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As filed with the Securities and Exchange Commission on March 31, 2000.
Registration No. ______________
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS UNDER SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
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MICROWAVE TRANSMISSION SYSTEMS, INC.
(Name of Small Business Issuer in its charter)
Texas 75-2197372
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
541 Sterling Drive
Richardson, Texas 75081
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(Address of principal (Zip Code)
executive offices)
Issuer's telephone number - (972) 669-0591
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Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
NONE NONE
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Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.001 per share
(Title of class)
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TABLE OF CONTENTS
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<S> <C>
PART I............................................................................................................1
ITEM 1. DESCRIPTION OF BUSINESS..................................................................................1
Background..................................................................................................1
History of the Company......................................................................................2
Events Leading to the Bankruptcy Proceedings of RBSC3
Stock Exchange with Microwave Transmissions Systems, Inc...............................................3
Business Development........................................................................................4
Summary................................................................................................4
Developing New Towers That We Will Own and Operate.....................................................5
Maintaining and Capitalizing on Strong Relationships with Major
Wireless Service Providers........................................................................5
Maintaining Our Expertise in Site Development Services.................................................5
Capitalizing on Management Experience..................................................................5
Build-to-Suit Programs.................................................................................5
Strategic Siting.......................................................................................6
Maintenance and Management.............................................................................6
Site Development Business..............................................................................7
Customers...................................................................................................8
Sales and Marketing.........................................................................................8
Competition.................................................................................................9
Employees..................................................................................................11
Regulatory and Environmental Matters.......................................................................11
Federal Regulations...................................................................................11
Environmental Regulation..............................................................................12
State and Local Regulations...........................................................................12
Research..............................................................................................13
Suppliers.............................................................................................13
Licenses, Franchises, Concessions, Royalty Agreements, Patents
Trademarks or Labor Contracts....................................................................13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.............................................................................................13
Revenues
Operating Costs
Depreciation, Amortization, Rent and Interest
Income Tax Expense
Liquidity and Capital Resources
ITEM 3. DESCRIPTION OF PROPERTY.................................................................................15
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT............................................................................................16
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS.......................................................................................16
Preston David Spurlin............................................................................16
Committees of the Board of Directors.............................................................16
ITEM 6. EXECUTIVE COMPENSATION..................................................................................17
Employee Benefit Plan............................................................................17
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..........................................................17
ITEM 8. DESCRIPTION OF SECURITIES...............................................................................18
Capital Stock....................................................................................18
Provisions Having a Possible Anti-Takeover Effect................................................19
ADDITIONAL INFORMATION...........................................................................................19
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS; MARKET DATA...................................................20
PART II..........................................................................................................21
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.........................................................21
Market Information...............................................................................21
Holders..........................................................................................21
Dividends........................................................................................21
ITEM 2. LEGAL PROCEEDINGS.......................................................................................21
ITEM 3. CHANGES IN AN DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING DISCLOSURE.................................................................................21
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.................................................................22
ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS...............................................................22
PART F/S........................................................................................................F-1
PART III
ITEM 1. INDEX TO EXHIBITS
ITEM 2. DESCRIPTION OF EXHIBITS
SIGNATURES
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
We are a public holding company and sole shareholder of MTSI, Inc., a
Texas corporation ("MTSI"), and independent builder of wireless communications
infrastructure in the United States and internationally. Our sole asset is the
stock of MTSI, and all references herein to "we," "us" or "our" with respect to
our business operations refer to the combined business operations of Microwave
Transmission Systems, Inc. and MTSI, unless specifically stated otherwise.
Our revenue is currently generated by our site development and tower
construction services. We have participated in the development of more than
1,000 antennae sites in the major wireless markets in the United States and we
are anticipating mandates for build-to-suit towers in the near future.
Our site development service business is an Aend-to-end" service
offering design, construction and operating expertise to a range of wireless
service providers. Site development services include: network pre-design,
communication site selection, communication site acquisition, local zoning and
permitting, and site construction and antennae installation. Our build-to-suit
program provides an integrated solution to those wireless service providers
seeking to minimize their capital expenditures, overhead and time associated
with the build-out and on-going maintenance of their wireless network
infrastructure.
We intend to use our leadership in the site development services
business, our existing national field organization and our strong relationships
with wireless service providers to expand into the ownership and leasing of
communication sites. Our growth strategy is to lease antennae space to multiple
tenants on towers that we construct or acquire.
BACKGROUND
Rapid advancements in communications technology have left a significant
void, and therefore, a unique opportunity for companies that support the
technologies of the future. Our goal is to design, develop and market the next
generation of communications infrastructure that will be compatible with a
variety of commercially viable hardware platforms and communications networks.
Suppliers of these platforms and networks from cable TV operators to
telecommunications companies are now scrambling to form strategic alliances with
suppliers of telecommunications infrastructure services.
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We provide the infrastructure necessary for the latest communication
systems. We fabricate, build, inspect and maintain wireless and satellite
based communication transmitting and receiving facilities for providers of
wireless communication services.
Cellular telephones and PCs in the United States and Canada rely on
analog and digital technology. A cellular telephone transmits a radio signal
to the closest cellular communications facility. The communications facility
contains an antenna that is connected by wireline or short haul microwave to
a nearby switching office. The switching office processes signals for several
cellular facilities. For transmission from a mobile telephone to a telephone
that is not a mobile phone, the switching office connects the telephone
signal to a local telephone exchange. For transmission between two mobile
telephones, the switching office locates the receiving cellular communication
facility to which the receiving telephone is connected and completes the
connection by transmitting the signal to that facility. If one or both of the
cellular telephones is moving, such as a car phone, the local switching
station hands the signal off to a different facility as the phone moves from
one area to another.
Cellular telephones use radio frequencies to transmit to the
communication facilities. The number of frequencies that are available to
transmit to a communication facility is limited. In areas with heavy demand for
cellular services, these available frequencies become congested. To increase
capacity, the number of cells is increased. This result in smaller cells that
cover a smaller geographic area. As a result, the cells must be closer together
and the demand for additional communications towers increases.
We initially constructed primarily microwave and cellular transmission
facilities, and installed electronic lines and components. As microwave
technology evolved and matured, so did the construction and installation
services relating to those technologies. In fact, we often return to previously
built facilities to upgrade the equipment. Recent years have seen the rise of
the use and demand for cellular telephones and PCs. As a result, we derive
substantial revenues from the design, building and installation of towers and
rooftop sites that house cellular telephone and PC antennae. These facilities
are presently designed for use with microwave, cellular telephone, pager,
specialized mobile radio and satellite based radio technologies.
HISTORY OF THE COMPANY
West Covina Auto Parts, Inc., ("Wesco") a California corporation,
was formed on June 22, 1962. On May 3, 1993, Reddi Brake Supply Company, Inc,
a California corporation, merged with and into Wesco, with the surviving
corporation amending its name to RBSC, Inc. ("RBSC") on May 23, 1997. On
December 11, 1998, RBSC changed its state of incorporation from California to
Texas by merging with and into RBS Acquisition Corp., a Texas corporation, in
exchange for 100% of the common stock of Microwave Transmission Systems,
Inc., a Texas corporation which became our wholly-owned subsidiary. On
January 11, 2000, RBS Acquisition Corp. changed its corporate name to
Microwave Transmission Systems, Inc. On January 12, 2000, our wholly-owned
subsidiary changed its name to MTSI, Inc.
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EVENTS LEADING TO THE BANKRUPTCY PROCEEDINGS OF RBSC
In late 1995, RBSC was experiencing significant losses primarily due to
lower than expected sales, particularly in regions outside of the Western United
States, decreased gross profit margins from diminishing amortization of past
purchase discounts, increased general and administrative expense, and increased
reserves due to the planned closures of 13 underperforming outlets. As a result,
RBSC lacked sufficient working capital, suffered severe cash flow shortages, and
fell behind in making payments to certain of its creditors during 1995.
In response to RBSC's operating losses, in February 1996 a new
management team was installed that undertook a restructuring of our operations.
Despite such efforts, RBSC reported an operating loss of $8,562,836 for its
fiscal year ending June 30, 1996 as well as significant operating losses for the
two following quarters.
On March 17, 1997, bankruptcy proceedings were commenced by the filing
of an involuntary petition under Chapter 11 of the United State Bankruptcy Code
by certain of the our unsecured creditors. On that date, RBSC ceased all
business operations and closed our remaining stores. On March 27, 1997, we
consented to the entry of an order for relief under Chapter 11 of the Untied
States Bankruptcy Code. The United States Bankruptcy Court for the Central
District of California entered the order for relief the following day. We filed
our Plan of Reorganization (the "Plan") on October 14, 1997, and modified the
Plan on January 23, 1998 and on January 28, 1998. The Court entered an order
approving the Plan on March 20, 1998.
The Plan provided for the liquidation of our assets and distribution of
the proceeds to secured, priority and unsecured creditors. The Plan further
provided that we would remain in existence, although all capital stock
outstanding as of the date of the bankruptcy petition was canceled. Under the
Plan, we secured post-petition financing in the amount of $10,000 from Halter
Financial Group to meet the costs and expenses of the reorganization effort. In
satisfaction of Halter Financial Group's administrative claim for such amount
and for the services rendered and expenses incurred in connection with an
anticipated acquisition or merger transaction between the Company and a
privately-held operating company, Halter Financial Group received 60% of the
newly-issued shares of common stock of the reorganized Company. Creditors with
allowed unsecured claims received a pro rata distribution of 40% of such common
stock.
STOCK EXCHANGE WITH MICROWAVE TRANSMISSIONS SYSTEMS, INC.
The wireless communications infrastructure business currently operated
by us was commenced in 1987 by Microwave Transmission Systems, Inc., a Texas
corporation ("MTSI") which is now our wholly-owned subsidiary. On August 6,
1999, we entered into a Stock Exchange Agreement with MTSI pursuant to which
Preston David Spurlin, the sole shareholder of MTSI, assigned his equity
ownership interest in that company to us in exchange for 5,750,000 shares (or
approximately 92%) of our outstanding common stock, resulting in our current
capitalization structure:
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# OF SHARES # OF SHARES
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BEFORE % AFTER %
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Preston David Spurlin 0 0% 5,750,000 92.0%
Halter Financial Group, Inc. 300,000 60% 300,000 4.8%
All Other Shareholders 200,084 40% 200,084 3.2%
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TOTAL 500,084 100% 6,250,084 100.0%
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The Stock Exchange Agreement was approved by the holders of our outstanding
shares of common stock issued pursuant to the Plan on September 23, 1999. On
January 11, 2000, we changed our corporate name to Microwave Transmission
Systems, Inc. On January 12, 2000, MTSI changed its corporate name to MTSI, Inc.
BUSINESS DEVELOPMENT
SUMMARY. Our principal goal is to position MTSI as an industry leader
in the design, fabrication, construction and maintenance of high quality
products. To achieve this goal, we have adopted a multi-tiered strategy to:
* Manage Risk Effectively
* Attract the Best and Brightest Talent
* Broaden Capabilities
* Maximize Market Opportunities
* Exploit Key Markets and Segments
* Retain Options and Maintain Flexibility
To capitalize on the growing demand for communications facilities and
antenna sites, we intend to implement an integrated program of tower ownership,
antenna site leasing and communications site services. Historically, we built
communications towers on a turnkey basis according to specifications provided by
the site owner and retained no ownership of the site or completed facilities. We
intend to embark on a built-to-suit-to-own program, whereby we will enter into
agreements with service providers for the construction of a communications
tower. We will build the tower to the specifications provided by the service
provider. The service provider will then lease one or more antenna sites on the
tower from us. The towers can accommodate multiple tenants. The antenna site
leasing companies are expected to come from a wide range of industries,
including cellular, PCs, enhanced specialized mobile radio, paging, fixed
microwave, radio and television.
We intend to construct new tower networks in and around markets in
which it already has a presence. We believe that this strategy will result in
attractive investment returns. We also intend to target new markets, both
domestically and internationally, that have not been significantly built out by
carriers or other communications site companies. By working with one or more
"anchor" tenants, we will seek to develop a comprehensive plan for a particular
network by locating new sites in areas identified by its customers as optimal
for their network expansion requirements. In order
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to minimize the risk associated with the investment, we generally will secure
commitments for leasing prior to commencing construction.
Our leadership in the site development services business, our
existing national field organization and our strong relationships with
wireless service providers provide us with a solid foundation for growth. We
believe that the following strategies will maintain that foundation and will
enhance our opportunities for future growth:
DEVELOPING NEW TOWERS THAT WE WILL OWN AND OPERATE. As wireless service
providers increasingly outsource their investment in, and ownership of, towers,
we plan to meet their needs by using our expertise and relationships in the site
development business to construct towers with anchor tenants through
build-to-suit programs. We intend to aggressively identify attractive locations
for new towers and strategically complete pre-construction procedures necessary
to secure tower sites in advance of customer demand.
MAINTAINING AND CAPITALIZING ON STRONG RELATIONSHIPS WITH MAJOR
WIRELESS SERVICE PROVIDERS. We believe that we are well-positioned to be a
preferred partner in build-to-suit programs due to our strong relationship with
wireless service providers and our proven operating experience. Generally, the
provider-personnel responsible for awarding site development projects for
wireless service providers are the same personnel who make decisions with
respect to build-to-suit programs. We continually market our build-to-suit
programs to such site development service customers.
MAINTAINING OUR EXPERTISE IN SITE DEVELOPMENT SERVICES. We perform an
array of site development services for wireless service providers across the
United States and internationally. Our knowledge of local markets and strong
customer relationships allow us to identify and participate in site development
projects across the United States and internationally.
CAPITALIZING ON MANAGEMENT EXPERIENCE. Our management team has
extensive experience in site development services. Preston David Spurlin, our
President and Chief Executive Officer, has more than twenty (20) years of
experience in the communications infrastructure industry.
BUILD-TO-SUIT PROGRAMS. We generally construct towers pursuant to an
antennae site lease agreement negotiated with an anchor tenant only after making
the determination that the initial or planned capital investment for those
towers would not exceed a targeted multiple of expected tower cash flow from
those towers over a certain period of time. Our sales representatives sell our
build-to-suit programs by utilizing their existing relationships in the wireless
communications industry to target wireless service providers interested in
outsourcing their network build-out. Our sales representatives make proposals
for build-to-suit towers in response to competitive bids or specific requests
and in circumstances where we believe the provider would have an interest in
build-to-suit towers. Although the terms may vary from proposal to proposal, we
typically sign a five-year lease agreement with each anchor tenant, with four or
five additional five-year renewal periods at the option of the lessee. While the
proposed monthly rent also varies, broadband customers utilizing PCS, cellular
or ESMR generally pay more than the aggregate monthly rent paid by paging or
other narrowband customers. Additionally, anchor tenants will typically pay
lower monthly rents than
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subsequent tenants of a similar type service. In certain cases, an anchor
tenant may enjoy an introductory lease rate for a given period of time.
A wireless provider accepts the terms of the proposal by awarding us a
non-binding mandate to pursue specific sites, specific search rings or general
areas. Based on the status of the geographic areas, we perform such due
diligence investigations only for a designated period during which time we
analyze the site based on a number of factors, chiefly, co-location
opportunities, zoning and permitting issues, economic potential of the site,
difficulty of constructing a multi-tenant tower and the remoteness of the site.
These mandates are non-binding agreements and either party may terminate the
mandate at any time.
If, after our due diligence investigation during the mandate, we
conclude that it is economically feasible to construct the towers requested by
the wireless service provider, we enter into an antennae site lease agreement
with the provider. In some cases we must build a tower for the carrier
regardless of the outcome of our due diligence investigation. We have negotiated
several master build-to-suit agreements, including antennae site lease terms,
with providers in specific markets who we believe will facilitate our obtaining
build-to-suit programs. The antennae site lease agreements typically provide
that all obligations are conditioned on our receiving necessary zoning approvals
where applicable. Some of our antennae site lease agreements contain penalty or
forfeiture provisions in the event the tower is not completed within specified
time periods.
STRATEGIC SITING. Our strategic siting activities focus on developing
new towers in locations chosen by us rather than by anchor tenants in
build-to-suit programs. We try to identify attractive locations for new towers
and strategically complete preconstruction procedures necessary to secure the
site in advance of demand from a specific customer. We may invest in the zoning
and permitting of these strategic sites (and even the construction of the
towers) when we have not yet obtained an anchor tenant if we believe that demand
for the site will exist in the near term, or that a competitor of ours may
acquire the site if we wait until an anchor tenant is secured. However, we
generally will not build a tower on a strategic site unless and until we have
signed a lease with a tenant.
MAINTENANCE AND MANAGEMENT. Once constructed, we maintain and manage
our communication sites through a combination of in-house personnel and
independent contractors. In-house personnel are responsible for oversight and
supervision of all aspects of site maintenance and management, and are
particularly responsible for monitoring security access and lighting, RF
emission and interference issues, signage, structural engineering and tower
capacity, tenant relations and supervision of independent contractors. We hire
independent contractors locally to perform routine maintenance functions such as
landscaping, pest control, snow removal, vehicular access, site access and
equipment installation oversight. We engage independent contractors on either a
fixed fee or time and materials basis.
Our network operations center is in Richardson, Texas, where, among
other functions, we have centralized our monitoring of security access and
lighting for our towers. As the number of communication sites we own and manage
increases, we anticipate increased expenditures to expand our maintenance
infrastructure, including expenditures for personnel and computer hardware and
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software, which may be material expenditures.
SITE DEVELOPMENT BUSINESS. We offer each phase of our site development
services to our customers. These services and phases are the same ones we employ
for our own benefit when we build towers for our ownership. During Phase I,
network pre-design, we perform pre-design analysis by investigating those
geographic areas that are designated as a priority by our customer. We then
identify, to the extent possible, all sites which meet the customer's RF
requirement in those areas. We then create maps of the sites, analyzing for a
number of factors, including which areas may have the most favorable zoning
regulations and availability of co-location opportunities. Typically, we conduct
preliminary zoning analysis and determine those areas where zoning approval is
likely, along with a possible time frame for approval. We use Phase I services
to eliminate costly redesigns once a project is started, which can result in
significant savings of both time and money.
In Phase II, site selection, we determine which sites most closely meet
the RF engineering requirements of the customer, which sites are leasable or can
be purchased, which sites have the potential to be zoned for site construction
or co-location based on the then-current zoning requirements, and which sites
are most suitable for construction and installation of antennae. We select the
most suitable sites based on demographics, traffic patterns and signal
characteristics. Typically, we identify two or three potential sites for each
location in the RF engineering plan, with the intent of co-locating on an
existing site or constructing a new site on the location most advantageous to
the customer. We also seek FAA approval at this time.
In Phase III, site acquisition, we secure the right from the property
owner to construct a tower or co-locate on the site. Depending on the type of
interest in the property that best suits the needs of our customer, we negotiate
and enter into one of the following types of agreements on behalf of the
customer:
1) A contract of sale pursuant to which the customer acquires fee title
to the property;
2) A long-term ground or rooftop lease pursuant to which the customer
acquires a leasehold interest in the property (typically a five-year
lease with four or five renewal periods of five years each);
3) An easement agreement pursuant to which the customer acquires an
easement over the property; or
4) An option to purchase or lease the property pursuant to which the
customer has a future right to acquire fee title to the property or
acquire a leasehold interest. During this phase of the site development
service, we generally obtain a title report on the site, conduct a
survey of the site, perform soil analysis of the site and obtain an
environmental survey of the site.
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Phase IV, local zoning and permitting, includes the preparation of all
appropriate zoning applications and providing representation at any zoning
hearings which may be conducted. During this phase, we also obtain all necessary
entitlement land use permits necessary to commence construction or install
equipment on the site.
Phase V, construction and installation, involves the construction
management of the tower on a selected site, whether by the third party or
directly by us. Phase V includes the preparation of a construction budget, the
installation or monitoring of the installation of equipment and antennae, hiring
sub-contractors to perform the actual construction of the tower or equipment
installation when not performed by us, the preparation of a construction
schedule, monitoring all vendors' delivery and installation of equipment and
monitoring the completion of all construction and landscaping of the site.
Our site development business is headquartered in Richardson, Texas.
Once we are hired to work on a site development project, we dispatch a site
development team from headquarters to the project site and establish a temporary
field office for the duration of the project. The site development team is
typically composed of our permanent employees and supplemented with local hires
employed only for that particular project. A team leader is assigned to each
phase of the site development project and reports to a project manager who
oversees all team leaders. Upon the completion of a site development project,
the field office is closed and all of our permanent employees are either
relocated to another project or directed to return to headquarters.
We generally set prices for each site development service separately.
Customers are billed for these services on a fixed price or time and materials
basis and we may negotiate fees on individual sites or for groups of sites.
CUSTOMERS
We have performed site development services for many of the largest
wireless service providers over the past several years. The majority of our
contracts have been for PCS broadband, ESMR, cellular and paging customers. We
also service PCS narrowband, SMR and MDS wireless providers. In 1999, our
largest customers were Pathnet, Inc., MCI Worldcom, and Southwestern Bell
Wireless, representing 30.3%, 26.8%, and 12.9% of our revenues, respectively. In
1998, our largest customers were MCI Worldcom, Southwestern Bell Mobile and
Viper Communications, Inc., representing 35.0% and 15.3% of our revenues,
respectively. No other customer represented more than 10% of our revenues during
these periods.
SALES AND MARKETING
A successful integrated transmission infrastructure and service
provider company requires creative and technical talent, along with skilled
experienced service personnel. We have assembled such a team. We have coupled
this team with proven executive management that has a unique blend of
entrepreneurial and operational experience.
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Our sales and marketing goals are to:
* Begin our site leasing business;
* Further cultivate existing customers to obtain mandates for
build-to-suit programs as well as to sell site development services;
* Use our contacts and industry knowledge to better identify attractive
locations for new tower builds;
* Use existing relationships and develop new relationships with wireless
service providers to lease antennae space on our owned or managed
communication sites;
* Form affiliations with select communications systems vendors who
utilize end-to-end services, including those provided by use, which
will enable us to market our services and product offerings through
additional channels of distribution; and
* Sustain our market leadership position in the site development
business.
Historically, we have capitalized on the strength of our experience,
performance and relationships with wireless service providers to position
ourselves for additional site development business. We have leveraged these
attributes to obtain build-to-suit mandates, and we expect to continue to
enhance and leverage these to sell build-to-suit programs and antennae space on
our owned or managed communications sites. We also use these attributes to
identify attractive locations to build towers on strategic sites.
Our primary marketing and sales support is centralized and directed
from our headquarters in Richardson, Texas and is supplemented by our regional
offices. Our full-time marketing and sales support staff are charged with
implementing our marketing strategies, prospecting and producing sales
presentation materials and proposals. Maintaining and cultivating relationships
with wireless service providers is a main focus of senior management. Our
strategy is to delegate sales efforts to those employees of ours who have the
best relationships with wireless service providers. We assign our
representatives specific accounts based on historical experience with a provider
and the quality of the relationship between these representatives and such
provider. Most wireless service providers have national corporate headquarters
with regional offices. We believe that most decisions for site development and
site leasing services are made by providers at the regional level with input
from their corporate headquarters. Our sales representatives work with the
provider representatives at the local level and, when appropriate, at the
national level. Our sales staff compensation is heavily weighted to
incentive-based goals and measurements. In addition to our marketing and sales
staff, we rely upon our executive and operations personnel on the national and
field office levels to identify sales opportunities within existing customer
accounts, as well as acquisition opportunities.
COMPETITION
The industry for wireless infrastructure building and implementation
services is highly competitive and fragmented. Most industry participants are
small companies with fewer than fifty employees. Other recent entrants into the
market are wireless equipment manufacturers that provide
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services in conjunction with the sale of wireless equipment. Finally, the
increased demand for wireless infrastructure building that far outstrips the
supply of companies able to provide the products and services has resulted in
the recent entry of traditional, non-wireless engineering and construction
companies and non-wireless subcontractors into the market. As demand for
wireless infrastructure building increases, we expect that more of these
non-traditional competitors will enter the market, increasing competition.
We face competition from American Tower Corporation, Crown Castle
International Corporation, Pinnacle Holdings, Inc. and SBA Communications
Corporation. These competitors are attempting to consolidate tower ownership
through acquisitions.
We compete for site leasing tenants with:
1. Wireless service providers that own and operate their own tower
footprints and lease, or may in the future decide to lease, antennae
space to other providers;
2. Site development companies that acquire antennae space on existing
towers for wireless service providers, manage new tower construction
and provider site development services;
3. Other large independent tower companies; and
4. Similar local independent tower operators.
Wireless service providers which own and operate their own tower
networks are generally substantially larger and have greater financial resources
than we do. We believe that tower location, capacity, price, quality of service
and density within a geographic market historically have been and will continue
to be the most significant competitive factors affecting tower leasing
companies. We also compete for development and new tower construction
opportunities with wireless service providers, site developers and other
independent tower operating companies and believe that competition for site
development will increase and that additional competitors may enter the tower
market, some of whom may have greater financial resources than we do.
The following is a list of some of the tower companies that compete
with us: American Tower Corporation, Crown Castle International Corp., Lodestar
Communications, Microcell, Motorola, Pinnacle Tower, SpectraSite and Unisite.
The following companies are primarily competitors for our site
management activities: AAT, APEX, JJS Leasing, Inc., Motorola, Signal One,
Subcarrier Communications and Tower Resources Management.
We believe that the majority of our competitors in the site development
business operate within local market areas exclusively, while some firms appear
to offer their services nationally, including American Tower Corporation,
Tetratech, Pyramid, NLS and SpectraSite. Our market includes participants from a
variety of market segments offering individual, or combinations of,
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competing services. The field of competitors includes site development
consultants, construction companies, tower owners/managers, radio frequency
engineering consultants, telecommunications equipment vendors (which provide
end-to-end site development services through multiple subcontractors) and
providers' internal staff. We believe that providers base their decisions on
site development services on certain criteria, including a company's
experience, track record, local reputation, price and time for completion of
a project, and believe that we compete favorably in these areas.
EMPLOYEES
As of March 15, 2000, we had forty-four (44) employees, none of whom is
represented by a collective bargaining agreement. All of our employees are
full-time employees. Of our total employees, three (3) work in management, ten
(10) in administration and thirty-two (32) in construction. We consider our
employee relations to be good, and we have never experienced a work stoppage.
From time to time, we also employ independent contractors to support our
operation.
Our future success will depend in part upon our ability to attract,
retain and motivate highly qualified technical and management personnel, for
whom competition is intense. As part of our retention efforts, we seek to
minimize turnover of key employees by emphasizing our industry experience, our
work environment and our competitive compensation packages. Due to the nature of
our business, we experience a "run-up" and "run-down" in employees as contracts
are completed in one area of the country and are commenced in a different area.
REGULATORY AND ENVIRONMENTAL MATTERS
FEDERAL REGULATIONS. Both the Federal Communications Commission ("FCC")
and Federal Aviation Administration ("FAA") regulate towers used for wireless
communications transmitters and receivers. These regulations control the siting
and marking of towers and may, depending on the characteristics of particular
towers, require registration of tower facilities. Wireless communications
devices operating on towers are separately regulated and independently licensed
based upon the particular frequency used.
Pursuant to the requirements of the Communications Act of 1934, the
FCC, in conjunction with the FAA, has developed standards to consider proposals
for new or modified antennae. These standards mandate that the FCC and the FAA
consider the height of proposed antennae, the relationship of the structure to
existing natural or man-made obstructions and the proximity of the structure to
runways and airports. Proposals to construct or to modify existing antennae
above certain heights are reviewed by the FAA to ensure the structure will not
present a hazard to aviation. The FAA may condition its issuance of a no-hazard
determination upon compliance with specified lighting and/or marking
requirements. The FCC will not license the operation of wireless
telecommunications devices on towers unless the tower has been registered with
the FCC or a determination has been made that such registration is not
necessary. The FCC will not register a tower unless the tower has been
registered with the FAA. The FCC may also enforce special lighting and painting
requirements. Owners of wireless transmissions towers may have an obligation
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<PAGE>
to maintain painting and lighting to conform to FCC standards. Tower owners
may also bear the responsibility of notifying the FAA of any tower lighting
outage. Failure to comply with the applicable requirements may lead to civil
penalties.
The Telecommunications Act of 1996 amended the Communications Act of
1934 by giving state and local zoning authorities jurisdiction over the
construction, modification and placement of towers. The new law preserves local
zoning authority by prohibiting any action that would (1) discriminate between
different providers of personal wireless services or (2) ban altogether the
construction, modification or placement of radio communication towers. Finally,
the 1996 Telecom Act requires the federal government to help licensees for
wireless communications services gain access to preferred sites for their
facilities. This may require that federal agencies and departments work directly
with licensees to make federal property available for tower facilities.
Owners and operators of antennae may be subject to, and therefore must
comply with, environmental laws. The FCC's decision to license a proposed tower
may be subject to environmental review pursuant to the National Environmental
Policy Act of 1969, which requires federal agencies to evaluate the
environmental impacts of their decisions under certain circumstances. The FCC
has issued regulations implementing the National Environmental Policy Act. These
regulations place responsibility on each applicant to investigate any potential
environmental effects of operations and to disclose any significant effects on
the environment in an environmental assessment prior to constructing a tower. In
the event the FCC determines the proposed tower would have a significant
environmental impact based on the standards the FCC has developed, the FCC would
be required to prepare an environmental impact statement. This process could
significantly delay the registration of a particular tower.
ENVIRONMENTAL REGULATION. As an owner and operator of real property, we
are subject to certain environmental laws that impose strict, joint and several
liability for the cleanup of on-site or off-site contamination and related
personal or property damages. We are also subject to certain environmental laws
that govern tower placement, including pre-construction environmental studies.
Operators of towers must also take into consideration certain RF emissions
regulations that impose a variety of procedural and operating requirements. The
potential connection between RF emissions and certain negative health effects,
including some forms of cancer, has been the subject of substantial study by the
scientific community in recent years. To date, the results of these studies have
been inconclusive. We believe that we are in substantial compliance with and we
have no material liability under all applicable environmental laws. These costs
of compliance with existing or future environmental laws and liability related
thereto may have a material adverse effect on our prospects, financial condition
or results of operations. We had no costs from our compliance with these laws
during the past three (3) years.
STATE AND LOCAL REGULATIONS. Most states regulate certain aspects of
real estate acquisition and leasing activities. Where required, we conduct the
site acquisition portions of our site development services business through
licensed real estate brokers or agents, who may be our
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employees or hired as independent contractors. Local regulations include city
and other local ordinances, zoning restrictions and restrictive covenants
imposed by community developers. These regulations vary greatly, but
typically require tower owners to obtain approval from local officials or
community standards organizations prior to tower construction. Local zoning
authorities generally have been hostile to construction of new transmission
towers in their communities because of the height and visibility of the
towers.
RESEARCH. We do not generally spend any material amount of our
resources on research and development.
SUPPLIERS. We are not dependent upon any supplier/vendor to
construct our towers and all of the materials necessary for their
construction are readily available from multiple suppliers. Our principal
vendors currently include Davis Motor Crane Service, FWT, Inc., Hutton &
Company, J. Wisdom Travel, Inc., Madden Bolts, Mobil Fleet, Office Depot,
Texas Bonner Chevrolet, Texas Fleet, United Rentals and Baillargeon Ford.
LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENT, PATENTS,
TRADEMARKS OR LABOR CONTRACTS. We have construction licenses in the states of
Florida (#CO-C0573) and New Mexico (#32164). Management believes that we are
in compliance with all regulatory requirements in the states in which we
conduct business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
Year ended December 31, 1999 compared to year-ended December 31, 1998.
REVENUES. The Company recorded a net profit of $306,147, or $.05 per
share for 1999 as compared to a net profit of $125,369, or $.02 per share for
1998.
Total revenues for 1999 were $6,358,896, an increase of $1,619,298 or
34.1% compared to revenues of $4,739,598 for 1998. The increase in revenues
was due largely to the accelerated build out of the wireless infrastructure.
The company expects the accelerated build out of the wireless infrastructure
to continue into the year 2000.
OPERATING COSTS. Cost of sales increased by $913,941 or 28.6% from 1998
to 1999 due primarily to the increase in related sales. The overall increase
is generally made up of the net of the following increases or decreases:
- - - Direct labor costs increased by $744,219 or 34.8% primarily due to
increases in labor utilization and the need to meet customer demands for
turnkey construction solutions. As a percentage of revenue, they
increased from 44.9% in 1998 to 45.2% in 1999.
- - - Fuel costs increased by $28,474 or 37.3% primarily due to soaring gas
prices and increased labor effort.
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- - - Job travel expenses increased by $85,940 or 47.4% primarily due to
increased airfare pricing and increased revenue.
- - - Material costs increased by $133,481 or 38% primarily due to meeting
customers demands of a turnkey construction solution.
- - - Expenses not billed increased $110,302 or 271%. This is primarily due to
the magnitude and scope of the many projects underway at the end of the
year. The Company expects to complete these projects and record the
revenue in the first quarter 2000.
Operating expenses increased by $404,068 or 27.5%. This increase was
primarily due to the legal and accounting costs associated with the reverse
merger of MTSI Inc with RBS acquisition. As a percentage of revenue, these
costs decreased from 30.9% in 1998 to 29.3% in 1999.
DEPRECIATION, AMORTIZATION, RENT AND INTEREST. Depreciation expense
increased from $142,856 in 1998 to $187,842 in 1999. This was primarily due
to the addition of several pieces of needed equipment. Rent remained
consistent with prior year numbers. Interest expense decreased $6,301 or
19.3%. This was primarily due to increased cash flow from operations
resulting in less average borrowings during 1999.
INCOME TAX EXPENSE. Deferred tax liability increased $103,194 or 32.7% to
$417,828. This liability exists primarily due to the use of the cash method
of accounting for income tax purposes. The company expects to change
accounting methods for tax purposes in the next two years and believes that
the payment of this liability will be spread out over three years.
LIQUIDITY AND CAPITAL RESOURCES
At December 31,1999, the company's working capital ratio was 1.31 to 1
compared to 1.27 to 1 at December 31, 1998. The company had a working capital
surplus of $417,332 at the end of December 31,1999, as compared to a surplus
of $293,784 at the end of 1998. The increase in the company's working capital
ratio and working capital is primarily due to an increase in cash collections
and increased revenue.
Net cash provided by operating activities for 1999 totaled $405,868 as
compared to net cash provided by operating activities of $145,321 for the
year ended 1998. The increase in net cash provided by operating activities is
primarily the result of increased operating income.
Capital expenditures for 1999 were $287,570 as compared to $273,110 in
1998. The increase is primarily associated with new equipment and vehicles to
meet the needs of continued expansion.
The company has a line of credit of $450,000 of which the company had
borrowed $400,806 at the end of 1999. The borrowing base fluctuates based on
reports submitted by the company to the lender on an as needed basis. The
availability is determined by a calculation of 80% of the eligible accounts
receivable submitted since the last report. The line of credit expires
November 20, 2000.
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The Company is currently in negotiations with several lenders, including the
current lender to both increase the line and reduce the interest rate.
Management believes this will happen in the second quarter of 2000.
The company believes that cash flow provided by operations, supplemented
by the Company's positive cash position, will be adequate to meet the needs
of the Company to sustain moderate growth. The Company believes it will be
able to increase its borrowing limits under its line of credit. The Company
also believes it is capable of borrowing additional amounts to acquire
equipment and of raising capital through the sale of its stock. Some or all
of these resources may be utilized to fund additional growth opportunities.
ITEM 3. DESCRIPTION OF PROPERTY
We lease our primary office facility from Preston David Spurlin, our
Chief Executive Officer, President, Sole Director and majority shareholder.
The lease is for an initial three (3) year term expiring 1999, with a
month-to-month renewal thereafter, and has been classified as an operating
lease. Total rent expense associated with this lease was $56,400 for each of
the years ended December 31, 1999 and 1998, respectively.
We also lease a house from Preston David Spurlin. The house provides
lodging for out-of-town employees and contractors in lieu of incurring hotel
and other travel related charges. The lease began in April 1999 and continues
on a month-to-month basis. Total rent expense associated with this lease was
$11,900 for the year ended December 31, 1999.
We open and close project offices from time to time in connection
with our site development business, which offices are generally leased for
periods not to exceed 18 months.
Total rental expense for all of our operating leases was $68,300 and
$73,596 for the years ended December 31, 1999 and 1998, respectively.
We believe that the condition of our lease facilities is excellent,
and are sufficient for our use and operation at our present level of
operations. We believe that these facilities will be sufficient for our
operations for the foreseeable future. In the opinion of our management,
these properties are adequately insured, in good condition and suitable for
their anticipated future use.
With respect to investments in real estate, real estate mortgages
and securities of or interest in persons primarily engaged in real estate
activities, we neither hold nor intend upon holding any such investments. It
is not our policy to acquire assets primarily for possible capital gain or
primarily for income. At present, we have no limitations on the percentage of
our assets which may be invested in any one investment or type of investment,
although this policy may be changed without a vote of our shareholders.
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<PAGE>
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of March 30, 2000, certain
information with respect to the beneficial ownership of our capital stock by
(1) each person who we know to be beneficial owner of more than 5% of any
class or series of our capital stock; (2) each of the directors and executive
officers individually and (3) all directors and executive officers as a
group. At March 30, 2000, we had outstanding the following shares of capital
stock issued and outstanding: 6,250,084 shares of common stock.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature
Title of Class Beneficial Owner of Beneficial Owner Percent of Class
- - -------------- ---------------- ------------------- ----------------
<S> <C> <C> <C>
Common Stock P. David Spurlin 5,750,000 92.0%
</TABLE>
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The table below sets forth certain information concerning our directors
and executive officers as of March 30, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Preston D. Spurlin 41 Chief Executive Officer, President and Sole
Director
</TABLE>
PRESTON DAVID SPURLIN is the founder of MTSI, Inc. and has served as
its Chief Executive Officer, President and Sole Director since its inception.
From 1983 to 1987, Mr. Spurlin served first as Director of Field Operations
and later as Vice President of International Tower Company. From 1979 to
1983, Mr. Spurlin worked for McFarlin Tower Company in a variety of positions
including Foreman and Manager of all crews. Mr. Spurlin, his wife Cheryl and
three children reside in Richardson, Texas.
COMMITTEES OF THE BOARD OF DIRECTORS. Our Board of Directors does
not have any committees at this time.
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ITEM 6. EXECUTIVE COMPENSATION
The information set forth below concerns the cash and non-cash
compensation to the named executive officers of the Company for each of the
past three fiscal years ended December 31, 1999, 1998 and 1997. In each case,
the compensation listed was paid by MTSI, Inc., our wholly-owned subsidiary.
No executive officer of the Company has an employment agreement with the
Company and all executive officers serve at the discretion of the Board of
Directors.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
--------------------------------------------------
Annual Compensation Long Term Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Other Annual Restricted Securities LTIP All other
Principal Compensation Stock Underlying Payouts Compensation(1)
Position Year Salary($) Bonus($) ($) Award(s) ($) Options/SAR's (#) ($) ($)
- - ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Preston David
Spurlin 1999 108,056 1,956 0 0 0 21,689
President, 1998 103,347 1,800 0 0 0 20,959
CEO, Director 1997 91,646 1,771 0 0 0 19,200
</TABLE>
(1) Represents premium paid on term life insurance policies on behalf of Preston
David Spurlin and employer contributions under the Profit Sharing Plan described
below.
EMPLOYEE BENEFIT PLAN. We offer a profit-sharing plan, the Microwave
Transmission Systems, Inc. Profit Sharing Plan, which covers all of our
employees and all employees of MTSI who have attained age 18 or older and
have at least six months of service with either us or MTSI as of the
semi-annual Plan entrance dates. We make non-matching contributions at the
discretion of the Plan's Trustees. Employees' profit sharing accounts are
fully vested after seven years. In accordance with the Profit Sharing Plan
provisions, we cover all costs associated with the administration of the
Profit Sharing Plan. Employer discretionary contributions for the years ended
December 31, 1999 and 1998 were $289,000 and $249,000, respectively.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There currently exists one loan to Preston David Spurlin, our Chief
Executive Officer, President and Sole Director, from MTSI with remaining
balances of $181,009 and $114,362 in 1999 and 1998, respectively. This loan
bears interest at 6% annually and is payable over 20 years.
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<PAGE>
MTSI leases its office space from Preston David Spurlin. The lease
agreement originated in January of 1996 and has a term of 36 months, with a
month-to-month renewal thereafter. The monthly lease payment under this lease
is $4,700. Total rent expense charged during both 1999 and 1998 was $56,400.
MTSI also leases a house from Preston David Spurlin. This house
provides lodging for out-of-town employees and contractors in lieu of MTSI
incurring hotel and other travel related charges. The lease began in April of
1999 and continues on a month-to-month basis. Total rent expense associated
with this lease was $11,900 for the year ended December 31, 1999.
Preston David Spurlin, our Chief Executive Officer, President, Sole
Director and majority shareholder, also serves as a director of and owns 51%
of the stock of each of the following Texas corporations: Viper
Communications Systems, Inc. ("Viper"), CKS Management, Inc. ("CKS") and Epic
Communications, Inc. ("Epic"). During 1999 and 1998, MTSI received $116,751
and $107,828 management fee income from each of Viper, CKS and Epic,
respectively. MTSI charges these related entities a fee of 2% of their gross
revenues for the accounting and bookkeeping services provided to Viper, CKS
and Epic. In addition, during 1999 and 1998, MTSI made cash loans to Viper of
$203,650 and $294,500, CKS of $488,000 and $504,660, and Epic of $35,000 and
$0, respectively, and MTSI paid expenses $108,815 and $15,029, respectively
on behalf of these entities. MTSI charges each of Viper, CKS and Epic,
respectively, 9.75% annual interest on all loans outstanding. On January 1,
1998, MTSI transferred vehicles under capital leases with a net book value of
$224,377 and related capital lease obligations of $222,645 to each of Viper
and CKS, respectively. At December 31, 1999 and 1998, MTSI had loans
receivable from each of Viper totaling $272,474 and ($33,633), CKS totaling
$26,789 and $232,665, and Epic totaling $(66,173) and $0, respectively.
Additionally, MTSI, Inc. holds a note of Epic Communications, Inc. with a
remaining balance of $37,320 and $0 at December 31, 1999 and $1998,
respectively. This note bears interest at 9.75% annually and is payable over
three years.
ITEM 8. DESCRIPTION OF SECURITIES
CAPITAL STOCK. Our authorized capital stock consists of 40,000,000
shares of common stock and 10,000,000 shares of preferred stock, each with a
par value of $.001 per share. Each share of common stock entitles the holder
thereof to one vote on all matters upon which shareholders are permitted to
vote. No shareholder has any preemptive right or other similar right to
purchase or subscribe for any additional securities issued by us, and no
shareholder has any right to convert his, her or its common stock into other
securities. No shares of common stock are subject to redemption or any
sinking fund provisions. All the outstanding shares of our common stock are
fully paid and non-assessable. Subject to the rights of the holders of the
preferred stock, if any, our shareholders of common stock are entitled to
dividends when, as and if declared by our Board of Directors from funds
legally available therefor and, upon liquidation, to a pro-rata share in any
distribution to shareholders. We do not anticipate declaring or paying any
cash dividends on the common stock in the year 2000. Our current line of
credit agreements require prior written consent for the payment of dividends.
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<PAGE>
Pursuant to our Articles of Incorporation, our Board of Directors
has the authority, without further shareholder approval, to provide for the
issuance of up to 10,000,000 shares of our preferred stock in one or more
series and to determine the dividend rights, conversion rights, voting
rights, rights in terms of redemption, liquidation preferences, the number of
shares constituting any such series and the designation of such series.
Because our Board of Directors has the power to establish such preferences
and rights of any such series, it may afford the holders of any preferred
stock preferences, powers and rights (including voting rights) senior to the
rights of holders of our common stock. No shares of our preferred stock are
currently outstanding. Although we have no present intention to issue any
shares of preferred stock, the issuance of shares of preferred stock, or the
issuance of rights to purchase such shares, may have the effect of delaying,
deferring or preventing a change in control of the Company.
As a successor to RBSC, Inc., a California corporation reorganized
pursuant to the plan, we are prohibited from issuing non-equity voting
securities under Section 1123(a)(6) of the United States Bankruptcy Code. If
there are to be any classes of securities issued in the future, all shall
possess voting power, an appropriate distribution of such voting power among
such classes, including, in the case of any class of equity securities having
a preference over another class of equity securities with respect to
dividends, and adequate provision for the election of directors representing
such preferred class in the event of default in the payment of such dividends.
PROVISIONS HAVING A POSSIBLE ANTI-TAKEOVER EFFECT. Our Articles of
Incorporation and Bylaws contain certain provisions that are intended to
enhance the likelihood of continuity and stability in the composition of our
Board of Directors and in the policies formulated by the Board and to
discourage certain types of transactions which may involve an actual or
threatened change of control of the Company. In addition, our Board of
Directors has the authority, without further action by our shareholders, to
issue up to 10,000,000 shares of our preferred stock in one or more series
and to fix the rights, preferences, privileges and restrictions thereof, and
to issue up to 33,749,916 additional shares of our common stock. The issuance
of our preferred stock or additional shares of our common stock could
adversely affect the voting power of the holders of our common stock and
could have the effect of delaying, deferring or preventing a change in our
control.
ADDITIONAL INFORMATION
Statements contained in this registration statement regarding the
contents of any contract or any other document are not necessarily complete
and, in each instance, reference is hereby made to the copy of such contract
or other document filed as an exhibit to the registration statement. As a
result of this Registration Statement, we will be subject to the
informational requirements of the Securities Exchange Act of 1934 and,
consequently, will be required to file annual and quarterly reports, proxy
statements and other information with the SEC. The registration statement,
including exhibits, may be inspected without charge at the SEC's principal
office in Washington, D.C., and copies of all or any part thereof may be
obtained from the Public Reference Section, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 upon payment of
the prescribed fees. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1.800.SEC.0330. The SEC maintains
a Website that contains reports, proxy and information statements and other
information regarding registrants that file electronically with it. The
address of the SEC's Website is http://www.sec.gov.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS; MARKET DATA
This registration statement contains forward-looking statements.
These statements relate to future events or our future financial performance.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue" or the
negative of such terms or other comparable terminology. Forward-looking
statements are speculative and uncertain and not based on historical facts.
Because forward-looking statements involve risks and uncertainties, there are
important factors that could cause actual results to differ materially from
those expressed or implied by these forward-looking statements, including
those discussed under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Description of Business."
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future
results, levels of activity, performance, or achievements. Moreover, neither
we nor any other person assumes responsibility for the accuracy and
completeness of such statements. We are under no duty to update any of the
forward-looking statements after the date of this registration statement or
to conform such statements to actual results.
This registration statement contains market data related to our
industry segment generally. In preparing these reports, the research firms
assumed certain events, trends and activities will occur and/or continue and
these firms project information based, in part, on those assumptions. If the
market research firms are wrong about any of their assumptions, then these
projections may also be wrong.
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PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
MARKET INFORMATION. Our common stock was approved for trading on the
NQB Pink Sheets on March 23, 2000. Although our stock has yet to trade, the
set bid and ask price is $.50 as of the date of this filing. As of March 30,
2000 there was one market maker in our common stock.
We are filing this Form 10-SB for the purpose of enabling our shares
of common stock to commence trading on the NASDAQ Bulletin Board for OTCBB.
Our Form 10-SB must be declared effective by the Securities and Exchange
Commission prior to our being approved for trading on the NASDAQ OTCBB, and
until such time as this Form 10-SB is declared effective, our shares of
common stock will continue to be quoted on the Apink sheets." Our market
maker must make an application to the National Association of Securities
Dealers, Inc., or NASD, following the effective date of the Form 10-SB in
order to have our shares of common stock quoted on the NASDAQ OTCBB.
HOLDERS. As of March 15, 2000, there were a total of Six Million Two
Hundred Fifty Thousand Eighty-Four (6,250,084) shares of our common stock
outstanding, held by one thousand eighty-three (1,083) shareholders of record.
DIVIDENDS. We have not declared any dividends on our common stock
during the last two fiscal years. Our current lines of credit agreements
require prior written consent for any payment of dividends.
ITEM 2. LEGAL PROCEEDINGS
From time to time, we are involved in various legal proceedings
relating to claims arising in the ordinary course of business. We are not a
party to any such legal proceedings, the adverse outcome of which,
individually or taken together with all other legal proceedings, is expected
to have a material adverse effect on our prospects, financial condition or
result of operations.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING DISCLOSURE
Not Applicable.
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<PAGE>
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES
Pursuant to our Plan of Reorganization, as described herein, all of
our outstanding capital stock as of the date of our bankruptcy petition
(March 17, 1997) were canceled. Pursuant to the Plan, we issued an aggregate
of 500,084 shares of our common stock to certain of our creditors and Halter
Financial Group, Inc. Such shares were issued in accordance with Section 1145
under the United States Bankruptcy Code and the transaction was thus exempt
from the registration requirements of Section 5 of the Securities Act of 1933
(the "Securities Act").
On August 6, 1999, we entered into a Stock Exchange Agreement with
MTSI pursuant to which Preston David Spurlin, the sole shareholder of MTSI,
assigned his equity ownership in that company to us in exchange for 5,750,000
shares (or approximately 92%) of our outstanding common stock. We relied on
Section 4(2) of the Securities Act because the transaction did not involve a
public offering and was therefore exempt from the registration requirements
of the Securities Act. No underwriters were used in connection with this
transaction.
ITEM 5. INDEMNIFICATION OF OFFICERS AND DIRECTORS
We have the authority under Articles 2.02a(16) and 2.02-1 of the
Texas Business Corporation Act to indemnify our Directors and Officers to the
extent provided for in such statute. The Texas Business Corporation Act
provides, in part, that a corporation may indemnify a director or officer or
other person who was, is or is threatened to be made a named defendant or
respondent in a proceeding because such person is or was a director, officer,
employee or agent of the corporation, if it is determined that such person:
- - - conducted himself in good faith;
- - - reasonably believed, in the case of conduct in his official capacity as
a director or officer of the corporation, that his conduct was in the
corporation's best interest and, in all other cases, that his conduct
was at least not opposed to the corporation's best interests; and
- - - in the case of any criminal proceeding, had no reasonable cause to
believe that his conduct was unlawful.
A corporation may indemnify a person under the Texas Business
Corporation Act against judgments, penalties, including excise and similar
taxes, fines, settlement, unreasonable expenses actually incurred by the person
in connection with the proceeding. If the person is found liable to the
corporation or is found liable on the basis that personal benefit was improperly
received by the person, the indemnification is limited to reasonable expenses
actually incurred by the person in connection with the proceeding, and shall not
be made in respect of any proceeding in which the person shall have been found
liable for willful or intentional misconduct in the performance of his duty to
the corporation. The corporation may also pay or reimburse expenses incurred by
a person in connection with his appearance as a witness or other participation
in a proceeding at a time when he is not a named defendant or respondent in the
proceeding.
Our Articles of Incorporation provide that none of our Directors shall
be personally liable
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<PAGE>
to us or our shareholders for monetary damages for an act or omission in such
Director's capacity as a Director; PROVIDED, HOWEVER, that the liability of
such Director is not limited to the extent that such Director is found liable
for (a) a breach of the Director's duty of loyalty to us or our shareholders,
(b) an act or omission not in good faith that constitutes a breach of duty of
the Director to us or an act or omission that involves intentional misconduct
or a knowing violation of the law, (c) a transaction from which the Director
received an improper benefit, whether or not the benefit resulted from an
action taken within the scope of the Director's office, or (d) an act or
omission for which the liability of the Director is expressly provided under
Texas law. Limitations on liability provided for in our Articles of
Incorporation do not restrict the availability of non-monetary remedies and
do not affect a Director's responsibility under any other law, such as the
federal securities laws or state or federal environmental laws.
We believe that these provisions will assist us in attracting and
retaining qualified individuals to serve as executive officers and directors.
The inclusion of these provisions in our Articles of Incorporation may have
the effect of reducing a likelihood of derivative litigation against our
Directors and may discourage or deter shareholders or management from brining
a lawsuit against Directors for breach of their duty of care, even though
such an action, if successful, might otherwise have benefitted us or our
shareholders.
We have directors' and officers' liability insurance policies to
cover certain liabilities of directors and officers arising out of claims
based on certain acts or omissions by them in their capacity as directors or
officers with policy limits of $1,000,000.
Our Bylaws provide that our Officers and Directors shall be
indemnified and held harmless by us from and against any judgments, penalties
(including excise taxes), fines, amounts paid in settlement and reasonable
expenses (including court costs and attorneys' fees) actually incurred by
such persons in connection with all threatened, pending or completed actions,
claims, suits or proceedings; PROVIDED, HOWEVER, that it must be determined
that such Officer or Director acted in good faith and reasonably believed (1)
that in the case of conduct in his official capacity on behalf of us that his
conduct was in our best interest, (2) in all other cases that his conduct was
not opposed to our best interests, and (3) with respect to any proceeding
which is a criminal action, that he had no reasonable cause to believe that
his conduct was unlawful. However, in the event a determination is made that
an Officer or Director is liable to us or is found liable on the basis that
personal benefit was improperly received by such person, such indemnification
is limited to reasonable expenses actually incurred by such person in
connection with the proceeding and shall not be made in respect of any
proceeding in which such person shall have been found liable for willful or
intentional misconduct in the performance of his duty to the corporation. Any
indemnification under our Bylaws shall be made by us only upon a
determination that indemnification of such person is proper, such
determination to be made by a majority vote of a quorum consisting of
Directors who at the time of the vote are not named defendants or respondents
in such proceeding, or in the alternative by special legal counsel and/or the
shareholders of the corporation, as described in our Bylaws.
The above discussion of the Texas Business Corporation Act, our
Articles of Incorporation, and our Bylaws is not intended to be exhaustive
and is qualified in its entirety by such statutes, our Articles of
Incorporation and our Bylaws, respectively.
23
<PAGE>
PART F/S
The following financial information is provided in accordance with the
requirements of Item 310 of Regulation S-B.
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS............................................................F-2
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets at December 31, 1999 and 1998..................................................F-3
Consolidated Statements of Income for the years ended December 31, 1999 and 1998...........................F-5
Consolidated Statement of Shareholders' Equity for the years ended December 31,
1999 and 1998 .............................................................................................F-6
Consolidated Statements of Cash Flows for the years ended December 31, 1999 and 1998.......................F-7
Notes to Consolidated Financial Statements.................................................................F-9
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
MICROWAVE TRANSMISSION SYSTEMS, INC.
We have audited the accompanying consolidated balance sheets of Microwave
Transmission Systems, Inc. and Subsidiary as of December 31, 1999 and 1998
and the related consolidated statements of income, shareholders' equity, and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Microwave Transmission
Systems, Inc. and Subsidiary as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
/s/ KING GRIFFIN & ADAMSON P.C.
-------------------------------
KING GRIFFIN & ADAMSON P.C.
Dallas, Texas
February 1, 2000
F-2
<PAGE>
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 22,445 $ 18,585
Accounts receivable - trade, net of allowance for doubtful accounts
of $0 and $39,775 in 1999 and 1998, respectively 1,243,759 950,278
Related party receivables 25,904 70,627
Due from affiliates 233,090 199,032
Employee advances 12,830 15,816
Jobs in progress 150,978 40,676
Prepaid and other current assets 18,835 32,601
Notes receivable - related parties 14,763 5,036
Income taxes receivable - 20,000
------------ ------------
Total current assets 1,722,604 1,352,651
Property and equipment, net 544,412 463,417
Non-current notes receivable - related parties 203,566 109,326
------------ ------------
Total assets $ 2,470,582 $ 1,925,394
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-3
<PAGE>
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Continued)
December 31, 1999 and 1998
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Current liabilities
Borrowings on line of credit $ 400,806 $ 350,000
Current portion of long-term debt 65,940 61,321
Current portion of capital lease obligation - 42,476
Accounts payable 40,587 52,618
Accrued liabilities 333,831 252,218
Income taxes payable 56,041 -
Deferred tax liability - current 408,067 300,234
------------ ------------
Total current liabilities 1,305,272 1,058,867
Deferred tax liability - non-current 9,761 14,400
Long-term debt, less current portion 44,598 44,021
Capital lease obligation, less current portion - 3,302
------------ ------------
Total liabilities 1,359,631 1,120,590
------------ ------------
Shareholders' equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized;
none issued and outstanding - -
Common stock $0.001 par value; 40,000,000 shares authorized;
6,250,084 shares issued and outstanding 6,250 6,250
Additional paid-in capital (5,250) (5,250)
Retained earnings 1,109,951 803,804
------------ ------------
Total shareholders' equity 1,110,951 804,804
------------ ------------
Total liabilities and shareholders' equity $ 2,470,582 $ 1,925,394
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-4
<PAGE>
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 6,358,896 $ 4,739,598
Cost of sales 4,101,005 3,187,064
------------ ------------
Gross profit 2,257,891 1,552,534
Operating expenses 1,869,245 1,465,177
------------ ------------
Operating income 388,646 87,357
Interest income from related parties 6,697 19,678
Other income from related parties 116,751 107,828
Other income - -
Interest expense (26,228) (32,529)
------------ ------------
Income before taxes 485,866 182,334
Provision for income taxes
Current 76,525 -
Deferred 103,194 56,938
------------ ------------
179,719 56,938
------------ ------------
Net income $ 306,147 $ 125,396
============ ============
Net earnings per common share - basic and diluted $ .05 $ .02
============ ============
Weighted average number of common shares outstanding - basic
and diluted 5,884,269 5,750,000
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-5
<PAGE>
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS TOTAL
------ ------ ---------- --------- -----
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1998 500,084 $ 500 $ 4,500 $ - $ 5,000
Issuance of common stock and
recapitalization in reverse
acquisition transaction 5,750,000 5,750 (59,945) 678,408 624,213
Capital contributed by majority
shareholder - - 50,195 - 50,195
Net income for the year - - - 125,396 125,396
---------- ------- -------- ------------ ------------
Balances at December 31, 1998 6,250,084 6,250 (5,250) 803,804 804,804
Net income for the year - - - 306,147 306,147
---------- ------- -------- ------------ ------------
Balances at December 31, 1999 6,250,084 $ 6,250 $ (5,250) $ 1,109,951 $ 1,110,951
========== ======= ======== ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-6
<PAGE>
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income from operations $ 306,147 $ 125,396
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 193,212 163,288
Loss on disposal or sale of property and equipment - 1,732
Deferred income tax provision 103,194 56,938
Bad debt expense - 487
Changes in operating assets and liabilities:
Accounts receivable - trade (293,481) (165,356)
Related party receivables 44,723 (70,627)
Employee advances 2,986 2,453
Jobs in progress (110,302) 53,157
Prepaid and other current assets 13,766 35,609
Accounts payable (12,031) 17,629
Accrued liabilities 81,613 (38,504)
Income taxes payable 76,041 (36,881)
------------ -----------
Cash flows provided by operating activities 405,868 145,321
------------ -----------
Cash flows from investing activities
Purchases of property and equipment (287,570) (273,110)
Issuance of notes receivable (123,999) (89,754)
Payments received on notes receivable 33,395 3,120
Advances to affiliates (835,465) (814,189)
Payments received on advances to affiliates 801,407 1,038,490
------------ -----------
Cash flows used in investing activities (412,232) (135,443)
------------ -----------
Cash flows from financing activities
Payments on capital leases (45,778) (103,356)
Proceeds from line of credit 895,806 970,000
Payments on line of credit (845,000) (910,000)
Borrowings of long-term debt 103,810 148,940
Repayment of long-term debt (98,614) (101,514)
------------ -----------
Cash flows provided by financing activities 10,224 4,070
------------ -----------
Net increase in cash 3,860 13,948
Cash, beginning of year 18,585 4,637
------------ -----------
Cash, end of year $ 22,445 $ 18,585
============ ===========
</TABLE>
F-7
<PAGE>
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Years Ended December 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Supplemental disclosures for cash flow information:
Cash paid during the year for:
Interest $ 26,200 $ 32,500
============ ===========
Income taxes $ 484 $ 36,881
============ ===========
Supplemental non-cash financing and investing activities:
Note received from sale of property and equipment $ 13,363 $ -
============ ===========
Property and equipment and related notes payable
transferred to affiliate $ - $ 224,377
============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
F-8
<PAGE>
MICROWAVE TRANSMISSION SYSTEMS, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 1999 and 1998
1. NATURE OF OPERATIONS
Microwave Transmission Systems, Inc. (the "Company" or "MTSI"), a Texas
corporation incorporated on August 7, 1987, provides contracting services
related to site development and the construction of wireless communication
towers. The Company's site development service business is a comprehensive
service offering design, construction and operating expertise to a range of
wireless service providers. Site development services include network
pre-design, communication site selection, communication site acquisition,
local zoning and permitting, and site construction and antennae
installation. MTSI operates primarily in the U.S. and is based in
Richardson, Texas.
In September 1999, MTSI entered into a reverse acquisition agreement with
RBS Acquisition Corp. ("RBS"), a publicly held "shell" Texas Corporation.
RBS purchased 100% of MTSI's shares in a tax free reorganization. RBS
issued 5,750,000 shares of RBS $0.001 par value common stock in exchange
for all of the outstanding shares of MTSI. For accounting purposes, the
acquisition will be treated as a recapitalization of MTSI with MTSI as the
acquirer (a reverse acquisition). On January 12, 2000, Microwave
Transmission Systems, Inc., the subsidiary, changed its name to MTSI, Inc.,
and the public company changed its name to Microwave Transmission Systems,
Inc. The historical financial statements included herein are those of MTSI.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Microwave Transmission Systems, Inc. and MTSI, Inc., its wholly-owned
subsidiary. All significant intercompany transactions and balances have
been eliminated in consolidation.
CASH EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values of cash equivalents, accounts receivable, accounts
payable, accrued liabilities and debt approximate fair value. The fair
value of notes receivable related party is approximately $172,000 and
$85,000 at December 31, 1999 and 1998, respectively, using a 10% effective
interest rate.
ACCOUNTS RECEIVABLE
The Company extends unsecured credit in the normal course of business to
virtually all of its customers. Management has provided an allowance for
doubtful accounts which reflects its opinion of amounts which may
ultimately become uncollectible. In the event of non-
F-9
<PAGE>
performance of accounts receivable, the maximum exposure to the Company is
the recorded amount shown on the balance sheet.
PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Property and equipment under
capital leases are stated at the lower of fair value or the present value
of minimum lease payments at the date of purchase. Expenditures for
maintenance and repairs are charged directly against income. Major renewals
and betterments are capitalized.
Depreciation on property and equipment other than amounts acquired under
capital leases is calculated on the straight-line method for financial
reporting purposes, with useful lives ranging from 3 to 17 years. Property
and equipment held under capital leases and leasehold improvements are
amortized straight-line over the shorter of the lease term or estimated
useful life of the asset.
FEDERAL INCOME TAXES
The Company provides for income taxes under the asset and liability
approach. This method requires that deferred tax assets and liabilities be
recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. 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. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that includes the enactment date.
REVENUE RECOGNITION
The Company uses the completed contract method of revenue recognition.
Under this method, revenue and its related expenses are not recognized
until a project, or a significant phase of the project, is completed. Costs
incurred, which primarily consist of labor and materials, on uncompleted
projects are capitalized as jobs in progress. Provisions for estimated
losses on uncompleted contracts are made in the period in which such losses
are determined.
EARNINGS PER COMMON SHARE
Basic earnings per share is computed by dividing earnings available to
common shareholders by the weighted-average number of common shares
outstanding during the year. Diluted earnings per common share is computed
by dividing earnings available to common shareholders by the
weighted-average number of common shares outstanding plus the number of
additional shares that would have been outstanding if potentially dilutive
securities had been
F-10
<PAGE>
issued. As of December 31, 1999 and 1998, the Company did not have any
potentially dilutive securities.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
the disclosure of contingent assets and liabilities as of the date of the
financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
RECLASSIFICATIONS
Certain prior year amounts have been reclassified to conform to the current
year presentation.
3. NOTES RECEIVABLE - RELATED PARTIES
The Company has a note receivable from an officer totaling $181,009 and
$114,362 at December 31, 1999 and 1998, respectively. Interest on the loan
is charged at 6% per annum and is paid monthly. The loan is payable over
twenty years.
The Company has a note receivable from an affiliated company totaling
$37,320 and $0 at December 31, 1999 and 1998, respectively. Interest on the
loan is charged at 9.75% per annum and is paid monthly. The loan is payable
over three years.
F-11
<PAGE>
4. PROPERTY AND EQUIPMENT
Property and equipment at December 31 consists of the following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Leasehold improvements $ 81,599 $ 78,703
Furniture and fixtures 62,088 52,163
Production equipment 353,483 227,668
Trailers 21,455 17,466
Vehicles - including capital leases 605,187 548,582
----------- -----------
1,123,812 924,582
Less accumulated depreciation and amortization (579,400) (461,165)
----------- -----------
$ 544,412 $ 463,417
=========== ===========
</TABLE>
At December 31, 1999 and 1998, the gross amount of vehicles and related
accumulated amortization recorded under capital leases were as follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Vehicles, at cost $ - $ 363,552
Less accumulated amortization - (314,429)
----------- -----------
$ - $ 49,123
=========== ===========
</TABLE>
F-12
<PAGE>
Amortization of assets held under capital leases is included with
depreciation expense. Depreciation and amortization expense for the years
ended December 31, 1999 and 1998 was $193,212 and $163,288, respectively.
5. LINE OF CREDIT
During 1998, the Company entered into a line of credit agreement with a
bank with a maximum facility of $450,000. Interest is payable monthly at
the prime rate plus 1.5% (10% at December 31, 1999) and the principal is
due November 20, 2000. The line of credit is secured by substantially all
of the assets of MTSI.
6. LONG-TERM DEBT
Long-term debt at December 31, 1999 and 1998 consists of the following:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Note payable with interest at 8.5%, collateralized by
vehicles, payable in monthly principal and interest
installments of $2,992, through January, 2000 $ - $ 37,052
Borrowings under financing agreements, interest from 1.9% to
9.1%, collateralized by vehicles, payable in monthly principal
and interest installments of $3,239, through October, 2001 63,612 54,808
Borrowings under financing agreements, interest from 8.9% to
9.25%, collateralized by vehicles, payable in monthly principal
and interest installments of $1,472, through December, 2001 22,433 13,482
Borrowings under financing agreements, interest at 8.5%,
collateralized by vehicles, payable in monthly principal and
interest installments of $1,542, through July, 2001 24,493 -
----------- -----------
110,538 105,342
Less current portion 65,940 61,321
----------- -----------
$ 44,598 $ 44,021
=========== ===========
</TABLE>
F-13
<PAGE>
At December 31, 1999, scheduled maturities of long-term debt are as
follows:
<TABLE>
<S> <C>
2000 $ 65,940
2001 44,598
--------
$110,538
========
</TABLE>
7. INCOME TAXES
At December 31, 1999 and 1998 deferred tax assets (liabilities) are
comprised of the following:
<TABLE>
<CAPTION>
1999 1998
----------- ------------
<S> <C> <C>
Deferred tax assets
Accounts payable and accrued expenses
not currently deductible $ 23,023 $ 15,785
Other - 2,456
----------- ------------
Total deferred tax asset 23,023 18,241
Deferred tax liabilities
Accounts receivable (380,899) (306,272)
Jobs in progress (45,293) (12,203)
Property and equipment (9,761) (14,400)
Other (4,898) -
----------- ------------
Total deferred tax liability (440,851) (332,875)
----------- ------------
Net deferred tax liability $ (417,828) $ (314,634)
=========== ============
</TABLE>
F-14
<PAGE>
At December 31, 1999 and 1998 deferred tax assets and liabilities included
in the balance sheets are as follows:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Current deferred tax asset $ 23,023 $ 18,241
Current deferred tax liability (431,090) (318,475)
----------- -----------
Net current deferred tax liability (408,067) (300,234)
Non-current deferred tax liability (9,761) (14,400)
----------- -----------
Net deferred tax liability $ (417,828) $ (314,634)
=========== ===========
</TABLE>
The effective income tax rate for the years ended December 31, 1999 and
1998 vary from the statutory rate due to the following:
<TABLE>
<CAPTION>
1999 1998
------- -----
<S> <C> <C>
Income tax expense at statutory rate 34% 34%
State taxes 0.5% -
Other 2.5% (2.8%)
------- -----
37.0% 31.2%
======= =====
</TABLE>
8. LEASES
The Company leases its office facility from the president and majority
shareholder of the Company. The lease is for an initial three-year term
expiring in 1999 with a month-to-month renewal thereafter, and has been
classified as an operating lease. Total rent expense associated with this
lease was $56,400 for each of the years ended December 31, 1999 and 1998.
The Company also leases a house from the president and majority
shareholder. The house provides lodging for out-of-town employees and
contractors in lieu of the Company incurring hotel and other travel related
charges. The lease began in April 1999 and continues on a month-to-month
basis. Total rent expense associated with this lease was $11,900 for the
year ended December 31, 1999.
Total rental expense for operating leases was $68,300 and $73,596 for the
years ended December 31, 1999 and 1998, respectively.
F-15
<PAGE>
9. EMPLOYEE BENEFIT PLAN
The Company offers a profit sharing plan, Microwave Transmission Systems,
Inc. Profit Sharing Plan, which covers all employees of the Company who
have attained age 18 or older with at least six months of service with the
Company as of the semi-annual plan entrance dates. The Company makes
non-matching contributions at the discretion of the plan's trustees.
Employees' profit sharing accounts are fully vested after seven years. In
accordance with the profit sharing plan provisions, the Company covers all
costs associated with the administration of the profit sharing plan.
Employer discretionary contributions for the years ended December 31, 1999
and 1998 were $289,000 and $249,000, respectively.
10. RELATED PARTY TRANSACTIONS
At December 31, 1999 and 1998, there exists a loan to an officer from the
Company with a remaining balance of $181,009 and $114,362, respectively.
The loan bears interest at 6% and is payable over twenty years.
Additionally, the Company holds a note to an affiliated Company from MTSI
with a remaining balance of $37,320 and $0 at December 31, 1999 and 1998,
respectively. The note bears interest at 9.75% and is payable over three
years.
The Company leases its office space from the president and majority
shareholder of the Company. The lease agreement originated in January 1996
and has a term of 36 months with a month-to-month renewal thereafter. The
monthly lease payment is $4,700. Total rent expense charged during both
1999 and 1998 was $56,400.
The Company also leases a house from the president and majority
shareholder. The house provides lodging for out of town employees and
contractors in lieu of the Company incurring hotel and other travel related
charges. The lease began in April 1999 and continues on a month-to-month
basis. Total rent expense associated with this lease was $11,900 for the
year ended December 31, 1999.
The majority shareholder of MTSI also owns 51% of the stock of Viper
Communication Systems, Inc. ("Viper"), CKS Management, Inc. ("CKS") and
EPIC Communications, Inc. ("EPIC"). During 1999 and 1998, the Company
received $116,751 and $107,828 in management fee income from Viper, CKS and
EPIC. MTSI charges these related entities a fee of 2% of their gross
revenues for the accounting and bookkeeping services it provides to Viper,
CKS and EPIC. In addition, during 1999 and 1998, the Company made cash
loans to Viper, CKS and EPIC of $726,650 and $799,160, respectively, and
MTSI paid expenses of $108,815 and $15,029, respectively, on behalf of
these entities. On January 1, 1998, MTSI transferred vehicles under capital
leases with a net book value of $224,377 and related capital lease
obligations of $222,645 to Viper and CKS. MTSI charges Viper, CKS and EPIC
9.75% interest on all loans outstanding. At December 31, 1999 and 1998, the
Company had loans receivable from Viper, CKS and EPIC totaling $233,090 and
$199,032, respectively.
F-16
<PAGE>
11. BUSINESS AND CREDIT CONCENTRATIONS
The Company has three customers that accounted for 70% of sales for the
year ended December 31, 1999 and had two customers that accounted for 51%
of sales for the year ended December 31, 1998. At December 31, 1999 and
1998, these customers accounted for 73% and 59%, respectively, of total
accounts receivable.
F-17
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
The following documents are filed as exhibits to this Registration
Statement:
<TABLE>
<S> <C>
3.1 Articles of Incorporation of Microwave Transmission Systems, Inc. (with
amendments).
3.2 Restated Bylaws of Microwave Transmission Systems, Inc.
6.1 Stock Exchange Agreement by and among Microwave Transmission Systems,
Inc., the Sole Shareholder of Microwave Transmission Systems, Inc., RBS
Acquisition Corp., and Halter Financial Group, Inc. dated August 6,
1999.
6.2 Consulting Agreement by and between Microwave Transmission Systems,
Inc. and Halter Financial Group, Inc. dated July 29, 1999.
6.3 Commercial Lease Agreement dated January 17, 1996 by and between
Microwave Transmission Systems, Inc. (now MTSI, Inc.) and P. David
Spurlin.
6.4 Lease Agreement dated April 1, 1999 by and between Microwave
Transmission Systems, Inc. (now MTSI, Inc.) and P. David Spurlin.
</TABLE>
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Act of 1934, the
Company caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
MICROWAVE TRANSMISSION SYTEMS, INC.
DATE: March 31,2000 By: /s/ Preston David Spurlin
-------------------------------
Preston David Spurlin
Chief Executive Officer and President
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
RBS ACQUISITION CORP.
The undersigned natural person, of the age of eighteen years or
more, a resident of the State of Texas, and acting as incorporator of a
corporation under the Texas Business Corporation Act, as amended (the "Act"),
hereby adopts the following Articles of Incorporation for such corporation.
ARTICLE ONE
NAME
The name of the corporation is RBS Acquisition Corp. (the
"Corporation").
ARTICLE TWO
PERIOD OF DURATION
The period of duration of the Corporation is perpetual.
ARTICLE THREE
PURPOSES AND POWERS
Section 1. PURPOSES. The purposes for which the Corporation is
organized are to transact any and all lawful business for which corporations
may be incorporated under the Act.
Section 2. POWERS. Subject to any specific written limitations or
restrictions imposed by the Act, by other law, or by these Articles of
Incorporation, and solely in furtherance thereof, but not in addition to the
limited purposes set forth in Section 1 of this Article, the Corporation
shall have and exercise all of the powers specified in the Act, which powers
are not inconsistent with these Articles.
ARTICLE FOUR
CAPITALIZATION, PREEMPTIVE RIGHTS AND VOTING
Section 1. AUTHORIZED SHARES. The Corporation shall have authority
to issue two classes of shares to be designated respectively, "Common Stock"
and "Preferred Stock." The total number of shares which the Corporation is
authorized to issue is 50,000 shares of which 40,000 shall be Common Stock
and 10,000,000 shall be Preferred Stock. Each share of Common Stock shall
have a par value of $.001, and each share of Preferred Stock shall have a par
value of $.001.
The Preferred Stock authorized by these Articles of Incorporation
may be issued from time to time in one or more series, each of which shall
have such designation(s) or title(s) as may be fixed by the Board of
Directors prior to the issuance of any shares thereof. Subject to the
provisions of these Articles of Incorporation, the Board of Directors is
hereby authorized to fix or alter the
1
<PAGE>
dividend rates, conversion rights, rights and terms of redemption, including
sinking funds provision, the redemption price or prices, voting rights and
liquidation preferences of any wholly unissued series of Preferred Stock, and
the number of shares constituting any such series and the designation
thereof, or any of them. The rights, powers, preferences, limitations and
restrictions, if any, accompanying such shares of preferred Stock shall be
set forth by resolution of the Board of Directors providing for the issue
thereof prior to the issuance of any shares thereof, in accordance with the
applicable provisions of the Act. Each share of any series of Preferred Stock
shall be identical with all other shares of such series, except as to the
date from which dividends, if any, shall accrue.
Section 2. PREEMPTIVE RIGHTS. No holder of shares of capital stock
of the Corporation shall, solely by reason of his holding shares of any
class, have any preemptive or preferential right to purchase or subscribe for
any shares of the Corporation, now or hereafter to be authorized, or any
notes, debentures, bonds or other securities convertible into or carrying
warrants, rights or options to purchase shares of any class, now or hereafter
to be authorized, whether or not the issuance of any such shares or such
notes, debentures, bonds or other securities would adversely affect the
dividend, voting or any other rights of such holder. The Board of Directors
may authorize the issuance of, and the Corporation may issue, shares of any
class of the Corporation, or any notes, debentures, bonds or other securities
convertible into or carrying warrants, rights or options to purchase any such
shares, without offering any shares of any class to the existing holders of
any class of stock of the Corporation.
Section 3. VOTING. In the exercise of voting privileges, each holder
of shares of the capital stock of the Corporation shall be entitled to one
vote for each share held in his name on the books of the Corporation. In all
elections of Directors of the Corporation, cumulative voting is expressly
prohibited. As such, each holder of shares of capital stock of the
Corporation entitled to vote at the election of Directors shall have the
right to vote, in person or by proxy, all or any portion of such shares for
or against each individual Director to be elected and shall not be entitled
to vote for or against any one Director more than the aggregate number of
shares held by such holder which are entitled to vote on the election of
Directors.
Section 4. NON-VOTING SECURITIES. As a successor to RBSC, Inc., a
California corporation reorganized pursuant to its Plan of Reorganization
dated October 14, 1997 as modified on January 23, 1998, January 28, 1998 and
February 26, 2998 and as confirmed by order of the United States Bankruptcy
Court, Central District of California on March 20, 1998, the Corporation is
prohibited from issuing non-equity voting securities under Section 1123(a)(6)
of the United States Bankruptcy Code. If there are to be several classes of
securities issued in the future, all shall possess voting power, an
appropriate distribution of such power among such classes, including, in the
case of any class of equity securities having a preference over another class
of equity securities with respect to dividends, an adequate provision for the
election of directors representing such preferred class in the event of
default in the payment of such dividends.
2
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The provisions of Section 4 of this Article shall apply unless and
until the Corporation amends, alters, changes or repeals such provisions in
the manner now or hereafter prescribed by the Act or these Articles of
Incorporation.
ARTICLE FIVE
MAJORITY VOTE FOR APPROVAL OF CERTAIN ACTIONS
If, with respect to any matter for which the affirmative vote or
concurrence of the Shareholders of the Corporation is required, any provision
of the Act, as the same may be amended from time to time, would, but for this
Article Five, require the affirmative vote or concurrence of the holders of
shares having more than a majority of the votes entitled to vote on such
matter, or of any class or series thereof, the affirmative vote or
concurrence of the holders of shares having only a majority of the votes
entitled to vote on such matter, or of any class or series thereof, shall be
required with respect to any such matter.
ARTICLE SIX
WRITTEN CONSENTS
Except for the election of directors of the Corporation, who when
elected by Shareholders shall be elected at either an annual or special
meeting of shareholders called for such purpose, any action required to, or
which may, be taken at any annual or special meeting of 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 taken, shall be
signed by the holder or holders of shares having not less than the minimum
number of votes that would be necessary to take such action at a meeting at
which the holders of all shares entitled to vote on the action were present
and voted.
ARTICLE SEVEN
QUORUM
With respect to any matter, a quorum will be present at a meeting of
shareholders if the holders of one-third of the shares entitled to vote on
that matter are represented at the meeting in person or by proxy.
ARTICLE EIGHT
POWER TO CALL SPECIAL SHAREHOLDERS' MEETINGS
Special meetings of the Shareholders of the Corporation may be
called by the President of the Corporation, the Board of Directors or holders
of not less than 30% of all the share entitled to vote at the proposed
special meeting of the Shareholders.
3
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ARTICLE NINE
COMMENCEMENT OF BUSINESS
The Corporation shall not commence business until it has received
for the issuance of its shares of Common Stock consideration of the value of
at least $1,000.
ARTICLE TEN
REGISTERED AGENT AND OFFICE
Section 1. REGISTERED OFFICE. The address of the initial registered
office of the Corporation is 14160 Dallas Parkway, Suite 950, Dallas, Texas
75240.
Section 2. REGISTERED AGENT. The name of the initial registered
agent of the Corporation at such address is Timothy P. Halter.
ARTICLE ELEVEN
DIRECTORS
Section 1. INITIAL BOARD OF DIRECTORS. The business and affairs of
the Corporation shall be managed by or be under the direction of the Board of
Directors of the Corporation. The initial Board of Directors shall consist of
one member who need not be a resident of the State of Texas or a Shareholder
of the Corporation. The number of Directors of the Corporation may from time
to time be changed in accordance with the Bylaws of the Corporation and the
Act.
Section 2. NAMES AND ADDRESSES. The name and address of the person
who is to serve as Director until the first annual meeting of Shareholders or
until his successor or successors are elected and qualified, or until his
earlier death, resignation, or removal are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS CITY, STATE
<S> <C> <C>
Timothy P. Halter 14160 Dallas Parkway, Suite 950 Dallas, Texas 75240
</TABLE>
Section 3. LIMITATIONS ON LIABILITY OF DIRECTORS. No Director of the
Corporation shall be personally liable to the Corporation or its Shareholders
for monetary damages for an act or omission in the Director's capacity as a
Director, provided, however, that the foregoing provision shall not eliminate
or limit the liability of a Director to the extent a Director is found liable
for (a) a breach of the Director's duty of loyalty to the Corporation or its
Shareholders, (b) an act or omission not in good faith that constitutes a
breach of duty of the Director to the Corporation or an act or omission that
involves intentional misconduct or a knowing violation of the law, (c) a
transaction from which the Director received an improper benefit, whether or
not the benefit resulted from an action taken within the scope of the
Director's office, or (d) an act or omission for which the liability of the
Director is expressly provided by an applicable statute.
4
<PAGE>
If the Texas Miscellaneous Corporation Laws Act or other applicable
provision of Texas law hereafter is amended to authorize further elimination
or limitation of the liability of Directors, then the liability of a Director
of the Corporation, in addition to the limitation on the personal liability
provided herein, shall be limited to the fullest extent permitted by the
Texas Miscellaneous Corporation Laws Act or other applicable provision of
Texas law as amended. Any repeal or modification of this Section 3 by the
Shareholders of the Corporation shall be prospective only, and shall not
adversely affect any limitation on the personal liability of a Director of
the Corporation existing at the time of such repeal or modification.
ARTICLE TWELVE
SPECIAL POWERS OF BOARD OF DIRECTORS
In furtherance of, and not in limitation of the powers and
authorities conferred under the Act, the Board of Directors is expressly
authorized:
1. To make, alter, amend and rescind the Bylaws of the Corporation;
to fix, adjust and maintain from time to time the amount to be reserved as
working capital; and to authorize and cause to be executed mortgages and
liens upon the real and personal property of the Corporation.
2. From time to time, to determine whether and to what extent and at
what times and places and under what conditions and provisions the accounts
and books of the Corporation shall be maintained and made available for
inspection of any Shareholder, and no Shareholder shall have any right to
inspect any account or books or records of the Corporation, except as
provided in the Act, or authorized by the Board of Directors.
3. If the Bylaws so provide, to designate two or more of their
number to constitute an executive committee, which committee shall, as
provided in said resolution or in the Bylaws of the Corporation, have and
exercise any or all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, except to the extent that the
Act requires a particular matter to be authorized by the Board of Directors.
ARTICLE THIRTEEN
ADDITIONAL POWERS IN BYLAWS
The Corporation may in its Bylaws confer powers and authorities upon
the Board of Directors in addition to the foregoing and to those expressly
conferred upon them by the Act.
ARTICLE FOURTEEN
TRANSACTIONS WITH INTERESTED DIRECTORS AND OFFICERS
No contract or transaction between the Corporation and one or more
of its Directors or Officers, or between the Corporation and any other
corporation, partnership, association or other
5
<PAGE>
organization in which one or more of the Directors or Officers of the
Corporation are directors, officers or partners, or have a financial
interest, shall be void or voidable solely by reason of such relationship, or
solely because the Director or Officer is present at or participates in the
meeting of the Board of Directors of the Corporation or committee thereof
that authorizes the contract or transaction, or solely because his or their
votes are counted for such purposes, if any one of the following conditions
are met:
1. The material facts concerning the relationship or interest of the
Director or Officer and the material facts concerning the contract or
transaction are disclosed or are known to the Board of Directors of the
Corporation or the committee thereof that considers the contract or
transaction, and the Board of Directors of the Corporation or committee
thereof in good faith authorizes the contract or transaction by the
affirmative vote of a majority of the disinterested Directors, even though
the disinterested Directors be less than a quorum; or
2. The material facts concerning the relationship or interest of the
Director or Officer and the material facts concerning the contract or
transaction are disclosed or are known to the Shareholders of the Corporation
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by the Shareholders of the Corporation at any annual
or special meeting of Shareholders called for that purpose; or
3. The contract or transaction is fair to the Corporation at the
time it is authorized, approved or ratified by the Board of Directors of the
Corporation, a committee thereof, or the Shareholders of the Corporation.
Common or interested Directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors of the
Corporation or of a committee thereof that authorizes such contract or
transaction.
ARTICLE FIFTEEN
INDEMNIFICATION
Section 1. MANDATORY INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.
Each person who was or is made a party or is threatened to be made a party to
or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, arbitrative or
investigative, any appeal in such action, suit or proceeding, and any inquiry
or investigation that could lead to such an action, suit, or proceeding
("Proceeding"), by reason of the fact that he is or was a Director or Officer
of the Corporation, or who, while a Director or Officer of the Corporation,
is or was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise, shall be
indemnified and held harmless by the Corporation to the fullest extent
permitted by the Act against all judgments, penalties (including excise and
similar taxes), fines, settlements, and reasonable expenses (including
6
<PAGE>
attorneys' fees) actually incurred by such person in connection with such
Proceeding. Such right shall be a contract right and shall include the right
to require advancement by the Corporation of reasonable expenses (including
attorneys' fees) incurred in defending any such Proceeding in advance of its
final disposition; provided, however, that the payment of such expenses in
advance of the final disposition of such Proceeding shall be made by the
Corporation only upon delivery to the Corporation of a written affirmation by
such person of his good faith belief that he has met the standard of conduct
necessary for indemnification under the Act and a written undertaking, by or
on behalf of such person, to repay all amounts so advanced if it should be
ultimately determined that such person has not satisfied such requirements.
Section 2. NATURE OF INDEMNIFICATION. The indemnification and
advancement of expenses provided for herein shall not be deemed exclusive of
any other rights permitted by law to which a person seeking indemnification
may be entitled under any 'Bylaw, agreement, vote of Shareholders or
disinterested Directors or otherwise, and shall continue as to a person who
has ceased to be a Director or Officer of the Corporation and shall inure to
the benefit of the heirs, executors and administrators of such a person.
Section 3. INSURANCE. The Corporation shall have power to purchase
and maintain insurance or another arrangement on behalf of any person who is
or was a director, Officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of
this Article Fifteen or the Act.
ARTICLE SIXTEEN
AMENDMENT OF BYLAWS
The Shareholders of the Corporation hereby delegate to the Board of
Directors the power to adopt, alter, amend or repeal the Bylaws of the
Corporation. Such power shall be vested exclusively in the Board of Directors
and shall not be exercised by the Shareholders.
ARTICLE SEVENTEEN
AMENDMENTS
The Corporation reserves the right to amend, alter, change or repeal
any provision contained in these Articles of Incorporation or in its Bylaws
in the manner now or hereafter prescribed by the Act or these Articles of
Incorporation, and all rights conferred on Shareholders herein are granted
subject to this reservation.
7
<PAGE>
ARTICLE EIGHTEEN
CAPTIONS
The captions used in these Articles of Incorporation are for
convenience only and shall not be construed in interpreting the provisions
hereof.
ARTICLE NINETEEN
INCORPORATOR
The name and address of the Incorporator are as follows:
<TABLE>
<CAPTION>
NAME ADDRESS CITY, STATE
<S> <C> <C>
Klara A. Albaral 14160 Dallas Parkway, Suite 950 Dallas, Texas 75240
</TABLE>
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 11th
day of December, 1998.
/s/Klara A. Albaral
- - ------------------------------------
Klara A. Albaral
8
<PAGE>
ARTICLES/CERTIFICATE OF CORRECTION
This correction is submitted pursuant to Article 1302.701 of the
Texas Miscellaneous Corporation Laws Act for a corporation to correct a
document which is an inaccurate record of the corporate action, contains an
inaccurate or erroneous statement, or was defectively or erroneously
executed, sealed, acknowledged or verified.
ARTICLE ONE
The name of the corporation is RBS Acquisition Corp.
ARTICLE TWO
The document to be corrected is the Articles of Incorporation, which
was filed in the office of the Secretary of State on the 11th day of
December, 1998.
ARTICLE THREE
The inaccuracy, error, or defect to be corrected is: The second
sentence of Article Four, Section One currently reads as follows: "The total
number of shares which the Corporation is authorized to issue is 50,000
shares of which 40,000 shall be Common Stock and 10,000,000 shall be
Preferred Stock." The numbers 50,000 and 40,000 are incorrect, and need to be
corrected to read 50,000,000 and 40,000,000, respectively, to be consistent
with the number 10,000,000.
ARTICLE FOUR
As corrected, the inaccurate, erroneous, or defective portion of the
document reads as follows: "The total number of shares which the Corporation
is authorized to issue is 50,000,000 shares of which 40,000,000 shall be
Common Stock and 10,000,000 shall be Preferred Stock."
Executed on May 26, 1999.
By: /s/ Timothy P. Halter
-----------------------------------------
Timothy P. Halter, President
<PAGE>
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF
RBS ACQUISITION CORP.
Pursuant to the provisions of Article 4.04 of the Texas Business
Corporation Act, the undersigned corporation (the "Corporation") adopts the
following Articles of Amendment to its Articles of Incorporation.
ARTICLE ONE
The name of the Corporation is RBS ACQUISITION CORP.
ARTICLE TWO
The following amendment to the Articles of Incorporation was adopted by
the shareholders of the Corporation on September 23, 1999:
"ARTICLE ONE
The name of the corporation is MICROWAVE TRANSMISSION SYSTEMS, INC.
ARTICLE TEN
REGISTERED AGENT AND OFFICE
Section 1. Registered Office. The address of the registered office of
the Corporation is 541 Sterling Drive, Richardson, Texas 75081.
Section 2. The name of the registered agent of the Corporation at such
address is Preston D. Spurlin."
The amendment alters or changes Articles One and Ten of the Articles of
Incorporation and the full text of each provision altered is as follows:
"ARTICLE ONE
NAME
The name of the corporation is RBS ACQUISITION CORP.
ARTICLE TEN
REGISTERED AGENT AND OFFICE
Section 1. Registered Office. The address of the initial registered
office of the Corporation is 14160 Dallas Parkway, Suite 950, Dallas, Texas
75240.
<PAGE>
Section 2. Registered Agent. The name of the registered agent of the
Corporation at such address is Timothy P. Halter."
ARTICLE THREE
The number of shares of the Corporation outstanding at the time of such
adoption was 500,084 shares; and the number of shares entitled to vote thereon
was 500,084.
ARTICLE FOUR
The number of shares voted for such amendment was 335,249; and the
number of shares voted against such amendment was 3.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment to the Articles of Incorporation of RBS Acquisition Corp. as of this 5
day of January, 2000.
RBS ACQUISITION CORP.
By: s/Preston D. Spurlin
---------------------------
Name: Preston D. Spurlin
Title: President
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS OF
MICROWAVE TRANSMISSION SYSTEMS, INC.
(A TEXAS CORPORATION)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
ARTICLE I. NAME AND OFFICERS
<S> <C> <C>
1.1 Name ....................................................................................................1
1.2 Registered Office and Agent..............................................................................1
(a) Registered Office...............................................................................1
(b) Registered Agent................................................................................1
(c) Change of Registered Office or Agent............................................................1
1.3 Other Offices ...........................................................................................1
ARTICLE II. SHAREHOLDERS
2.1 Place of Meetings........................................................................................2
2.2 Annual Meetings..........................................................................................2
2.3 Special Meetings.........................................................................................2
2.4 Notice...................................................................................................2
2.5 Voting...................................................................................................3
2.6 Quorum...................................................................................................3
2.7 Requisite Vote...........................................................................................3
2.8 Withdrawal of Quorum.....................................................................................3
2.9 Voting at Meeting........................................................................................4
(a) Voting Power....................................................................................4
(b) Exercise of Voting Power; Proxies...............................................................4
(c) Election of Directors...........................................................................4
2.10 Record Date for Meetings; Closing Transfer Records.......................................................4
2.11 Action Without Meetings..................................................................................5
2.12 Record Date for Action Without Meetings..................................................................5
2.13 Preemptive Rights........................................................................................6
ARTICLE III. DIRECTORS
3.1 Management Powers........................................................................................6
3.2 Number and Qualification.................................................................................6
3.3 Election and Term........................................................................................7
3.4 Voting on Directors......................................................................................7
3.5 Vacancies................................................................................................7
3.6 New Directorships........................................................................................7
3.7 Removal..................................................................................................7
3.8 Meetings.................................................................................................8
(a) Place...........................................................................................8
(b) Annual Meeting..................................................................................8
(c) Regular Meetings................................................................................8
(d) Special Meetings................................................................................8
(e) Notice and Waiver of Notice.....................................................................8
(f) Quorum..........................................................................................8
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(g) Requisite Vote..................................................................................8
3.10 Committees...............................................................................................9
(a) Designation and Appointment.....................................................................9
(b) Members; Alternate Members; Terms...............................................................9
(c) Authority.......................................................................................9
(d) Records.........................................................................................9
(e) Change in Number................................................................................9
(f) Vacancies.......................................................................................9
(g) Removal.........................................................................................9
(h) Meetings.......................................................................................10
(i) Quorum; Requisite Vote.........................................................................10
(j) Compensation...................................................................................10
(k) Action Without Meetings........................................................................10
(l) Responsibility.................................................................................10
3.11 Compensation............................................................................................10
3.12 Maintenance of Records..................................................................................10
3.13 Interested Directors and Officers.......................................................................11
ARTICLE IV. NOTICES
4.1 Method of Notice........................................................................................11
4.2 Waiver..................................................................................................12
ARTICLE V. OFFICERS AND AGENTS
5.1 Designation.............................................................................................12
5.2 Election of Officers....................................................................................12
5.3 Qualifications..........................................................................................12
5.4 Term of Office..........................................................................................12
5.5 Authority...............................................................................................13
5.6 Removal.................................................................................................13
5.7 Vacancies...............................................................................................13
5.8 Compensation............................................................................................13
5.9 Chairman of the Board...................................................................................13
5.10 President...............................................................................................13
5.11 Vice Presidents.........................................................................................14
5.12 Secretary...............................................................................................14
5.13 Assistant Secretaries...................................................................................14
5.14 Treasurer...............................................................................................14
5.15 Assistant Treasurers....................................................................................15
ARTICLE VI. INDEMNIFICATION
6.1 Mandatory Indemnification...............................................................................15
6.2 Determination of Indemnification........................................................................16
6.3 Advance of Expenses.....................................................................................17
6.4 Permissive Indemnification..............................................................................17
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<PAGE>
6.5 Nature of Indemnification...............................................................................17
6.6 Insurance...............................................................................................18
6.7 Notice..................................................................................................18
ARTICLE VII. STOCK CERTIFICATES AND TRANSFER REGULATIONS
7.1 Description of Certificates.............................................................................19
7.2 Delivery................................................................................................19
7.3 Signatures..............................................................................................19
7.4 Issuance of Certificates................................................................................20
7.5 Payment for Shares......................................................................................20
(a) Consideration..................................................................................20
(b) Valuation......................................................................................20
(c) Effect.........................................................................................20
(d) Allocation of Consideration....................................................................20
7.6 Subscriptions...........................................................................................20
7.7 Closing of Transfer Records; Record Date for Action With Meetings.......................................20
7.8 Registered Owners.......................................................................................21
7.9 Lost, Stolen or Destroyed Certificates..................................................................21
(a) Proof of Loss..................................................................................22
(b) Timely Request.................................................................................22
(c) Bond...........................................................................................22
(d) Other Requirements.............................................................................22
7.10 Registration of Transfers...............................................................................22
(a) Endorsement....................................................................................22
(b) Guaranty and Effectiveness of Signature........................................................22
(c) Adverse Claims.................................................................................22
(d) Collection of Taxes............................................................................22
(e) Additional Requirements Satisfied..............................................................22
7.11 Restrictions on Transfer and Legends on Certificates....................................................23
(a) Shares in Classes or Series....................................................................23
(b) Restriction on Transfer........................................................................23
(c) Preemptive Rights..............................................................................23
(d) Unregistered Securities........................................................................23
ARTICLE VIII. GENERAL PROVISIONS
8.1 Distributions...........................................................................................24
(a) Declaration and Payment........................................................................24
(b) Record Date....................................................................................24
8.2 Reserves................................................................................................24
8.3 Books and Records.......................................................................................25
8.4 Annual Statement........................................................................................25
8.5 Contracts and Negotiable Instruments....................................................................25
8.6 Fiscal Year.............................................................................................25
8.7 Corporate Seal..........................................................................................26
8.8 Resignations............................................................................................26
8.9 Amendment of Bylaws.....................................................................................26
iv
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8.10 Construction............................................................................................26
8.11 Telephone Meetings......................................................................................26
8.12 Table of Contents; Captions.............................................................................26
</TABLE>
v
<PAGE>
AMENDED AND RESTATED BYLAWS
OF
MICROWAVE TRANSMISSION SYSTEMS, INC.
(a Texas Corporation)
ARTICLE 1.
NAME AND OFFICES
1.1 NAME. The name of the Corporation is Microwave Transmission
Systems, Inc., hereinafter referred to as the "Corporation."
1.2 REGISTERED OFFICE AND AGENT. The Corporation shall establish,
designate and continuously maintain a registered office and agent in the State
of Texas, subject to the following provisions:
(a) REGISTERED OFFICE. The Corporation shall establish and
continuously maintain in the State of Texas a registered office which
may be, but need not be, the same as its place of business.
(b) REGISTERED AGENT. The Corporation shall designate and
continuously maintain in the State of Texas a registered agent, which
agent may be either an individual resident of the State of Texas whose
business office is identical with such registered office, or a domestic
corporation or a foreign corporation authorized to transact business in
the State of Texas, having a business office identical with such
registered office.
(c) CHANGE OF REGISTERED OFFICE OR AGENT. The Corporation may
change its registered office or change its registered agent, or both,
upon the filing in the Office of the Secretary of State of Texas of a
statement setting forth the facts required by law, and executed for the
Corporation by its President or a Vice President.
1.3 OTHER OFFICES. The Corporation may also have offices at such other
places within and without the State of Texas as the Board of Directors may, from
time to time, determine the business of the Corporation may require.
Page 1
<PAGE>
ARTICLE II.
SHAREHOLDERS
2.1 PLACE OF MEETING. Each meeting of the shareholders of the
Corporation is to be held at the principal offices of the Corporation or at such
other place, either within or without the State of Texas, as may be specified in
the notice of the meeting or in a duly executed waiver of notice thereof.
2.2 ANNUAL MEETINGS. The annual meeting of the shareholders for the
election of Directors and for the transaction of such other business as may
properly come before the meeting shall be held within one hundred twenty (120)
days after the close of the fiscal year of the Corporation on a day during such
period to be selected by the Board of Directors; provided, however, that the
failure to hold the annual meeting within the designated period of time or on
the designated date shall not work a forfeiture or dissolution of the
Corporation.
2.3 SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes, may be called by the Chairman of the Board or the
President. Special meetings of the shareholders shall be called by the President
or Secretary at the request in writing of a majority of the Board of Directors,
or at the request in writing of shareholders owning thirty percent (30%) of the
capital stock of the Corporation issued and outstanding and entitled to vote.
Such request shall state the purpose or purposes of the proposed meeting and the
business to be transacted at any such special meeting of shareholders, and shall
be limited to the purposes stated in the notice therefor.
2.4 NOTICE. Written or printed notice of the meeting stating the place,
day and hour of the meeting, and in the case of a special meeting, the purpose
or purposes for which the meeting is called, shall be delivered not less than
ten (10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the Chairman of the Board or
the President, the Secretary or a majority of the members of the Board of
Directors calling the meeting, to each shareholder entitled to vote at such
meeting as determined in accordance with the provisions of Section 2. 1 0
hereof. If mailed, such notice shall be deemed to be delivered when deposited in
the United States Mail, with postage thereon prepaid, addressed to the
shareholder entitled thereto at his address as it appears on the share transfer
records of the Corporation.
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2.5 VOTING LIST. The officer or agent having charge and custody of the
share transfer records of the Corporation, shall prepare, at least ten (IO) days
before each meeting of shareholders, a complete list of the shareholders
entitled to vote at such meeting, arranged in alphabetical order and containing
the address and number of voting shares held by each, which list shall be kept
on file at the registered office or principal place of business of the
Corporation for a period of not less than ten (10) days prior to such meeting
and shall be subject to inspection by any shareholder at any time during usual
business hours. 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 entire time of the meeting. The original share ledger or transfer
book, or a duplicate thereof, shall be prima facie evidence as to identity of
the shareholders entitled to examine such list or share ledger or transfer book
and to vote at any such meeting of the shareholders.
2.6 QUORUM. The holders of a majority of the shares of the capital
stock issued and outstanding and entitled to vote thereat, represented in person
or by proxy, shall be requisite and shall constitute a quorum at all meetings of
the shareholders for the transaction of business except as otherwise provided by
statute or by the Articles of Incorporation or by these Bylaws. The shareholders
represented in person or by proxy at a meeting of the shareholders at which a
quorum is not present may adjourn the meeting until such time and to such place
as may be determined by a vote of the holders of a majority of the shares
represented in person or by proxy at that meeting. At such adjourned meeting at
which a quorum shall be present or represented, any business may be transacted
which might have been transacted at the meeting as originally notified.
2.7 REQUISITE VOTE. If a quorum is present at any meeting, the vote of
the holders of a majority of the shares of capital stock having voting power,
present in person or represented by proxy, shall determine any question brought
before such meeting, unless the question is one upon which, by express provision
of the Articles of Incorporation or of these Bylaws, a different vote shall be
required or permitted, in which case such express provision shall govem and
control the determination of such question.
2.8 WITHDRAWAL OF QUORUM. If a quorum is present at the time of
commencement of any meeting, the shareholders present at such duly convened
meeting may continue to transact any
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business which may properly come before said meeting until adjournment thereof,
notwithstanding the withdrawal from such meeting of sufficient holders of the
shares of capital stock entitled to vote thereat to leave less than a quorum
remaining.
2.9 VOTING AT MEETING. Voting at meetings of shareholders shall be
conducted and exercised subject to the following procedures and regulations:
(a) VOTING POWER. In the exercise of voting power with respect
to each matter properly submitted to a vote at any meeting of
shareholders, each shareholder of the capital stock of the Corporation
having voting power shall be entitled to one (1) vote for each such
share held in his name on the records of the Corporation, except to the
extent otherwise specified by the Articles of Incorporation.
(b) EXERCISE OF VOTING POWER; PROXIES. At any meeting of the
shareholders, every holder of the shares of capital stock of the
Corporation entitled to vote at such meeting may vote either in person,
or by proxy executed in writing by such shareholder. A telegram, telex,
cablegram, or similar transmission by a shareholder, or a photographic,
photostatic, facsimile, or similar reproduction of a writing executed
by a shareholder, shall be treated as an execution in writing. No proxy
shall be valid after the expiration of eleven (11) months from the date
of its execution, unless otherwise stated therein. A proxy shall be
revocable unless expressly designated therein as irrevocable and
coupled with an interest. Proxies coupled with an interest include the
appointment of proxy of: (a) a pledgee; (b) a person who purchased or
agreed to purchase or owns or holds an option to purchase the shares
voted; (c) a creditor of the Corporation who extended its credit under
terms requiring the appointment; (d) an employee of the Corporation
whose employment contract requires the appointment; or (e) a party to a
voting agreement created under Section B of Article 2.30 of the Texas
Business Corporation Act, as amended. Each proxy shall be filed with
the Secretary of the Corporation prior to or at the time of the
meeting. Voting for directors shall be in accordance with the
provisions of Paragraph (c) below of this Section 2.9. Any vote may be
taken by voice vote or by show of hands unless someone entitled to vote
at the meeting objects, in which case written ballots shall be used.
(c) ELECTION OF DIRECTORS. In all elections of Directors
cumulative voting shall be prohibited.
2.10 RECORD DATE FOR MEETINGS; CLOSING TRANSFER RECORDS. As more
specifically provided in Article 7, Section 7.7 hereof, the Board of Directors
may fix in advance a record date for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such record date
to be not less than ten (10) nor more than sixty (60) days prior to such
meeting, or the Board of Directors may close the share transfer records for such
purpose for a period of not less
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than ten (10) nor more than sixty (60) days prior to such meeting. In the
absence of any action by the Board of Directors, the date upon which the notice
of the meeting is mailed shall be deemed the record date.
2.11 ACTION WITHOUT MEETINGS. Any action permitted or required to be
taken at a meeting of the shareholders of the Corporation may be taken without a
meeting, without prior notice, and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holder or
holders of shares having not less than the minimum number of votes that would be
necessary to take such action at a meeting at which the holders of all shares
entitled to vote on the action were present and voted, and such written consent
shall have the same force and effect as the requisite vote of the shareholders
thereon. Any such executed written consent, or an executed counterpart thereof,
shall be placed in the minute book of the Corporation. 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 sixty (60) days after the date of the earliest dated
consent delivered to the Corporation in the manner required under Section 2.12
hereof, a consent or consents signed by the holders of a majority of the shares
of the capital stock issued and outstanding and entitled to vote on the action
that is the subject of the consent are delivered to the Corporation.
2.12 RECORD DATE FOR ACTION WITHOUT MEETINGS. Unless a record date
shall have previously been fixed or determined by the Board of Directors as
provided in Section 2. 1 0 hereof, 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 (IO) 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 statute or the Articles of Incorporation, 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 of
business, or an officer or agent of the Corporation having custody of the books
in which proceedings of meetings
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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 principal
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
statute, 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 in which the Board of Directors adopts a resolution taking such prior
action.
2.13 PREEMPTIVE RIGHTS. Unless otherwise determined by the Board of
Directors in the manner provided under the Texas Business Corporation Act, as
amended, no holder of shares of capital stock of the Corporation shall, as such
holder, have any right to purchase or subscribe for any capital stock of any
class which the Corporation may issue or sell, whether or not exchangeable for
any capital stock of the Corporation of any class or classes, whether issued out
of unissued shares authorized by the Articles of Incorporation, as amended, or
out of shares of capital stock of the Corporation acquired by it after the issue
thereof; nor, unless otherwise determined by the Board of Directors in the
manner provided under the Texas Business Corporation Act, as amended, shall any
holder of shares of capital stock of the Corporation, as such holder, have any
right to purchase, acquire or subscribe for any securities which the Corporation
may issue or sell whether or not convertible into or exchangeable for shares of
capital stock of the Corporation of any class or classes, and whether or not any
such securities have attached or appurtenant thereto warrants, options or other
instruments which entitle the holders thereof to purchase, acquire or subscribe
for shares of capital stock of any class or classes.
ARTICLE III
DIRECTORS
3.1 MANAGEMENT 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
exercise all such powers of the Corporation and do all such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
Bylaws directed or required to be exercised or done by the shareholders.
3.2 NUMBER AND QUALIFICATION. The Board of Directors shall consist of
not less than one (1) member. Directors need not be residents of the State of
Texas nor shareholders of the
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Corporation. Each Director shall qualify as a Director following election as
such by agreeing to act or acting in such capacity. The number of Directors may
be increased or decreased from time to time by resolution of the Board of
Directors or shareholders without the necessity of a written amendment to the
Bylaws of the Corporation; provided, however, no decrease shall have the effect
of shortening the term of any incumbent Director.
3.3 ELECTION AND TERM. Members of the Board of Directors shall hold
office until the annual meeting of shareholders and until their successors shall
have been elected and qualified. At the annual meeting of the shareholders, the
shareholders entitled to vote in an election of Directors shall elect Directors
to hold office until the next succeeding annual meeting. Each Director shall
hold office for the term for which he is elected, and until his successor shall
be elected and qualified or until his death, resignation or removal, if earlier.
3.4 VOTING ON DIRECTORS. Directors shall be elected by the vote of the
holders of a plurality of the shares entitled to vote in the election of
Directors and represented in person or by proxy at a meeting of shareholders at
which a quorum is present. Cumulative voting in the election of Directors is
expressly prohibited.
3.5 VACANCIES. Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of a majority of the remaining Directors then in
office, though less than a quorum of the Board of Directors. For purposes of
these Bylaws, a "vacancy" shall be defined as an unfilled directorship arising
by virtue of the death, resignation or removal of a Director theretofore duly
elected to serve in such capacity in accordance with the relevant provisions of
these Bylaws. A Director elected to fill a vacancy shall be elected for the
unexpired portion of the term of his predecessor in office.
3.6 NEW DIRECTORSHIPS. Any directorship to be filled by reason of an
increase in the number of Directors actually serving as such shall be filled by
election at an annual meeting of the shareholders or at a special meeting of
shareholders called for that purpose, or 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
(2) such directorships during the period between any two (2) successive annual
meetings of shareholders.
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3.7 REMOVAL. Any Director may be removed either for or without cause at
any duly convened special or annual meeting of shareholders, by the affirmative
vote of a majority in number of shares of the shareholders present in person or
by proxy at any meeting and entitled to vote for the election of such Director,
provided notice of intention to act upon such matter shall have been given in
the notice calling such meeting.
3.8 MEETINGS. The meetings of the Board of Directors shall be held and
conducted subject to the following regulations:
(a) PLACE. Meetings of the Board of Directors of the
Corporation, annual, regular or special, are to be held at the
principal office or place of business of the Corporation, or such other
place, either within or without the State of Texas, as may be specified
in the respective notices, or waivers of notice, thereof.
(b) ANNUAL MEETING. The Board of Directors shall meet each
year immediately after the annual meeting of the shareholders, at the
place where such meeting of the shareholders has been held (either
within or without the State of Texas), for the purpose of organization,
election of officers, and consideration of any other business that may
properly be brought before the meeting. No notice of any kind to either
old or new members of the Board of Directors for such annual meeting
shall be required.
(c) REGULAR MEETINGS. Regular meetings of the Board of
Directors may be held without notice at such time and at such place or
places as shall from time to time be determined and designated by the
Board.
(d) SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board or the President
of the Corporation on notice of two (2) days to each Director either
personally or by mail or by telegram; special meetings shall be called
by the Chairman of the Board or the President or Secretary in like
manner and on like notice on the written request of two (2) Directors.
(e) NOTICE AND WAIVER OF NOTICE. Attendance of a Director at
any meeting shall constitute a waiver of notice of such meeting, except
where a Director attends for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called
or convened. Neither the business to be transacted at, nor the purpose
of, any regular meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting.
(f) QUORUM. At all meetings of the Board of Directors, a
majority of the number of Directors fixed by these Bylaws shall
constitute a quorum for the transaction of business, until a greater
number is required by law or by the Articles of Incorporation. If a
quorum shall not be present at any meeting of. Directors, the Directors
present thereat may adjourn the meeting, from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present.
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(g) REQUISITE VOTE. In the exercise of voting power with
respect to each matter properly submitted to a vote at any meeting of
the Board of Directors, each Director present at such meeting shall
have one (1) vote. The act of a majority of the Directors present at
any meeting at which a quorum is present shall be the act of the Board
of Directors.
3.9 ACTION WITHOUT MEETING . Unless otherwise restricted by the
Articles of Incorporation or these Bylaws, any action required or permitted by
law to be taken at any meetings of the Board of Directors, or any committee
thereof, may be taken without a meeting, if prior to such action a written
consent thereto is signed by all members of the Board or of such committee, as
the case may be, and such written consent is filed in the minutes or proceedings
of the Board of Directors or committee.
3.10 COMMITTEES. Committees designated and appointed by the Board of
Directors shall function subject to and in accordance with the following
regulations and procedures:
(a) DESIGNATION AND APPOINTMENT. The Board of Directors may,
by resolution adopted by a majority of the entire Board, designate and
appoint one or more committees under such name or names and for such
purpose or function as may be deemed appropriate.
(b) MEMBERS: ALTERNATE MEMBERS, TERMS. Each Committee thus
designated and appointed shall consist of two or more of the Directors
of the Corporation, one of whom, in the case of the Executive
Committee, shall be the President. The Board of Directors may designate
one or more of its members as alternate members of any committee, who
may, subject to any limitations imposed by the entire Board, replace
absent or disqualified members at any meeting of that committee. The
members or alternate members of any such committee shall serve at the
pleasure of and subject to the discretion of the Board of Directors.
(c) AUTHORITY. Each Committee, to the extent provided in the
resolution of the Board creating same, shall have and may exercise such
of the powers and authority of the Board of Directors in the management
of the business and affairs of the Corporation as the Board of
Directors may direct and delegate, except, however, those matters which
are required by statute to be reserved unto or acted upon by the entire
Board of Directors.
(d) RECORDS. Each such Committee shall keep and maintain
regular records or minutes of its meetings and report the same to the
Board of Directors when required.
(e) CHANGE IN NUMBER. The number of members or alternate
members of any Committee appointed by the Board of Directors, as herein
provided, may be increased or decreased (but not below two) from time
to time by appropriate resolution adopted by a majority of the entire
Board of Directors.
(f) VACANCIES. Vacancies in the membership of any committee
designated and appointed hereunder shall be filled by the Board of
Directors, at a regular or special meeting of the Board of Directors,
in a manner consistent with the provisions of this Section 3.10.
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(g) REMOVAL. Any member or alternate member of any committee
appointed hereunder may be removed by the Board of Directors by the
affirmative vote of a majority of the entire Board, whenever in its
judgment the best interests of the Corporation will be served thereby.
(h) Meetings. The time, place and notice (if any) of committee
meetings shall be determined by the members of such committee.
(i) QUORUM: REQUISITE VOTE. At meetings of any committee
appointed hereunder, a majority of the number of members designated by
the Board of Directors shall constitute a quorum for the transaction of
business. The act of a majority of the members and alternate members of
the committee present at any meeting at which a quorum is present shall
be the act of such committee, except as otherwise specifically provided
by statute or by the Articles of Incorporation or by these Bylaws. If a
quorum is not present at a meeting of such committee, the members of
such committee present may adjourn the meeting from time to time,
without notice other than an announcement at the meeting, until a
quorum is present.
(j) COMPENSATION. Appropriate compensation for members and
alternate members of any committee appointed pursuant to the authority
hereof may be authorized by the action of a majority of the entire
Board of Directors pursuant to the provisions of Section 3.11 hereof.
(k) ACTION WITHOUT MEETINGS. Any action required or permitted
to be taken at a meeting of any committee may be taken without a
meeting if a consent in writing, setting forth the action so taken, is
signed by all members of such committee. Such consent shall have the
same force and effect as a unanimous vote at a meeting. The signed
consent, or a signed copy, shall become a part of the record of such
committee.
(1) RESPONSIBILITY. Notwithstanding any provision to the
contrary herein, the designation and appointment of a committee and the
delegation of authority to it shall not operate to relieve the Board of
Directors, or any member or alternate member thereof, of any
responsibility imposed upon it or him by law.
3.11 COMPENSATION. By appropriate resolution of the Board of Directors,
the Directors may be reimbursed their expenses, if any, of attendance at each
meeting of the Board of Directors and may be paid a fixed sum (as determined
from time to time by the vote of a majority of the Directors then in office) for
attendance at each meeting of the Board of Directors or a stated salary as
Director. No such payment shall preclude any Director from serving the
Corporation in another capacity and receiving compensation therefor. Members of
special or standing committees may, by appropriate resolution of the Board of
Directors, be allowed similar reimbursement of expenses and compensation for
attending committee meetings.
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3.12 MAINTENANCE OF RECORDS. The Directors may keep the books and
records of the Corporation, except such as are required by law to be kept
within the State, outside the State of Texas or at such place or places as
they may, from time to time, determine.
3.13 INTERESTED DIRECTORS AND OFFICERS. No contract or other
transaction between the Corporation and one or more of its Directors or
officers, or between the Corporation and any firm of which one or more of its
Directors or officers are members or employees, or in which they are
interested, or between the Corporation and any corporation or association of
which one or more of its Directors or officers are shareholders, members,
directors, officers, or employees, or in which they are interested, shall be
void or voidable solely for this reason, solely because of the presence of
such Director or Directors or officer or officers at the meeting of the Board
of Directors of the Corporation, which acts upon, or in reference to, such
contract, or transaction, or solely because his or their votes are counted
for such purpose, if (a) the material facts of such relationship or interest
shall be disclosed or known to the Board of Directors and the Board of
Directors shall, nevertheless in good faith, authorize, approve and ratify
such contract or transaction by a vote of a majority of the Directors
present, such interested Director or Directors to be counted in determining
whether a quorum is present, but not to be counted in calculating the
majority of such quorum necessary to carry such vote; (b) the material facts
of such relationship or interest as to the contract or transaction are
disclosed or are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by the vote of
the shareholders; or (c) the contract or transaction is fair to the
Corporation as of the time it is authorized, approved or ratified by the
Board of Directors, a committee thereof or the shareholders. The provisions
of this Section shall not be construed to invalidate any contract or other
transaction which would otherwise be valid under the common and statutory law
applicable thereto.
ARTICLE IV.
NOTICES
4.1 METHOD OF NOTICE. Whenever under the provisions of the Texas
Business Corporation Act or of the Articles of Incorporation or of these
Bylaws, notice is required to be given to any Director or shareholder, it
shall not be construed to mean personal notice, but such notice may be given
in writing, by mail, addressed to such Director or shareholder, at his
address as it appears on
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the records of the Corporation, with postage thereon prepaid, and such notice
shall be deemed to be given at the time when the same shall be deposited in
the United States Mail. Notice to Directors or shareholders may also be given
by telegram.
4.2 WAIVER. Whenever any notice whatever is required to be given
under the provisions of the Texas Business Corporation Act or under the
provisions of the Articles of Incorporation or these Bylaws, a waiver thereof
in writing signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Attendance by such person or persons, whether in
person or by proxy, at any meeting requiring notice shall constitute a waiver
of notice of such meeting, except as provided in Section 3.8(5) hereof.
ARTICLE V.
OFFICERS AND AGENTS
5.1 DESIGNATION. The officers of the Corporation shall be chosen by
the Board of Directors and shall consist of the offices of:
(a) President and Secretary; and
(b) Such other offices and officers (including a Chairman of
the Board, one or more Vice Presidents and a Treasurer) and assistant
officers and agents as the Board of Directors shall deem necessary.
5.2 ELECTION OF OFFICERS. Each officer designated in Section 5.1(a)
hereof shall be elected by the Board of Directors on the expiration of the
term of office of such officer, as herein provided, or whenever a vacancy
exists in such office. Each officer or agent designated in Section 5.1(b)
above may be elected by the Board at any meeting.
5.3 QUALIFICATIONS. No officer or agent need be a shareholder of the
Corporation or a resident of Texas. No officer or agent is required to be a
Director, except the Chairman of the Board. Any two or more offices may be
held by the same person.
5.4 TERM OF OFFICE. Unless otherwise specified by the Board of
Directors at the time of election or appointment, or by the express
provisions of an employment contract approved by the Board, the term of
office of each officer and each agent shall expire on the date of the first
meeting
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of Directors next following the annual meeting of shareholders each year.
Each such officer or agent shall serve until the expiration of the term of
his office or, if earlier, his death, resignation or removal.
5.5 AUTHORITY. Officers and agents shall have such authority and
perforin such duties in the management of the Corporation as are provided in
these Bylaws or as may be determined by resolution of the Board of Directors
not inconsistent with these Bylaws.
5.6 REMOVAL. Any officer or agent elected or appointed by the Board
of Directors may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation will be served thereby. Such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not
of itself create contract rights.
5.7 VACANCIES. Any vacancy occurring in any office of the
Corporation (by death, resignation, removal or otherwise) shall be filled by
the Board of Directors.
5.8 COMPENSATION. The compensation of all officers and agents of the
Corporation shall be fixed from time to time by the Board of Directors.
5.9 CHAIRMAN OF THE BOARD. If a Chairman of the Board is elected, he
shall be chosen from among the Directors and shall be the chief executive and
principal officer of the Corporation. He shall have the power to call special
meetings of the shareholders and of the Directors for any purpose or
purposes, and he shall preside at all meetings of the shareholders and of the
Board of Directors, unless he shall be absent or unless he shall, at his
election, designate the President to preside in his stead. The Chairman of
the Board shall be responsible for the operations and business affairs of the
Corporation and shall possess all of the powers granted by the Bylaws to the
President, including the power to make and sign contracts and agreements in
the name and on behalf of the Corporation. He shall, in general, have
supervisory power over the President and all other officers and the business
activities of the Corporation, subject to the discretion of the Board of
Directors.
5.10 PRESIDENT. Subject to the supervision of the Chairman of the
Board, or in the absence of the election of a Chairman of the Board, the
President shall be the chief executive officer of the Corporation; shall
preside at all meetings of the shareholders and the Board of Directors; shall
have general and active management of the business of the Corporation and
shall see that all orders and resolutions of the Board of Directors are
carried into effect. The President shall execute bonds,
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mortgages and other contracts requiring a seat, under the seal of the
Corporation, except where required or permitted by law to be otherwise
executed and except where the execution thereof shall be expressly delegated
by the Board of Directors to some other officer or agent of the Corporation.
The President shall perform such other duties and possess such other
authority and powers as the Board of Directors may from time to time
prescribe.
5.11 VICE PRESIDENTS. The Vice President, or if there shall be more
than one, the Vice Presidents in the order determined by a majority vote of
the Board of Directors, shall, in the prolonged absence or disability of the
President (and Chairman of the Board, if one is elected), perform the duties
and exercise the powers of the President and shall perform such other duties
and have such other powers as the Board of Directors may from time to time
prescribe or the chief executive officer may from time to time delegate.
5.12 SECRETARY. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders of the Corporation and
record all proceedings of the meetings of the Corporation and of the Board of
Directors in a book to be maintained for that purpose and shall perform like
duties for the standing committees when required. The Secretary 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, the Chairman of the Board, or
President. He shall have custody of the corporate seal 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.
5.13 ASSISTANT SECRETARIES. The Assistant Secretary, or if there be
more than one, the Assistant Secretaries in the order determined by the Board
of Directors, shall in the absence or disability of the Secretary, 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 may from
time to time prescribe or the chief executive officer may from time to time
delegate.
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5.14 TREASURER. The Treasurer 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. The Treasurer 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 President (and Chairman of the Board,
if one is elected) 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 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 to the Corporation, in case of his death, resignation,
retirement or removal from office, of all books, papers, vouchers, money, and
other property of whatever kind in his possession or under his control owned
by the Corporation. The Treasurer shall perform such other duties and have
such other authority and powers as the Board of Directors may from time to
time prescribe or as the chief executive officer may from time to time
delegate.
5.15 ASSISTANT TREASURERS. The Assistant Treasurer, or, if there
shall be more than one, the Assistant Treasurers in the order deten-nined by
the Board of Directors, shall, in the absence or disability of the Treasurer,
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 may
from time to time prescribe or as the chief executive officer may from time
to time delegate.
ARTICLE VI
INDEMNIFICATION
6.1 MANDATORY INDEMNIFICATION. Each person who was or is made a
party or is threatened to be made a party, or who was or is a witness without
being named a party, to any threatened, pending or completed action, claim,
suit or proceeding, whether civil, criminal, administrative or investigative,
any appeal in such an action, suit or proceeding, and any inquiry or
investigation that could lead to such an action, suit or proceeding (a
"Proceeding"), by reason of the fact that such
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<PAGE>
individual is or was a Director or officer of the Corporation, or while a
Director or officer of the Corporation is or was serving at the request of
the Corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent or similar functionary of another corporation,
partnership, trust, employee benefit plan or other enterprise, shall be
indemnified and held harmless by the Corporation from and against any
judgments, penalties (including excise taxes), fines, amounts paid in
settlement and reasonable expenses (including court costs and attorneys'
fees) actually incurred by such person in connection with such Proceeding if
it is determined that he acted in good faith and reasonably believed (i) in
the case of conduct in his official capacity on behalf of the Corporation
that his conduct was in the Corporation's best interests, (ii) in all other
cases, that his conduct was not opposed to the best interests of the
Corporation, and (iii) with respect to any Proceeding which is a criminal
action, that he had no reasonable cause to believe his conduct was unlawful;
provided, however, that in the event a determination is made that such person
is liable to the Corporation or is found liable on the basis that personal
benefit was improperly received by such person, the indemnification is
limited to reasonable expenses actually incurred by such person in connection
with the Proceeding and shall not be made in respect of any Proceeding in
which such person shall have been found liable for willful or intentional
misconduct in the performance of his duty to the Corporation. The termination
of any Proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contenders or its equivalent, shall not, of itself be determinative
of whether the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any Proceeding which is a criminal action,
had no reasonable cause to believe that his conduct was unlawful. A person
shall be deemed to have been found liable in respect of any claim, issue or
matter only after the person shall have been so adjudged by a court of
competent jurisdiction after exhaustion of all appeals therefrom.
6.2 DETERMINATION OF INDEMNIFICATION. Any indemnification under the
foregoing Section 6.1 (unless ordered by a court of competent jurisdiction)
shall be made by the Corporation only upon a determination that
indemnification of such person is proper in the circumstances by virtue of
the fact that it shall have been determined that such person has met the
applicable standard of conduct. Such determination shall be made (1) by a
majority vote of a quorum consisting of Directors who at the time of the vote
are not named defendants or respondents in the Proceeding; (2) if such
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quorum cannot be obtained, by a majority vote of a committee of the Board of
Directors, designated to act in the matter by a majority of all Directors,
consisting solely of two or more Directors who at the time of the vote are
not named defendants or respondents in the Proceeding; (3) by special legal
counsel (in a written opinion) selected by the Board of Directors or a
committee of the Board by a vote as set forth in Subsection (1) or (2) of
this Section, or, if such quorum cannot be obtained and such committee cannot
be established, by a majority vote of all Directors (in which Directors who
are named defendants or respondents in the Proceeding may participate); or
(4) by the shareholders of the Corporation in a vote that excludes the shares
held by Directors who are named defendants or respondents in the Proceeding.
6.3 ADVANCE OF EXPENSES. Reasonable expenses, including court costs
and attorneys' fees, incurred by a person who was or is a witness or who was
or is named as a defendant or respondent in a Proceeding, by reason of the
fact that such individual is or was a Director or officer of the Corporation,
or while a Director or officer of the Corporation is or was serving at the
request of the Corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another
corporation, partnership, trust, employee benefit plan or other enterprise,
shall be paid by the Corporation at reasonable intervals in advance of the
final disposition of such Proceeding, and without the determination specified
in the foregoing Section 6.2, upon receipt by the Corporation of a written
affirmation by such person of his good faith belief that he has met the
standard of conduct necessary for indemnification under this Article 6, and a
written undertaking by or on behalf of such person to repay the amount paid
or reimbursed by the Corporation if it is ultimately determined that he is
not entitled to be indemnified by the Corporation as authorized in this
Article 6. Such written undertaking shall be an unlimited obligation of such
person and it may be accepted without reference to financial ability to make
repayment.
6.4 PERMISSIVE INDEMNIFICATION. The Board of Directors of the
Corporation may authorize the Corporation to indemnify employees or agents of
the Corporation, and to advance the reasonable expenses of such persons, to
the same extent, following the same determinations and upon the same
conditions as are required for the indemnification of and advancement of
expenses to Directors and officers of the Corporation.
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6.5 NATURE OF INDEMNIFICATION. The indemnification and advancement
of expenses provided hereunder shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under the
Articles of Incorporation, these Bylaws, any agreement, vote of shareholders
or disinterested Directors or otherwise, both as to actions taken in an
official capacity and as to actions taken in any other capacity while holding
such office, shall continue as to a person who has ceased to be a Director,
officer, employee or agent of the Corporation and shall inure to the benefit
of the heirs, executors and administrators of such person.
6.6 INSURANCE. The Corporation shall have the power and authority to
purchase and maintain insurance or another arrangement on behalf of any
person who is or was a Director, officer, employee or agent of the
Corporation, or who is or was serving at the request of the Corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent,
or similar functionary of another foreign or domestic corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan
or other enterprise against any liability, claim, damage, loss or risk
asserted against such person and incurred by such person in any such capacity
or arising out of the status of such person as such, irrespective of whether
the Corporation would have the power to indemnify and hold such person
harmless against such liability under the provisions hereof 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 other arrangement, the Corporation may, for
the benefit of persons indemnified by the Corporation, (1) create a trust
fund; (2) establish any form of self-insurance; (3) secure its indemnity
obligation by grant of a security interest or other lien on the assets of the
Corporation; or (4) establish a letter of credit, guaranty, or surety
arrangement. The insurance or other arrangement may be procured, maintained,
or established within the Corporation or with any insurer or other person
deemed appropriate by the Board of Directors regardless of whether all or
part of the stock or other securities of the insurer or other person are
owned in whole or part by the corporation. In the absence of fraud, the
judgment of the Board of Directors as to the terms and conditions of the
insurance or other
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arrangement and the identity of the insurer or other person participating in
the 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
participating in the approval are beneficiaries of the insurance or
arrangement.
6.7 NOTICE. Any indemnification or advance of expenses to a present
or former director of the Corporation in accordance with this Article 6 shall
be reported in writing to the shareholders of the Corporation with or before
the notice or waiver of notice of the next shareholders' meeting or with or
before the next submission of a consent to action without a meeting and, in
any case, within the next twelve month period immediately following the
indemnification or advance.
ARTICLE VII.
STOCK CERTIFICATES AND TRANSFER REGULATIONS
7.1 DESCRIPTION OF CERTIFICATES. The shares of the capital stock of
the Corporation shall be represented by certificates in the form-n approved
by the Board of Directors and signed in the name of the Corporation by the
President or a Vice President and the Secretary or an Assistant Secretary of
the Corporation, and sealed with the seal of the Corporation or a facsimile
thereof. Each certificate shall state on the face thereof the name of the
holder, the number and class of shares and the designation of the series, if
any, which such certificate represents, the par value of shares covered
thereby or a statement that such shares are without par value, and such other
matters as are required by law. At such time as the Corporation may be
authorized to issue shares of more than one class or any class in series,
every certificate shall set forth upon the face or back of such certificate a
statement of the designations, preferences, limitations and relative rights
of the shares of each class or series authorized to be issued, as required by
the laws of the State of Texas.
7.2 DELIVERY. Every holder of the capital stock in the Corporation
shall be entitled to have a certificate signed in the name of the Corporation
by the President or a Vice President and the Secretary or an Assistant
Secretary of the Corporation, certifying the class of capital stock and the
number of shares represented thereby as owned or held by such shareholder in
the Corporation.
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7.3 SIGNATURES. The signatures of the President, Vice President,
Secretary or Assistant Secretary upon a certificate may be facsimiles. In
case any officer or officers who have signed, or whose facsimile signature or
signatures have been placed upon any such certificate or certificates, shall
cease to serve as such officer or officers of the Corporation, whether
because of death, resignation, removal or otherwise, before such certificate
or certificates are issued and delivered by the Corporation, such certificate
or certificates may nevertheless be adopted by the Corporation and be issued
and delivered with the same effect as though the person or persons who signed
such certificate or certificates or whose facsimile signature or signatures
have been used thereon had not ceased to serve as such officer or officers of
the Corporation.
7.4 ISSUANCE OF CERTIFICATES. Certificates evidencing shares of its
capital stock (both treasury and authorized but unissued) may be issued for
such consideration (not less than par value, except for treasury shares which
may be issued for such consideration) and to such persons as the Board of
Directors may determine from time to. time. Shares shall not be issued until
the full amount of the consideration, fixed as provided by law, has been paid.
7.5 PAYMENT FOR SHARES. Consideration for the issuance of shares
shall be paid, valued and allocated as follows:
(a) CONSIDERATION. The consideration for the issuance of
shares shall consist of money paid, labor done (including services
actually performed for the Corporation), or property (tangible or
intangible) actually received. Neither promissory notes nor the promise
of future services shall constitute payment of consideration for
shares.
(b) VALUATION. In the absence of fraud in the transaction, the
determination of the Board of Directors as to the value of
consideration received shall be conclusive.
(c) EFFECT. When consideration, fixed as provided by law, has
been paid, the shares shall be deemed to have been issued and shall be
considered fully paid and nonassessable.
(d) ALLOCATION OF CONSIDERATION. The consideration received
for shares shall be allocated by the Board of Directors, in accordance
with law, between the stated capital and capital surplus accounts.
7.6 SUBSCRIPTIONS. Unless otherwise provided in the subscription
agreement, subscriptions of shares, whether made before or after organization
of the Corporation, shall be paid in full in such installments and at such
times as shall be determined by the Board of Directors. Any call made by
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the Board of Directors for payment on subscriptions shall be uniform as to
all shares of the same class and series. In case of default in the payment of
any installment or call when payment is due, the Corporation may proceed to
collect the amount due in the same manner as any debt due to the Corporation.
7.7 CLOSING OF TRANSFER RECORDS; RECORD DATE FOR ACTION WITH
MEETINGS. For the purpose of determining shareholders entitled to notice of
or to vote at any meeting of shareholders, or any adjournment thereof, or
entitled to receive a distribution by the Corporation (other than a
distribution involving a purchase or redemption by the Corporation of any of
its own shares) or a share dividend, or in order to make a determination of
shareholders for any other proper purpose (other than determining
shareholders entitled to consent to action by shareholders proposed to be
taken without a meeting of shareholders), the Board of Directors may provide
that share transfer records shall be closed for a stated period of time not
to exceed, in any case, sixty (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 (10) days immediately preceding such meeting. In lieu
of closing the share transfer records, as aforesaid, the Board of Directors
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than sixty (60) days, and
in the case of a meeting of shareholders, not less than ten (10) 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 a distribution (other than a distribution involving a purchase or
redemption by the Corporation of any of its own shares) or a share dividend,
the date on which 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 be applied to any adjournment thereof
except where the determination has been made through the closing of the stock
transfer books and the stated period of closing has expired.
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7.8 REGISTERED OWNERS. Prior to due presentment for registration of
transfer of a certificate evidencing shares of the capital stock of the
Corporation in the manner set forth in Section 7. 1 0 hereof, the Corporation
shall be entitled to recognize the person registered as the owner of such
shares on its records (or the records of its duty appointed transfer agent,
as the case may be) as the person exclusively entitled to vote, to receive
notices and dividends with respect to, and otherwise exercise all rights and
powers relative to such shares; and the Corporation shall not be bound or
otherwise obligated to recognize any claim, direct or indirect, legal or
equitable, to such shares by any other person, whether or not it shall have
actual, express or other notice thereof, except as otherwise provided by the
laws of Texas.
7.9 LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation shall
issue a new certificate in place of any certificate for shares previously
issued if the registered owner of the certificate satisfies the following
conditions:
(a) PROOF OF LOSS. Submits proof in affidavit form
satisfactory to the Corporation that such certificate has been lost,
destroyed or wrongfully taken; and
(b) TIMELY REQUEST. Requests the issuance of a new certificate
before the Corporation has notice that the certificate has been
acquired by a purchaser for value in good faith and without notice of
an adverse claim; and
(e) BOND. Gives a bond in such form, and with such surety or
sureties, with fixed or open penalty, as the Corporation may direct, to
indemnify the Corporation (and its transfer agent and registrar, if
any) against any claim that may be made or otherwise asserted by virtue
of the alleged loss, destruction, or theft of such certificate or
certificates; and
(d) OTHER REQUIREMENTS. Satisfies any other reasonable
requirements imposed by the Corporation.
In the event a certificate has been lost, apparently destroyed or wrongfully
taken, and the registered owner of record fails to notify the Corporation
within a reasonable time after he has notice of such loss, destruction, or
wrongful taking, and the Corporation registers a transfer (in the manner
hereinbelow set forth) of the shares represented by the certificate before
receiving such notification, such prior registered owner of record shall be
precluded from making any claim against the Corporation for the transfer
required hereunder or for a new certificate.
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7.10 REGISTRATION OF TRANSFERS. Subject to the provisions hereof,
the Corporation shall register the transfer of a certificate evidencing
shares of its capital stock presented to it for transfer if:
(a) ENDORSEMENT. Upon surrender of the certificate to the
Corporation (or its transfer agent, as the case may be) for transfer,
the certificate (or an appended stock power) is properly endorsed by
the registered owner, or by his duly authorized legal representative or
attorney-in-fact, with proper written evidence of the authority and
appointment of such representative, if any, accompanying the
certificate; and
(b) GUARANTY AND EFFECTIVENESS OF SIGNATURE. The signature of
such registered owner or his legal representative or attorney-in-fact,
as the case may be, has been guaranteed by a national banking
association or member of the New York Stock Exchange, and reasonable
assurance in a form satisfactory to the Corporation in its sole
discretion is given that such endorsements are genuine and effective;
and
(c) ADVERSE CLAIMS. The Corporation has no notice of an
adverse claim or has otherwise discharged any duty to inquire into such
a claim; and
(d) COLLECTION OF TAXES. Any applicable law (local, state or
federal) relating to the collection of taxes relative to the
transaction has been complied with; and
(e) ADDITIONAL REQUIREMENTS SATISFIED. Such additional
conditions and documentation as the Corporation (or its transfer agent,
as the case may be) shall reasonably require, including without
limitation thereto, the delivery with the surrender of such stock
certificate or certificates of proper evidence of succession,
assignment or other authority to obtain transfer thereof, as the
circumstances may require, and such legal opinions with reference to
the requested transfer as shall be required by the Corporation (or its
transfer agent) pursuant to the provisions of these Bylaws and
applicable law, shall have been satisfied.
7.11 RESTRICTIONS ON TRANSFER AND LEGENDS ON CERTIFICATES.
(a) SHARES IN CLASSES OR SERIES. If the Corporation is
authorized to issue shares of more than one class, the certificate
shall set forth, either on the face or back of the certificate, a full
or summary statement of all of the designations, preferences,
limitations, and relative rights of the shares of each such class and,
if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences
of the shares of each such series so far as the same have been fixed
and determined, and the authority of the Board of Directors to fix and
determine the relative rights and preferences of subsequent series. In
lieu of providing such a statement in full on the certificate, a
statement on the face or back of the certificate may provide that the
Corporation will furnish such information to any shareholder without
charge upon written request to the Corporation at its principal place
of business or registered office and that copies of the information are
on file in the office of the Secretary of State.
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(b) RESTRICTION ON TRANSFER. Any restrictions imposed or
agreed to by the Corporation on the sale or other disposition of its
shares and on the transfer thereof must be copied at length or in
summary form on the face, or so copied on the back and referred to on
the face, of each certificate representing shares to which the
restriction applies. The certificate may however state on the face or
back that such a restriction exists pursuant to a specified document
and that the Corporation will furnish a copy of the document to the
holder of the certificate without charge upon written request to the
Corporation at its principal place of business.
(c) PREEMPTIVE RIGHTS. Any preemptive rights of a shareholder
to acquire unissued or treasury shares of the Corporation which are
limited or denied by the articles of incorporation must be set forth at
length on the face or back of the certificate representing shares
subject thereto. In lieu of providing such a statement in full on the
certificate, a statement on the face or back of the certificate may
provide that the Corporation will furnish such information to any
shareholder without charge upon written request to the Corporation at
its principal place of business and that a copy of such information is
on file in the office of the Secretary of State.
(d) UNREGISTERED SECURITIES. Any security of the Corporation,
including, among others, any certificate evidencing shares of the
Common Stock or warrants to purchase Common Stock of the Corporation,
which is issued to any person without registration under the Securities
Act of 1933, as amended, or the Blue Sky laws of any state, shall not
be transferable until the Corporation has been furnished with a legal
opinion of counsel with reference thereto, satisfactory in form and
content to the Corporation and its counsel, to the effect that such
sale, transfer or pledge does not involve a violation of the Securities
Act of 1933, as amended, or the Blue Sky laws of any state having
jurisdiction. The certificate representing the security shall bear
substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR THE PRIVATE
INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE OFFERED, SOLD OR
TRANSFERRED UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) THE CORPORATION SHALL
HAVE RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION AND
ITS COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED OFFER, SALE OR TRANSFER.
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ARTICLE VIII.
GENERAL PROVISIONS
8.1 DISTRIBUTIONS. Subject to the provisions of the Texas Business
Corporation Act, as amended, and the Articles of Incorporation, distributions
of the Corporation shall be declared and paid pursuant to the following
regulations:
(a) DECLARATION AND PAYMENT. Distributions on the issued and
outstanding shares of capital stock of the Corporation may be declared
by the Board of Directors at any regular or special meeting and may be
paid in cash, in property, or in shares of capital stock. Such
declaration and payment shall be at the discretion of the Board of
Directors.
(b) RECORD DATE. The Board of Directors may fix in advance a
record date for the purpose of determining shareholders entitled to
receive payment of any distribution, such record date to be not more
than sixty (60) days prior to the payment date of such distribution, or
the Board of Directors may close the stock transfer books for such
purpose for a period of not more than sixty (60) days prior to the
payment date of such distribution. In the absence of action by the
Board of Directors, the date upon which the Board of Directors adopts
the resolution declaring such distribution shall be the record date.
8.2 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 Directors from time to time, in their discretion, think proper to provide
for contingencies, or to equalize distributions, or to repair or maintain any
property of the Corporation, or for such other purposes as the Directors
shall think beneficial to the Corporation, and the Directors may modify or
abolish any such reserve in the manner in which it was created.
8.3 BOOKS AND RECORDS. The Corporation shall maintain books and
records of account and shall prepare and maintain minutes of the proceedings
of its shareholders, its Board of Directors and each committee of its Board
of Directors. The Corporation shall keep at its registered office or
principal place of business, or at the office of its transfer agent or
registrar, 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 of transfer. Such records shall
contain the names and addresses of all past and present shareholders of the
Corporation and the number and class of shares issued by the Corporation held
by each of them.
8.4 ANNUAL STATEMENT. The Board of Directors shall present at or
before each annual meeting of shareholders a full and clear statement of the
business and financial condition of the Corporation, including a reasonably
detailed balance sheet and income statement under current date.
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8.5 CONTRACTS AND NEGOTIABLE INSTRUMENTS. Except as otherwise
provided by law or these Bylaws, any contract or other instrument relative to
the business of the Corporation may be executed and delivered in the name of
the Corporation and on its behalf by the Chairman of the Board, the Chief
Executive Officer, or the Chief Operating Officer, if any, or the President
of the Corporation. The Board of Directors may authorize any other officer or
agent of the Corporation to enter into any contract or execute and deliver
any contract in the name and on behalf of the Corporation, and such authority
may be general or confined to specific instances as the Board of Directors
may determine by resolution. All bills, notes, checks or other instruments
for the payment of money shall be signed or countersigned by such officer,
officers, agent or agents and in such manner as are permitted by these Bylaws
and/or as, from time to time, may be prescribed by resolution of the Board of
Directors. Unless authorized to do so by these Bylaws or by the Board of
Directors, no officer, agent or employee shall have any power or authority to
bind the Corporation by any contract or engagement, or to pledge its credit,
or to render it liable pecuniarily for any purpose or to any amount.
8.6 FISCAL YEAR. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
8.7 CORPORATE SEAL. The Corporation seal shall be in such form as
may be determined by the Board of Directors. The seal may be used by causing
it or a facsimile thereof to be impressed or affixed or in any manner
reproduced.
8.8 RESIGNATIONS. Any director, officer or agent may resign his
office or position with the Corporation by delivering written notice thereof
to the President or the Secretary. Such resignation shall be effective at the
time specified therein, or immediately upon delivery if no time is specified.
Unless otherwise specified therein, an acceptance of such resignation shall
not be a necessary prerequisite of its effectiveness.
8.9 AMENDMENT OF BYLAWS. These Bylaws may be altered, amended, or
repealed and new Bylaws adopted at any meeting of the Board of Directors at
which a quorum is present, by the affirmative vote of a majority of the
Directors present at such meeting, provided notice of the proposed
alteration, amendment, or repeal be contained in the notice of such meeting.
8.10 CONSTRUCTION. Whenever the context so requires herein, the
masculine shall include the feminine and neuter, and the singular shall
include the plural, and conversely. If any portion or provision of these
Bylaws shall be held invalid or inoperative, then, so far as is reasonable and
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possible: (1) the remainder of these Bylaws shall be considered valid and
operative, and (2) effect shall be given to the intent manifested by the
portion or provision held invalid or inoperative.
8.11 TELEPHONE MEETINGS. Shareholders, Directors, or members of any
committee may hold any meeting of such shareholders, Directors or committee
by means of conference telephone or similar communications equipment which
permits all persons participating in the meeting to hear each other and
actions taken at such meetings shall have the same force and effect as if
taken at a meeting at which persons were present and voting in person. The
Secretary of the Corporation shall prepare a memorandum of the action taken.
8.12 TABLE OF CONTENTS: CAPTIONS. The table of contents and captions
used in these Bylaws have been inserted for administrative convenience only
and do not constitute matter to be construed in interpretation.
IN DUE CERTIFICATION WHEREOF, the undersigned, being the President
of the Corporation confirms the adoption and approval of the foregoing
Amended and Restated Bylaws, effective as of March 15, 2000.
/s/ Preston David Spurlin
-------------------------------------
Preston David Spurlin
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EXHIBIT 6.1
* * * * *
STOCK EXCHANGE AGREEMENT
BY AND AMONG
MICROWAVE TRANSMISSION SYSTEMS, INC.,
THE SOLE SHAREHOLDER OF MICROWAVE TRANSMISSION SYSTEMS, INC.,
RBS ACQUISITION CORP.
AND
HALTER FINANCIAL GROUP, INC.
* * * * *
AUGUST 6, 1999
<PAGE>
TABLE OF CONTENTS
ARTICLE/SECTION PAGE
ARTICLE 1 - THE EXCHANGE ................................................1
1.1 The Exchange ........................................................1
1.2 Closing .............................................................1
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF MTS .......................2
2.1 Organization ........................................................2
2.2 Capitalization ......................................................2
2.3 Certain Corporate Matters ...........................................2
2.4 Authority Relative to this Agreement ................................2
2.5 Consents and Approvals; No Violations ...............................2
2.6 Disclosure ..........................................................3
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER ...........3
3.1 Ownership of the MTS Shares .........................................3
3.2 Authority Relative to this Agreement ................................3
3.3 Consents and Approvals; No Violations ...............................3
3.4 Disclosure of Information ...........................................4
3.5 Investment Experience ...............................................4
3.6 Restricted Securities ...............................................4
3.7 Legend ..............................................................4
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF THE AND HFG ...............5
4.1 Organization ........................................................5
4.2 Capitalization ......................................................5
4.3 Certain Corporate Matters ...........................................5
4.4 Authority Relative to this Agreement ................................6
4.5 Consents and Approvals; No Violations ...............................6
4.6 Subsidiaries ........................................................6
4.7 Financial Statements ................................................6
4.8 Events Subsequent to Financial Statements ...........................7
4.9 Undisclosed Liabilities .............................................7
4.10 Tax Matters ........................................................8
4.11 Real Property ......................................................8
4.12 Books and Records ..................................................8
4.13 Questionable Payments ..............................................8
4.14 Environmental Matters ..............................................9
4.15 Intellectual Property .............................................11
4.16 Insurance .........................................................11
4.17 Contracts .........................................................11
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4.18 Litigation ........................................................12
4.19 Employees .........................................................12
4.20 Employee Benefit Plans ............................................12
4.21 Legal Compliance ..................................................12
4.22 Broker's Fees .....................................................12
4.23 Disclosure ........................................................12
4.24 Powers of Attorney ................................................13
4.25 Guaranties ........................................................13
ARTICLE 5 - CONDUCT OF BUSINESS PENDING THE CLOSING ....................13
5.1 Conduct of Business by the Company Pending the Closing ............13
5.2 Other Actions .....................................................14
ARTICLE 6 - ADDITIONAL AGREEMENTS ......................................14
6.1 Access and Information ............................................14
6.2 Litigation Support ................................................14
6.3 Proxy Statement ...................................................15
6.4 Meeting of Shareholders ...........................................15
6.5 Certain Information ...............................................15
6.6 Press Releases ....................................................15
ARTICLE 7 - CONDITIONS TO CLOSING ......................................15
7.1 Conditions to Obligations of Each Party to Effect the Closing ......15
7.2 Additional Conditions to MTS's Obligations .........................16
7.3 Additional Conditions to the Obligations of the Company and HFG ....17
ARTICLE 8 - TERMINATION ................................................18
8.1 Termination by Mutual Consent ......................................18
8.2 Automatic Termination ..............................................18
8.3 Termination by Any Party ...........................................18
8.4 Material Breach ....................................................19
8.5 Effect of Termination ..............................................19
ARTICLE 9 - SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION ............19
9.1 Survival ...........................................................19
9.2 Indemnification by HFG .............................................19
9.3 Indemnification by MTS and the Post-Closing Company ................19
9.4 Conditions of Indemnification ......................................19
9.5 Remedies Not Exclusive .............................................20
ARTICLE 10 - GENERAL PROVISIONS ........................................21
10.1 Notices ...........................................................21
10.2 Interpretation ....................................................21
10.3 Severability ......................................................21
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10.4 Miscellaneous .....................................................21
10.5 Separate Counsel ..................................................21
10.6 Governing Law .....................................................21
10.7 Counterparts ......................................................21
10.8 Amendment .........................................................22
10.9 Parties In Interest: No Third Party Beneficiaries .................22
10.10 Waiver ...........................................................22
10.11 Expenses .........................................................22
10.12 Construction .....................................................22
10.13 Arbitration of Disputes ..........................................22
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STOCK EXCHANGE AGREEMENT
THIS STOCK EXCHANGE AGREEMENT, dated as of August 6, 1999 (this
"Agreement"), is made and entered into by and among Microwave Transmission
Systems, Inc., a Texas corporation ("MTS"), Preston D. Spurlin, the sole
shareholder of MTS (the "Shareholder"), RBS Acquisition Corp., a Texas
corporation (the "Company") and Halter Financial Group, Inc., a Texas
corporation ("HFG").
WHEREAS, the respective Boards of Directors of MTS, the Company and HFG
have adopted resolutions approving and adopting the proposed stock exchange (the
"Exchange") upon the terms and conditions hereinafter set forth in this
Agreement, as contemplated by that Consulting Agreement dated July 29, 1999 by
and between HFG, MTS and the Company (the "Consulting Agreement");
WHEREAS, the Shareholder holds all of the issued and outstanding
shares of common stock of MTS in the amount set forth on Exhibit "A" hereto
(the "MTS Shares"), and the Shareholder desires to participate in the
Exchange;
WHEREAS, MTS will enter into this Agreement for the purpose of
evidencing its consent to the consummation of the Exchange and for the purpose
of making certain representations, warranties, covenants and agreements; and
WHEREAS, HFG, which is affiliated with the Company, will enter into
this Agreement for the purpose of evidencing its consent to the consummation of
the Exchange and for the purpose of making certain representations, warranties,
covenants and agreements.
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE 1
THE EXCHANGE
1.1 The Exchange. Upon the terms and subject to the conditions hereof,
at the Closing (as hereinafter defined) the Shareholder will sell, convey,
assign, transfer and deliver to the Company stock certificates representing the
number of MTS Shares set forth opposite his name on Exhibit "A" hereto, and the
Company will issue to the Shareholders in exchange for the MTS Shares, stock
certificate(s) representing an aggregate of 5,750,000 shares of its common stock
(the "Company Shares") as set forth on Exhibit "A" hereto.
1.2 Closing. The closing of the Exchange (the "Closing") shall take
place on or before 10:00 a.m., local time, at the offices of the Company located
at 14160 Dallas Parkway, Suite 950, Dallas, Texas 75240 on September 23, 1999,
or as soon as the conditions set forth in Article 7 have been satisfied or
waived or as soon as practicable thereafter. Such date is herein referred to as
the "Closing Date." Subject to the provisions of Article 7 and Article 8, the
failure to consummate the Exchange on the date and time determined pursuant to
this Section 1.2 will not result in the termination of this Agreement and will
not relieve any party of any obligation hereunder.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF MTS
MTS hereby represents and warrants to the Company and HFG as follows:
2.1 Organization. MTS has been duly incorporated, is validly existing
as a corporation and is in good standing under the laws of its state of
incorporation, and has the requisite corporate power to carry on its business as
now conducted.
2.2 Capitalization. The authorized capital stock of MTS consists of
1,000,000 shares of common stock, $1.00 par value, of which 1,000 shares are
issued and outstanding. All of the issued and outstanding shares of common stock
are duly authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. Except as set forth on Schedule 2.2, there are no outstanding
or authorized options, rights, warrants, calls, convertible securities, rights
to subscribe, conversion rights or other agreements or commitments to which MTS
is a party or which are binding upon MTS providing for the issuance or transfer
by MTS of additional shares of its capital stock, and MTS has not reserved any
shares of its capital stock for issuance, nor are there any outstanding stock
option rights, phantom equity, profit participation or similar rights,
contracts, arrangements or commitments. There are no voting trusts or any other
agreements or understandings with respect to the voting of MTS's capital stock.
2.3 Certain Corporate Matters. MTS is duly qualified to do business as
a foreign corporation and is in good standing in each jurisdiction in which the
ownership of its properties, the employment of its personnel or the conduct of
its business requires it to be so qualified, except where such failure would not
have a material adverse effect on MTS's financial condition, results of
operations or business. MTS has full corporate power and authority and all
authorizations, licenses and permits necessary to carry on the business in which
it is engaged and to own and use the properties owned and used by it.
2.4 Authority Relative to this Agreement. MTS has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution, delivery and performance of this Agreement
by MTS and the consummation by MTS of the transactions contemplated hereby have
been duly authorized by the Board of Directors of MTS and no other actions on
the part of MTS are necessary to authorize this Agreement or the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by MTS and constitutes a valid and binding agreement of MTS,
enforceable against MTS in accordance with its terms, except as such enforcement
may be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights generally or by general principles of equity.
2.5 Consents and Approvals; No Violations. Except for applicable
requirements of federal securities laws and state securities or blue sky laws
and except as set forth on Schedule 2.5, no filing with, and no permit,
authorization, consent or approval of, any third party, public body or authority
is necessary for the consummation by MTS of the transactions contemplated by
this Agreement. Neither the execution and delivery of this Agreement by MTS nor
the consummation by MTS of the transactions contemplated hereby, nor compliance
by MTS with any of the provisions
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hereof, will (a) conflict with or result in any breach of any provisions of the
Articles of Incorporation or Bylaws of MTS, (b) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which MTS or any of its subsidiaries is a party or by which any of them or their
properties or assets may be bound or (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to MTS, any of its subsidiaries
or any of their properties or assets, except in the case of clauses (b) and (c)
for violations, breaches or defaults which are not in the aggregate material to
MTS and its subsidiaries taken as a whole.
2.6 Disclosure. The representations and warranties and statements of
fact made by MTS in this Agreement are, as applicable, accurate, correct and
complete and do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained herein not false or misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder severally represents and warrants, as to itself and its
respective ownership in the MTS Shares, as follows:
3.1 Ownership of the MTS Shares. The Shareholder owns, beneficially and
of record, good and marketable title to the MTS Shares set forth opposite his
name on Exhibit "A" hereto, free and clear of all security interests, liens,
adverse claims, encumbrances, equities, proxies, options or Shareholders'
agreements. At the Closing, the Shareholder will convey to the Company good and
marketable title to the MTS Shares set forth opposite his name on Exhibit "A"
hereto, free and clear of any security interests, liens, adverse claims,
encumbrances, equities, proxies, options, shareholders' agreements or
restrictions.
3.2 Authority Relative to this Agreement. The execution, delivery and
performance of this Agreement by the Shareholder and the consummation by the
Shareholder of the transactions contemplated hereby have been duly authorized by
the Shareholder, and no other actions on the part of the Shareholder are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the
Shareholder and constitutes a valid and binding agreement of the Shareholder,
enforceable against the Shareholder in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity.
3.3 Consents and Approvals; No Violations. Except for applicable
requirements of the federal securities laws and the state securities or blue sky
laws, no filing with, and no permit, authorization, consent or approval of, any
public body or authority is necessary for the consummation by the Shareholder of
the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by the Shareholder nor the consummation by the
Shareholder of the transactions contemplated hereby, nor compliance by the
Shareholder with any
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of the provisions hereof, will (a) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which the
Shareholder is a party or by which the Shareholder or its properties may be
bound or (b) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Shareholder, except in the case of clauses (a) and
(b) for violations, breaches or defaults which are not in the aggregate material
to the Shareholder.
3.4 Disclosure of Information. The Shareholder acknowledges that he has
been furnished such information regarding the management, financial condition,
results of operations and business of the Company necessary to make an informed
decision regarding the Exchange. The Shareholder has had an opportunity to ask
questions of and receive answers regarding the Company and its financial
condition, results of operations or business and the terms and conditions of the
Exchange.
3.5 Investment Experience. The Shareholder acknowledges that he is able
to fend for himself, can bear the economic risk of its investment in the Company
Shares, and has such knowledge and experience in financial and business matters
that he is capable of evaluating the merits and risks of an investment in the
Company Shares. The Shareholder is acquiring the Company Shares for his own
account, for investment purposes only and not with a view to further
distribution thereof.
3.6 Restricted Securities. The Shareholder acknowledges that the
Company Shares will not be registered pursuant to the Securities Act of 1933, as
amended (the "Securities Act") or any applicable state securities laws, that the
Company Shares will be characterized as "restricted securities" under federal
securities laws, and that under such laws and applicable regulations the Company
Shares cannot be sold or otherwise disposed of without registration under the
Securities Act or an exemption therefrom. In this regard, the Shareholder is
familiar with Rule 144 promulgated under Securities Act, as currently in effect,
and understands the resale limitations imposed thereby and by the Securities
Act. Stop transfer instructions may be issued to the transfer agent (or a
notation may be made in the appropriate records of the Company) in connection
with the Company Shares.
3.7 Legend. The Shareholder acknowledges that the certificates
representing the Company Shares shall each conspicuously set forth on the face
or back thereof a legend in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND HFG
The Company and HFG hereby jointly and severally represent and warrant
to MTS and the Shareholder as follows:
4.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
and has the requisite corporate power to carry on its business as now conducted.
4.2 Capitalization. The Company's authorized capital stock consists of
40,000,000 shares of common stock, par value $.001 per share (the "Company
Common Stock"), of which 500,084 shares are issued and outstanding and
10,000,000 shares of preferred stock, par value $.001 per share, of which none
are presently issued and outstanding. All issued and outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights and are held of record by the
Company's shareholders as set forth in Schedule.
4.2 When issued, the Company Shares will be duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights, there are no
outstanding or authorized options, rights, warrants, calls, convertible
securities, rights to subscribe, conversion rights or other agreements or
commitments to which the Company or HFG are parties or which are binding upon
the Company or HFG providing for the issuance by the Company or transfer by the
Company or HFG of additional shares of the Company's capital stock and the
Company has not reserved any shares of its capital stock for issuance, nor are
there any outstanding stock option rights, phantom equity, profit participation
or similar rights, contracts, arrangements or commitments. There are no voting
trusts or any other agreements or understandings with respect to the voting of
the Company's capital stock.
4.3 Certain Corporate Matters. The Company is duly licensed or
qualified to do business and is in good standing as a foreign corporation in
every jurisdiction in which the character of the Company's properties or nature
of the Company's business requires it to be so licensed or qualified other than
such jurisdictions in which the failure to be so licensed or qualified does not,
or insofar as can reasonably be foreseen, in the future will not, have a
material adverse effect on its financial condition, results of operations or
business. The Company has full corporate power and authority and all
authorizations, licenses and permits necessary to carry on the business in which
it is engaged or in which it proposes presently to engage and to own and use the
properties owned and used by it. The Company has delivered to MTS true, accurate
and complete copies of its Articles of Incorporation and Bylaws, which reflect
all restatements of and amendments made thereto at any time prior to the date of
this Agreement. The records of meetings of the shareholders and Board of
Directors of the Company are complete and correct in all material respects. The
stock records of the Company and the shareholder lists of the Company that the
Company has previously furnished to MTS are complete and correct in all material
respects and accurately reflect the record ownership and the beneficial
ownership of all the outstanding shares of the Company's capital stock and any
other outstanding securities issued by the Company, except as may be provided in
the Plan. The Company is not in default under or in violation of any provision
of its Articles of Incorporation, Bylaws or the Plan (as hereinafter defined) in
any material respect. The Company is not in any
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material default or in violation of any restriction, lien, encumbrance,
indenture, contract, lease, sublease, loan agreement, note or other obligation
or liability by which it is bound or to which any of its assets is subject.
4.4 Authority Relative to this Agreement. Subject to approval by the
Company's Shareholders, each of the Company and HFG has the requisite corporate
power and authority to enter into this Agreement and carry out its obligations
hereunder. The execution, delivery and performance of this Agreement by the
Company and HFG and the consummation of the transactions contemplated hereby
have been duly authorized by the Boards of Directors of the Company and HFG and
except for the approval by the Company's Shareholders, no other actions on the
part of the Company or HFG are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and HFG and constitutes a valid and
binding obligation of the Company and HFG, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency or
other similar laws affecting the enforcement of creditors' rights generally or
by general principles of equity.
4.5 Consents and Approvals; No Violations. Except for approval by the
CompanyAEs shareholders and applicable requirements of federal securities laws
and state securities or blue sky laws, no filing with, and no permit,
authorization, consent or approval of, any third party, public body or authority
is necessary for the consummation by the Company and HFG of the transactions
contemplated by this Agreement. Neither the execution and delivery of this
Agreement by the Company and HFG nor the consummation by the Company or HFG of
the transactions contemplated hereby, nor compliance by the Company or HFG with
any of the provisions hereof, will (a) conflict with or result in any breach of
any provisions of the Articles of Incorporation, Bylaws, or the Plan of the
Company or HFG, (b) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which either the
Company or HFG is a party or by which either of them or any of their properties
or assets may be bound or (c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or HFG, or any of their
properties or assets, except in the case of clauses (b) and (c) for violations,
breaches or defaults which are not in the aggregate material to the Company or
HFG taken as a whole.
4.6 Subsidiaries. The Company does not own, directly or indirectly, any
of the capital stock of any other corporation or any equity, profit sharing,
participation or other interest in any corporation, partnership, joint venture
or other entity.
4.7 Financial Statements. The Company has delivered to MTS audited
financial statements for the period from February 28, 1997 through June 30, 1998
and for the fiscal year ended June 30, 1999, respectively (collectively, the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods covered thereby and present fairly the financial
condition of the Company as of such dates and the results of its operations and
changes in cash flows for such periods.
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4.8 Events Subsequent to Financial Statements. Since June 30, 1999,
there has not been any material adverse change in the business, financial
condition, operations, results of operations or future prospects. Without
limiting the generality of the foregoing, since that date there has not been:
(a) Any sale, lease, transfer, license, sublicense or
assignment of any assets, tangible or intangible, of the Company;
(b) Any damage, destruction or property loss, whether or not
covered by insurance, affecting adversely the properties or business of
the Company;
(c) Any declaration or setting aside or payment of any
dividend or distribution with respect to the shares of capital stock of
the Company or any redemption, purchase or other acquisition of any
such shares;
(d) Any subjection to any lien or security interest on any of
the assets, tangible or intangible, of the Company;
(e) Any capital expenditures or capital investment, issuance
of any note, bond or other incurrence of indebtedness, guarantee or
liability or assumption of obligations by the Company;
(f) Any cancellation, compromise, waiver or release by the
Company of any right of any material value;
(g) Any compensation or benefits paid to officers or directors
of the Company;
(h) Any change made or authorized in the Articles of
Incorporation or Bylaws of the Company;
(i) Any loan to or other transaction with any officer,
director or shareholder of the Company giving rise to any claim or
right of the Company against any such person or of such person against
the Company;
(j) Any employment contract or collective bargaining
agreement, written or oral, or modification in the terms of any
existing contract or agreement;
(k) Any promise or pledge to make any charitable or other
capital contribution; or
(l) Any commitment to any of the foregoing.
4.9 Undisclosed Liabilities. Except as otherwise disclosed under this
Agreement and as reflected on the Financial Statements, the Company has no
material liability or obligation whatsoever, either direct or indirect, matured
or unmatured, accrued, absolute, contingent or otherwise.
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4.10 Tax Matters.
(a) The Company has (and as of the Closing Date will have)
duly filed all material federal, state, local and foreign tax returns
required to be filed by or with respect to it with the Internal Revenue
Service or other applicable taxing authority, and no extensions with
respect to such tax returns have (or as of the Closing Date will have)
been requested or granted;
(b) The Company has (and as of the Closing Date will have)
paid, or adequately reserved against in the Financial Statements, all
material taxes due, or claimed by any taxing authority to be due, from
or with respect to it;
(c) To the best knowledge of the Company and HFG, there has
been no material issue raised or material adjustment proposed (and none
is pending) by the Internal Revenue Service or any other taxing
authority in connection with any of the tax returns and no claim has
been made (and none is pending) by an authority in a jurisdiction where
the Company does not file tax returns that it is or may be subject to
taxation by that jurisdiction;
(d) No waiver or extension of any statute of limitations as to
any material federal, state, local or foreign tax matter has been given
by or requested from the Company; and
(e) The Company has not filed a consent under Section 341 (f)
of the Internal Revenue Code of 1986, as amended. The Company has not
made any payment and is not obligated to make any payments that would
not be deductible under Section 280G. The Company has not been a United
States real property holding corporation within the meaning of Section
897(c)(2) during the applicable period specified in Section
897(c)(1)(A)(ii).
For the purposes of this Section 4.10, a tax is due (and must therefore
either be paid or adequately reserved against in the Financial Statements) only
on the last date payment of such tax can be made without interest or penalties,
whether such payment is due in respect of estimated taxes, withholding taxes,
required tax credits or any other tax.
4.11 Real Property. The Company does not own or lease any
real property.
4.12 Books and Records. The books and records of the Company
fairly reflect the transactions to which the Company is a party or by which
its properties are bound.
4.13 Questionable Payments. Neither the Company nor HFG nor any
employee, agent or representative of either of them has, directly or
indirectly, made any bribes, kickbacks, illegal payments or illegal political
contributions using Company funds or made any payments from the Company's
funds to governmental officials for improper purposes or made any illegal
payments from the Company's funds to obtain or retain business.
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4.14 Environmental Matters.
(a) Definitions. For the purpose of this Agreement, the
following terms shall have the meaning herein specified:
(i) "Governmental Authority" shall mean the
United States, each state, each county,
each city and each other political
subdivision in which the Company's
business is located, and any court,
political subdivision, agency or
instrumentality with jurisdiction over
the Company's business.
(ii) "Environmental Laws" shall mean (A) the
Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C.A.
9601 et seq. ("CERCLA"), (B) the Resource
Conservation and Recovery Act, as amended by
the Hazardous and Solid Waste Amendment of
1984, 42 U.S.C.A. 6901 et seq. ("RCRA"), (C)
the Clean Air Act, 42 U.S.C.A. 7401 et seq.,
(D) the Federal Water Pollution Control Act,
as amended, 33 U.S.C.A. 1251 et seq., (E)
the Toxic Substances Control Act, 15
U.S.C.A. 2601 et seq., (F) all applicable
state laws, and (G) all other laws and
ordinances relating to municipal waste,
solid waste, air pollution, water pollution
and/or the handling, discharge, disposal or
recovery of on-site or off-site hazardous
substances or materials, as each of the
foregoing has been or may hereafter be
amended from time to time.
(iii) "Hazardous Materials" shall mean, among
others, (A) any "hazardous waste" as defined
by RCRA, and regulations promulgated
thereunder; (B) any "hazardous substance" as
defined by CERCLA, and regulations
promulgated thereunder; (C) any "toxic
pollutant" as defined in the Federal Water
Pollution Prevention and Control Act, as
amended, 33 U.S.C. 1251 et seq., (commonly
known as "CWA" for "Clean Water Act"), and
any regulations thereunder; (D) any
"hazardous air pollutant" as defined in the
Air Pollution Prevention and Control Act, as
amended, 42 U.S.C. 7401 et seq. (commonly
known as "CAA" for "Clean Air Act") and any
regulations thereunder; (E) asbestos; (F)
polychlorinated biphenyls; (G) any substance
the presence of which on the Business
Location (as hereinafter defined) is
prohibited by any Environmental Laws; and
(H) any other substance which is regulated
by any Environmental Laws.
(iv) "Hazardous Materials Contamination" shall
mean the presence of Hazardous Materials in
the soil, groundwater, air or any other
media regulated by the Environmental Laws
on, under or around the Company's facilities
at levels or concentration which trigger any
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requirement under the Environmental Laws to
remove, remediate, mitigate, abate or
otherwise reduce the level or concentration
of the Hazardous Materials. The term
"Hazardous Materials Contamination" does not
include the presence of Hazardous Materials
in process tanks, lines, storage or reactor
vessels, delivery trucks or any other
equipment or containers, which Hazardous
Materials are used in the manufacture,
processing, distribution, use, storage,
sale, handling, transportation, recycling,
reuse or disposal of the products that were
manufactured and/or distributed by the
Company.
(b) Representations and Warranties. Based on the foregoing,
the Company and HFG jointly and severally represent and warrant that:
(i) To the best knowledge of the Company and
HFG, there has been no material failure by
the Company to comply with all applicable
requirements of Environmental Laws relating
to the Company and the Company's operations,
and neither the Company nor HFG is aware of
any facts or circumstances which could
materially impair such compliance with all
applicable Environmental Laws.
(ii) Neither the Company nor HFG has, through the
Closing Date, received notice from any
Governmental Authority or any other person
of any actual or alleged violation of any
Environmental Laws, nor is any such notice
anticipated.
(iii) Prior to the Closing Date, neither the
Company nor HFG will do or permit anything
that will cause the Company to be in
material violation of any requirements of
Environmental Laws, or do or permit a
violation of Environmental Laws that would
materially and adversely affect the
financial condition of the Company or
subject the Company to any enforcement
actions under any Environmental Laws.
(iv) To the best knowledge of the Company,
Environmental Laws do not require that any
permits, licenses or similar authorizations
to construct, occupy or operate any
equipment or facilities used in the conduct
of the Company's business.
(v) Neither the Company nor HFG has received any
notices, whether from a Governmental
Authority or some other third party, that
Hazardous Material Contamination exists at
the Business Location or at any other
location, property or facility owned or
operated by the Company in the conduct of
its business nor is the Company nor HFG
aware of any circumstances that would give
rise to an allegation of such contamination.
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(vi) To the best knowledge of the Company and
HFG, no investigation, administrative order,
consent order or agreement, litigation or
settlement with respect to Hazardous
Materials or Hazardous Materials
Contamination is proposed, threatened,
anticipated, pending or otherwise in
existence with respect to any site
controlled or utilized by the Company in the
operation of its business (collectively, a
"Business Location"). To the best knowledge
of the Company and HFG, the Business
Location is not currently on, and has never
been on, any federal or state "Superfund" or
"Superlien" list.
(vii) To the best knowledge of the Company and
HFG, the Company has no liability and has
not handled or disposed of any substance,
arranged for the disposal of any substance,
exposed any employee or other individual to
any substance or condition, or owned or
operated any property or facility in any
manner that could form the basis for any
present or future action, suit, proceeding,
hearing, investigation, charge, complaint,
claim or demand against the Company for
damage to any site, location, or body of
water (surface or subsurface), for any
illness of or personal injury to any
employee or other individual, or for any
reason under any Environmental Law or
Hazardous Materials Law.
(viii) To the best knowledge of the Company and
HFG, all properties and equipment used in
the business of the Company were free of
asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2-transdichlorothylene,
dioxins, and dibenzofurans.
4.15 Intellectual Property. The Company does not own or use or
have the right to use pursuant to license, sublicense, agreement or
permission any trademarks, trade names, service marks, patents, copyrights or
any applications with respect thereto. The Company and HFG have no knowledge
of any claim that, or inquiry as to whether, any product, activity or
operation of the Company, interferes with, infringes upon, misappropriates or
otherwise conflicts with any trademarks, trade-names, service marks, patents,
copyrights or other proprietary rights of any other person, corporation or
other entity; and no proceedings have been instituted, are pending or are
threatened.
4.16 Insurance. The Company has no insurance policies in
effect.
4.17 Contracts. Except as set forth on Schedule 4.17, the
Company has no material contracts, leases, arrangements and commitments
(whether oral or written). The Company is not a party to or bound by or
affected by any contract, lease, arrangement or commitment (whether oral or
written) relating to: (a) the employment of any person; (b) collective
bargaining with, or any representation of any employees by, any labor union
or association; (c) the acquisition of services, supplies, equipment or other
personal property; (d) the purchase or sale of real property; (e)
distribution, agency or construction; (f) lease of real or personal property
as lessor or lessee or
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sublessor or sublessee; (g) lending or advancing of funds; (h) borrowing of
funds or receipt of credit; (i) incurring any obligation or liability; or (j)
the purchase or sale of personal property.
4.18 Litigation. Except as it relates to the Plan, the Company
is not subject to any judgment or order of any court or quasijudicial or
administrative agency of any jurisdiction, domestic or foreign, nor is there
any charge, complaint, lawsuit or governmental investigation pending against
the Company. The Company is not a plaintiff or defendant in any action,
domestic or foreign, judicial or administrative. There are no existing
actions, suits, proceedings or investigations of the Company, and neither the
Company nor HFG know of any basis for such actions, suits, proceedings or
investigations. There are no unsatisfied judgments, orders, injunctions,
decrees or stipulations affecting the Company or to which the Company is a
party.
4.19 Employees. Except for Timothy P. Halter, the Company's sole
officer and director, the Company does not have any employees. The Company
does not owe any compensation of any kind, deferred or otherwise, to any
current or previous employees. The Company has no written or oral employment
agreements with any officer or director of the Company. The Company is not a
party to or bound by any collective bargaining agreement. There are no loans
or other obligations payable or owing by the Company to any shareholder,
officer, director or employee of the Company, nor are there any loans or
debts payable or owing by any of such persons to the Company or any
guarantees by the Company of any loan or obligation of any nature to which
any such person is a party.
4.20 Employee Benefit Plans. The Company has no (a)
non-qualified deferred or incentive compensation or retirement plans or
arrangements, (b) qualified retirement plans or arrangements, (c) other
employee compensation, severance or termination pay or welfare benefit plans,
programs or arrangements or (d) any related trusts, insurance contracts or
other funding arrangements maintained, established or contributed to by the
Company.
4.21 Legal Compliance. To the best knowledge of the Company and
HFG, no claim has been filed against the Company alleging a violation of any
applicable laws (including rules regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings and charges thereunder) and regulations
of foreign, federal, state and local governments and all agencies thereof.
The Company holds all of the material permits, licenses, certificates or
other authorizations of foreign, federal, state or local governmental
agencies required for the conduct of its business as presently conducted.
4.22 Broker's Fees. Neither the Company, HFG nor anyone on their
behalf has any liability to any broker, finder, investment banker or agent,
or has agreed to pay any brokerage fees, finderAEs fees or commissions, or to
reimburse any expenses of any broker, finder, investment banker or agent in
connection with this Agreement.
4.23 Disclosure. The representations and warranties and
statements of fact made by the Company and HFG in this Agreement are, as
applicable, accurate, correct and complete and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements and information contained herein not false or
misleading.
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4.24 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Company.
4.25 Guaranties. The Company is not a guarantor or otherwise
liable for any liability or obligation (including indebtedness) of any other
person or entity.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 Conduct of Business by the Company Pending the Closing. The
Company and HFG jointly and severally covenant and agree that prior to the
Closing Date:
(a) The Company shall conduct its business and operations only
in the usual and ordinary course of business;
(b) Except as contemplated by this Agreement and as necessary
to effect the proposals contained in the Proxy Statement, the Company
shall not directly or indirectly do any of the following: (i) sell,
pledge, dispose of or encumber any of its assets; (ii) amend or propose
to amend its Articles of Incorporation or Bylaws; (iii) split, combine
or reclassify any outstanding shares of its capital stock, or declare,
set aside or pay any dividend or other distribution payable in cash,
stock, property or otherwise with respect to shares of its capital
stock; (iv) redeem, purchase or acquire or offer to acquire any shares
of its capital stock or other securities; (v) create any subsidiaries;
(vi) enter into or modify any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(c) Except as contemplated by this Agreement, the Company
shall not (i) issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any additional shares of, or any options,
warrants, conversion privileges or rights of any kind to acquire any
shares of, its capital stock; (ii) acquire (by merger, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership or other business organization or division or the material
assets thereof; (iii) incur any indebtedness for borrowed money, issue
any debt securities or guarantee any indebtedness to others; or (iv)
enter into or modify any contract, agreement, commitment or arrangement
with respect to any of the foregoing;
(d) The Company shall not enter into any employment, severance
or similar agreements or arrangements with, or grant any bonus, salary
increase, severance or termination pay to, any officers or directors;
(e) The Company shall not adopt any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee;
(f) Except as otherwise required by its Articles of
Incorporation or Bylaws, by this Agreement or by applicable law, the
Company shall not call any meeting of shareholders;
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<PAGE>
(g) The Company and HFG shall notify MTS of any emergency or
other change in the normal course of its business or in the operation
of its properties and of any tax audits, tax claims, environmental,
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such
emergency, change, audit, claim, complaint, investigation or hearing
would be material, individually or in the aggregate, to the financial
condition, results of operations or business of the Company, or to the
ability of any of the parties hereto to consummate the transactions
contemplated by this Agreement;
(h) The Company shall notify MTS promptly of any material
adverse event or circumstance affecting the Company, whether threatened
or existing (including the filing of any material litigation against
the Company or the existence of any dispute with any person or entity
which involves a reasonable likelihood of such litigation being
commenced); and
(i) The Company shall comply in all material respects with all
legal requirements and contractual obligations applicable to its
operations and business and pay all applicable taxes.
5.2 Other Actions. Unless approved in writing by MTS, the Company
and HFG shall not to take any action or permit any action to occur that might
reasonably be expected to result in any of the representations and warranties
of the Company and HFG contained in this Agreement becoming untrue, false or
misleading after the date hereof or any of the conditions to the Closing set
forth in Article 7 of this Agreement not being satisfied.
ARTICLE 6
ADDITIONAL AGREEMENTS
6.1 Access and Information. Except for information relating to any
claims any party may have against the other, MTS and the Company shall each
afford to the other and to the other's financial advisors, legal counsel,
accountants, consultants and other representatives necessary access, at all
reasonable times, and in a manner so as not to interfere with the normal
business operations, throughout the period prior to the Closing to all of its
books, records (including tax records), properties and personnel and, during
such period in order to allow each party to complete its due diligence
review, each shall furnish promptly to the other all information as such
other party may reasonably request.
6.2 Litigation Support. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement, or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company, the other party will
cooperate with the party and its counsel in the contest or defense, make
available its personnel, and provide such testimony and access to its books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending party,
subject to the indemnification provision set forth in Article 9.
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<PAGE>
6.3 Proxy Statement. The Company, HFG and their representatives
shall, with the assistance of MTS and its representatives, prepare a proxy
statement (together with the related notice to shareholders and any annexes
and exhibits thereto, the "Proxy Statement") that will submit certain matters
to the Company's shareholders for approval in accordance with applicable law
and the Company's Plan of Reorganization (the "Plan") dated October 14, 1997,
as confirmed by order of the United States Bankruptcy Court for the Central
District of California on March 20, 1998, including: (a) this Agreement, and
(b) an amendment to the Company's Articles of Incorporation changing the
Company's name to Microwave Transmission Systems, Inc. The Proxy Statement
may also contain additional proposals regarding such other matters
appropriate for shareholder approval as may be mutually agreed upon by the
parties.
MTS shall be responsible for providing the information to HFG
required in the Proxy Statement that relates to MTS and its management,
business and financial condition. HFG and the Company shall be responsible
for providing the information required in the Proxy Statement that relates to
HFG and the management, business and financial condition of the Company.
6.4 Meeting of Shareholders. The Company shall call a special
meeting of its shareholders to be held in accordance with the laws of the
State of Texas to consider and vote upon the proposals contained in the Proxy
Statement.
6.5 Certain Information. The Company, HFG, MTS and each of their
respective representatives shall prepare and assemble certain information
regarding the Exchange, the Company and MTS necessary for the shareholders of
MTS to make an informed investment decision regarding the Exchange.
6.6 Press Releases. The Company and MTS shall consult with each
other as to the form and substance of any press release or other public
disclosure of matters related to this Agreement or any of the transactions
contemplated hereby; provided, however, that nothing herein shall be deemed
to prohibit any party hereto from making any disclosure that is required to
fulfill such party's disclosure obligations imposed by law, including,
without limitation, federal securities laws.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of Each Party to Effect the Closing.
The respective obligations of each party hereto to effect the Closing shall
be subject to the fulfillment on or prior to the Closing Date of the
following conditions:
(a) The Exchange and the other proposals contained in the
Proxy Statement shall have been approved by the shareholders of the
Company in accordance with the Plan and applicable law; and
(b) No order shall have been entered and remained in effect in
any action or proceeding before any foreign, federal or state court or
governmental agency or other
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<PAGE>
foreign, federal or state regulatory or administrative agency or
commission that would prevent or make illegal the consummation of the
transactions contemplated hereby.
7.2 Additional Conditions to MTS's Obligations. The obligations of
MTS to effect the Closing are subject to the satisfaction of the following
additional conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 4
of this Agreement will be true and correct in all material respects as
of the date hereof and at and as of the Closing Date as though then
made;
(b) The Company and HFG shall have performed, in all material
respects, each obligation and agreement and complied with each covenant
to be performed and complied with by them under Articles 5 and 6 of
this Agreement prior to the Closing Date;
(c) All consents by governmental or regulatory agencies or
otherwise that are required to be obtained by the Company for the
consummation of the transactions contemplated hereby will have been
obtained;
(d) No action or proceeding before any court or governmental
body will be pending or threatened wherein a judgment, decree or order
would prevent any of the transactions contemplated hereby or cause such
transactions to be declared unlawful or rescinded;
(e) MTS and its financial and legal representatives shall have
completed a due diligence review of the available business, operations
and financial statements of the Company provided by HFG, the results of
which shall be satisfactory to MTS in its sole discretion;
(f) MTS will have received from Jackson Walker L.L.P., counsel
to the Company, an opinion addressed to MTS, dated the Closing Date in
a form mutually satisfactory to the parties; and
(g) At the Closing, the Company shall have delivered or caused
to be delivered to MTS the following:
(i) a certificate executed on behalf of the
Company and HFG stating that the conditions
set forth in Sections 7.2(a) through (d) of
this Agreement have been satisfied;
(ii) resolutions duly adopted by the respective
Boards of Directors of the
Company and HFG authorizing and approving
the proposals
contained in the Proxy Statement, including
the Exchange and the
execution, delivery and performance of this
Agreement;
(iii) resolutions duly adopted by the shareholders
of the Company approving the proposals
contained in the Proxy Statement, including
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<PAGE>
the Exchange and the execution, delivery and
performance of this Agreement;
(iv) a certificate of good standing for the
Company from the Secretary of State of the
State of Texas, dated not earlier than five
days prior to the
Closing Date;
(v) a copy of the Articles of Incorporation of
the Company certified as of a recent date by
the Secretary of State of the State of
Texas;
(vi) an incumbency certificate of the officers
of the Company and HFG;
(vii) the written resignation of Timothy P. Halter
from his positions of officer and director
of the Company;
(viii) certificates representing the Company Shares
to be delivered pursuant to this Agreement
bearing the name of the Shareholder in the
amount set forth on Exhibit "A" hereto; and
(ix) such other documents as MTS may reasonably
request in connection with the transactions
contemplated hereby.
7.3 Additional Conditions to the Obligations of the Company and HFG.
The respective obligations of the Company and HFG to effect the Closing are
subject to the satisfaction of the following conditions on or before the
Closing Date:
(a) The representations and warranties set forth in Articles 2
and 3 of this Agreement will be true and correct in all material
respects as of the date hereof and at and as of the Closing Date as
though then made;
(b) MTS shall have performed, in all material respects, each
obligation and agreement and complied with each covenant required to be
performed and complied with by it under Article 6 of this Agreement
prior to the Closing Date;
(c) All consents by governmental or regulatory agencies or
otherwise that are required to be obtained by MTS for the consummation
of the transactions contemplated hereby will have been obtained;
(d) No action or proceeding before any court or governmental
body will be pending or threatened wherein a judgment, decree or order
would prevent any of the transactions contemplated hereby or cause such
transactions to be declared unlawful or rescinded;
(e) The Company shall have received from counsel to MTS
satisfactory to the Company, an opinion addressed to the Company and
HFG, dated the Closing Date in a form mutually satisfactory to the
parties; and
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(f) On the Closing Date, MTS shall have delivered to the
Company the following:
(i) a certificate executed on behalf of MTS
stating that the conditions set forth in
Sections 7.3(a) through (d) of this
Agreement have been satisfied;
(ii) resolutions duly adopted by the Board of
Directors of MTS authorizing and approving
the Exchange and the execution, delivery and
performance of this Agreement;
(iii) a certificate of good standing for MTS from
the Secretary of State of the State of
Texas, dated not earlier than five days
prior to the Closing Date;
(iv) a copy of the Articles of Incorporation of
MTS certified as of a recent date by the
Secretary of State of the State of Texas;
(v) an incumbency certificate of the officers
of MTS;
(vi) certificate(s) representing the MTS Shares
to be delivered pursuant to this Agreement
duly endorsed or accompanied by duly
executed stock powers; and
(vii) such other documents as the Company may
reasonably request in connection with the
transactions contemplated hereby.
ARTICLE 8
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Closing by the mutual written consent of the parties
hereto.
8.2 Automatic Termination. This Agreement shall automatically
terminate if the Closing does not occur on or before 5:00 p.m., Central
Standard Time, on September 24, 1999.
8.3 Termination by Any Party. This Agreement may be terminated by
any party hereto if a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and
such order, decree, ruling or other action shall have become final and
non-appealable; provided, however, that the party seeking to terminate this
Agreement pursuant to this clause shall have used all reasonable efforts to
remove such injunction, order or decree.
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<PAGE>
8.4 Material Breach. This Agreement may be terminated by any party
if a material breach of this Agreement has been committed and such breach has
not been waived or cured by the alleged breaching party within 30 days of
receipt of written notice from a non-breaching party detailing such breach.
8.5 Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 8, the rights and obligations of the
parties hereto to consummate the Exchange shall terminate. Each party's right
of termination under this Article 8 is in addition to any other rights it may
have under this Agreement or otherwise, and the exercise of such right of
termination will not be an election of remedies.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
9.1 Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any written statement, certificate
or other document to be delivered in connection herewith shall survive the
Closing for a period of five years, regardless of any investigation made by
or on behalf of any party.
9.2 Indemnification by HFG. Subject to the terms and conditions of
this Article 9, HFG agrees to indemnify, defend and hold the Company
subsequent to the Exchange (the "Post-Closing Company"), MTS and their
respective directors, officers, agents, attorneys and affiliates harmless
from and against all losses, claims, actions, causes of action, fines,
obligations, demands, assessments, penalties, liabilities, costs, damages,
attorneys' fees and expenses (collectively, "Damages"), asserted against or
incurred by any such persons or entities by reason of or resulting from a
breach of any representation, warranty, non-fulfillment of any agreement or
covenant of the Company or HFG contained in this Agreement or in any written
statement, certificate or other document to be delivered in connection
herewith.
9.3 Indemnification by MTS and the Post-Closing Company. Subject to
the terms and conditions of this Article 9, MTS and the Post-Closing Company
agree to indemnify, defend and hold HFG and its directors, officers, agents,
attorneys and affiliates harmless from and against all Damages asserted
against or incurred by any such persons or entities by reason of or resulting
from a breach of any representation, warranty, non-fulfillment of any
agreement or covenant of MTS contained in this Agreement or in any written
statement, certificate or other document to be delivered in connection
herewith.
9.4 Conditions of Indemnification. The obligations and liabilities
of HFG, MTS and the Post-Closing Company (the "indemnifying party") to the
others (the "party to be indemnified") under this Article 9 with respect to
claims resulting from the assertion of liability by third parties shall be
subject to the following terms and conditions:
(a) Within 20 days (or such earlier time as might be required
to avoid prejudicing the indemnifying party's position) after receipt
of notice of commencement of any action
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evidenced by service of process or other legal pleading, the party to
be indemnified shall give the indemnifying party written notice thereof
together with a copy of such claim, process or other legal pleading,
and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing and at its own
expense; provided that the party to be indemnified may participate in
the defense with counsel of its own choice, the fees and expenses of
which counsel shall be paid by the party to be indemnified unless (i)
the indemnifying party has agreed to pay such fees and expenses, (ii)
the indemnifying party has failed to assume the defense of such action
or (iii) the named parties to any such action (including any impleaded
parties) include both the indemnifying party and the party to be
indemnified and the party to be indemnified has been advised by counsel
that there may be one or more legal defenses available to it that are
different from or additional to those available to the indemnifying
party (in which case, if the party to be indemnified informs the
indemnifying party in writing that it elects to employ separate counsel
at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such action on behalf of
the party to be indemnified, it being understood, however, that the
indemnifying party shall not, in connection with any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the party to be
indemnified, which firm shall be designated in writing by the party to
be indemnified).
(b) In the event that the indemnifying party, by the 30th day
after receipt of notice of any such claim (or, if earlier, by the 10th
day preceding the day on which an answer or other pleading must be
served in order to prevent judgment by default in favor of the person
asserting such claim), does not elect to defend against such claim, the
party to be indemnified will (upon further notice to the indemnifying
party) have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk of
the indemnifying party and at the indemnifying party's expense, subject
to the right of the indemnifying party to assume the defense of such
claims at any time prior to settlement, compromise or final
determination thereof.
(c) Notwithstanding the foregoing, the indemnifying party
shall not settle any claim without the consent of the party to be
indemnified unless such settlement involves only the payment of money
and the claimant provides to the party to be indemnified a release from
all liability in respect of such claim. If the settlement of the claim
involves more than the payment of money, the indemnifying party shall
not settle the claim without the prior consent of the party to be
indemnified.
(d) The party to be indemnified and the indemnifying party
will each cooperate with all reasonable requests of the other.
9.5 Remedies Not Exclusive. The remedies provided in this Article 9
shall not be exclusive of any other rights or remedies available to one party
against the other, either at law or in equity.
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ARTICLE 10
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally, sent by overnight courier or mailed by registered or certified
mail (postage prepaid and return receipt requested) to the party to whom the
same is so delivered, sent or mailed at the following addresses (or at such
other address for a party as shall be specified by like notice):
To HFG or the Company prior to the Exchange:
Timothy P. Halter, President
Halter Financial Group, Inc.
14160 Dallas Parkway, Suite 950
Dallas, Texas 75240
To MTS or the Company after the Exchange:
Preston D. Spurlin
514 Sterling Drive
Richardson, Texas 75081
10.2 Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. References to Sections and Articles refer
to sections and articles of this Agreement unless otherwise stated.
10.3 Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated and the parties shall
negotiate in good faith to modify this Agreement to preserve each party's
anticipated benefits under this Agreement.
10.4 Miscellaneous. This Agreement (together with all other
documents and instruments referred to herein): (a) constitutes the entire
agreement and supersedes all other prior agreements and undertakings, both
written and oral, among the parties with respect to the subject matter
hereof; (b) except as expressly set forth herein, is not intended to confer
upon any other person any rights or remedies hereunder and (c) shall not be
assigned by operation of law or otherwise, except as may be mutually agreed
upon by the parties hereto.
10.5 Separate Counsel. Each party hereby expressly acknowledges that
it has been advised and urged to seek its own separate legal counsel for
advice with respect to this Agreement.
10.6 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, which together shall constitute a single agreement.
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10.8 Amendment. This Agreement may be amended, modified or
supplemented only by an instrument in writing executed by all parties hereto.
10.9 Parties In Interest: No Third Party Beneficiaries. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective heirs, legal
representatives, successors and assigns of the parties hereto. This Agreement
shall not be deemed to confer upon any person not a party hereto any rights
or remedies hereunder.
10.10 Waiver. No waiver by any party of any default or breach by
another party of any representation, warranty, covenant or condition
contained in this Agreement shall be deemed to be a waiver of any subsequent
default or breach by such party of the same or any other representation,
warranty, covenant or condition. No act, delay, omission or course of dealing
on the part of any party in exercising any right, power or remedy under this
Agreement or at law or in equity shall operate as a waiver thereof or
otherwise prejudice any of such party's rights, powers and remedies. All
remedies, whether at law or in equity, shall be cumulative and the election
of any one or more shall not constitute a waiver of the right to pursue other
available remedies.
10.11 Expenses. Except as may be otherwise provided in the
Consulting Agreement the parties hereto shall pay all of their own expenses
relating to the transactions contemplated by this Agreement, including,
without limitation, the fees and expenses of their respective counsel and
financial advisers.
10.12 Construction. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.
10.13 Arbitration of Disputes. In the event that a dispute arises
between the parties, said dispute arising out of, in connection with or as a
result of the Agreement entered into between the parties, the parties agree
that said dispute shall be resolved through binding arbitration rather than
litigation. Both parties hereby agree to submit the dispute for resolution,
under the rules then obtaining, to either the American Arbitration
Association, or the National Association of Securities Dealers, Inc., within
five (5) days after receiving a written request to do so from either party.
The determination of the arbitrators shall be final and binding upon both
parties and may be enforced in any court of competent jurisdiction.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RBS ACQUISITION CORP.
By: /s/ Timothy P. Halter
--------------------------------------
Timothy P. Halter, President
HALTER FINANCIAL GROUP, INC.
By: /s/ Timothy P. Halter
--------------------------------------
Timothy P. Halter, President
MICROWAVE TRANSMISSION SYSTEMS, INC.
By: /s/ Preston D. Spurlin
--------------------------------------
Preston D. Spurlin, Chief Executive
Officer
THE SHAREHOLDER:
By: /s/ Preston D. Spurlin
--------------------------------------
Preston D. Spurlin
-23-
<PAGE>
EXHIBIT "A"
<TABLE>
<CAPTION>
Number of MTS Number of Company
SHAREHOLDER SHARES OWNED SHARES TO BE ISSUED
- - -------------------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
Preston D. Spurlin 1,000 5,750,000
----- ---------
TOTAL 1,000 5,750,000
===== =========
</TABLE>
-24-
<PAGE>
SCHEDULE 4.17
Agreement dated April 12, 1999,
between RBS Acquisition Corp. and
Securities Transfer Corporation
-25-
<PAGE>
EXHIBIT 6.2
CONSULTING AGREEMENT
This Consulting Agreement (this "Agreement") is made and entered into
on July 29, 1999 by and among Halter Financial Group, Inc., a Texas corporation
("HFG"), RBS Acquisition Corp., a Texas corporation (the "Public Company) and
Microwave Transmission Systems, Inc., a Texas corporation and any subsidiary,
affiliate or successor thereof (the "Company").
WHEREAS, HFG is experienced in assisting companies that wish to become
publicly held entities through reverse merger or reverse acquisition
transactions;
WHEREAS, in order to further its business purpose, the Company desires
to enter into a reverse merger or reverse acquisition transaction (the "Public
Merger Transaction") with the Public Company, a publicly-held "shell"
corporation controlled by HFG.
WHEREAS, the shares of Common Stock in the Public Merger Transaction
will be issued in reliance on the exemption from registration provided in
Section 4(2) under the Securities Act of 1933, as amended (the "Securities
Act");
WHEREAS, the Public Company is entering into this Agreement for the
purpose of assuming the same obligations that the Company has hereunder
subsequent to the completion of the Public Merger Transaction; and
WHEREAS, HFG is willing to provide certain consulting services to the
Company with respect to the Public Merger Transaction and certain other related
matters on the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the respective
covenants contained in this Agreement, the parties hereby agree as follows:
1. CONSULTING SERVICES. HFG hereby agrees to provide the
following consulting services to the Company on a best efforts basis, under the
terms and conditions set forth in this Agreement:
(i) Providing the Public Company;
(ii) Preparing proposals involving the structure of the Public
Merger Transaction and certain other related matters contemplated by
this Agreement;
(iii) Preparing and reviewing the necessary documents to
effect the Public Merger Transaction in a form mutually satisfactory to
the parties thereto;
(iv) Preparing a proxy statement (the "Proxy Statement") that
will submit certain matters to the Public Company's shareholders for
approval in accordance with applicable law, including, but not
necessarily limited to, the Public Merger Transaction and a corporate
name change. Such proxy statement may also contain additional
PAGE 1
<PAGE>
proposals regarding such other matters appropriate for shareholder
approval as may be mutually agreed upon by the parties;
(v) Subsequent to the Public Merger Transaction and as soon as
permitted by the rules of the National Association of Securities
Dealers, Inc., and any applicable law, rule or regulation during the
term of this Agreement, HFG will assemble documentation required and
draft and prepare application for quotation of the Public Company's
common stock (the "Common Stock") on the Pink Sheets maintained by the
National Quotation Bureau, Inc. for review by the Company and its legal
counsel. In addition, as soon as permitted by the rules of the National
Association of Securities Dealers, Inc., and any applicable law, rule
or regulation, including the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the rules and regulations thereunder
during the term of this Agreement, HFG will assemble documentation
required and draft and prepare application for quotation of the Common
Stock on the OTC Bulletin Board for review by the Company and its legal
counsel. This obligation does not require HFG to prepare and file a
Registration Statement on Form 10. However, to the extent necessary,
HFG will provide information pertaining to HFG and the Public Company
to be included in such registration statement. The Company shall be
responsible for preparing any financial statements and description of
its business operations necessary to complete any such applications.
(vi) Introducing the Company to a market maker;
(vii) Assisting the Company with the preparation of
communications with brokerage professionals, investment bankers and
market makers that may include the following: (a) written communication
with brokerage firms, investment bankers, analysts and market makers;
(b) introductions to retail brokers and investment bankers; (c)
assistance with brokerage presentations; and (d) coordinating
conference calls with brokers;
(viii) Preparing a program of shareholder communications and
relations acceptable to the Company that may include the following: (a)
review of communications with shareholders; and (b) review and
distribution of press releases; and
(ix) Providing such other general assistance and advice as may
be mutually agreed by the parties.
2. REGISTRATION STATEMENT ON FORM 10. Subsequent to the completion of
the Public Merger Transaction, the parties anticipate that the Public Company
will file with the Securities and Exchange Commission (the "Commission") a
Registration Statement on Form 10 (together with any amendments or supplements
thereto, the "Registration Statement") to register the Common Stock under the
Exchange Act. The parties agree and acknowledge that the Company and its legal
counsel and other representatives will be responsible for the drafting,
preparation and filing of the Registration Statement and responding to any
comments of the Commission thereto.
PAGE 2
<PAGE>
In this regard, HFG will assist the Public Company with assembling and
preparing the information required in the Registration Statement as it relates
to HFG and to the Public Company's management, business and financial condition
prior to the Public Merger Transaction.
3. CONSIDERATION.
(i) Lock-Up Agreement. HFG, in connection with the reverse
merger, does hereby agree that prior to the expiration of three hundred
sixty-five days (365) from June 3, 1999, that neither it nor any entity
or person controlled by it will sell, contract to sell or make any
other disposition of, or grant any purchase option for the sale of, any
shares of Common Stock, directly or indirectly whether or not it
disclaims beneficial ownership of such shares of Common Stock, without
first obtaining the prior written consent of the Company. The parties
further agree that, assuming consummation of the Public Merger
Transaction, this provision will survive termination of the Consulting
Agreement and be in full force and effect for three hundred and
sixty-five days from June 3, 1999.
(ii) This Agreement obligates HFG to perform certain services
in connection with the Public Merger Transaction in addition to those
required to be provided under the plan of bankruptcy to which the
Public Company is subject. In this regard, the Company shall also pay
to HFG the sum of $100,000 in cash at the closing of the Public Merger
Transaction in order to compensate HFG for certain costs and expenses
incurred in performing such services.
4. COMPANY DEPOSIT. The Company hereby acknowledges that time is
of the essence with regard to the consummation of the Public Merger Transaction,
and that the failure to consummate such transaction in a timely manner would
have an adverse effect upon HFG. As such, the Company will deposit the amount of
$50,000 (the "Deposit") into the trust account of the Law Offices of Richard B.
Mills, 2305 Cedar Springs, Suite 208, Dallas, Texas 75201 (the "Escrow Agent")
to be held by the Escrow Agent pursuant to the provisions of this Paragraph 4.
The Deposit shall be returned in full to the Company if the Company notifies HFG
of its decision not to proceed with consummation of the Public Merger
Transaction at any time prior to the consummation of such transaction, if such
decision is as a result of (a) any misrepresentation or omission of material
fact with regard to information, written or oral, imparted by HFG to the Company
regarding the Public Company or (b) the inability of the Public Company or HFG
to cure, to the satisfaction of the Company, which shall not be unreasonably
withheld, any matter arising from the Company's due diligence review of the
Public Company. One-half (1/2) of the Deposit shall be payable to the Company
and one-half (1/2) shall be payable to HFG if, prior to August 6, 1999, the
Company notifies HFG of its decision not to proceed with the Public Merger
Transaction for any reason other than those set forth in subparts 4.(a) and (b)
above. The Deposit shall be payable in full to HFG if the Company, after August
6, 1999, notifies HFG of its decision not to proceed with the Public Merger
Transaction for any reason other than those set forth in subparts 4.(a) and (b)
above. Upon an event requiring the immediate delivery of all or a portion of the
Deposit to HFG, said amount shall be immediately paid to HFG upon the delivery
of written instruction to the Escrow Agent by HFG.
PAGE 3
<PAGE>
If the Company is entitled to all or a portion of the Deposit prior to
the consummation of the Public Merger Transaction as a result of the
circumstances set forth in the preceding paragraph, said amount shall be
immediately payable to the Company upon receipt by the Escrow Agent of written
instructions signed by the Company. Furthermore, the Deposit shall be returned
immediately to the Public Company upon consummation of the Public Merger
Transaction upon receipt by the Escrow Agent of written instruction signed by
both the Public Company and HFG.
5. CERTAIN RELATED MATTERS. The Company shall use its
commercially reasonable efforts to comply with its obligations under this
Agreement and to consummate the Public Merger Transaction. HFG shall use its
best efforts to cause the Public Company to consummate the Public Merger
Transaction.
6. ACCURACY OF INFORMATION AND INDEMNIFICATION.
(i) The Company has and will furnish HFG with certain
information relating to the Company and its management, business and
financial condition in order to enable HFG to perform the consulting
services under this Agreement. In this regard, the Company agrees that
such information is and will be complete, truthful and accurate in all
material respects.
(ii) HFG agrees that it will notify the Company that
circumstances have arisen for which it will seek indemnification and
that after notice, the Company shall have fifteen days to determine if
the Company will assume the defense of such action or proceeding and
will employ counsel reasonably satisfactory to HFG and will pay the
fees and expenses of such counsel. Alternatively, the Company may elect
to indemnify HFG from any against any and all losses, claims, damages
or liabilities, joint or several, to which HFG or any of its officers,
directors, controlling persons or representatives may become subject
under any applicable federal or state law, related to or arising out of
any untrue statement or alleged untrue statement of any material fact
relating to the Company and its management, business and financial
condition contained in any proxy statement, filing or other document
prepared pursuant to this Agreement or relating to or arising out of
the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading as they relate to the Company and its management, business
and financial condition; except in the event that such arose out of
gross negligence, willful misconduct or malfeasance of HFG. In no event
will the Company be obligated to provide such indemnification relating
to any untrue statements or alleged untrue statements based on
information provided to Company by HFG. At its election, the Company
will reimburse HFG for all reasonable expenses as they are incurred in
connection with the investigation of, preparation for or defense of any
pending or threatened claim or any action or proceeding arising
therefrom, provided that the Company shall have the right to control
the investigation, defense and settlement of any such claim. The
Company shall not be liable for any settlement affected without its
consent.
(iii) As a condition of the information being furnished to
HFG, HFG agrees not to use the information for any purposes other than
in connection with the rendering of
PAGE 4
<PAGE>
consulting services to the Company, to keep the information
confidential and not to disclose the information to any third party
for a period of one year from the Effective Date hereof; provided,
however, that HFG may make any disclosure of the information to which
the Company gives its prior written consent or to such of HFG's
officers and employees as may be determined have a need to know.
Notwithstanding the above, HFG shall not be prohibited from using or
disclosing information furnished to HFG by the Company which (a) is or
becomes generally available to the public other than as a result of
disclosure by HFG, (b) was within HFG's possession prior to its
disclosure by the Company to HFG pursuant hereto, (c) becomes
available to HFG on a non-confidential basis after the date hereof
from any third party which is not known to HFG to be bound by a
confidentiality agreement with the Company with respect to such
information, (d) is disclosed to others by the Company without
restriction as to disclosure and/or commercial use, (e) is
independently developed by persons who did not access the information
as a result of HFG's disclosure of the information, or (f) HFG is
required to disclose by law, judicial or administrative orders,
subpoena, or other valid legal process.
7. EXPENSES. HFG will pay all fees and expenses of counsel and
consultants retained directly by HFG. Except as otherwise provided herein, the
Company will pay all other expenses incurred in connection with the performance
of the consulting services under this Agreement, including (i) all fees and
expenses of the Company's counsel and independent public accountants and (ii)
printing, copying and distribution expenses. The Company will, in its sole
discretion, approve and authorize any expenses to be incurred directly by HFG on
behalf of the Company. In the event that HFG directly incurs any approved
expenses on behalf of the Company; HFG will timely provide the Company with an
itemized list of such expenses and the Company will reimburse HFG for such
expenses within 30 days of receipt thereof.
8. TERM. This Agreement will terminate twelve months from the
date of execution of this Agreement, unless terminated earlier pursuant to
Section 9 below.
9. TERMINATION.
(i) This Agreement shall be terminated if the consummation of
the Public Merger Transaction does not occur on or before October 1,
1999 for any reason.
(ii) This Agreement may be terminated:
PAGE 5
<PAGE>
a) By the Company, subject to forfeiture by the
Company of the Deposit, except as otherwise provided for in
Paragraph 4, hereto, at any time prior to the consummation of
the Public Merger Transaction;
b) By HFG at any time, if the Company does not
provide reasonably necessary or appropriate assistance,
information, documents or other materials necessary or
advisable in order to enable HFG to perform the consulting
services under this Agreement; or
c) Upon the mutual written agreement of the parties.
10. AMENDMENT AND MODIFICATION. This Agreement may be amended or
modified by the written consent of the parties.
11. COUNSEL. The Company hereby expressly acknowledges that it has
been advised that it has not been represented by HFG's attorneys in this matter
and has been advised and urged to seek separate legal counsel for advice in this
matter.
12. CAPTIONS AND HEADINGS. The paragraph headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit or add to the meaning of any provision of this Agreement.
13. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of Texas, without regard to conflicts
or choice of law provisions of the State of Texas.
14. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile copies bearing facsimile signature of a
party shall constitute a valid and binding execution and delivery of this
Agreement by such party. Such facsimile copies shall constitute enforceable
original documents.
15. NOTICES AND WAIVERS. Any notice or waiver required or
permitted to be given by the parties hereto shall be in writing and shall be
deemed to have been given, when delivered, three business days after being
mailed by certified or registered mail, faxed during regular business hours of
the recipient and there is confirmation of receipt, or sent by prepaid full rate
telegram to the following addresses:
<TABLE>
<CAPTION>
<S> <C>
To HFG or the Public Company prior
to the Public Merger Transaction: Timothy P. Halter
14160 Dallas Parkway, Suite 950
Dallas, Texas 75240
To the Company or the Public Company
subsequent to the Public Merger Transaction: P. David Spurlin
541 Sterling Drive
Richardson, Texas 75081
</TABLE>
PAGE 6
<PAGE>
16. ARBITRATION OF DISPUTES. In the event that a dispute arises
between the parties, said dispute arising out of, in connection with or as a
result of the Agreement entered into between the parties, the parties agree that
said dispute shall be resolved through binding arbitration rather than
litigation. Both parties hereby agree to submit the dispute for resolution,
under the rules then obtaining, to either the American Arbitration Association,
or the National Association of Securities Dealers, Inc., within five (5) days
after receiving a written request to do so from either party. The determination
of the arbitrators shall be final and binding upon both parties and may be
enforced in any court of competent jurisdiction. The parties hereto hereby
agree that the Federal Arbitration Act shall govern the proceeding and all
issues raised.
17. INDEPENDENT CONTRACTOR; NO POWER TO BIND. HFG is not an
employee of Company for any purpose whatsoever, but is an independent
contractor. HFG does not have the right or authority to create a contract or
obligation either express or implied, on behalf of, in the name of or binding
upon Company, or to pledge Company credit, or to extend credit in the Company's
name unless otherwise agreed in writing. HFG shall have no right or authority to
commit Company in any manner without the prior written consent of Company.
18. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the Company and HFG, and supersedes any and all
negotiations, prior discussions and preliminary and prior agreements and
understandings related to the subject matter hereof and may not be amended or
rescinded except in a writing signed by both parties hereto.
19. SEVERABILITY. If any provision of this Agreement shall be held
or deemed to be, or shall in fact be, inoperative or unenforceable as applied in
any particular case, such event shall not affect the validity or enforceability
of the remainder of the Agreement.
PAGE 7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the day written above.
HALTER FINANCIAL GROUP, INC.
By:______________________________________
Timothy P. Halter, President
RBS ACQUISITION CORP.
By:______________________________________
Timothy P. Halter, President
MICROWAVE TRANSMISSION SYSTEMS, INC.
By:______________________________________
P. David Spurlin, Chief
Executive Officer
PAGE 8
<PAGE>
COMMERCIAL LEASE EXHIBIT 6.3
This lease is made between MICROWAVE TRANSMISSION SYSTEMS, INC.,
Lessee, and P. DAVID SPURLIN, herein called Lessor, located at 541 Sterling
Drive, Richardson, Texas 75081.
Lessee hereby offers to lease from Lessor the premises situated in the
City of Richardson, County of Dallas, State of Texas, described as
, upon the following TERMS and CONDITIONS:
(Legal Description:
0000541 STERLING VOL95236/4158 DD113095
ORIG TOWN RICHARDSON
TOR SHEET 10-E
1. Term and Rent. Lessor demises the above premises to the Lessee
for a term of 36 Months, commencing 1/17/96 and terminating on 1/17/99 as
provided herein at the monthly rental of $ . All rental payments
shall be made to Lessor, at the address specified above. RENT WILL CONTINUE
ON A MONTH TO MONTH BASIS STARTING 2/17/99.
2. Use. Lessee shall use and occupy the premises for
business . The premises shall be used for no other purpose. Lessor
represents that the premises may lawfully be used for such purpose.
3. Care and Maintenance of Premises. Lessee acknowledges that the
premises are in good order and repair, unless otherwise indicated herein. Lessee
shall, at his own expense and at all times, maintain the premises in good and
safe condition, including plate glass, electrical wiring, plumbing and HVAC
installations and any other system or equipment upon the premises and shall
surrender the same, at termination hereof, in as good condition as received,
normal wear and tear excepted. Lessee shall be responsible for all repairs
required, excepting the roof, exterior walls and structural foundations, which
shall be maintained by Lessor. Lessor shall warrant that existing HVAC systems
shall be in proper operating order until 199 .
4. Alterations. Lessee shall not, without first obtaining the written
consent of lessor, make any alterations, additions or improvements, in, to or
about the premises.
5. Ordinances and Statutes. Lessee shall comply with all statutes,
ordinances and requirements of all municipal, state and federal authorities now
in force, or which may hereafter be in force, pertaining to the premises,
occasioned by or affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease or
sublet any portion of the premises without prior written consent of the Lessor,
which shall not be unreasonably withheld. Any such assignment of subletting
without consent shall be void and, at the option of the Lessor, may terminate
this lease.
Page 1 of 4
<PAGE>
7. Utilities. Lessor shall maintain both water and electrical
service in Lessor's name. Upon receipt of bill the Lessor shall bill Lessee
(with copy of total bills attached). The billing for the electrical shall be
based on subtracting the sub meter reading of Allen Advertising from the
electric bill and Lessee shall be responsible for the balance. The billing of
the water shall be based upon a pro-rata share of the whole bill identical to
the percentage of Lessee's space as compared to the entire building. Lessee
shall immediately reimburse Lessor for same. Lessee shall be solely
responsible for all telephone application, hookup, services, etc. and the
cost thereof.
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's
agents to enter upon the premises at reasonable times and upon reasonable
notice, for the purpose of inspecting the same, and will permit Lessor at any
time within sixty (60) days prior to the expiration of this lease, to place
upon the premises any usual "To Let" or "For Lease" signs, and permit persons
desiring to lease the same to inspect the premises thereafter.
9. Possession. If Lessor is unable to deliver possession of the
premises at the commencement hereof, Lessor shall not be liable for any damage
caused thereby, and shall this lease be void or voidable, but Lessee shall not
be liable for any rent until possession is delivered within 30 days of the
commencement of the term hereof.
10. Indemnification of Lessor. Lessor shall not be liable for any
damage or injury to Lessee, or any other person, or to any property, occurring
on the demised premises or any part thereof, (unless caused by the negligence or
willful misconduct of Landlord or it's agents or contractors) and Lessee agrees
to hold Lessor harmless from any claims for damages, no matter how caused.
11. Insurance. Lessee, at his expense, shall maintain public
liability insurance including bodily injury and property damage insuring
Lessee and Lessor with minimum coverage as follows:
Lessee shall provide Lessor with a Certificate of Insurance showing
Lessor as additional insured. The Certificate shall provide for a ten-day
written notice to Lessor in the event of cancellation or material change of
coverage. To the maximum extent permitted by insurance policies which may be
owned by Lessor or Lessee, Lessee and Lessor, for the benefit of each other,
waive any and all rights of subrogation which might otherwise exist.
12. Eminent Domain. If the entire premises or any material part
thereof or any material estate therein, or any other part of the building
materially affecting Lessee's use of the premises, shall be taken by eminent
domain, this lease shall terminate on the date when title vests pursuant to
such taking. The rent, and any additional rent, shall be apportioned as of
the termination's date, and any rent paid for any period beyond that date
shall be repaid to Lessee. Lessee shall not be entitled to any part of the
award for such taking or any payment in lieu thereof, but Lessee may file a
claim for any taking of fixtures and improvements owned by Lessee, and for
moving expenses.
13. Destruction of Premises. In the event of partial destruction
of the premises during the term hereof, from any cause, Lessor shall
forthwith repair the same, provided that such repairs can be made within
sixty (60) days under existing governmental laws and regulation, but such
partial
Page 2 of 4
<PAGE>
destruction shall not terminate this lease, except that Lessee shall be entitled
to a proportionate reduction of rent while such repairs are being made, based
upon the extent to which the making of such repairs shall interfere with the
business of Lessee on the premises. If such repairs cannot be made within said
sixty (60) days, Lessor, at his option, may make the same within a reasonable
time, this lease continuing in effect with the rent proportionately abated as
fore said, and in the event that the Lessor shall not elect to make such repairs
which cannot be made within sixty (60) days, this lease may be terminated at the
option of either party. In the event that the building in which the demised
premises may be situated is destroyed to an extent of not less than one-third of
the replacement costs thereof, Lessor may elect to terminate this lease whether
the demised premises be injured or not. A total destruction of the building in
with the premises may be situated shall terminate this lease.
14. Lessor's Remedies on Default. If Lessee defaults in the
payment of rent, or any additional rent, or defaults in the performance of
any other covenants or conditions hereof, Lessor shall give Lessee written
notice of such default and if Lessee does not cure any such default within
5 days, after the giving of such notice (or if such other default is of such
nature that it cannot be completely cured within such period, if Lessee does
not commence such curing within 30 days and thereafter proceed with
reasonable diligence and in good faith to cure such default), then Lessor may
terminate this lease on not less than 30 days' written notice to Lessee. On
the date specified in such notice the terms of this lease shall terminate,
and Lessee shall quit and surrender the premises to Lessor, but Lessee shall
remain liable as hereinafter provided. If this lease shall have been so
terminated by Lessor, Lessor may at any time thereafter resume possession of
the premises by any lawful means and remove Lessee or other occupants and
their effects. No failure to enforce any term shall be deemed a waiver.
15. Security Deposit. Lessee shall deposit with Lessor on the signing
of this lease the sum of $4,700.00 dollars ($4,700) as security for the
performance of Lessee's obligations under this lease, including without
limitation the surrender of possession of the premises to Lessor as herein
provided. If Lessor applies any part of the deposit to cure any default of
Lessee, Lessee shall on demand deposit with Lessor the amount applied so that
Lessor shall have the full deposit on hand at all times during the term of this
lease, or with 30 days notice to move after the lease has expired.
16. Tax Increase. In the event there is any such increase during any
year of the term of this lease in the City, County or State real estate taxes
over and above the amount of such taxes assessed for the tax year during which
the term of this lease commences, whether because of increased rate or
valuation, Lessee shall pay to Lessor upon presentation of paid tax bills an
amount equal to 100% of the increase in taxes for Lessee's proportionate share
of the entire land and building occupied by Lessee. In the event that such taxes
are assessed for a tax year extending beyond the term of the lease, the
obligation of Lessee shall be proportionate to the portion of the lease term
included in such year. Lessee has right to audit such increases.
Page 3 of 4
<PAGE>
17. Attorney's Fees. In case suit should be brought for recovery
of the premises, or for any sum due hereunder, or because of any act which
may arise out of the possession of the premises, by either party, the
prevailing party shall be entitled to all costs incurred in connection with
such action, including a reasonable attorney's fee.
18. Notices. Any notice which either party may or is required to
give, shall be given by mailing the same, postage prepaid, to Lessee at the
premises, or Lessor at the address shown below, or at such other places as
may be designated by the parties from time to time.
19. Subordination. This lease is and shall be subordinated to all
existing and future liens and encumbrances against the property.
20. Lessor represents and warrants that (a) to the best of his
knowledge, as of the date of execution of the Lease there are no violations
outstanding in any governmental agency having jurisdiction over the leased
premises; (b) Lessor is the fee owner of the property containing the leased
premises; and (c) Lessor has the full right and authority to enter into the
Lease and the terms thereof.
21. Entire Agreement. The foregoing constitutes the entire agreement
between the parties and may be modified only by a writing signed by both
parties.
Signed this 17th day of January 1996.
---- -------
Microwave Transmission Systems, Inc. P. David Spurlin
- - ------------------------------------ ----------------
By: /s/ Susan King By: /s/ P. David Spurlin
-------------------------------- ----------------------
Lessee Lessor
Page 4 of 4
<PAGE>
COMMERCIAL LEASE EXHIBIT 6.4
This lease is made between MICROWAVE TRANSMISSION SYSTEMS, INC.,
Lessee, and P. DAVID SPURLIN, herein called Lessor, located at
Lessee hereby offers to lease from Lessor the premises situated in the
City of Richardson, County of Dallas, State of Texas, described as
_________________________ , upon the following TERMS and CONDITIONS:
(Legal Description:
3302 Whitley Road
Wylie, TX 75098
1. Term and Rent. Lessor demises the above premises to the Lessee
for a term of Months, commencing 4/1/99 and terminating on * as
provided herein at the monthly rental of $700.00. All rental payments shall
be made to Lessor, at the address specified above.
*Month to month basis, no deposit.
2. Use. Lessee shall use and occupy the premises for .
The premises shall be used for no other purpose. Lessor represents that the
premises may lawfully be used for such purpose.
3. Care and Maintenance of Premises. Lessee acknowledges that the
premises are in good order and repair, unless otherwise indicated herein.
Lessee shall, at his own expense and at all times, maintain the premises in
good and safe condition, including plate glass, electrical wiring, plumbing
and HVAC installations and any other system or equipment upon the premises
and shall surrender the same, at termination hereof, in as good condition as
received, normal wear and tear excepted. Lessee shall be responsible for all
repairs required, excepting the roof, exterior walls and structural
foundations, which shall be maintained by Lessor. Lessor shall warrant that
existing HVAC systems shall be in proper operating order until
199 .
4. Alterations. Lessee shall not, without first obtaining the
written consent of lessor, make any alterations, additions or improvements,
in, to or about the premises.
5. Ordinances and Statutes. Lessee shall comply with all statutes,
ordinances and requirements of all municipal, state and federal authorities
now in force, or which may hereafter be in force, pertaining to the premises,
occasioned by or affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease
or sublet any portion of the premises without prior written consent of the
Lessor, which shall not be unreasonably withheld. Any such assignment of
subletting without consent shall be void and, at the option of the Lessor,
may terminate this lease.
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7. Utilities. Lessor shall maintain both water and electrical
service in Lessor's name. Upon receipt of bill the Lessor shall bill Lessee
(with copy of total bills attached). The billing for the electrical shall be
based on subtracting the sub meter reading of Allen Advertising from the
electric bill and Lessee shall be responsible for the balance. The billing of
the water shall be based upon a pro-rata share of the whole bill identical to
the percentage of Lessee's space as compared to the entire building. Lessee
shall immediately reimburse Lessor for same. Lessee shall be solely
responsible for all telephone application, hookup, services, etc. and the
cost thereof.
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's
agents to enter upon the premises at reasonable times and upon reasonable
notice, for the purpose of inspecting the same, and will permit Lessor at any
time within sixty (60) days prior to the expiration of this lease, to place
upon the premises any usual "To Let" or "For Lease" signs, and permit persons
desiring to lease the same to inspect the premises thereafter.
9. Possession. If Lessor is unable to deliver possession of the
premises at the commencement hereof, Lessor shall not be liable for any
damage caused thereby, and shall this lease be void or voidable, but Lessee
shall not be liable for any rent until possession is delivered within 30 days
of the commencement of the term hereof.
10. Indemnification of Lessor. Lessor shall not be liable for any
damage or injury to Lessee, or any other person, or to any property,
occurring on the demised premises or any part thereof, (unless caused by the
negligence or willful misconduct of Landlord or it's agents or contractors)
and Lessee agrees to hold Lessor harmless from any claims for damages, no
matter how caused.
11. Insurance. Lessee, at his expense, shall maintain public
liability insurance including bodily injury and property damage insuring
Lessee and Lessor with minimum coverage as follows:
Lessee shall provide Lessor with a Certificate of Insurance showing
Lessor as additional insured. The Certificate shall provide for a ten-day
written notice to Lessor in the event of cancellation or material change of
coverage. To the maximum extent permitted by insurance policies which may be
owned by Lessor or Lessee, Lessee and Lessor, for the benefit of each other,
waive any and all rights of subrogation which might otherwise exist.
12. Eminent Domain. If the entire premises or any material part
thereof or any material estate therein, or any other part of the building
materially affecting Lessee's use of the premises, shall be taken by eminent
domain, this lease shall terminate on the date when title vests pursuant to
such taking. The rent, and any additional rent, shall be apportioned as of
the termination's date, and any rent paid for any period beyond that date
shall be repaid to Lessee. Lessee shall not be entitled to any part of the
award for such taking or any payment in lieu thereof, but Lessee may file a
claim for any taking of fixtures and improvements owned by Lessee, and for
moving expenses.
13. Destruction of Premises. In the event of partial destruction
of the premises during the term hereof, from any cause, Lessor shall
forthwith repair the same, provided that such repairs
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can be made within sixty (60) days under existing governmental laws and
regulation, but such partial destruction shall not terminate this lease,
except that Lessee shall be entitled to a proportionate reduction of rent
while such repairs are being made, based upon the extent to which the making
of such repairs shall interfere with the business of Lessee on the premises.
If such repairs cannot be made within said sixty (60) days, Lessor, at his
option, may make the same within a reasonable time, this lease continuing in
effect with the rent proportionately abated as fore said, and in the event
that the Lessor shall not elect to make such repairs which cannot be made
within sixty (60) days, this lease may be terminated at the option of either
party. In the event that the building in which the demised premises may be
situated is destroyed to an extent of not less than one-third of the
replacement costs thereof, Lessor may elect to terminate this lease whether
the demised premises be injured or not. A total destruction of the building
in with the premises may be situated shall terminate this lease.
14. Lessor's Remedies on Default. If Lessee defaults in the
payment of rent, or any additional rent, or defaults in the performance of
any other covenants or conditions hereof, Lessor shall give Lessee written
notice of such default and if Lessee does not cure any such default within 5
days, after the giving of such notice (or if such other default is of such
nature that it cannot be completely cured within such period, if Lessee does
not commence such curing within 30 days and thereafter proceed with
reasonable diligence and in good faith to cure such default), then Lessor may
terminate this lease on not less than 30 days' written notice to Lessee. On
the date specified in such notice the terms of this lease shall terminate,
and Lessee shall quit and surrender the premises to Lessor, but Lessee shall
remain liable as hereinafter provided. If this lease shall have been so
terminated by Lessor, Lessor may at any time thereafter resume possession of
the premises by any lawful means and remove Lessee or other occupants and
their effects. No failure to enforce any term shall be deemed a waiver.
15. Security Deposit. Lessee shall deposit with Lessor on the
signing of this lease the sum of -0- dollars ($ -0- ) as security for the
performance of Lessee's obligations under this lease, including without
limitation the surrender of possession of the premises to Lessor as herein
provided. If Lessor applies any part of the deposit to cure any default of
Lessee, Lessee shall on demand deposit with Lessor the amount applied so that
Lessor shall have the full deposit on hand at all times during the term of
this lease.
16. Tax Increase. In the event there is any such increase during
any year of the term of this lease in the City, County or State real estate
taxes over and above the amount of such taxes assessed for the tax year
during which the term of this lease commences, whether because of increased
rate or valuation, Lessee shall pay to Lessor upon presentation of paid tax
bills an amount equal to 100% of the increase in taxes for Lessee's
proportionate share of the entire land and building occupied by Lessee. In
the event that such taxes are assessed for a tax year extending beyond the
term of the lease, the obligation of Lessee shall be proportionate to the
portion of the lease term included in such year. Lessee has right to audit
such increases.
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17. Attorney's Fees. In case suit should be brought for recovery
of the premises, or for any sum due hereunder, or because of any act which
may arise out of the possession of the premises, by either party, the
prevailing party shall be entitled to all costs incurred in connection with
such action, including a reasonable attorney's fee.
18. Notices. Any notice which either party may or is required to
give, shall be given by mailing the same, postage prepaid, to Lessee at the
premises, or Lessor at the address shown below, or at such other places as
may be designated by the parties from time to time.
19. Subordination. This lease is and shall be subordinated to all
existing and future liens and encumbrances against the property.
20. Lessor represents and warrants that (a) to the best of his
knowledge, as of the date of execution of the Lease there are no violations
outstanding in any governmental agency having jurisdiction over the leased
premises; (b) Lessor is the fee owner of the property containing the leased
premises; and (c) Lessor has the full right and authority to enter into the
Lease and the terms thereof.
21. Entire Agreement. The foregoing constitutes the entire
agreement between the parties and may be modified only by a writing signed by
both parties.
Signed this 1st day of April 1999 .
------------------ -------------------- --
Microwave Transmission Systems, Inc. P. David Spurlin
- - ------------------------------------ -----------------------------
By: /s/ Susan King By: /s/ P. David Spurlin
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Lessee Lessor
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