before the
meeting.
SECTION 3. SPECIAL MEETINGS. Special meetings of the share-holders may
be called at any time by the Chief Executive Officer or the Board of Directors,
and shall be called by the Chief Executive Officer or the Secretary at the
request in writing of the holders of not less than ten percent (10 %) of the
voting power represented by all the shares issued, outstanding and entitled to
be voted at the proposed special meeting, unless the Articles of Incorporation
provide for a different percentage, in which event such provision of the
Articles of Incorporation shall govern. Such request shall state the purpose or
purposes of the proposed meeting. Business transacted at special meetings shall
be confined to the purposes stated in the notice of the meeting.
SECTION 4. NOTICE. Written or printed notice stating the place, day and
hour of any shareholders' meeting and, in case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not less than
ten nor more than 60 days before the date of the meeting, either personally or
by mail, by or at the direction of the Chief Executive Officer, the Secretary or
the officer or person calling the meeting, to each shareholder entitled to vote
at such meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, postage prepaid, addressed to the
shareholder at his address as it appears on the share transfer records of the
Corporation.
SECTION 5. CLOSING OF SHARE TRANSFER RECORDS AND FIXING RECORD DATES
FOR MATTERS OTHER THAN CONSENTS TO ACTION. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment
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thereof, or entitled to receive payment of any distribution or share dividend,
or in order to make a determination of shareholders for any other proper purpose
(other than determining shareholders entitled to consent to action by
shareholders proposed to be taken without a meeting of shareholders), the Board
of Directors of the Corporation may provide that the share transfer records
shall be closed for a stated period but not to exceed, in any case, 60 days. If
the share transfer records shall be closed for the purpose of determining
shareholders, such records shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the share transfer records, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than 60 days
and, in the case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the share transfer records are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to receive
payment of a distribution (other than a distribution involving a purchase or
redemption by the Corporation of any of its own shares) or share dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such distribution or share
dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof except where the
determination has been made through the closing of share transfer records and
the stated period of closing has expired.
SECTION 6. FIXING RECORD DATES FOR CONSENTS TO ACTION. Unless a record
date shall have previously been fixed or determined pursuant to this section 6,
whenever action by shareholders is proposed to be taken by consent in writing
without a meeting of shareholders, the Board of Directors may fix a record date
for the purpose of determining shareholders entitled to consent to that action,
which record date shall not precede, and shall not be more than ten days after,
the date upon which the resolution fixing the record date is adopted by the
Board of Directors. If no record date has been fixed by the Board of Directors
and the prior action of the Board of Directors is not required by the Texas
Business Corporation Act (herein called the "Act"), the record date for
determining shareholders entitled to consent to action in writing without a
meeting shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the Corporation by
delivery to its registered office, its principal place if business, or an
officer or agent of the Corporation having custody of the records in which
proceedings of meetings of shareholders are recorded. Delivery shall be by hand
or by certified or registered mail, return receipt requested. Delivery to the
Corporation's principal place of business shall be addressed to the President or
the Chief Executive Officer of the Corporation. If no record date shall have
been fixed by the Board of Directors and prior action of the Board of Directors
is required by the Act, the record date for determining shareholders entitled to
consent to action in writing without a meeting shall be at the close of business
on the date which the Board of Directors adopts a resolution taking such prior
action.
SECTION 7. LIST OF SHAREHOLDERS. The officer or agent of the
Corporation having charge of the share transfer records for shares of the
Corporation shall make, at least ten days before each meeting of the
shareholders, a complete list of the share-
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holders entitled to vote at such meeting or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of voting shares held by
each, with list, for a period of ten days prior to such meeting, 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 the usual business hours of the Corporation. Such 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 transfer records or to vote any
meeting of shareholders. Failure to comply with the requirements of this Section
shall not affect the validity of any action taken at such meeting.
SECTION 8. QUORUM. A quorum shall be present at a meeting of
shareholders if the holders of share having a majority of the voting power
represented by all issued and outstanding share entitled to vote at the meeting
are present in person or represented by proxy at such meeting, unless otherwise
provided by the Articles of Incorporation in accordance with the Act. Once a
quorum is present at a meeting of shareholders, the shareholders represented in
person or by proxy at the meeting may conduct such business as may properly be
brought before the meeting until it is adjourned, and the subsequent withdrawal
from the meeting of any shareholder or the refusal of any shareholder
represented in person or by proxy to vote shall not affect the presence of a
quorum at the meeting. If, however, a quorum shall not be present at any meeting
of shareholders, the shareholders entitled to vote, present in person or
represented by proxy, shall have power to adjourn the meeting, without notice
other than announcement at the meeting, until such time and to such place as may
be determined by a vote of the holders of a majority of the share represented in
person or by proxy at such meeting until a quorum shall be present. At such
adjourned meeting at which a quorum is present, any business may be transacted
which might have been transacted at the meeting as originally noticed.
SECTION 9. VOTING. When a quorum is present at any meeting, the vote of
the holders of a majority of the shares entitled to vote, present in person or
represented by proxy at such meeting, shall decide any matter brought before
such meeting, other than the election of directors or a matter for which the
affirmative vote of the holders of a specified portion of the shares entitled to
vote is required by the Act, and shall be the act of the shareholders, unless
otherwise provided by the Articles of Incorporation or these Bylaws in
accordance with the Act.
Unless otherwise provided in the Articles of Incorporation or these
Bylaws in accordance with the Act, directors of the Corporation shall be elected
by a plurality of the votes cast by the holders of shares entitled to vote in
the election of directors at a meeting of shareholders at which a quorum is
present.
At every meeting of the shareholders, each shareholder shall be
entitled to such number of votes, in person or by proxy, for each share having
voting power held by such shareholder, as is specified in the Articles of
Incorporation (including the resolution of the Board of Directors (or a
committee thereof) creating such shares), except to the extent that the voting
rights of the shares of any class or series are limited or denied by the
Articles of Incorporation. At each election of directors, every shareholder
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shall be entitled to cast, in person or by proxy, the number of votes to which
the shares owned by him are entitled for as many persons as there are directors
to be elected and for whose election he has a right to vote. Cumulative voting
is prohibited by the Articles of Incorporation. Every proxy must be executed in
writing by the shareholder. A telegram, telex, cablegram ram, or similar
transmission by the shareholder, or a photographic, photostatic, facsimile, or
similar reproduction of a writing executed by the shareholder, shall be treated
as an execution in writing for the purposes of this Section 9. No proxy shall be
valid after 11 months from the date of its execution unless otherwise provided
therein. Each proxy shall be revocable unless (i) the proxy form conspicuously
states that the proxy is irrevocable, and (ii) the proxy is coupled with an
interest, as defined in the Act and other Texas law.
Shares standing in the name of another corporation may be voted by such
officer, agent or proxy as the bylaws of such corporation may prescribe or, in
the absence of such provision, as the board of directors of such corporation may
determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him, either in person or by proxy, without 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.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without being transferred into his name, if such authority is
contained in an appropriate order of the court that appointed the receiver.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Treasury shares, shares of the Corporation's stock owned by another
corporation the majority of the voting stock of which is owned or controlled by
the Corporation, and shares of its own stock 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 10. ACTION BY CONSENT. Any action required or permitted to be
taken at a meeting of the shareholders may be taken without a meeting, without
prior notice, and without a vote if a consent in writing, setting forth the
action so taken, shall be signed by all of the shareholders entitled to vote
with respect to the action that is the subject of the consent.
In addition, if the Articles of Incorporation so provide, any action
required or permitted to be taken at a meeting of the shareholders may be taken
without a meeting, without prior notice, and without a vote if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holder or holders of shares having not less than the minimum number of votes
that would be necessary to take such action at a meeting at which the holders of
all shares entitled to vote on the action were present
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and voted. Prompt notice of the taking of any action by shareholder without a
meeting by less than unanimous written consent shall be given to those
shareholders who did not consent in writing to the action.
Every written consent shall bear the date of signature of each
shareholder who signs the consent. No written consent shall be effective to take
the action that is the subject of the consent unless, within 60 days after the
date of the earliest dated consent delivered to the Corporation and set forth
below in this Section 10, the consent or consents signed by the holder or
holders of shares having not less than the minimum number of votes that would be
necessary to take the action that is the subject of the consent are delivered to
the Corporation by delivery to its registered office, its principal place of
business, or an officer or agent of the Corporation having custody of the
records in which proceedings of meetings of shareholders are recorded. Delivery
shall be by hand or certified or registered mail, return receipt requested.
Delivery to the Corporation's principal place of business shall be addressed to
the President or the Chief Executive Officer of the Corporation. A telegram,
telex, cablegram, or similar transmission by a shareholder, or a photographic,
photostatic, facsimile, or similar reproduction of a writing signed by a
shareholder, shall be regarded as signed by a shareholder for the purposes of
this Section 10.
SECTION 11. PRESENCE AT MEETINGS BY MEANS OF COMMUNICATIONS EQUIPMENT.
Shareholders may participate in and hold a meeting of the shareholders by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting pursuant to this Section 11 shall constitute present in person at
such meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER OF DIRECTORS. The number of directors of the
Corporation shall be fixed from time to time by resolution of the Board of
Directors, but in no case shall the number of directors be less than one. Until
otherwise fixed by resolution of the Board of Directors, the number of directors
shall be the number stated in the Articles of Incorporation. No decreases in the
number of directors shall have the effect of reducing the term of any incumbent
director. Directors shall be elected at each annual meeting of the shareholders
by the holders of shares entitled to vote in the election of directors, except
as provided in Section 2 of this Article III, and each director shall hold
office until the annual meeting of shareholders following his election or until
his successor is elected and qualified. Directors need not be residents of the
State of Texas or shareholders of the Corporation.
SECTION 2. VACANCIES. Subject to other provisions of this Section 2,
any vacancy occurring in the Board of Directors may be filled by election at an
annual or special meeting of the shareholders called for that purpose or by the
affirmative vote of a majority of the remaining directors, though the remaining
directors may constitute
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less than a quorum of the Board of Directors as fixed by Section 8 of this
Article III. A director elected to fill a vacancy shall be elected for the
unexpired term of his predecessor in office. Any directorship to be filled by
reason of an increase in the number of directors shall be filled by election at
an annual meeting or at a special meeting of shareholders called for that
purpose or may be filled by the Board of Directors for a term of office
continuing only until the next election of one or more directors by the
shareholders; provided that the Board of Directors may not fill more than two
such directorships during the period between any two successive annual meetings
of shareholders. Shareholders holding a majority of shares then entitled to vote
at an election of directors may, at any time and with or without cause,
terminate the term of office of all or any of the directors by a vote at any
annual or special meeting called for that purpose. Such removal shall be
effective immediately upon such shareholder action even if successors are not
elected simultaneously, and the vacancies on the Board of Directors caused by
such action shall be filled only by election by the shareholders.
Notwithstanding the foregoing, whenever the holders of any class or
series of shares are entitled to elect one or more directors by the provisions
of the Articles of Incorporation, only the holders of shares of that class or
series shall be entitled to vote for or against the removal of any director
elected by the holders of shares of that class or series; and any vacancies in
such directorships and any newly created directorships of such class or series
to be filled by reason of an increase in the number of such directors may be
filled by the affirmative vote of a majority of the directors elected by such
class or series then in office or by a sole remaining director so elected, or by
the vote of the holders of the outstanding shares of such class or series, and
such directorships shall not in any case be filled by the vote of the remaining
directors or the holders of the outstanding shares as a whole unless otherwise
provided in the Articles of Incorporation.
SECTION 3. GENERAL POWERS. The powers of the Corporation shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, its Board of Directors,
which may do or cause to be done all such lawful acts and things, as are not by
the Act, the Articles of Incorporation or these Bylaws directed or required to
be exercised or done by the shareholders.
SECTION 4. PLACE OF MEETINGS. The Board of Directors of the Corporation
may hold meetings, both regular and special, either within or without the State
of Texas.
SECTION 5. ANNUAL MEETINGS. The first meeting of each newly elected
Board of Directors shall be held, without further notice, immediately following
the annual meeting of shareholders at the same place, unless by the majority
vote or unanimous consent of the directors then elected and serving, such time
or place shall be changed.
SECTION 6. REGULAR MEETINGS. Regular meetings of the Board of Directors
may be held with or without notice at such time and place as the Board of
Directors may determine by resolution.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of Directors
may be called by or at the request of the Chief Executive Officer and shall be
called by the
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Secretary on the written request of a majority of the incumbent directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix the place for holding any special meeting of the Board of Directors
called by such person or persons. Notice of any special meeting shall be given
at least 24 hours previous thereto if given either personally (including written
notice delivered personally or telephone notice) or by telex, telecopy, telegram
or other means of immediate communication, and at least 72 hours previous
thereto if given by written notice mailed or otherwise transmitted to each
director at the address of his business or residence. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the Board
of Directors need be specified in the notice or waiver of notice of such
meeting. Any director may waive notice of any meeting, as provided in Section 2
of Article IV of these Bylaws. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction of any business
on the ground that the meeting is not lawfully called or convened.
SECTION 8. QUORUM AND VOTING. At all meetings of the Board of
Directors, the presence of a majority of the number of directors fixed in the
manner provided in Section 1 of this Article III shall constitute a quorum for
the transaction of business. At all meetings of committees of the Board of
Directors (if one or more be designated in the manner described in Section 9 of
this Article III), the presence of a majority of the number of directors fixed
from time to time by resolution of the Board of Directors to serve as members of
such committees shall constitute a quorum for the transaction of business. The
affirmative vote of at least a majority of the directors present and entitled to
vote at any meeting of the Board of Directors or a committee of the Board of
Directors at which there is a quorum shall be the act of the Board of Directors
or the Committee, except as may be otherwise specifically provided by the Act,
the Articles of Incorporation or these Bylaws. Directors with an interest in a
business transaction of the Corporation and directors who are directors or
officers or have a financial interest in any other corporation, partnership,
association or other organization with which the Corporation is transacting
business may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or of a committee of the Board of Directors to authorize
such business transaction. If a quorum shall not be present at any meeting of
the Board of Directors or a committee thereof, a majority of the directors
present thereat may adjourn the meeting, without notice other than announcement
at the meeting, until such time and to such place as may be determined by such
majority of directors, until a quorum shall be present.
SECTION 9. COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors
may, by resolution passed by a majority of the whole Board of Directors,
designate from among its members one or more committees, each of which shall be
composed of one or more of its members, and may designate one or more of its
members as alternate members of any committee, who may, subject to any
limitations imposed by the Board of Directors, replace absent or disqualified
members at any meeting of that committee. Any such committee, to the extent
provided in the resolution of the Board of Directors designating the committee
or in the Articles of Incorporation or these Bylaws, shall have and may exercise
all of the authority of the Board of Directors of the Corporation, except where
action of the Board of Directors is required by the Act or by the Articles of
Incorporation. Any member of a committee of the Board of Directors may be
removed,
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for or without cause, by the affirmative vote of a majority or the whole Board
of Directors. If any vacancy or vacancies occur in a committee of the Board of
Directors caused by death, resignation, retirement, disqualification, removal
from office or otherwise, the vacancy or vacancies shall be filled by the
affirmative vote of a majority of the whole Board of Directors. Such committee
or committees shall have such name or names as may be designated by the Board of
Directors and shall keep regular minutes of their proceedings and report the
same to the Board of Directors when required.
SECTION 10. COMPENSATION OF DIRECTORS. Unless otherwise provided by
resolution of the Board of Directors, directors, as members of the Board of
Directors or of any committee thereof, shall not be entitled to receive any
stated salary for their services. Nothing herein contained, however, shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefore.
SECTION 11. ACTION BY UNANIMOUS CONSENT. Any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting if a written consent, setting
forth the action so taken, is signed by all the members of the Board of
Directors or the committee, as the case may be, and such written consent shall
have the same force and effect as a unanimous vote at a meeting of the Board of
Directors.
SECTION 12. PRESENCE AT MEETINGS BY MEANS OF COMMUNICATIONS EQUIPMENT.
Members of the Board of Directors of the Corporation or any committee designated
by the Board of Directors, may participate in and hold a meeting of such board
or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to the Section 12 shall
constitute presence in person at such meeting, except where a person
participated in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or conceived.
ARTICLES IV
NOTICES
SECTION 1. FORM OF NOTICE. Whenever under the provisions of the Act,
the Articles of Incorporation or these Bylaws, notice is required to be given to
any director or shareholder, and no provision is made as to how such notice
shall be given, it shall not be construed to mean personal notice exclusively,
but any such notice may be given in writing, by mail, postage prepaid, or by
telex, telecopy, or telegram, or other means of immediate communication,
addressed or transmitted to such director or shareholder at such address as
appears on the books of the Corporation. Any notice required or permitted to be
given by mail shall be deemed to be given at the time when the same be thus
deposited, postage prepaid, in the United States mail as aforesaid. Any notice
required or permitted to be given by telex, telecopy, telegram, or other means
of immediate communication shall be deemed to be given at the time of actual
delivery.
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SECTION 2. WAIVER. Whenever under the provisions of the Act, the
Articles of Incorporation or these, Bylaws, any notice is required to be given
to any director or shareholder of the Corporation, 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.
SECTION 3. WHEN NOTICE UNNECESSARY. Whenever under provisions of the
Act, the Articles of Incorporation or these Bylaws, any notice is required to be
given to any shareholder, such notice need not be given to the share-holder if
(1) notice of two consecutive annual meetings and all notices of meetings held
during the period between those annual meetings, if any, or (2) all (but in no
event less than two) payments (if sent by first class mail) of distributions or
interest on securities during a 12-month period have been mailed to that person,
addressed at his address as shown on the records of the Corporation, and have
been returned undeliverable. Any action or meeting taken or held without notice
to such a person shall have the same force and effect as if the notice had been
duly given. If such a person delivers to the Corporation a written notice
setting forth his then current address, the requirement that notice be given to
that person shall be reinstated.
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ARTICLE V
OFFICERS
SECTION 1. GENERAL. The elected officers of the Corporation shall be a
President and a Secretary. The Board of Directors may also elect or appoint a
Chairman of the Board, one or more Vice Presidents, one or more Assistant Vice
Presidents, one or more Assistant Secretaries, a Treasurer and one or more
Assistant Treasurers, all of whom shall also be officers. Two or more offices
may be held by the same person.
SECTION 2. ELECTION. The Board of Directors shall elect the officers of
the Corporation at each annual meeting of the Board of Directors. The Board of
Directors may appoint such other officers and agents as it shall deem necessary
and shall determine the salaries of all officers and agents from time to time.
The officers shall hold office until their successors are chosen and qualified.
No officer need be a member of the Board of Directors except the Chairman of the
Board, if one be elected. Any officer elected or appointed by the Board of
Directors may be removed, with or without cause, at any time by a majority vote
of the whole Board. Election or appointment of an officer or agent shall not of
itself create contract rights.
ARTICLE V
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the board, if any,
subject to the provisions of these Bylaws, shall have general supervision of
the affairs of the Corporation and shall have general and active control of all
its business. He shall preside, when present, at all meetings of shareholders
and at all meetings of the Board of Directors. He shall see that all orders
and resolutions of the Board of Directors and the shareholders are carried into
effect. He shall have general authority to execute bonds, deeds and contracts
in the name of the Corporation and affix the corporate seal thereto; to sign
stock certificates; to sign all corporate checks, and negotiate all bank
transfers of funds on behalf of the Corporation; to borrow money on behalf of
the Corporation; to make loans from the Corporation to any officer, director,
employee, subsidiary, or any other entity, as is reasonable and prudent, under
the prevailing circumstances; to cause the employment or appointment of such
officers, employees and agents of the Corporation as the proper conduct
of operations may require, and to fix their compensation, subject to the
provisions of these Bylaws, to remove or suspend any officer, employee or agent
who shall have been employed or appointed under the authority of the Board of
Directors, his authority or under authority of an officer subordinate to him.
SECTION 4. PRESIDENT. The President shall be the ranking and Chief
Executive Officer of the Corporation, and shall have the duties and
responsibilities, and the authority and power, of the Chairman of the Board if
same be incompetent or otherwise unavailable to perform, as determined by the
Board of Directors. The President shall be the Chief Operating Officer of the
Corporation and as such shall have, subject to review and approval of the
Chairman of the Board, if one be elected, the responsibility for the operation
of the Corporation.
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SECTION 5. VICE PRESIDENTS. In the absence of the President or in the
event of his inability or refusal to act, the Vice President, if any (in the
event there be more than one, the Vice Presidents in the order designated or, in
the absence of any designation, then in the order of their election), shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
President shall perform such other duties and have such other powers as the
Board of Directors, the Chief Executive Officer or the Chief Operating Officer
may from time to time prescribe. The Vice President in charge of finance, if
any, shall also perform the duties and assume the responsibilities described in
Section 9 of this Article for the Treasurer, and shall report directly to the
Chief Executive Officer of the Corporation.
SECTION 6. ASSISTANT VICE PRESIDENTS. In the absence of a Vice
President or in the event of his inability or refusal to act, the Assistant Vice
President, if any (or, if there be more than one, the Assistant Vice Presidents
in the order designated or, in the absence of any designation, then in the order
of their election), shall perform the duties and exercise the powers of that
Vice President, and shall perform such other duties and have such other powers
as the Board of Directors, the Chief Executive Officer, the Chief Operating
Officer or the Vice President under whose supervision he is appointed may from
time to time prescribe.
SECTION 7. SECRETARY. The Secretary shall attend and record minutes of
the proceedings of all meetings of the Board of Directors and any committees
thereof and all meetings of the shareholders. He shall file the records of such
meetings in one or more books to be kept by him for that purpose. Unless the
Corporation has appointed a transfer agent or other agent to keep such a record,
the secretary shall also keep at the Corporation's registered office or
principal place of business a records of the original issuance of shares issued
by the Corporation and a record of the original issuance of shares issued by the
Corporation and a record of each transfer of those shares that have been
presented to the Corporation for registration or transfer. He shall give or
cause to be given, notice of all meetings of the shareholders and special
meetings of the Board of Directors, and shall perform such other duties as may
be prescribed by the Board of Directors or the Chief Executive Officer, under
whose supervision he shall be. He shall have custody of the corporate seal of
the Corporation of the Corporation and he, or an Assistant Secretary, shall have
authority to affix the same to any instrument requiring it, and when so affixed,
it may be attested by his signature or by the signature of such Assistant
Secretary. The Board of Directors may give general authority to any other
officer to affix the seal of the Corporation and to attest the affixing by his
signature. The Secretary shall keep and account for all books, documents, papers
and records of the Corporation except those for which some other officer or
agent is properly accountable. He shall have authority to sign stock
certificates and shall generally perform all the duties usually appertaining to
the office of the secretary of a corporation.
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SECTION 8. ASSISTANT SECRETARIES. In the absence of a Secretary or in
the event of his inability or refusal to act, the Assistant Secretary, if any
(or, if there be more than one, the Assistant Secretary in the order designated
or, in the absence of any designation, then in the order of their election),
shall perform the duties and exercise the powers of the Secretary, and shall
perform such other duties and have such other powers as the Board of Directors,
the Chief Executive Officer, the Chief Operating Officer or the Secretary may
from time to time prescribe.
SECTION 9. TREASURER. The Treasurer, if any (or the Vice President in
charge of finance, if one be elected), shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the Executive Officer and the Board of Directors, at its regular meetings, or
when the Board of Directors so requires an account of all his transactions as
Treasurer and of the financial condition of the Corporation. If required by the
Board of Directors, he shall give the Corporation a bond (which shall be renewed
every six years) in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration of 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. The Treasurer shall be under the
supervision of the Vice President in charge of finance, if any, and he shall
perform such other duties as may be prescribed by the Board of Directors, the
Chief Executive Officer or any such Vice President in charge of finance.
SECTION 10. ASSISTANT TREASURERS. In the absence of the Treasurer or in
the event of his inability or refusal to act, the Assistant Treasurer, if one be
elected (or, if there shall be more than one, the Assistant Treasurer in the
order designated or, in the absence of any designation, then in the order of
their election), shall perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors, the Chief Executive Officer or the Treasurer may from time
to time prescribe.
SECTION 11. BONDING. If required by the Board of Directors, all or
certain of the officers 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 their office and for the restoration
to the Corporation, in case of their death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in their possession or under their control belonging to the
Corporation.
ARTICLE VI
CERTIFICATES REPRESENTING SHARES
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SECTION 1. FORM OF CERTIFICATES. The Corporation shall deliver
Certificates representing all shares to which shareholders are entitled.
Certificates representing shares of the Corporation shall be in such form as
shall be approved and adopted by the Board of Directors and shall be numbered
consecutively and entered in the share transfer records of the Corporation as
they are issued. Each certificate shall state on the face thereof that the
Corporation is organized under the laws of the State of Texas, the name of the
registered holder, the number and class of shares, and the designation of the
series, if any, which said certificate represents, and either the par value of
the shares or a statement that the shares are without par value. Each
certificate shall also set forth on the back thereof a full summary statement of
matters described on certificates representing shares, and shall contain a
conspicuous statement on the face thereof referring to the matters set forth on
the back thereof. Certificates shall be signed by the Chairman of the Board,
President or any Vice President and the Secretary or any Assistant Secretary,
and may be sealed with the seal of the Corporation. Either the seal of the
Corporation or the signatures of the Corporation's officers or both may be
facsimiles. In case any officer or officers who have signed, or whose facsimile
signature or signatures have been used on such certificate or certificates,
shall cease to be such officer or officers of the Corporation, whether because
of death, resignation or otherwise, before such certificate or certificates have
been delivered by the Corporation or its agents, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed the certificate or certificates or whose facsimile signature
or signatures have been used thereon had not ceased to be such officer or
officers of the Corporation.
SECTION 2. LOST CERTIFICATES. The Corporation may direct that a new
certificate be issued in place of any certificate theretofore 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 certificate to be lost or
destroyed. When authorizing the issue of a new certificate, the Board of
Directors, in its discretion and as a condition precedent to the issuance
thereof, may 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 give the Corporation a bond in such form, in such sum, and with such
surety or sureties as it may direct as indemnity against any claim that may be
made against the Corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
SECTION 3. TRANSFER OF SHARES. Shares of stock shall be transferable
only on the share transfer records of the Corporation by the holder thereof in
person or by his duly authorized attorney. Subject to any restrictions on
transfer set forth in the Articles of Incorporation, these Bylaws or any
agreement among shareholders to which this Corporation is a party or has notice,
upon surrender to the Corporation or to the transfer agent of the Corporation of
a certificate representing shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation or the transfer agent of the Corporation to issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
SECTION 4. REGISTERED SHAREHOLDERS. Except as otherwise provided in the
Act or other Texas law, the Corporation shall be entitled to regard the person
in whose name any shares issued by the Corporation are registered in the share
transfer records
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of the Corporation at any particular time (including, without limitation, as of
the record date fixed pursuant to Section 5 or Section 6 of Article II hereof)
as the owner of those shares 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 shall have express or other notice
thereof.
ARTICLE VII
INDEMNIFICATION OF OFFICERS AND DIRECTORS
SECTION 1. GENERAL. The Corporation shall indemnify persons who are or
were a director, officer, employee or agent of the Corporation, or persons who
are not or were not directors, officers, employees or agents of the Corporation
but who are or were serving at the request of the Corporation as a director,
officer, trustee, employee, agent or similar functionary of another foreign or
domestic corporation, trust, partnership, joint venture, sole proprietorship,
employee benefit plan or other enterprise (such persons collectively referred to
herein as "Corporate Functionaries") against any and all liability and
reasonable expense that may be incurred by them in connection with or resulting
from (a) any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, (b) an
appeal in such an action, suit or proceeding, all to the full extent permitted
by Article 2.02-1 of the Texas Business Corporation Act. The rights of
indemnification provided for in this Article VII shall be in addition to all
rights to which any Corporate Functionary may be entitled under any agreement or
vote of shareholders or as a matter of law or otherwise.
SECTION 2. INSURANCE. The Corporation may purchase or maintain
insurance on behalf of any Corporate Functionary against any liability asserted
against him and incurred by him in such a capacity or arising out of his status
as a Corporate Functionary, whether or not the Corporation would have the power
to indemnify him or her against the liability under the Act or these Bylaws;
provided, however, that if the insurance or other arrangement is with a person
or entity that is not regularly engaged in the business of providing insurance
coverage, the insurance or arrangement may provide for payment of a liability
with respect to which the Corporation would not have the power to indemnify the
person only if including coverage for the additional liability has been approved
by the shareholders of the Corporation. Without limiting the power of the
Corporation to procure or maintain any kind of insurance or arrangement, the
Corporation may, for the benefit of persons indemnified by the Corporation, (i)
create a trust fund, (ii) establish any form of self-insurance, (iii) secure its
indemnification obligation by grant of any security interest or other lien on
the assets of the Corporation, or (iv) establish a letter of credit, guaranty of
surety arrangement. Any such insurance or other arrangement may be procured,
maintained or established within the Corporation or its affiliates or with any
insurer or other person deemed appropriate by the Board of Directors of the
Corporation regardless of whether all or part of the stock or other securities
thereof are owned in whole or in part by the Corporation. In the absence of
fraud, the judgment of the Board of Directors of the Corporation as to the terms
and conditions of such insurance or other arrangement and the identity of the
insurer or other person participating in an arrangement shall be conclusive, and
the insurance or arrangement shall not be voidable and shall not subject the
directors approving the insurance or arrangement to liability, on any ground,
regardless of whether directors par-
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ticipating in approving such insurance or other arrangement shall be
beneficiaries thereof.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS AND SHARE DIVIDENDS. Distributions or share
dividends to the shareholders of the Corporation, subject to the provisions of
the Act and the Articles of Incorporation, if any, may be declared by the Board
of Directors at any regular or special meeting. Distributions may be declared
and paid in cash or in property (other than shares or rights to acquire shares
of the Corporation) provided that all such declarations and payments of
distributions, and all declarations and issuances of share dividends, shall be
in strict compliance with all applicable laws and the Articles of Incorporation.
SECTION 2. RESERVES. There may be created by resolution of the Board of
Directors out of the surplus of the Corporation such reserve or reserves as the
Board of Directors from time to time, in its discretion, deems proper to provide
for contingencies, or to equalize distributions or share dividends, or to repair
or maintain any property of the Corporation, or for such other proper purpose as
the Board shall deem beneficial to the Corporation, and the Board may increase,
decrease or abolish any reserve in the same manner in which it was created.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
determined by the Board of Directors.
SECTION 4. SEAL. The Corporation may have a seal which may be used by
causing it or a facsimile thereof to be impressed or affixed or in any manner
reproduced. Any officer of the Corporation shall have authority to affix the
seal to any document requiring it.
SECTION 5. RESIGNATION. Any director, officer or agent of the
Corporation 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 specified in such notice,
the acceptance of such resignation shall not be necessary to make it effective.
ARTICLE IX
AMENDMENT TO BYLAWS
Unless otherwise provided by the Articles of Incorporation or a bylaw
adopted by the shareholders of the Corporation, these Bylaws may be amended or
repealed, or new Bylaws may be adopted, at any meeting of the shareholders of
the Corporation or of the Board of Directors at which a quorum is present, by
the affirmative vote of the holders of a majority of the shares or the
directors, as the case may be, present at such meeting.
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CERTIFICATION
I, James R. Leone, Secretary of the Corporation, hereby certify that
the foregoing is a true, accurate and complete copy of the Amended Bylaws of
MOBILE AREA NETWORKS, Inc. adopted by its Board of Directors as of December 24,
1996.
/s/ James R. Leone
-------------------------------
Secretary
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STOCK TRANSFER RESTRICTION AND SHAREHOLDERS AGREEMENT
This Stock Transfer Restriction and Shareholders Agreement (this "Agreement") is
entered into effective as of the 8th day of November, 1996, by and among MOBILE
AREA NETWORKS, INC., a Texas corporation (the Corporation"), William J. Reid
("Reid"), George E. Wimbish ("Wimbish") and Robert M. Good ("Good"). Reid,
Wimbish and Good, together with any subsequent shareholders in the Corporation
who hereafter execute this Agreement, are collectively referred to herein as the
Shareholders". Reid, Wimbish and Good are also sometimes referred to herein as
the Named Shareholders".
R E C I T A L S:
WHEREAS, the Shareholders own all the issued and outstanding capital stock of
the Corporation (all such capital stock, together with any hereafter acquired,
is hereinafter referred to as the Shares"); and
WHEREAS, the Shareholders and the Corporation desire to enter into this
Agreement to control the distribution of ownership interests in the Corporation
and to promote the harmonious management of the Corporation's affairs.
NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained herein, and for other valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
RESTRICTIONS AGAINST TRANSFER
Except as otherwise provided in this Agreement, a Shareholder shall not
transfer, assign, pledge, hypothecate, or in any way alienate any Shares, or any
interest therein, whether voluntarily or by operation of law, or by gift or
otherwise, without the prior written consent of the Corporation and the other
Shareholders. Any purported transfer in violation of any provision of this
Agreement shall be void and ineffectual, shall not operate to transfer any
interest or title to the purported transferee, and shall give the Corporation
and the other Shareholders options to purchase such Shares in the manner and on
the conditions hereinafter provided.
ARTICLE II
OPTIONS
2.1 OPTION UPON VOLUNTARY TRANSFER.
2.1.1 Notice of Intention to Transfer. If a Shareholder intends to voluntarily
transfer any of its Shares to any person other than the Corporation and does not
obtain the written consents required in ARTICLE I hereof, the Shareholder shall
give written notice to the Corporation and the other Shareholders stating (i)
the intention to transfer Shares, (ii) the number of Shares to be transferred,
(iii) the name, business and residence address of the proposed transferee, (iv)
the nature and amount of the consideration, and (v) the other terms of the
proposed sale.
2.1.2 Option to Purchase. The Corporation shall have, and may exercise within 60
days after receipt of the notice of intent to transfer, an option to purchase
all or any portion of the Shares
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owned by the transferring Shareholder for the price and upon the other terms
stated in the notice of intent to transfer. If the Corporation elects not to
purchase all or any portion of such Shares, it shall, prior to the expiration of
said 60-day period, notify the other Shareholders in writing of its election,
and the other Shareholders shall have, and may exercise within 30 days of
receipt of the Corporation's notice of election, an option to purchase such
unpurchased Shares upon the same terms and conditions.
2.1.3 Death Before Closing. If a Shareholder who proposed to transfer Shares
dies prior to the closing of the sale and purchase contemplated by this Section
2.1, the Shares of such deceased Shareholder shall be the subject of sale and
purchase under Section 2.3.
2.1.4 Allowable Consideration. All parties hereto acknowledge and agree that it
would be impractical to exercise an option to purchase arising pursuant to this
Section 2.1 whenever the proposed consideration to be received by the
transferring Shareholder is other than cash. Therefore, the parties agree that
no transfer shall be permitted and no option shall arise pursuant to this
Section 2.1 whenever the consideration to be received from the proposed
transferee is other than cash.
2.2 OPTION UPON CERTAIN INVOLUNTARY TRANSFERS.
2.2.1 Exercise Event and Notice. The filing of a voluntary or involuntary
petition of bankruptcy by or on behalf of a Shareholder, an assignment by a
Shareholder of any of its Shares, or of any right or interest therein, for the
benefit of creditors, or the voluntary transfer, transfer by law or any other
transfer, of any Shares, or of any right or interest therein (other than
transfers governed by ARTICLE I or Sections 2.1, 2.3, 2.4 or 2.5 hereof), shall
give the Corporation and the other Shareholders the option to purchase the
Shares of such bankrupt Shareholder or such transferred Shares as provided
herein. Upon the filing of a voluntary or involuntary petition of bankruptcy by
or on behalf of a Shareholder or an assignment by Shareholder of any of its
Shares, or of any right or interest therein, for the benefit of creditors, the
Shareholder or its personal representative shall promptly give written notice of
such occurrence to the Corporation and to the other Shareholders. In the event
of a transfer of Shares, as described above, the Shareholder transferring such
Shares shall promptly give written notice of such transfer to the Corporation
and to the other Shareholders.
2.2.2 Option to Purchase. The Corporation shall have, and may exercise within 60
days after receipt of the notice of the applicable Exercise Event, an option to
purchase all or any portion of the Shares owned by the bankrupt or transferring
Shareholder for the price and upon the other terms hereinafter provided. If the
Corporation elects not to purchase all or any portion of such Shares, it shall,
prior to the expiration of said 60-day period, notify the other Shareholders in
writing of its election. The other Shareholders shall have, and may exercise
within 30 days of receipt of the notice of election, an option to purchase such
unpurchased Shares for the price and upon the other terms hereinafter provided.
2.3 PURCHASE AND SALE OF SHARES UPON DEATH.
2.3.1 Notice of Deaths. Upon the death of a Shareholder (other than a
Shareholder who is also the spouse of a Named Shareholder, in which case Section
2.4 shall apply), the representative of the estate of the deceased Shareholder
shall promptly give written notice of the death to the Corporation and the other
Shareholders.
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2.3.2 Option to Purchase. The Corporation shall have, and may exercise within 60
days after receipt of the notice of death, an option to purchase all or any
portion of the Shares of the deceased Shareholder which, by the deceased
Shareholder's last will and testament or by law, are not transferred as allowed
by Section 2.5, for the price and upon the other terms hereinafter provided. If
the Corporation elects not to purchase all or any portion of such Shares, it
shall, prior to the expiration of said 60-day period, notify the other
Shareholders in writing of its election. The other Shareholders shall have, and
may exercise within 30 days of receipt of the notice of election, an option to
purchase such unpurchased Shares for the price and upon the other terms
hereinafter provided.
2.4 OPTION UPON DEATH OF A SHAREHOLDER'S SPOUSE, TERMINATION OF MARITAL
RELATIONSHIP OR PARTITION OF COMMUNITY PROPERTY.
2.4.1 Death of Shareholder's Spouse. Shareholder and each Shareholder's spouse
agree that in event the spouse of a Shareholder predeceases such Shareholder and
such Shareholder does not succeed by the spouse's last will and testament or by
operation of law to any Shares or into (including, without limitation, a
community property interest of the spouse in any Shares, such Shareholder shall
have and may exercise within 60 days after the death of the spouse Shareholders
an option to purchase all or any portion of the spouse's Share interest therein
for the price and upon the terms hereinafter provided. If the Shareholder's
spouse elects to not purchase all or any portion of the deceased spouse's Share
interest, it shall, prior to expiration of said 60-day period notify the
Corporation and the other Shareholders in writing, its election. The Corporation
shall then have, and exercise within 30 days of receipt of the election, an
option to purchase the unpurchased, deceased spouse's Shares interest for the
price and upon the other terms herein provided. If the Corporation elects not to
purchase all or a portion of the deceased spouse's Shares or interest, shall
prior to expiration of said 30-day period, notify the other Shareholders in
writing of its election and the other Shareholders shall have, and may exercise
within 30 days of receipt of election, an option to purchase the unpurchased
deceased spouse's Shares or interest for the price and upon the terms
hereinafter provided.
2.4.2 Termination of Marital Relationship and Partition of Community
Property. In the event a divorce, annulment or other proceeding for termination
of the marital relationship is filed by or against a Shareholder, or upon the
initiation of any voluntary or involuntary attempt to partition the community
property estate between a Shareholder and the Shareholder's spouse for any
reason, the Shareholder shall promptly give written notice to the Corporation
and the other Shareholders of such event. The Shareholder may exercise within 60
days of giving of such notice, an option to purchase all or any portion of the
spouse's Shares, or interest in any Shares (including without limitation
community property interest), for the price and upon the terms hereinafter
provided. If the Shareholder elects not to purchase all or any portion of the
spouse's Shares or interest, it shall, prior to expiration of said 60-day
period, notify Corporation in writing of its election and the Corporation shall
have, and may exercise within 30 days of receipt of the election, an option to
purchase the unpurchased spouse's Shares or interest, for the price and upon the
other terms hereinafter provided. If the Corporation elects not to purchase all
or any portion of the spouse's Shares or interest, it shall, prior to expiration
of said 30-day period, notify the other Shareholders in writing of its election,
and the other Shareholders shall have, and may exercise within 30 days of
receipt of such election, an option to purchase the unpurchased spouse's Shares
or interest for the price and upon the other terms hereinafter provided.
2.4.3 Applicability of this Section. In recognition of the fact that a
Shareholder shall be entitled to transfer Shares to a spouse, or trust for the
benefit of a spouse, pursuant to Section 2.5 below, it is
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acknowledged and agreed by the parties hereto that, notwithstanding the
definition of Shareholders set forth in the introductory paragraph to this
Agreement, the spouse of a Shareholder who receives Shares from a Shareholder
pursuant to a transfer permitted by Section 2.5 below shall not be deemed a
Shareholder for purposes of Section 2.4, and that a Shareholder for purposes of
Section 2.4 shall only be deemed to include persons who received their Shares
other than by a transfer from their spouse pursuant to Section 2.5 below. Any
person who receives their Shares from a spouse pursuant to Section 2.5 below
shall not be entitled to receive or exercise any option to purchase the Shares,
or interest therein, of any other current or future party to this Agreement
under the provisions of this Section 2.4.
2.5 PERMITTED INTRA-FAMILY TRANSFERS.
The transfer restrictions of this Agreement shall not apply to a transfer
(either inter-vivos or testamentary) by any Named Shareholder to such Named
Shareholder's spouse or lineal descendants, or a trust for the sole benefit of
them. However, before any such transfer shall be made, the transferring Named
Shareholder shall give written notice thereof to the Corporation and the other
Named Shareholders and the transferring Named Shareholder shall require that the
person(s) or trust(s) acquiring the transferred Shares (i) execute a counterpart
of this Agreement and become a party hereto and thereafter hold such Shares
subject to all the terms and conditions provided herein, such that any
subsequent transfer of such Shares (or interest therein) shall only be made in
accordance with the terms and conditions provided herein, and (ii) execute such
agreements, documents and instruments as the Named Shareholders shall, from time
to time, require, in each Named Shareholder's sole discretion, to provide that
the transferee will thereafter vote all Shares at any time owned or controlled
by the transferee in favor of the living Named Shareholders, or designees of the
living Named Shareholders, for (A) all positions on the Corporation's Board of
Directors and (B) all officers of the Corporation. It is the intention of all
parties and signatories hereto that the foregoing provision be construed to
allow the Named Shareholders to control the size and composition of the
Corporation's Board of Directors and the identity of all the Corporation's
officers; and any proxies given or implied in connection therewith shall be
conclusively deemed to be coupled with an interest and irrevocable.
2.6 PLEDGES.
A Shareholder may grant a security interest in, pledge, or otherwise encumber
its Shares without the consent of the other Shareholders, but only if such
security interest, pledge, or other encumbrance is made subject to this
Agreement and the restrictions on transfer herein set forth, which shall be
applicable to the beneficiary of such security interest, pledge, or other
encumbrance and any person acquiring any Shares from any such beneficiary,
whether by foreclosure or otherwise.
Prior to any Shareholder granting a security interest in, pledging or otherwise
encumbering any of its Shares, such Shareholder shall require the beneficiary
thereof to execute a written acknowledgment in form and substance reasonably
satisfactory to the other Shareholders and the Corporation, wherein such
beneficiary acknowledges the terms and conditions of this Agreement and
covenants that, upon an event of default and prior to foreclosing on, or
otherwise forcing a transfer of, any pledged or encumbered Shares, such
beneficiary shall give written notice of such event of default to the
Corporation and the other Shareholders, which written notice shall be deemed an
Exercise Event for purposes of Section 2.2 hereof and shall give rise to the
option to purchase on the part of the Corporation and the other Shareholders as
provided in Section 2.2.
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2.7 ALTERNATE NOTICES.
The failure of any person, whether a party to this Agreement or otherwise, to
give notice of the occurrence of an Exercise Event (as defined in Section 4.3)
as contemplated herein shall not operate to prevent the creation of any option
which would otherwise arise pursuant to this ARTICLE II. Any party to this
Agreement who has actual knowledge of the occurrence of an Exercise Event may
give the required written notice of the occurrence of an Exercise Event, and
upon the giving of such written notice the options shall be created and become
exercisable to the same extent as if such notice was given by the party
initially contemplated above. For instance, and purely by way of example, in the
event of the death of a Shareholder, another Shareholder having actual knowledge
of the Shareholder's death may give the notice initially contemplated to be
given by a representative of the estate of the deceased Shareholder pursuant to
Section 2.3.1 above, whereupon the Corporation's option described in Section
2.3.2 would arise and become exercisable to the same extent as if the notice had
been given by the representative of the estate of the deceased Shareholder.
ARTICLE III
EXERCISE OF OPTIONS: EFFECT OF NON-EXERCISE
3.1 MANNER OF EXERCISE OF OPTIONS.
All options granted in, or arising pursuant to, ARTICLE II shall be exercised by
a written notice to that effect delivered within the time provided for the
exercise of the option.
3.2 COMPLETE EXERCISE OF OPTIONS.
The holders of options granted in, or arising pursuant to, ARTICLE II must,
either alone or in the aggregate, exercise the options in such a manner as-to
purchase all of the Shares (or interest therein) subject to such options, and
failure to do so shall cause a forfeiture of the options.
3.3 MULTIPLE OPTION HOLDERS.
In cases where an option is held by more than one Shareholder, each purchasing
Shareholder shall be entitled to purchase his or her proportionate share of the
Shares subject to the option. A Shareholder's proportionate share shall equal
the total number of Shares subject to the option multiplied by a fraction the
numerator of which is the number of Shares held by such Shareholder and the
denominator of which shall be the number of Shares held by all Shareholders
electing to exercise the option.
3.4 EFFECT OF NON-EXERCISE OF OPTIONS.
If the holders of options granted or arising pursuant to this Agreement do not
exercise their options, or such options are forfeited, as provided herein, the
person or persons acquiring the Shares (or interest therein) that were the
subject of the options shall execute a counterpart of this Agreement and become
a party hereto and shall hold such Shares subject to all the terms and
conditions provided herein, and any transfer of such Shares (or interest
therein) shall only be made in accordance with the terms and conditions provided
herein. In the event the person or persons acquiring the Shares (or interest
therein) fail to execute a counterpart of this Agreement and become a party
hereto, such transfer shall be void and ineffectual, and shall not operate to
transfer any interest or
21
<PAGE> 25
title to the purported transferee and such Shares shall thereafter be subject to
cancellation and extinguishment by the Corporation, without consideration
therefor. In addition, in the event of a voluntary transfer subject to the
provisions of Section 2.1, upon the lapse or forfeiture of the options - arising
pursuant to that Section, the Shareholder proposing the transfer shall have the
right to effectuate the transfer of Shares in accordance with the terms stated
in the notice of intent to transfer, and the transferee of such Shares shall
execute and become a party to this Agreement and shall hold such Shares subject
to all of its terms and conditions. Provided further, however, any such transfer
of Shares shall be void and ineffectual, and shall not operate to transfer any
interest or title to the purported transferee, if (i) the transfer is not upon
the terms or is not to the transferee stated in the notice of intent to
transfer, or (ii) the transfer is not closed within 10 days of receipt of
written notice of the election not to exercise, or the forfeiture of, all
applicable options.
ARTICLE IV
PURCHASE PRICE
4.1 PURCHASE PRICE.
The purchase price of Shares to be purchased pursuant to options granted, held
or exercised pursuant to Sections 2.2, 2.3 and 2.4 hereof, shall be the amount
calculated in accordance with Section 4.2 hereof.
4.2 CALCULATION OF PURCHASE PRICE.
The purchase price for Shares or any portion thereof or spouse's interest
therein shall be equal to the Appraised Value of the Shares as of the Valuation
Date (as defined in Section 4.3 hereof), reduced when necessary to reflect the
purchase of less than a one hundred percent (100%) interest in each of the
Shares to be transferred (for example: reduced by one-half when a spouse's
interest is only an undivided one-half community property interest in each of
the Shares of a Shareholder spouse). For purposes of this Agreement, the
Appraised Value of Shares shall be determined by a certified business appraiser,
selected by the Corporation, that is a member of either the American Society of
Appraisers or the Institute of Business Appraisers; but if a Shareholder
disagrees with such determination that Shareholder may, at its expense, have
another certified business appraiser that is a member of one or both of the
above named professional organizations determine the value, and if the two
appraisers cannot agree upon a value, they shall mutually select a third
certified business appraiser (that meets the above described membership
requirements) who shall, together with the first two appraisers, determine the
value of the Shares by majority vote. The expense of such third appraiser shall
also be paid by the Shareholder who disagrees with the value determination of
the Corporation's original appraiser, unless the appraised value ultimately
determined is more than ten percent (10%) greater than the value determined by
the Corporation's original appraiser.
4.3 CERTAIN DEFINITIONS.
As used herein, the term Evaluation Date shall mean and refer to the end of the
fiscal year of the Corporation immediately preceding the Exercise Event, unless
the purchasing party elects to use the alternate valuation date, in which event
the Valuation Date shall be the end of the month immediately preceding the
Exercise Event. As used herein, the term Exercise Events shall mean and refer to
the event or circumstance described in ARTICLE II of this Agreement, as a result
of which
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the Corporation or a Shareholder, as the case may be in the first instance,
become entitled to exercise a purchase option hereunder.
ARTICLE V
PAYMENT OF THE PURCHASE PRICE
5.1 PAYMENT.
Except as otherwise provided in this Agreement, including Section 2.1, the
purchase price for Shares to be purchased from a selling party shall either: (i)
be paid in cash; or (ii) at the option of the purchasing party, up to one
hundred percent (100%) of the purchase price may be deferred with the remainder
paid in cash at the closing.
5.2 PROMISSORY NOTE.
If the purchasing party elects to defer part of the purchase price by the
execution and delivery of a promissory note, the deferred portion of the price
shall be evidenced by the promissory note of the purchasing party to the order
of the selling party payable in sixty (60) equal monthly installments of
principal and interest on or before the first day of each month beginning the
month next following the date of closing. The annual interest rate for such
installment promissory note shall be equal to two percent (2%) plus the prime or
base rate on corporate loans at large U.S. money center commercial banks as
published in the Money Rates column of the Wall Street Journal on the date of
exercise of the option to purchase (or, if such option is not exercised on a
date on which such rate is published, the next following date on which such rate
is published). In no event shall the interest rate exceed the maximum legal
interest rate then prevailing for such obligations in the state of Texas. The
note shall be secured by a first lien security interest in the Shares
transferred and the purchasing party shall deliver certificates evidencing the
Shares to the selling party and take such further action as is reasonably
necessary to perfect the security interest.
ARTICLE VI
THE CLOSING
Unless otherwise agreed by the parties, the closing of the sale and purchase of
Shares shall take place at the principal offices of the Corporation within sixty
(60) days after the exercise of any option provided by this Agreement. Each
party hereto (including the spouses of the Shareholders) shall bear its own
transaction costs, including legal and accounting fees, if any, attributable to
any transfer of Shares, or any interest therein, pursuant to this Agreement.
Upon the closing, the selling party shall deliver its Shares to the purchaser
free and clear of all liens and encumbrances, and shall deliver to the
Corporation its resignation and that of all of its nominees, if any, as officers
and directors of the Corporation and any of the Corporation's subsidiaries. The
selling party shall deliver to the purchasing party at closing, all appropriate
documents of transfer, including without limitation bills of sale, assignments
or other instruments of conveyance. As a condition to any closing of the sale
and purchase of Shares (or any interest therein) pursuant to this Agreement: (i)
the selling party shall be indemnified by the purchasing party (in a form
reasonably satisfactory to the selling party) for all the Corporation's
liabilities, whether fixed or contingent, to lenders and others, incurred prior
to the closing of the transaction, (ii) the purchasing party and/or the
Corporation shall cause the release of any personal guaranties by the selling
party that the selling party may have granted to the Corporation's lenders or
other creditors or which may have otherwise been provided by the selling party
for the benefit of the Corporation, and (iii) if the selling party is a
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<PAGE> 27
creditor of the Corporation, the purchasing party shall unconditionally
guarantee the debt of the Corporation to the selling party and execute such
documents and instruments of guarantee as may be necessary in connection
therewith. Furthermore, and as a condition to closing, in the event the selling
party owes any amounts to the Corporation at the time of closing, such
indebtedness shall be paid in full by the selling party at or prior to the
closing, or may be deducted from and offset against the purchase price by the
purchasing party, in the purchasing party's sole discretion. In the event of a
failure to close as a result of the non-satisfaction of the conditions to
closing set forth herein, this Agreement shall remain in full force and effect
and all Shares shall remain subject to the restrictions contained herein and, in
addition, the parties hereto shall be entitled to such other remedies as may be
available in the event the failure to close constitutes a breach hereof.
ARTICLE VII
ACTIONS REQUIRING,UNANIMOUS APPROVAL
The following acts or transactions by the Corporation shall require the
unanimous approval of all of the Shareholders:
(a) Any amendment to the Corporation's Articles of Incorporation.
(b) Mergers, consolidations or combinations with other
corporations or entities.
(c) Issuance of any of the Corporation's capital stock, including
any stock held as treasury stock by the Corporation.
(d) Dissolving, liquidating, or filing bankruptcy or seeking
relief under any debtor relief law.
(e) The removal from office, or election, of any officer, director
or advisory director.
(f) The amount and timing of all salaries and bonuses paid by the
Corporation, including, without limitation, those to any
Shareholders or officers of the Corporation.
ARTICLE VIII
LEGEND ON CERTIFICATES
All Shares now or hereafter owned by the Shareholders shall be subject to the
provisions of this Agreement, and the certificates representing same shall bear
the following legend:
THE SHARES REPRESENTED HEREBY AND THE SALE, ASSIGNMENT, TRANSFER,
PLEDGE OR OTHER DISPOSITION THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS
CONTAINED IN A STOCK TRANSFER RESTRICTION AGREEMENT AMONG THE
CORPORATION AND THE WITHIN NAMED SHAREHOLDER, AND ANY AMENDMENT
THERETO. THE AGREEMENT LIMITS THE USE OF THIS STOCK AS COLLATERAL FOR
ANY LOAN WHETHER BY PLEDGE, HYPOTHECATION OR OTHERWISE. A COPY OF THE
STOCK TRANSFER RESTRICTION AGREEMENT AND ALL APPLICABLE AMENDMENTS
THERETO WILL BE FURNISHED BY THE CORPORATION TO THE HOLDER HEREOF
WITHOUT CHARGE UPON
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<PAGE> 28
WRITTEN REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE."
ARTICLE IX
TERMINATION OF AGREEMENT
This Agreement and all restrictions on stock transfer created hereby shall
terminate on the occurrence of any of the following events:
(a) The dissolution of the Corporation.
(b) The ownership by one person of all of the Shares of the
Corporation which are then subject to this Agreement.
(c) The execution of a written instrument by the Corporation and
all of the Shareholders who then own Shares subject to this
Agreement which terminates the same.
(d) The date twenty-one (21) years after the death of the last
survivor of all individuals who are parties to this Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 REMEDIES FOR BREACH.
The Shares are unique chattels, and each party to this Agreement shall have the
remedies which are available to him, her or it for the violation of any of the
terms of this Agreement, including, but not limited to, the equitable remedy of
specific performance.
10.2 BINDING EFFECT.
This Agreement is binding upon and inures to the benefit of the Corporation, its
successors and permitted assigns and to the Shareholders and their respective
heirs, personal representatives, successors and permitted assigns. This
Agreement may not be assigned, in whole or in part, by any party hereto without
the express written consent of all parties hereto.
10.3 PRIOR AGREEMENTS.
This Agreement supersedes all prior written and oral agreements between the
parties regarding the subject matter hereof.
10.4 GOVERNING LAWS.
This Agreement is executed under, and in conformity with, the laws of the State
of Texas and shall be governed thereby. If any provision of this Agreement shall
be determined to be invalid or unenforceable or prohibited by the laws of the
State of Texas, this Agreement shall be considered divisible as to such
provisions and such provisions shall be inoperative and shall not be a part of
the consideration moving from any party to another party. The remaining
provisions shall be valid and binding upon the parties and be of like effect as
though such invalid, unenforceable or prohibited provisions were not included
herein.
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<PAGE> 29
10.5 AMENDMENT.
This Agreement may be amended in whole or in part only by the written consent of
all the parties. Such amendment shall be effective as of the date then
determined by the parties and shall supersede any provisions herein contained
which are in conflict.
10.6 CAPTIONS AND GENDER.
The captions and titles herein are for convenience only and are not intended to
include or conclusively define the subject matter of the text. All pronouns and
references thereto shall refer to the masculine, feminine, and neuter genders,
singular or plural, as the identification of the persons, entities, and
corporations may require. The term Persons as used in this Agreement shall
include natural persons, corporations, partnerships, trusts, estates and any
other form of entity.
10.7 NOTICES.
All notices required to be given hereunder shall be deemed to be duly given by
personally delivering such notice or by mailing it by certified mail, to the
Corporation and to the Shareholders at the following addresses (which may be
changed by giving written notice of such change to all other parties hereto):
To the Corporation: MOBILE AREA NETWORKS, Inc.
7819 Pencross Lane
Dallas, Texas 75248
To Reid: William J. Reid
7819 Pencross Lane
Dallas, Texas 75248
To Wimbish: George E. Wimbish
1279 Regency Place
Heathrow, Florida 32746
To Good: Robert M. Good
1282 Regency Place
Heathrow, Florida 32746
10.8 EXECUTION OF DOCUMENTS.
Whenever Shares are to be purchased by the Corporation or a Shareholder pursuant
to this Agreement, the transferor shall do all things and execute and deliver
all documents and make all transfers as may be necessary to consummate such
purchase. In the event that the transferor refuses to abide by the terms and
conditions specified herein, the purchaser(s) may tender payment for such Shares
by mailing payment to the transferor's attention at the address of the
Corporation's registered office on file at the office of the Texas Secretary of
State. After payment is tendered accordingly, the Corporation shall be entitled
to cancel such Shares on its books, and reissue such Shares to the purchaser(s)
or, if the purchaser is the Corporation, the Corporation may hold such Shares as
treasury stock or cancel such Shares.
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<PAGE> 30
10.9 ACTIONS BY THE CORPORATION.
Any decision by the Corporation to exercise any purchase option, give any notice
or otherwise enforce any provisions of this Agreement, shall be made by a
majority vote of Shareholders who are not then in breach of this Agreement and
whose Shares are not then the subject of any option or requirement of notice of
an Exercise Event.
EXECUTED as of the date first mentioned above.
<TABLE>
<S> <C>
CORPORATION: MOBILE AREA NETWORKS, INC.
By: /s/ William J. Reid
- --------------------------------- -----------------------------
William J. Reid
Reid:
/s/ William J. Reid By: /s/ William J. Reid
- --------------------------------- ------------------------------
William J. Reid
Wimbish:
/s/ George E. Wimbish By: /s/ George E. Wimbish
- --------------------------------- ------------------------------
George E. Wimbish
Good:
/s/ Robert M. Good By: /s/ Robert M. Good
- --------------------------------- ------------------------------
Robert M. Good
</TABLE>
27
<PAGE> 31
SPOUSAL ACKNOWLEDGEMENT AND CONSENTS
The undersigned spouse of William J. Reid hereunto subscribes her name in
evidence of her agreement and consent made in any interest in the capital stock
of Mobile Area Networks, Inc., referred to in the foregoing Agreement, and to
all other provisions of such Agreement.
By: /s/ Marilyn K. Reid
---------------------------------
Marilyn K. Reid
The undersigned spouse of George E. Wimbish hereunto subscribes her name in
evidence of her agreement and consent made in any interest in the capital stock
of Mobile Area Networks, Inc., referred to in the foregoing Agreement, and to
all other provisions of such Agreement.
By: /s/ Judy D. Wimbish
---------------------------------
Judy D. Wimbish
The undersigned spouse of Robert M. Good hereunto subscribes her name in
evidence of her agreement and consent made in any interest in the capital stock
of Mobile Area Networks, Inc., referred to in the foregoing Agreement, and to
all other provisions of such Agreement.
By: /s/ Marion Good
---------------------------------
Marion Good
28
<PAGE> 1
EXHIBIT 5
JAMES R. LEONE & ASSOC., P.A. [LETTERHEAD]
Mobile Area Networks, Inc.
120 International Parkway
Suite 220
Heathrow, Florida 32746
RE: MOBILE AREA NETWORKS, INC.
Registration Statement on Form SB-2, No. 333-18439
Gentlemen:
My Activities As Legal Counsel For The Company
I have acted as legal counsel to Mobile Area Networks, Inc. (the
"Company"). I have provided legal services in connection with the Company's
proposed distribution of 1,000,000 shares of the Company's no par value Common
Stock (the "Common Stock"). The Common Stock is more particularly described in
the Prospectus in the Registration Statement (No. 333-18439) on Form SB-2 (the
"Registration Statement"), filed by the Company under the Securities Act of
1933, as amended. In such capacity, I have examined the corporate records of
the Company, including its Articles of Incorporation, Bylaws, and Minutes of
Meetings and Consents of its Directors. I also have examined and participated
in the preparation of the Registration Statement.
My Opinion Relating To The Securities Offering
Based upon the foregoing investigations and examinations, I am of the
opinion that:
1. Valid Corporation. The Company is a corporation duly
incorporated and existing under the laws of the State of Texas.
2. Authorized Stock. The Company's authorized Stock consists of
10,000,000 shares of voting Common Stock and 10,000,000 shares of non-voting
Preferred Stock, all with no par value.
<PAGE> 2
3. Validity And Nonassessibility of Stock Being Sold.
The shares of the Company's Common Stock being offered for sale, upon receipt
of the consideration therefor (there being no par value) and satisfaction of any
other specified conditions (including compliance with federal and state
securities laws), when issued, will be duly authorized and issued, fully paid
and nonassessable.
Consent To Use of Opinion And To References In Prospectus
I consent to the filing of this opinion with the U.S. Securities and
Exchange Commission as an Exhibit to the Registration Statement, as amended,
and with any state or self regulatory agencies for qualification or
registration for sale. I also consent to the reference to me under the caption
"Legal Matters" in the Prospectus contained in the Registration Statement, as
amended.
Very truly yours,
/s/ James R. Leone
-------------------------
JAMES R. LEONE
<PAGE> 1
EXHIBIT 23A
[JAMES, PARKS, TSCHOPP & WHITCOMB, LETTERHEAD]
The Board of Directors
Mobile Area Networks, Inc.:
We consent to the use of our reports included herein and to the reference to
our firm under the heading "Experts" in the prospectus.
/s/ James, Parks, Tschopp & Whitcomb, P.A.
Maitland, Florida
December 13, 1996
