-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JIlUfDHOUUxjL0rLUcRpG7ejlyQ7l1/lMa3GhMBrBVaYVbhc375Yfm9FPTh2nfrt 9rfU9ZbJUORFDwHhdm0QVA== 0001050234-99-000067.txt : 19990824 0001050234-99-000067.hdr.sgml : 19990824 ACCESSION NUMBER: 0001050234-99-000067 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990823 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD WIRELESS COMMUNICATIONS INC CENTRAL INDEX KEY: 0001031744 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-38567 FILM NUMBER: 99697392 BUSINESS ADDRESS: STREET 1: 150 WRIGHT BROS DR STREET 2: # 570 CITY: SALT LAKE CITY STATE: UT ZIP: 84116 BUSINESS PHONE: 8015756600 MAIL ADDRESS: STREET 1: 150 WRIGHT BROTHERS DR SUITE 570 CITY: SALT LAKE CITY STATE: UT ZIP: 84116 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _____________________ FORM 10-Q _____________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1999 Commission file number 333-3856 __________________________________ WORLD WIRELESS COMMUNICATIONS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Nevada 87-0549700 ------------------------------- ------------------------ (State of other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 2441 South 3850 West, West Valley City, Utah 84120 ---------------------------------------------------------------- (Address of principal executive offices (Zip Code) Registrant's telephone number (801) 575-6600 -------------- Indicate by check mark whether registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __. As of June 30, 1999 there were 17,492,939 shares of the Registrant's Common Stock, par value $0.001, issued and outstanding. TABLE OF CONTENTS PART I. Financial Information Item 1. Financial Statements: Condensed Consolidated Balance Sheets - as of June 30, 1999 and December 31, 1998 . . . . . . . . . . . . . . . . . . . . . 1 Condensed Consolidated Statements of Operation - for the three-month and six-month periods ended June 30, 1999 and June 30, 1998. . . . . . . . . . . . . . . . . . . . . 3 Condensed Consolidated Statements of Cash Flows - for the six-month periods ended June 30, 1999 and June 30, 1998 . . 4 Notes to Condensed Consolidated Financial Statements. . . . . . . 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation . . . . . . . . . . . . . . . . . . . . 9 Part II. Other Information Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 17 Item 2. Changes in Senior Securities. . . . . . . . . . . . . . . . . . . 18 Item 6. Exhibits and Reports on Form 10-K . . . . . . . . . . . . . . . . 19 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 PART I FINANCIAL INFORMATION Item 1. Financial Statements WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS June 30, December 31, 1999 1999 ----------- ---------- Current Assets Cash and cash equivalents $ 675,916 $ 614,897 Investment in securities available-for-sale 137,648 137,648 Trade receivables, net of allowance for doubtful accounts 193,568 327,387 Other receivables 93,698 77,005 Inventory 626,577 550,239 Prepaid expenses 20,269 18,594 ----------- ---------- Total Current Assets 1,747,676 1,725,770 Equipment 2,153,035 2,085,930 Less accumulated depreciation (1,507,999) (1,047,285) ----------- ----------- Net Equipment 645,036 1,038,645 Goodwill, net of accumulated amortization 857,596 957,794 Other Assets, net of accumulated amortization 377,169 414,381 ----------- ----------- Total Assets $ 3,627,477 $ 4,136,590 =========== =========== CONTINUED) The accompanying notes are an integral part of these condensed consolidated financial statements. -1- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED) (UNAUDITED) LIABILITIES AND STOCKHOLDERS' DEFICIT June 30, December 31, 1999 1998 ----------- ----------- Current Liabilities Trade accounts payable $ 491,877 $ 982,506 Accrued liabilities 998,554 880,638 Notes payable 2,609,857 2,992,858 Obligation under capital leases - current portion 162,797 197,626 ----------- ----------- Total Current Liabilities 4,263,085 5,053,628 Long-Term Obligation Under Capital Leases 45,281 84,968 Mandatorily Redeemable Preferred Stock Liquidation Preference of $650,000 650,000 - Stockholders' Deficit Common stock - $0.001 par value; 50,000,000 shares authorized; issued and outstanding: 17,492,939 shares at June 30, 1999 and 13,920,400 shares at December 31, 1998 17,492 13,920 Additional paid-in capital 29,594,486 25,419,026 Unrealized gain on marketable equity securities 62,648 62,648 Unearned compensation (38,500) (70,518) Receivable from shareholder (66,828) (66,828) Accumulated deficit (30,900,187) (26,360,254) ----------- ----------- Total Stockholders' Deficit (1,330,889) (1,002,006) Total Liabilities and Stockholders' Deficit $ 3,627,477 $ 4,136,590 =========== =========== The accompanying notes are an integral part of these condensed consolidated financial statements. -2- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the Three For the Six Months Ended Months Ended June 30, June 30, ------------------------ ------------------------ 1999 1998 1999 1998 ----------- ----------- ----------- ----------- Sales $ 639,624 $ 1,058,074 $ 1,672,999 $ 2,366,957 Cost of Sales 559,586 900,129 1,381,271 1,556,577 ----------- ----------- ----------- ----------- Gross Profit 80,038 157,945 291,728 810,380 Expenses Research and development expense 428,805 1,272,763 670,070 1,936,512 General and administrative expenses 1,196,978 1,269,140 2,329,736 2,654,236 Amortization of goodwill 50,099 401,495 100,198 802,990 Interest income (5,924) - (10,606) - Interest expense 617,292 201,076 1,092,086 225,657 ----------- ----------- ----------- ----------- Total Expenses 2,287,250 3,144,474 4,181,484 5,619,395 ----------- ----------- ----------- ----------- Loss From Operations (2,207,212) (2,986,529) (3,889,756) (4,809,015) Other Income - - - 319,528 ----------- ----------- ----------- ----------- Net Loss $(2,207,212) $(2,986,529) $(3,889,756) $(4,489,487) Preferred Stock Dividend 650,000 - 650,000 - ----------- ----------- ----------- ----------- Net Loss Applicable to Common Stockholders $(2,857,212) $(2,986,529) $(4,539,756) $(4,489,487) =========== =========== =========== =========== Basic and Diluted Loss Per Common Share $ (0.17) $ (0.27) $ (0.28) $ (0.42) =========== =========== =========== =========== Weighted Average Number of Common Shares Used in Per Share Calculation 17,135,024 11,141,692 16,081,399 10,807,073 =========== =========== =========== =========== The accompanying notes are an integral part of these condensed consolidated financial statements.
-3- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, ------------------------- 1999 1998 ----------- ----------- Cash Flows From Operating Activities Net Loss $(3,889,756) $(4,489,487) Adjustments to reconcile net loss to net cash used by operating activities: Amortization of goodwill 100,198 802,990 Depreciation and amortization 497,926 374,429 Amortization of debt discount 325,448 144,628 Purchased research and development - 300,000 Amortization of unearned compensation 57,936 - Compensation for stock options 21,540 506,890 Stock issued for interest 93,698 - Stock issued for services 231,616 - Valuation allowance on inventory and other assets - 239,066 Gain on sale of business assets - (319,528) Changes in operating assets and liabilities: Accounts receivable 117,126 (250,904) Inventory (76,338) (158,647) Prepaid expenses/other assets (1,675) (2,406) Accounts payable (490,629) (37,055) Accrued liabilities 117,916 207,025 ----------- ----------- Net Cash and Cash Equivalents Used By Operating Activities (2,894,994) (2,682,999) ----------- ----------- Cash Flows From Investing Activities Payments for the purchase of property and equipment (67,105) (141,231) Proceeds from sale of business assets and property - 372,499 Proceeds from receivable from shareholder - 10,000 Loan to a related company - (56,410) ----------- ----------- Net Cash and Cash Equivalents Provided by (Used by) Investing Activities (67,105) 184,858 ----------- ----------- (CONTINUED) The accompanying notes are an integral part of these condensed consolidated financial statements. -4- WORLD WIRELESS COMMUNICATIONS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED) For the Six Months Ended June 30, ------------------------- 1999 1998 ----------- ----------- Cash Flows From Financing Activities Proceeds from issuance of common stock $ 2,356,083 $ 1,047,407 Proceeds from issuance of preferred stock 400,000 - Proceeds from borrowings, net of discounts 1,600,000 2,900,000 Principal payments on notes payable (1,258,449) (389,665) Principal payments on obligation under capital lease (74,516) (126,634) ----------- ----------- Net Cash and Cash Equivalents Provided By Financing Activities 3,023,118 3,431,108 ----------- ----------- Net Increase In Cash and Cash Equivalents 61,019 932,967 Cash and Cash Equivalents - Beginning of Period 614,897 218,234 ----------- ----------- Cash and Cash Equivalents - End of Period $ 675,916 $ 1,151,201 =========== =========== Supplemental Cash Flow Information - Cash paid for interest was $25,228 and $35,306 for the six months ended June 30, 1999 and 1998, respectively. The accompanying notes are an integral part of these condensed consolidated financial statements. -5- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Interim Condensed Consolidated Financial Statements - The accompanying condensed consolidated financial statements are unaudited. In the opinion of management, all necessary adjustments (which include only normal recurring adjustments) have been made to present fairly the financial position, results of operations and cash flows for the periods presented. Certain information and note disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the December 31, 1998 annual report on Form 10-K/A. The results of operations for the six month period ended June 30, 1999 are not necessarily indicative of the operating results to be expected for the full year. NOTE 2 - COMMON STOCK During February 1999, the Company issued 2,040,000 common shares for cash in the amount of $2,040,000 received in a private placement offering. In connection with the offering, the Company granted options to purchase 200,000 common shares at $1.75 per share within 5 years, and issued 8,000 shares of common stock as finder's fees. The Company also paid $163,200 as finder's fees. During June 1999, the Company issued 510,000 common shares for cash in the amount of $510,000 received in a private placement offering. In connection with this offering, the Company paid $30,000 as a finders fee. During March 1999, note holders converted two unsecured promissory notes totaling $800,000, together with accrued interest, into 893,698 common shares at $1.00 per share under the terms of a conversion privilege granted to the note holders in December 1998. During the first and second quarter of 1999, the Company issued 120,841 restricted common shares for services valued at $231,499, or $1.92 per share. NOTE 3 - MANDATORILY REDEEMABLE PREFERRED STOCK AND WARRANTS On May 14, 1999 the Company offered to issue 650 shares of senior liquidating mandatorily redeemable 10% preferred stock with a liquidation preference of $1,000 per share and detachable five-year warrants to purchase 3,250,000 common shares at $0.25 per share, and issued such shares of preferred stock on July 1, 1999. The preferred shares must be redeemed on or before May 14, 2000 at their par value plus accrued dividends. The preferred stock cash dividend requirement is $65,000 annually. The preferred stock was issued for $650,000 consisting of $400,000 cash and the deemed payment of $250,000 principal amount of 1998 bridge loan notes. The issuance of the preferred stock with warrants was accounted for as the granting of a favorable conversion feature to the preferred stock holders. was based on their intrinsic value but limited to the cash proceeds and the amount of the notes converted. Since the warrants were immediately exercisable, the resulting discount to the preferred stock of $650,000 was recognized on the date granted as a preferred dividend. The value assigned to the warrants -7- WORLD WIRELESS COMMUNICATIONS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 4 - NOTES PAYABLE On May 14, 1999 the Company issued $2,600,000 of senior secured 16% notes payable which mature in one year. The notes were issued for $2,600,000 consisting of $1,600,000 in cash and the deemed payment of $1,000,000 principal amount of 1998 Bridge Loan notes. The notes payable are secured by substantially all the Company's assets. Interest on the notes is payable quarterly. A manditory pre-payment of principal equal to 25% of the gross proceeds from any issuanc of the Company's securities is due upon the closing of the issuance. The notes will be in default if the reported loss before interest, depreciation, amortization and taxes exceeds $1,000,000 for the quarter ended June 30, 1999 or if income as computed above is less than $250,000 or $1,000,000 for the quarters ended September 30, 1999 and December 31, 1999 respectively. The Notes will also be in default if the Company fails to make a manditory prepayment of principal from the issuance of the Company's securities. If the notes are determined to be in default for a quarter the Company could be required to issue five-year warrants to purchase 300,000 shares of common stock at $0.25 per share as compensation for the default with respect to such quarter. For the quarter ended June 30, 1999, the Company accrued $431,250 of interest expense for the potential default and issuance of warrants. NOTE 5 - COMMITMENTS AND CONTINGENCIES Legal Proceedings - The Company leased computer-aided design software which did not perform as specified; the software, which cost $550,887, was returned to the seller. The Company requested a cancellation of the $735,207 debt including a technical support agreement in the amount of $184,320. The software vendor, Mentor Graphics, Inc., commenced a lawsuit against the Company seeking damages of approximately $485,000 plus interest, legal fees and expenses arising out of the Company's alleged breach of contract for the purchase of software and related items. The Company settled this claim for $100,000 during the quarter ended June 30, 1999. An investment banking firm commenced a lawsuit against the Company seeking to recover damages of $231,129, plus legal fees and expenses. In this case, the Company asserted a counterclaim seeking damages of approximately $250,000. The Company anticipates that such lawsuit will be settled although there can be no assurance of such result. Unasserted Claim - The Company received a verbal request in 1998 from Mr. and Mrs. Richard Austin to rescind the Company's acquisition of Austin Antenna, Ltd., formerly known as TWC, Ltd., a Delaware corporation, by a stock purchase which closed in 1997. In addition, Mr. Austin requested that the Company bear the cost of (i) the legal fees and expenses in a litigation commenced against Mr. Austin in a state court in Massachusetts brought by Charles Rich seeking damages of approximately $50,000 for non-payment of commissions arising out of the Company's purchase of Austin Antenna Ltd. and (ii) the unpaid finder's fee that is the subject of the litigation. The Company, in turn, has put Mr. and Mrs. Austin on notice of the Company's claims that the Austins have failed to honor their agreements with Austin Antenna and the Company by failing to make available engineering drawings and other related data, proprietary to Austin Antenna and the Company by virtue of the acquisition agreement, that would enable the Company to consolidate antenna manufacture in its Salt Lake City facility. The Company is currently in negotiation with Mr. and Mrs. Austin and is working on a belief that the claims between the parties may be resolved amicably. However, there is no current assurance as to the ultimate outcome of those efforts. Default On 1999 Notes - The Company would have been in default under a Pledge/Security Agreement associated with the 1999 Notes on the date of the filing of its Form 10-Q for the quarter ended June 30, 1999 because, among other things, the Company had an operating loss in excess of that projected for such quarter and because of its failure to make a mandatory prepayment of principal, which failures would have each constituted an event of default under the Loan Agreement between the Company and the holders of the 1999 Notes. Upon the occurrence of an event of default, the holders of the 1999 Notes have the right, among other things, to accelerate the due date of the 1999 Notes to the date of the default and to sell the assets of the Company securing the debt as a means of repaying the debt. However, the Company is in the process of obtaining separate waivers of the default for the quarter ended June 30, 1999 from the holders of the 1999 Notes. In addition, the Company anticipates obtaining a deferral of any payment of principal on the 1999 Notes until December 31, 1999 regardless of any financing raised by the Company prior to such date through the sale of its securities, and anticipates obtaining certain other changes in the loan agreements. As a condition thereto, the Company anticipates agreeing, among other things,(a) to grant the holders of the 1999 Notes additional warrants to purchase 300,000 shares of the Company's common stock at an exercise price of $0.25 per share, exercisable in whole or in part at any time for a period of five years, and (b) to grant the holders of the 1999 Notes 200,000 shares of the Company's common stock, which shares would be subject to applicable securities law restrictions. Although the Company believes that it will obtain such waivers, there can be no assurance of such result. Moreover, there can be no assurance that the Company will not commit a default under the May 1999 transactions in the future. In the event that the holders of the 1999 Notes sell the Company's assets securing the 1999 Notes following a current or future default, such sale would materially and adversely affect the Company's business and financial condition. -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS When used in this discussion, the words "expect(s)", "feel(s)", "believe(s)", "will", "may", "anticipate(s)" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, and are urged to carefully review and consider the various disclosures elsewhere in this Form 10-Q. THREE MONTHS ENDED JUNE 30, 1999 AND THREE MONTHS ENDED JUNE 30, 1998 Sales in the three-month period ended June 30, 1999 were $639,624 compared to $1,058,074 during the three-month period ended June 30, 1998. During the second quarter of 1999 the Company derived its revenue as follows: engineering services, $195,445; branded products, $124,328; and contract and cable manufacturing, $319,851. During the second quarter of 1998 the Company derived its revenue from engineering services, $758,738; branded products, $219,625; and contract and cable manufacturing, $79,711. The decrease in engineering services was due to the completion of the development of products for Williams that will be used in their SCADA and Automatic Meter Reading (AMR) applications. Gross profit in the three-month period ended June 30, 1999 was $80,038 compared to $157,945 during the comparable period during 1998, which represents 12.5% and 14.9% of sales respectively. The Company reduced its research and development costs by $843,958 from $1,272,763 in the second quarter in 1998 to $428,805 in the second quarter in 1999. Such saving was achieved primarily by the Company's reducing the number of employees. General and administrative expenses decreased $72,162 from $1,269,140 in the second quarter of 1998 to $1,196,978 in the second quarter of 1999. The decrease is due to cost cutting measures implemented during the first and second quarters of 1999. The amortization of goodwill decreased $351,396 from $401,495 for the three-months ending June 30, 1998 to $50,099 for the three-months ending June 30, 1999. The decrease was due to the impairment of goodwill the Company recognized in the third quarter of 1998. Interest income is due to the Company's investing idle cash in overnight interest bearing accounts. Interest expense increased $416,160 from $201,076 for the three-months ending June 30, 1999 to $617,292 for the three-months ending June 30, 1998, primarily due to the recognition of warrant interest expense and fees the Company bore in connection with the obtaining of debt financing in the second quarter of 1999. The Company issued 650 shares of senior liquidating mandatorily redeemable 10% preferred stock with a liquidation preference of $1,000 per share and detachable five-year warrants to purchase 3,250,000 common shares at $0.25. The issuance of the preferred stock with warrants has been accounted for as the granting of a favorable conversion feature to the preferred stockholders. The value assigned to the warrants was based on their intrinsic value but limited to the cash proceeds and the amount of the notes converted. Since the warrants were immediately exercisable, the resulting discount to the preferred stock of $650,000 was recognized on the date granted as a preferred dividend. -9- SIX MONTHS ENDED JUNE 30, 1999 AND SIX MONTHS ENDED JUNE 30, 1998 Sales in the six-month period ending June 30, 1999 were $1,672,999 compared to $2,366,957 during the six-month period ending June 30, 1998. During the first six months of 1999 the Company derived its revenue as follows: engineering services, $840,263; branded products, $238,425; and contract and cable manufacturing, $594,311. During the first six months of 1998, the Company derived its revenue from engineering services, $1,863,672; branded products, $219,625; and contract and cable manufacturing, $283,660. The decrease in engineering services was due to the completion of the development of products for Williams that will be used in their SCADA and Automatic Meter Reading (AMR) applications. Gross profit in the first six-month periods ending June 30, 1999 was $291,728 compared to $810,380 during the comparable period during 1998, which represents 17% and 34% of sales respectively. The decrease was due primarily to two factors: during the first six months of 1998, 78% of the Company's revenues were derived from the most profitable segment of the business, engineering services, compared to 50% in the first six months of 1999. Also, in the first six months of 1998, the Company met certain design and development contract milestones for efforts and costs incurred over several preceding periods. The Company reduced its research and development costs by $1,266,442 from $1,936,512 in the first six-months of 1998 to $670,070 in the first six months in 1999, primarily by reducing the number of its employees. General and administrative expenses decreased $324,500 from $2,654,236 in the first six months of 1998 to $2,329,736 in the first six months of 1999. This decrease was due primarily to a reduction of employees and cost cutting measures implemented during the first half of 1999. The amortization of goodwill decreased $702,792 from $802,990 for the first six-months ending June 30, 1998 to $100,198 for the first six-months ending June 30, 1999. The decrease was due to the impairment of goodwill the Company recognized in the third quarter of 1998. Interest expense increased $866,429 from $225,657 for the first six-months ending June 30, 1999 to $1,092,086 for the first six-months ending June 30, 1998. In May 1998, the Company executed certain bridge loans in the amount of $2,500,000. The 1998 bridge loans had detachable warrants, which had been accounted for as a discount of the related notes and was amortized to interest expense over the life of the note. The amortization of this debt discount was $325,000 in the first half of 1999, compared to $108,000 in the first half of 1998. Also, the Company recognized warrant interest expense during the second quarter of 1999. Interest income is due to the Company investing idle cash into overnight interest bearing accounts. The Company issued 650 shares of senior liquidating mandatorily redeemable 10% preferred stock with a liquidation preference of $1,000 per share and detachable five-year warrants to purchase 3,250,000 common shares at $0.25. The issuance of the preferred stock with warrants has been accounted for as the granting of a favorable conversion feature to the preferred stockholders. The value assigned to the warrants was based on their intrinsic value but limited to the cash proceeds and the amount of the notes converted. Since the warrants were immediately exercisable, the resulting discount to the preferred stock of $650,000 was recognized on the date granted as a preferred dividend. -11- LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity at June 30, 1999 consisting of cash and cash equivalents was $675,916, which represented an increase of $61,019 over the Company's cash and cash equivalents of $614,897 as of December 31, 1998. The Company's current assets were $1,747,676 as of June 30, 1999, which represented an increase of $21,906 over the Company's current assets of $1,725,770 as of December 31, 1998. In addition, the Company's current liabilities were $4,263,085 as of June 30, 1999, a decrease of $790,543 from the Company's current liabilities of $5,053,628 as of December 31, 1998. The Company's cash and cash equivalents at June 30, 1999 of $675,916 represented a decrease of $185,381 from the Company's cash and cash equivalents of $861,297 as of March 31, 1999. The Company's current assets at June 30, 1999 of $1,747,676 represented a decrease of $373,502 from the Company's current assets of $2,121,178 as of March 31, 1999. Also the Company's current liabilities at June 30, 1999 of $4,263,085 represented an increase of $402,772 from the Company's current liabilities of $3,860,313 as of March 31, 1999. In order to pay off the Company's Senior Secured Notes which had a maturity date of May 15, 1998 (the "1998 Notes"), the Company raised financing in May 1999. Such financing involved the sale of separate units consisting of $2,600,000 principal amount of the Company's Senior Secured Notes, bearing interest at 16% per annum, payable quarterly and maturing on May 14, 1999 (the "1999 Notes"). The 1999 Notes are secured by a first security interest in substantially all the assets of the Company's assets, including its machinery, equipment, automobiles, fixtures, furniture, accounts receivable and general intangibles, including any stock in any subsidiary. Also, the Company sold separate units consisting of 650 shares of the Company's 10% Senior Preferred Stock(1) and detachable warrants to purchase 3,250,000 shares of the Company's Common Stock at an exercise price of $0.25 per share, exercisable in whole or in part by the holder at any time on or before May 14, 2004. Such sales by the Company occurred in a private placement transaction exempt from registration made by the Securities Act of 1933, as amended. ** ____________________ * Each share of the Company's Senior Preferred Stock has the following characteristics: (a)has a 10% cumulative dividend; (b)constitutes the senior series of any preferred stock the Company may issue; (c)is non-voting; (d)is convertible into shares of the Company's Common Stock at the conversion rate of 10,000 shares of Common Stock for each share of Senior Preferred Stock (or $0.10 per share), if all the shares the Company's Senior Preferred Stock are not redeemed by May 14, 2000 (or up to a total of 6,500,000 shares of the Company's Common Stock based on the 650 shares of the Company's Senior Preferred Stock which are issued and outstanding); (e)is mandatorily redeemable upon the earlier to occur of (i) May 14, 2000 or (ii) the Company's raising of gross proceeds of $5,500,000 from the closing of one or more private placement transactions or secondary offerings of its securities; and (f)has a first priority in liquidation of $1,000 per share, plus the amount of unpaid cumulative dividends, payable from the Company's assets after its payment (or its making of adequate provision for the payment) of all claims of its creditors. **In May 1999, Lancer Offshore Inc. and the Orbiter Fund, who are affiliates of the Company's largest shareholder group (consisting of such entities, Michael Lauer, Lancer Partners LLC and Lancer Partners L.P.) purchased $1,400,000 principal amount of the 1999 Notes and also acquired at such time separate units consisting of 350 shares of the Company's Senior Preferred Stock and warrants to purchase 3,250,000 shares of the Company's Common Stock, for an aggregate investment of $1,750,000. -12- As a result of such new financing, the Company paid off the principal amount of the Notes of $2,395,528 outstanding and accrued interest of $96,355 in full on or immediately after the maturity date of the 1998 Notes. Accordingly, the Company believes that it satisfied all of its remaining obligations under the 1998 Notes in full and it does not anticipate any further claim with respect thereto. The Company would have been in default under a Pledge/Security Agreement associated with the 1999 Notes on the date of the filing of its Form 10-Q for the quarter ended June 30, 1999 because, among other things, the Company had an operating loss in excess of that projected for such quarter and because of its failure to make a mandatory prepayment of principal, which failures would have each constituted an event of default under the Loan Agreement between the Company and the holders of the 1999 Notes. Upon the occurrence of an event of default, the holders of the 1999 Notes have the right, among other things, to accelerate the due date of the 1999 Notes to the date of the default and to sell the assets of the Company securing the debt as a means of repaying the debt. However, the Company is in the process of obtaining separate waivers of the default for the quarter ended June 30, 1999 from the holders of the 1999 Notes. In addition, the Company anticipates obtaining a deferral of any payment of principal on the 1999 Notes until December 31, 1999 regardless of any financing raised by the Company prior to such date through the sale of its securities, and anticipates obtaining certain other changes in the loan agreements. As a condition thereto, the Company anticipates agreeing, among other things,(a) to grant the holders of the 1999 Notes additional warrants to purchase 300,000 shares of the Company's common stock at an exercise price of $0.25 per share, exercisable in whole or in part at any time for a period of five years, and (b) to grant the holders of the 1999 Notes 200,000 shares of the Company's common stock, which shares would be subject to applicable securities law restrictions. Although the Company believes that it will obtain such waivers, there can be no assurance of such result. Moreover, there can be no assurance that the Company will not commit a default under the May 1999 transactions in the future. In the event that the holders of the 1999 Notes sell the Company's assets securing the 1999 Notes following a current or future default, such sale would materially and adversely affect the Company's business and financial condition. OUTLOOK The statements contained in this Outlook are based on current expectation. These statements are forward looking and actual results may differ materially. X-traWeb(TM) PRODUCTS The Company commenced the shifting of its strategic direction during the first quarter of 1999. In early 1999, the Company successfully implemented its proprietary X-traWeb(TM) network for integrating wireless solutions with Internet technologies. The Company's X-traWeb(TM) network allows data from a remote wireless radio frequency (RF) system to be accessed via a secure, encrypted Internet connection using a standard Web browser located anywhere. As a result, the data is available at an Internet-accessible remote location to simplify the control, access and monitoring of those devices. The Company's existing X-traWeb products currently offered for sale are described below: (a) X-Node is a small (approximately 1" x 1") embedded controller suitable for mounting in existing equipment for the purpose of remotely monitoring and controlling the equipment over the Internet. For example, a small, embedded computer, called a micro-controller, controls many beverage vending machines. This embedded controller has a serial port built-in to allow a hand-held computer to configure the machine and obtain transaction information. This information can now be collected, remotely, by fitting an X-Node to this serial port. Two versions of the X-Node have been developed and are fully operational; one has a serial interface and the other a digital interface. (b) X-Gate is a small, rugged Internet gateway device that replaces the more common gateway: the personal computer. The X-Gate is fully operational at present. (c) X-traWeb(TM) Internet Access Servers dedicated to remote monitoring and control applications are available. The Company formed X-traWeb, Inc. its wholly-owned Delaware subsidiary, on May 12, 1999 to conduct the Company's X-traWeb(TM) business. Applications for X-traWeb(TM) in addition to automatic meter reading (AMR), include remote monitoring and control of wireless supervisory control and data acquisition (SCADA)implementations in the oil and gas pipeline; environmental control; water and wastewater management; and heating, ventilation and air conditioning (HVAC) industries. Other applications include data access and monitoring for vending machines, medical devices, and security systems. -13- During the period from January 1, 1999 through June 30, 1999, the Company received no revenues from, and had no sales of any of, its X-traWeb products. As of July 31, 1999, the Company had submitted proposals to an Italian telephone manufacturer, an Italian electrical utility, a California utility and others. In addition, the Company received a purchase order for the initial installation of an X-traWeb(TM) network for a vending machine owner and operator in Pennsylvania and for a test site at a national fast food chain site in Columbus, Ohio. While the Company believes that its pending proposals will be accepted in whole or in part from these sources and others, and that it will derive substantial revenues therefrom in 1999 and thereafter, there cannot be any assurance that any such sales will be made or the amount thereof, although management anticipates that X-traWeb(TM) product sales will constitute the bulk of its revenues over the next 12-month period and thereafter. PROPRIETARY RADIO PRODUCTS The Company is currently offering for sale a total of four 900 MHZ and two 2.4 Ghz low speed digital radios ("LSDRs") which can be used in a variety of industrial applications, including remote control, event detection, SCADA, environmental monitoring, security and industrial control applications. The Company only sold a limit quantity of these radio products to date since the Company is awaiting Federal Communications Commission (FCC) clearance on all of the above models (with the exception of 2.4 Ghz Hopper). The Company expects to receive FCC approval of these LSDRs within the next 60 day period, although there can be no assurance of such result. If such FCC approval is obtained, the Company can then offer the LSDRs so approved for sale in unlimited quantities for commercial application. The Company believes that it will derive significant revenues from the sale of its proprietary radio products in the future. However, there can be no assurance as to the amount of such sales or when such sales will occur. The Company had also developed for The Williams Companies, Inc. devices called Telemetry Interfaces Modular, or TIM (TM)s, which operate at the point of data origin and transmit date to A data collection and forwarding point called a WinGate (TM) unit and the WinGate (TM) unit, in turn, forwards that data to an operating center via a wide area network. These supervisory control and data acquisition (SCADA) units use some of the Company's radio products. However, market penetration in the automatic meter reading (AMR) field has not occurred as anticipated, and, as a result, the Company's contract with Williams has generated a substantially lower level of revenues from that originally anticipated therefrom. Although there are current negotiations in progress for firm commitments from Williams of TIM(TM)s and WinGate (TM) for AMR and gas and oil pipeline applications, there can be no assurance as to the outcome thereof. CONTRACT MANUFACTURE AND ASSEMBLY; ANTENNAS The Company is actively engaged in performing assembly and manufacturing services for other manufacturers and vendors of medical, communications, computer graphics and consumer electronic products at its Salt Lake City manufacturing facility. The Company expects its level of manufacturing and assembly activities to increase during the second half of 1999 and during the year 2000. However, there can be no assurance as to the amounts to be derived therefrom or the timing thereof. In addition, while the Company is engaged in the manufacture and sales of various antennas, it does not expect antenna products to contribute materially to its consolidated net sales or income in the foreseeable future. -14- On October 15, 1998, the Company entered into a seven-year lease for a 34,000 square foot facility in West Valley City, Utah. The Company consolidated its American Fork and Salt Lake City, Utah operations and staff into the new facility. Management expects the new facility to provide sufficient manufacturing and office space for the foreseeable future. However, if additional capacity were required, management would consider out-sourcing a portion of the manufacturing overload. If a portion of manufacturing is out-sourced, the Company may lose some control over the following areas: cost, timeliness of deliveries and quality. However, by out-sourcing a portion of its manufacturing the Company could avoid delays and costs associated with the expansion of its own facilities. The magnitude of any expansion of the Company's manufacturing capabilities that is required would be a direct function of the sales increase and manufacturing overload, both of which are unknown at this time. ENGINEERING SERVICES While the Company does continue to provide design and development services for various third parties, it has reduced its current level of activity inthis area. The Company completed development under a contract with Kyushu Matsushita Electric Co., Ltd. (KME, which is also known as Panasonic) that calls for royalty payments upon shipment of certain KME products. Shipments of KME products containing the Company's technology began during the third quarter of 1998. Management believes royalty payments from the contract were earned during the fourth quarter of 1998, and first half of 1999, but were subject to recoupment by KME up to the first $600,000 of royalties. Management further believes that the Company may become entitled to royalty payments with respect to the third quarter of 1999 (which may be paid during the fourth quarter of 1999), although there can be no assurance of such result. The Company cannot predict the amount of the royalties to be received from the future sale of such KME products. SUMMARY Management believes that the potential growth of the Company's X-traWeb(TM) business segment, proprietary radio products and manufacturing activities require additional financing to sustain the Company's proposed operations in these areas. It is anticipated that additional executive and marketing personnel will be required for the X-traWeb(TM) business in advance of the receipt of any substantial revenues from such source. There can be no assurance that the Company will be able to locate and hire qualified personnel for such functions; moreover, such a task is time-consuming. Similarly, the Company's inventory needs are expected to increase if, as and when orders are received for these new products. Thus, the Company is currently engaged in seeking to raise additional financing (whether through debt, equity or a combination thereof). The Company has private placement transactions being undertaken in implementation of its fund-raising program. While the Company believes that such additional financing can be obtained, there can be no assurance that such financing will be achieved, or, if made available, on terms acceptable to the Company. In summary, while management is optimistic about the Company's future, it is fully aware that anticipated revenue increases from sales of X-traWeb(TM) products, proprietary radios and manufactures activities, design and development contracts and royalty income are by no means assured, and that if such increases do materialize, the requirements for capital are substantial, for which there is no present commitment. -15- STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act which represent the Company's expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the ability of the Company to obtain financing for its current and future operations, to manufacture (or arrange for the manufacturing of) its products, to market and sell its products, and the ability of the Company to establish and maintain its sales of X-traWeb(TM) products. All statements other than statements of historical facts included in this Report including, without limitation, the statements under "Management's Discussion and Analysis of Results of Operations and Financial Condition" and elsewhere herein, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company's expectations ("Cautionary Statements") are disclosed in this Report, including without limitation, in connection with the forward-looking statements included in this report. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. -16- Part II ITEM 1. LEGAL PROCEEDINGS Mentor Graphics, Inc. commenced a lawsuit against the Company in 1998 in a State court in Utah, which was subsequently removed to the United States District Court for the District of Utah, seeking damages of approximately $485,000 plus interest, legal fees and expenses arising out of the Company's alleged breach of contract for the purchase of software and related items. The Company settled such action in May, 1999 by paying $100,000 to the plaintiff. PaineWebber Incorporated commenced a lawsuit against the Company in the United States District Court for the Southern District of New York in which the plaintiff seeks to recover damages of approximately $231,000, plus legal fees and expenses of its counsel in such action. In this case, the Company asserted a counterclaim seeking damages of approximately $250,000. Plaintiff filed a motion for summary judgment in the case in May, 1999 and the Company filed a reply thereto in June, 1999. The Company anticipates that such lawsuit will be settled, although there can be no assurance of such result. The Company received a oral request in 1998 from Mr. and Mrs. Richard Austin to rescind its purchase of the stock of Austin Antenna Ltd. and related assets which closed in 1997. In addition, Mr. Austin requested that the Company bear the cost of (i) the legal fees and expenses in a litigation commenced against Mr. Austin in a state court in Massachusetts brought by Charles Rich seeking damages of approximately $50,000 for non-payment of commissions arising out of the Company=s purchase of Austin Antenna Ltd. and related assets and (ii) the unpaid finder=s fee that is the subject of the litigation. The Company, in turn, advised Mr. and Mrs. Austin that Austin Antenna Ltd. has breached its agreement with the Company by, among other things, failing to furnish the Company with proprietary engineering drawings and related data that would enable the Company to manufacture the antennas now produced by the Austin Antenna division. The Company is currently negotiating with Mr. and Mrs. Austin and believes that the claims may be resolved amicably, although there can be no assurance as to the outcome thereof. ITEM 2. CHANGES IN SECURITIES During May, 1999, the Company authorized the issuance of up to 650 Senior shares of a series of preferred stock designated as its Senior Preferred Stock. Each share of the Company=s Senior Preferred Stock has the following characteristics: (a) has a 10% cumulative dividend; (b) constitutes the senior series of any preferred stock the Company may issue; (c) is non-voting; -18- (d) is convertible into shares of the Company=s Common Stock at the conversion rate of 10,000 shares of Common Stock for each share of Senior Preferred Stock (or $0.10 per share), if all the shares the Company=s Senior Preferred Stock are not redeemed by May 14, 2000 (or up to a total of 6,500,000 shares of the Company=s Common Stock based on the 650 shares of the Company=s Senior Preferred Stock which are issued and outstanding); (e) is mandatorily redeemable upon the earlier to occur of (i) May 14, 2000 or (ii) the Company=s raising of gross proceeds of $5,500,000 from the closing of one or more private placement transactions or secondary offerings of its securities; and (f) has a first priority in liquidation of $1,000 per share, plus the amount of unpaid cumulative dividends, payable from the Company=s assets after its payment (or its making of adequate provision for the payment) of all claims of its creditors. Thus, each share of such Senior Preferred Stock has a priority over the shares of Common Stock in the payment of dividends and upon the liquidation of the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 1. (a) The following documents are filed as part of this report: Financial Statements of the Company (unaudited), including Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operation, Condensed Consolidated Statements of Cash Flow and Notes to Financial Statements as at and for the period ended June 30, 1999. (b) The Exhibits which are listed on the Exhibit Index attached hereto: EXHIBIT INDEX No. Description 3.1 Articles of Incorporation of the Company and all amendment thereto 3.2 Bylaws of the Company 4.1 Form of Common Stock Certificate 4.2 Form of Subscription Agreement used in private financing providing for registration rights 5. Opinion of Connolly Epstein Chicco Foxman Engelmyer & Ewing regarding the legality of securities being registered* 10.1 1997 Stock Option Plan 10.2 DRCC Omnibus Stock Option Plan 10.3 Development and License Agreement dated April 4, 1997, between DRCC and Kyushu Matsushita Electric Co., Ltd. 10.4 Amended and restated Technical Development and Marketing Alliance Agreement dated September 15, 1997, between the Company and Williams Telemetry Services, Inc. 10.5 Lease Agreement dated May 17, 1995, between DRCC and Pracvest Partnership relating to the Company's American Fork City offices and facility 10.6 Lease Agreement dated February 12, 1996, between the Company the Green/Praver, et al., relating to the Company's Salt Lake City offices 10.7 Shareholders Agreement dated May 21, 1997 between the Company, DRCC,Philip A. Bunker and William E. Chipman, Sr. 10.8 Asset Purchase Agreement dated October 31, 1997, between the Company and Austin Antenna, Ltd. 10.9 Stock Exchange Agreement dated October 31, 1997, between the Company, TWC, Ltd. and the shareholders of TWC, Ltd. 10.10 Settlement Agreement, Mutual Waiver and Release of All Claims dated November 11, 1997 between Digital Radio Communications Corp. and Digital Scientific, Inc. 10.11 Agreement (undated) between the Company, Xarc Corporation and Donald J. Wallace relating to the Company's acquisition of Xarc Corporation 10.12 Promissory Note dated December 4, 1997, by the Company, payable to William E. Chipman, Sr. in the principal amount of $125,000 10.13 Promissory Note dated November 13, 1997, by the Company, payable to T. Kent Rainey in the principal amount of $200,000 10.14 Investment Banking Services Agreement dated November 19, 1997, between The Company and PaineWebber Incorporated 10.15 $400,000 Promissory Note dated December 24, 1997, payable to Electronic Assembly Corporation 10.16 $400,000 Promissory Note dated January 8, 1998, payable to Tiverton Holdings Ltd. 10.17 Loan Agreement by and among the Registrant and the Bridge Noteholders dated as of May 15, 1998 10.18 Amendment and Waiver Agreement by and among the Registrant and the Bridge Noteholders dated August 7, 1998 10.19 Amendment and Waiver Agreement by and among the Registrant and the Bridge Noteholders dated September 11, 1998 10.20 Loan Agreement by and among the Registrant and the Bridge Noteholders dated as of May 15, 1998 (Previously filed), together with the Notes, Pledge/Security Agreement, Pledgee/Representative Agreement, Subordination, and Registration Rights Agreement* 10.21 Separation and Mutual Release Agreement between the Registrant and William E. Chipman, Sr. dated as of May 26, 1998*+ 10.22 Registration Rights Agreement by and among the Registrant and the purchasers of common stock issued pursuant to the Registrants Confidential Private Placement Memorandum dated September 9, 1998, as amended* 10.23 Employment Agreement between the Registrant and James O'Callaghan dated May 20, 1998*+ 10.24 Lease agreement between the Registrant and NP#2 dated as of July 29, 1998 relating to the premises at 2441 South 3850 West, West Valley City, Utah 84120* 10.25 Agreement between KME and the Registrant dated October 19, 1998 relating to the Registrant's providing of technical assistance and development relating to the Giarange telephone* 10.26 Agreement between KME and the Registrant dated as of March 1, 1998 relating to the Panasonic MicroCast System* 10.27 General and Mutual Release Agreement between the Registrant and Phil Acton dated November 2, 1998*+ 10.28 Agreement and Waiver Agreement by and among the Registrant and the Bridge Noteholders dated November 25, 1998* 10.29 1998 Employee Incentive Stock Option Plan*+ 10.30 1998 Non-qualified Stock Option Plan*+ 10.31 Amendment of Agreement by and among the Registrant and the Bridge Noteholders dated as of March 26, 1999* 10.32 Loan Agreement by and among the Registrant and the Senior Secured Noteholders dated as of May 14, 1999, together with the Notes, Pledge/Security Agreement, Pledgee Representative Agreement, Subordination and Registration Rights Agreement** 27 Financial Data Schedules* ------------- ** Filed herewith * Filed previously + Management contract or compensatory plan or arrangement filed previously All other exhibits were filed previously. 2. No reports on Form 8-K were filed by the Registrant during the last quarter of the period covered by this report. -19- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: August 20, 1999 WORLD WIRELESS COMMUNICATIONS, INC. /s/ David D. Singer ---------------------------------- David D. Singer President and Chief Executive Officer -20- EX-10 2 EXHIBIT 10.32 APPENDIX A LOAN AGREEMENT This Loan Agreement dated as of the 14th day of May, 1999 by and between each party hereto making a loan pursuant to this Agreement as of the date hereof or from time to time thereafter (individually "each Lender" and collectively the "Lender") and World Wireless Communications, Inc., a Nevada corporation, having an address at 2441 South 3850 West, West Valley City, Utah 84120 (the "Borrower"). WHEREAS, each Lender is willing to lend to Borrower funds to enable Borrower to conduct its business operations; and WHEREAS, Borrower wishes to borrow funds from Lender in order to conduct such operations; NOW, THEREFORE, the parties agree as follows: ARTICLE I OBLIGATIONS 1.1 Simultaneously with the execution and the delivery of this Agreement, Lender agrees to lend to Borrower the minimum sum of $2,000,000 and, as any initial Lender (or any lender becoming a signatory hereto from time to time) and the Company so determine, up to a maximum amount of $3,800,000, in the amounts set forth on the signature page hereto, which amount shall be repaid on May 14, 2000 (the "Loan") and which is to be used by Borrower first to pay the outstanding principal amount and accrued interest on the Notes issued by Borrower on May 15, 1998 and the balance thereof in the operation of its business as determined by the Board of Directors of Borrower. 1.2 The Loan shall bear simple interest at the rate of 16% per annum payable quarterly as provided in, and shall include any additional expenses payable hereunder or under, the Note (as defined in Section 1.3 hereof). 1.3 Simultaneously with the execution and delivery of this Agreement, Borrower shall deliver to each Lender an executed original of the note in the form of Exhibit A attached hereto for the amount loaned to Borrower by such Lender (the "Note"). 1.4 Simultaneously with the execution and the delivery of this Agreement, each Lender and Borrower will execute and deliver the Pledge/Security Agreement attached hereto as Exhibit B (the "Pledge/Security Agreement"). 1.5 Simultaneously with the execution and the delivery of this Agreement, each Lender will execute and deliver the Pledgee Representative Agreement attached to the Loan Agreement as Exhibit C. 1.6 Simultaneously with the execution and the delivery of this Agreement, each Lender and Borrower will execute and deliver the Registration Rights Agreement attached to the Loan Agreement as Exhibit D. ARTICLE II REPRESENTATIONS AND WARRANTIES OF EACH LENDER Each Lender represents and warrants to Borrower that: 2.1 Power and Authority. Each Lender which is a corporation, limited liability company or partnership is a duly organized, validly existing entity in good standing under the laws of its respective state of formation; each Lender has all requisite power and authority to carry on the business in which it is engaged; each owns its assets; and each has the power and authority to execute and deliver this Agreement and to perform all of its respective obligations hereunder. 2.2 Authorization. This Agreement has been duly and validly authorized, executed and delivered by each of them; and this Agreement constitutes the valid and binding obligation of each and is enforceable against each in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is considered in a proceeding in equity or at law). 2.3 No Violations. Neither the execution and delivery of this Agreement, nor the performance of any of their respective obligations hereunder will violate (or, with the passage of time, will violate) any material term, covenant, condition, or provision of any contract (written or unwritten) or any document, certificate of incorporation, by-law, judgment, decree, order, or regulation of any court or governmental or regulatory authority by which any Lender is bound or subject. 2.4 Brokers and Finders. Neither any Lender nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement. ARTICLE III REPRESENTATIONS AND WARRANTIES OF BORROWER 3.1 Corporate Organization; Power and Authority. Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has full corporate power and authority to carry on its business as it is now being conducted and to own the properties and assets it now owns; is duly qualified or licensed to do business as a foreign corporation in good standing in each jurisdiction in which Borrower's failure to qualify to do business will have a material adverse effect on the business, prospects, operations, properties, assets or condition (financial or otherwise) of Borrower. The copies of the Certificate of Incorporation and By-Laws of Borrower heretofore delivered to Acquiror are complete and correct copies of such instruments as presently in effect. 3.2 Authorization Borrower has full corporate power and authority to enter into this Agreement and to carry out the transactions contemplated hereby. The Board of Directors of Borrower has taken all action required by law, Borrower's Certificate of Incorporation, its By-Laws or otherwise to be taken by them to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, the issuance of the Notes and the Warrants, and this Agreement is a valid and binding agreement of Borrower enforceable in accordance with its terms, except that such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect relating to creditors' rights. 3.3 No Violations. Neither the execution and delivery of this Agreement, nor the performance of any of their respective obligations hereunder will violate (or, with the passage of time, will violate) any material term, covenant, condition, or provision of any contract (written or unwritten) or any document, certificate of incorporation, by-law, judgment, decree, order, or regulation of any court or governmental or regulatory authority by which Borrower is bound or subject. 3.4 Capitalization. As of the date hereof, the authorized capital stock of Borrower consisted of 50,000,000 shares of common stock, $.001 par value per share, of which 16,590,855 shares were issued and outstanding, and, 1,000,000 shares of preferred stock, par value $.001 per share, of which no shares were issued and outstanding. All issued and outstanding shares of capital stock of Borrower are validly issued, fully paid and nonassessable, and all securities of the Borrower have been issued in compliance with all applicable state and federal securities laws. As of the date hereof, Borrower had outstanding (a) securities convertible into or exchangeable for Borrower common stock, (b) options, warrants or other rights to purchase or subscribe for common stock or securities convertible into or exchangeable for common stock of Borrower, or (c) contracts, commitments, agreements, understandings or arrangements of any kind relating to the issuance of any common stock of the Borrower, any such convertible or exchangeable securities or any such options, warrants or rights, totalling 2,104,936 shares. 3.5 Financial Statements; SEC Filings. (a) Borrower has heretofore delivered to Lender an audited financial statement of the Company and its subsidiaries for the year ended December 31, 1998 (the "Financial Statement"). The Financial Statement and the notes thereto are true, complete and accurate and fairly present the assets, liabilities and financial condition of Borrower as at the date thereof, and such statement of income and the notes thereto are true, complete and accurate and fairly present the results of operations for the period therein referred to all in accordance with generally accepted accounting principles consistently applied throughout the period involved. (b) Borrower has heretofore delivered to each Lender a copy of its Prospectus dated February 17, 1998 filed with the Securities and Exchange Commission and its Special Financial Report filed pursuant to Section 15(d)-2 of the Securities Exchange Act of 1934, receipt of which is acknowledged, and each Lender has had the opportunity to review all of the quarterly and annual reports filed by Borrower with the Securities and Exchange Commission as of the date hereof. 3.6 Title to Properties; Encumbrances. Borrower has good, valid and marketable title to all the properties and assets which it purports to own (real, personal and mixed, tangible and intangible), including, without limitation, all the properties and assets reflected in the Financial Statement and all the properties and assets purchased by Borrower since the date of the Financial Statement. Except as set forth in the Financial Statement or reflected therein as a capital lease, all such properties and assets are free and clear of all title defects or objections, liens, claims, charges, security interests or other encumbrances of any nature whatsoever, including, without limitation, leases, chattel mortgages, conditional sales contracts, collateral security arrangements and other title or interest retention arrangements, and are not, in the case of real property, subject to any rights of way, building use restrictions, exceptions, variances, reservations or limitations of any nature whatsoever except, with respect to all such properties and assets, (a) liens shown on the Financial Statement as securing specified liabilities or obligations and liens incurred in connection with the purchase of property and/or assets, if such purchase was effected after the date of the Financial Statement, with respect to which no default exists; (b) minor imperfections of title, if any, none of which is substantial in amount, materially detract from the value or impair the use of the property subject thereto, or impair the operations of Borrower and which have arisen only in the ordinary course of business and consistent with past practice since the date of the Financial Statement; and (c) liens for current taxes not yet due. With respect to the property and assets it leases, Borrower is in compliance with such leases, and Borrower holds valid leasehold interests in such property and assets free of any liens, encumbrances and security interests of any party other than the lessors of such property and assets. 3.7 Litigation. There is no action, suit, inquiry, proceeding or investigation by or before any court or governmental or other regulatory or administrative agency or commission pending or, to the best knowledge of Borrower, threatened against or involving Borrower, or which challenges the validity of this Agreement or any action taken or to be taken by Borrower pursuant to this Agreement or in connection with the transactions contemplated hereby; and Borrower does not know or have any reason to know of any valid basis for any such action, proceeding or investigation. 3.8 Consents and Approvals of Governmental Authorities. No consent, approval or authorization of, or declaration, filing or registration with, any governmental or regulatory authority is required to be obtained or made by Borrower in connection with the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. 3.9 Brokers and Finders. Neither Borrower nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders' fees in connection with the transactions contemplated by this Agreement, except for any liability which Borrower has to Capital Research LLC, James T. Kelly and Sterling Technology Partners, LLC relating thereto. 3.10 Subsidiaries. Borrower does not own, directly or indirectly, any capital stock or other equity securities of any other corporation or have any direct or indirect equity or ownership interest in any other business, except its wholly-owned subsidiaries and other entities listed in Section 3.10 of the Disclosure Schedule. 3.11 Taxes. Borrower has filed all tax returns that are required to have been filed in any jurisdiction, and has paid all taxes shown to be due and payable on such returns and all the taxes and assessments levied upon it or its properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for taxes and assessments the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which Borrower has established adequate reserves. To the best of Borrower's knowledge, there are no tax examinations in progress involving Borrower for any fiscal period or periods, and no notice of any claim for taxes, whether pending or threatened, has been received, and no requests for waivers of the time to assess any such taxes are pending. 3.12 Affiliate Transactions. Except as set forth on Section 3.12 of the Disclosure Schedule, Borrower is not party to any contract with any Affiliate of Borrower. "Affiliate" shall mean, with respect to Borrower, any person or entity that directly or indirectly controls, is controlled by, or is under common control with Borrower. For purposes of this definition, "control" of an entity shall mean the power, directly or indirectly, either to (i) vote 10% or more of the securities having ordinary voting power for the election of directors of such entity or (ii) direct or cause the direction of the management and policies of such entity, whether through the ownership of voting securities, by contract or otherwise. Section 3.12 of the Disclosure Schedule sets forth a complete and accurate list of all of the Affiliates of Borrower. ARTICLE IV MISCELLANEOUS PROVISIONS 4.1 Notices. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to the Borrower, World Wireless Communications, Inc., 2441 South 3850 West, West Valley City, Utah 84120, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, New York, New York, Attn: Stephen R. Field, Esq.; and if to a Lender, at his or its address as set forth in the books and records of the Lender. Any party may change his or its address by giving notice to the other party stating his or its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. 4.2 Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Utah, without regard to its conflicts of law principles. All parties hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted only in a federal or state court in Salt Lake City, Utah or in the State of Colorado, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the jurisdiction of any federal or state court in Salt Lake City, Utah or in the State of Colorado in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal service thereof. 4.3 Entire Agreement; Waiver of Breach. This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as provided herein; and no waiver of any breach or condition of this Agreement shall be deemed to have occurred unless such waiver is in writing, signed by the party against whom enforcement is sought, and no waiver shall be claimed to be a waiver of any subsequent breach or condition of a like or different nature. 4.4 Binding Effect; Assignability. This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties and their respective heirs, successors and permitted assigns. This Agreement and the rights of the parties hereunder shall not be assigned except with the written consent of all parties hereto. 4.5 Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. 4.6 Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. 4.7 Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. 4.8 Amendments. This Agreement may not be amended except in a writing signed by all of the parties hereto. 4.9 Survival of Representations and Warranties. The representations and warranties of each party hereto shall survive the execution and the delivery of this Agreement until one year from the date hereof. 4.10 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of such signature pages executed by the parties to one copy of the Agreement; all of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. IN WITNESS WEREOF, each of the parties has signed this Agreement as of the date first written above. WORLD WIRELESS COMMUNICATIONS, INC. By: /s/ David D. Singer -------------------------------- David Singer, President BORROWER LOAN AMOUNT LENDER $800,000 LANCER OFFSHORE, INC. By: /s/ Michael Lauer -------------------------------- Michael Lauer, President $600,000 ORBITER FUND LTD. By: /s/ Michael Lauer -------------------------------- Michael Lauer, President $440,000 THE McCLOSKEY TRUST By: /s/ Thomas D. McCloskey, Jr., ------------------------------ Thomas D. McCloskey, Jr., Trustee P.O. Box 7846 Aspen, CO 81612 $40,000 DPM INVESTMENT CORP. By: /s/ Thomas D. McCloskey ------------------------------ Thomas D. McCloskey, Jr. , V.P. P.O. Box 7846 Aspen, CO 81612 $40,000 FRYING PAN PARTNERS, LLC. By: /s/ David L. Marrs ----------------------------- David L. Marrs, Member P.O. Box 7846 Aspen, CO 81612 $80,000 CJL INVESTMENTS, LLC By: /s/ John H. Perry ---------------------------- John H. Perry, III, Managing-Member $200,000 STERLING TECHNOLOGY PARTNERS, LLC By: /s/ Bruce D. Cowen ------------------------------- Mr. Bruce D. Cowen $200,000 /s/ James T. Kelly ------------------------------- James T. Kelly 111 Veterans Square Media, PA 19063 $200,000 /s/ K.R. Braithwaite ------------------------------- K.R. Braithwaite 3267 Paseo Gallita San Clemente, CA 92672-3514 EXHIBIT A PROMISSORY NOTE $800,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of Lancer Offshore, Inc. (the "Holder"), the principal sum of Eight Hundred Thousand Dollars ($800,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, throught he date of prepayment. EXHIBIT A PROMISSORY NOTE $600,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of Orbiter Fund Ltd. (the "Holder"), the principal sum of Six Hundred Thousand Dollars ($600,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, throught he date of prepayment. EXHIBIT A PROMISSORY NOTE $440,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of The McCloskey Trust (the "Holder"), the principal sum of Four Hundred and Forty Thousand Dollars ($440,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, throught he date of prepayment. EXHIBIT A PROMISSORY NOTE $40,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of DPM Investment Corp. (the "Holder"), the principal sum of Forty Thousand Dollars ($40,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, throught he date of prepayment. EXHIBIT A PROMISSORY NOTE $40,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of Frying Pan Partners, LLC (the "Holder"), the principal sum of Forty Thousand Dollars ($40,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, throught he date of prepayment. EXHIBIT A PROMISSORY NOTE $80,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of CJL Investments, LLC (the "Holder"), the principal sum of Eighty Thousand Dollars ($80,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, through the date of prepayment. EXHIBIT A PROMISSORY NOTE $200,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of Sterling Technology Partners, LLC (the "Holder"), the principal sum of Two Hundred Thousand Dollars ($200,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, through the date of prepayment. EXHIBIT A PROMISSORY NOTE $200,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of James T. Kelly (the "Holder"), the principal sum of Two Hundred Thousand Dollars ($200,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, throught he date of prepayment. EXHIBIT A PROMISSORY NOTE $200,000 Salt Lake City, Utah May 14, 1999 1. Amount; Maturity. FOR VALUE RECEIVED, the undersigned, World Wireless Communications, Inc. (the "Maker"), promises to pay to the order of K.R. Braithwaite (the "Holder"), the principal sum of Two Hundred Thousand Dollars ($200,000), which principal sum shall mature on May 14, 2000 and shall bear simple interest at the rate of 16% per annum, payable quarterly commencing on August 15, 1999 and on November 15, 1999, February 15, 2000 and May 14, 2000 thereafter. 2. Mode of Payment. All payments of principal and interest due under this Note shall be made in legal tender in the United States of America for the payment of private and public debts and delivered to the Holder at or, at the option of the Holder, in such other manner and at such other place as the Holder shall have designated to the Maker in writing. 3. Prepayment. (a) This Note may be voluntarily prepaid, without penalty or premium, in whole or in part, at any time and from time to time. Any prepayment must include all accrued interest on the principal being prepaid, through the date of prepayment. (b) Notwithstanding anything contained herein to the contrary, this Note shall be mandatorily prepaid in an amount equal to 25% of the gross proceeds received by the Maker from any and all closings of an offering of its securities, whether through one or more private placement or secondary public offerings, which prepayment shall be made upon the closing of any such offering. 4. Acceleration upon Event of Default. This Note may be accelerated at the option of the Holder, upon the occurrence of any event of default as described below: (a) any default, whether in whole or in part, shall occur in the payment to the Holder of principal, interest or other item comprising the Note as and when due which shall continue for a period of 10 days after the receipt of written notice by the Maker thereof; (b) any default, whether in whole or in part, shall occur in the due observance or performance of any other covenant, term or provision to be performed under the Loan Agreement by the Maker dated as of May 14, 1999 and all the exhibits thereto (the "Loan Agreement"), which default is not described in any other subsection of this Section, and such default shall continue for a period of 10 days after the receipt of written notice by the Maker; provided, however, that if the Maker shall have commenced to cure such default within such 10-day period and shall proceed continuously in good faith and with due diligence to cure such default, then such period instead shall be 30 days; (c) the Maker shall (1) make a general assignment for the benefit of its creditors, (2) apply for or consent to the appointment of a receiver, trustee, assignee, custodian, sequestrator, liquidator or similar official for itself or any of its assets and properties, (3) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code, (4) file with or otherwise submit to any governmental authority any petition, answer or other document seeking (A) reorganization, (B) an arrangement with creditors or (C) to take advantage of any other present or future applicable law respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief of debtors, dissolution or liquidation, (5) file or otherwise submit any answer or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted against it in any proceeding under any such applicable law, or (6) be adjudicated a bankrupt or insolvent by a court of competent jurisdiction; (d) any case, proceeding or other action shall be commenced against the Maker for the purpose of effecting, or an order, judgment or decree shall be entered by any court of competent jurisdiction approving (in whole or in part) anything specified in of Section 4(d) hereof, or any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed with respect to the Maker, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial part of the assets and properties of the Maker, and any of the foregoing shall continue unstayed and in effect for any period of 60 days; or (e) the Maker's income before interest, depreciation, amortization and taxes reflected on its financial statements filed with the Securities and Exchange Commission for any quarter while the Obligations under the Loan Agreement remain outstanding exceed the loss or are less than the income projected for such quarter as set forth below: (i) for the quarter ending June 30, 1999, a loss of $1,000,000, (ii) for the quarter ending September 30, 1999, income of $250,000, and (iii) for the quarter ending December 31, 1999, income of $1,000,000, in each case, as computed as set forth above. 5. Delay in Exercise of Rights. No delay on the part of the Holder in exercising any of its options, powers or rights nor any partial or single exercise of its options, powers or rights shall constitute a waiver thereof or of any other option, power or right, and no waiver on the part of the Holder of any of its options, powers or rights shall constitute a waiver of any other option, power or right. 6. Waiver of Presentment; No Offsets. The Maker hereby waives presentment for payment, dishonor, protest, notice of protest and any demand whatsoever with respect to this Note and the right to interpose any defense based upon any statute of limitation or any claim of laches and any set-off or counterclaim of any nature or description. 7. Collection Costs; Maximum Interest Limitations. (a) The Maker agrees to pay all reasonable costs, including all attorneys' fees and disbursements incurred by the Holder in collecting or enforcing payment of this Note in accordance with its terms. (b) After this Note becomes due, at stated maturity or on acceleration, any unpaid balance hereof shall thereafter bear interest until paid at a rate of 16% simple interest per annum, but such interest rate shall not exceed at any time the maximum interest rate allowable under applicable state usury laws. 8. Governing Law. (a) This Note and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Utah, without regard to its conflicts of law principles. All parties hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this Note shall be instituted only in a federal or state court in Salt Lake City, Utah or in the State of Colorado, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the jurisdiction of such federal or state court in Utah or in the State of Colorado in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Note. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Note shall constitute personal service thereof. (b) THE MAKER HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS NOTE. 9. Notices. All notices or other communications required or permitted to be given pursuant to this Note shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) five days after mailing if mailed by registered or certified mail, return receipt requested to the party entitled to receive the same, if to the Holder, at his or its address on the books and records of the Maker; and if to the Maker, c/o World Wireless Communications, Inc., 2441 South 3850 West, West Valley City, Utah 84120, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, Third Floor, New York, New York, Attn: Stephen R. Field, Esq., facsimile number (212) 332-6055. Any party may change his or its address by giving notice to the other party stating its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Note. 10. Severability. If any provision of this Note shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Note, and this Note shall be carried out as if any such invalid or unenforceable provision were not contained herein. 11. Amendment. This Note shall not be amended without the prior written consent of the Holder. WORLD WIRELESS COMMUNICATIONS, INC. By: /s/ David D. Singer ------------------------- David D. Singer, President MAKER EXHIBIT B PLEDGE/SECURITY AGREEMENT THIS PLEDGE/SECURITY AGREEMENT, dated as of the 14th day of May, 1999, by and between World Wireless Communications, Inc., a Nevada corporation ("Pledgor"), and each of the holders of the Senior Secured Notes (the "Notes") purchased pursuant to the Confidential Private Placement Memorandum of Pledgor dated May 14, 1999 (the "Memorandum") who is listed on Schedule 1 and whose separate signature page is attached hereto, as the same may be amended from time to time (collectively known as "Pledgee" or the "Holders"). WHEREAS, Pledgor wishes to raise a minimum of $2,500,000 and a maximum of $4,750,000 through a sale of the two different classes of securities consisting of the Notes, on the one hand, and shares of Senior Preferred Stock and warrants to purchase Common Stock of the Company, on the other hand (the "Units") pursuant to the Memorandum; WHEREAS, Pledgee desires to obtain a security interest in certain property owned by Pledgor; and WHEREAS, as an inducement to Pledgee's purchase of the Units from Pledgor, Pledgor has agreed to grant to Pledgee a security interest in and to the Pledged Collateral (as hereinafter defined). NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration, the adequacy and receipt for which are hereby acknowledged, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATIONS Section 1.1 Interpretations. Nothing herein expressed or implied is intended or shall be construed to confer upon any person other than Pledgee any right, remedy or claim under or by reason hereof. All covenants, stipulations and agreements herein contained by or on behalf of Pledgee shall be for the sole and exclusive benefit of Pledgee. Section 1.2 Obligations Secured. The obligations secured hereby are the obligations of Pledgor to Pledgee under the Notes sold by Pledgor to Pledgee pursuant to the Memorandum, in the maximum principal amount thereof outstanding from time to time, up to a maximum amount of $3,800,000 thereunder, and any additional amounts payable by or chargeable to Pledgor thereunder or hereunder (the "Obligations"). ARTICLE II PLEDGE AND ADMINISTRATION OF PLEDGED COLLATERAL Section 2.1 Pledged Collateral. (a) Pledgor hereby pledges to Pledgee, and creates in Pledgee for its benefit, a security interest, for such time as the Obligations shall remain outstanding, in and to all of Pledgor's right, title and interest in and to (i) the property listed in Exhibit 1 attached hereto (and signed by Pledgor), including, without limitation, any securities described therein (which securities are collectively referred to as the "Pledged Securities"), now owned by Pledgor, and all machinery, equipment, automobiles, accounts receivable, inventory, securities of any kind, and general intangibles acquired by Borrower on or after the date of this Agreement; and (ii) all products and proceeds from the pledged property. The property pledged in Section 2.1(a)(i) hereof, the Pledged Securities and the products thereof and the proceeds of all such items are hereinafter collectively referred to as the "Pledged Collateral." The security interest granted by Pledgor to Pledgee in and to the Pledged Collateral shall be free and clear of all security interests and restrictions on transfer of any kind except as provided in this Agreement or as may be imposed by applicable law. (b) Simultaneously with the execution and delivery of this Agreement, Pledgor shall make, execute, acknowledge, file, record and deliver to Pledgee any documents reasonably requested by Pledgee to perfect its first-in-priority security interest in the Pledged Collateral. Simultaneously with the execution and delivery of this Agreement, Pledgor shall make, execute, acknowledge, file, record and deliver to Pledgee such documents and instruments, including, without limitation, financing statements, certificates, affidavits and forms as may, in the reasonable opinion of Pledgee, be necessary to effectuate, complete or perfect, or to continue and preserve, the first-in-priority security interest of Pledgee in the Pledged Collateral, and Pledgee shall hold such documents and instruments as secured party, subject to the terms and conditions contained herein. Section 2.2 Rights; Interests; Etc. (a) So long as no Event of Default (as hereinafter defined) shall have occurred and be continuing: (i) Pledgor shall be entitled to exercise any and all rights pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms hereof; and (ii) Pledgor shall be entitled to receive and retain any and all payments paid or made in respect of the Pledged Collateral. (b) Upon the occurrence and during the continuance of an Event in Default: (i) Subject to Section 2.2 (b) (iii) hereof, all rights of Pledgor to exercise the rights which it would otherwise be entitled to exercise pursuant to Section 2.2 (a) (i) hereof and to receive payments which it would otherwise be authorized to receive and retain pursuant to Section 2.2 (a) (ii) hereof shall be suspended, and all such rights shall thereupon become vested in Pledgee who shall thereupon have the sole right to exercise such rights and to receive and hold as Pledged Collateral such payments; provided, however, that if Pledgee shall become entitled and shall elect to exercise its right to realize on the Pledged Collateral pursuant to Article V hereof, then all cash sums received by Pledgee, or held by Pledgor for the benefit of Pledgee and paid over pursuant to Section 2.2 (b) (ii) hereof, shall be applied against any outstanding Obligations. (ii) All interest, dividends, income and other payments and distributions which are received by Pledgor contrary to the provisions of Section 2.2(b)(i) hereof shall be received in trust for the benefit of Pledgee, shall be segregated from other property of Pledgor and shall be forthwith paid over to Pledgee; (iii) notwithstanding anything contained herein to the contrary. Pledgor shall retain any voting rights it may have with respect to any of the Pledged Securities until such time as Pledgee is entitled and elects to exercise its rights to realize on the Pledged Securities pursuant to Article V hereof. (c) Each of the following events shall constitute a default under this Agreement (each an "Event of Default"): (i) any default, whether in whole or in part, shall occur in the payment to Pledgee of principal, interest or other item comprising the Obligations as and when due, which default shall continue for a period of 10 days after the receipt of written notice thereof by Pledgor; (ii) any default, whether in whole or in part, shall occur in the due observance or performance of any other covenant, term or provision to be performed under this Agreement by Pledgor, or the Loan Agreement, and all exhibits thereto, of even date herewith, which default is not described in any other subsection of this Section, and such default shall continue for a period of 10 days after the receipt of written notice thereof by Pledgor; provided, however, that if Pledgor shall have commenced to cure such default within such 10-day period and shall proceed continuously in good faith and with due diligence to cure such default, then such period instead shall be thirty (30) days; (iii) Pledgor shall (1) make a general assignment for the benefit of its creditors, (2) apply for or consent to the appointment of a receiver, trustee, assignee, custodian, sequestrator, liquidator or similar official for itself or any of its assets and properties, (3) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code, (4) file with or otherwise submit to any governmental authority any petition, answer or other document seeking (A) reorganization, (B) an arrangement with creditors or (C) to take advantage of any other present or future applicable law respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief of debtors, dissolution or liquidation, (5) file or otherwise submit any answer or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted against it in any proceeding under any such applicable law, or (6) be adjudicated a bankrupt or insolvent by a court of competent jurisdiction; (iv) any case, proceeding or other action shall be commenced against Pledgor for the purpose of effecting, or an order, judgment or decree shall be entered by any court of competent jurisdiction approving (in whole or in part) anything specified in of Section 2.2(c) (iii) hereof, or any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed with respect to Pledgor, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial part of the assets and properties of Pledgor, and any of the foregoing shall continue unstayed and in effect for any period of 60 days; or (v) Pledgor's income before interest, depreciation, amortization and taxes reflected on its financial statements filed with the Securities and Exchange Commission for any quarter while the Obligations under the Loan Agreement remain outstanding exceed the loss or are less than the income projected for such quarter as set forth below: (i) for the quarter ending June 30, 1999, a loss of $1,000,000, (ii) for the quarter ending September 30, 1999, income of $250,000, and (iii) for the quarter ending December 31, 1999, income of $1,000,000 in each case, as computed as set forth above. ARTICLE III ATTORNEY-IN-FACT; PERFORMANCE Section 3.1 Pledgee Appointed Attorney-in-Fact. Upon the occurrence of an Event of Default and only as long as such Event of Default shall be continuing, Pledgor hereby appoints Pledgee Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, from time to time in Pledgee's discretion to take any action and to execute any instrument which Pledgee reasonably may deem necessary to accomplish the purposes of this Agreement, including, without limitation, to receive and collect all instruments made payable to Pledgor representing any payment in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. Section 3.2 Pledgee May Perform. If Pledgor fails to perform any agreement contained herein, Pledgee, at its option, may itself perform, or cause performance of, such agreement, and the reasonable expenses of Pledgee incurred in connection therewith shall be payable by Pledgor under Section 8.3. Section 3.3 Appointment of Agent. The Holders shall appoint from time to time by a Pledgee Representative Agreement, in the form attached to the Loan Agreement between the parties hereto as Exhibit C, one Pledgee to act as their authorized representative for the benefit of all of the Holders (the "Pledgee Representative"), and to perform all of the acts of Pledgee permitted or required hereunder. ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.1 Authorization; Enforceability. Each of the parties hereto represents and warrants that it has taken all action necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and binding obligations of the respective party, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors' rights or by the principles governing the availability of equitable remedies. Section 4.2 Ownership of Pledged Collateral. Pledgor warrants and represents that Pledgor is the legal and beneficial owner of the Pledged Collateral free and clear of any lien, security interest, option or other charge or encumbrance except for the security interest created by this Agreement. Section 4.3 Validity of Security Interest. Pledgor warrants and represents that the pledge of the Pledged Collateral pursuant to this Agreement creates a valid and perfected first priority pledge and security interest in the Pledged Collateral. Section 4.4 Due Organization. Pledgor warrants and represents that it (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada, (ii) has the corporate power and authority necessary to entitle it to use its corporate name and to own, lease or otherwise hold its properties and assets and to carry on its business as presently conducted or proposed to be conducted; (iii) is duly qualified and in good standing to do business as presently conducted or proposed to be conducted; and (iv) is duly qualified and in good standing to do business in every jurisdiction where the nature of the business conducted or the property owned or leased by it requires such qualification, except where the failure to so qualify would not have a material adverse effect on the business or financial condition of such corporation. ARTICLE V DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL Section 5.1 Event Default and Remedies. (a) If an Event of Default described in Section 2.2(c)(i), (ii) and (v) occurs and is continuing, then in each such case the Pledgee Representative or the Holders of not less than a majority in principal amount of the Notes may declare the principal amount to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration, such principal amount shall become immediately due and payable. If an Event of Default described in Sections 2.2(c)(iii) or (iv) occurs and is continuing, then the principal amount of all the Notes shall automatically become immediately due and payable without declaration or other act on the part of any Holder. (b) Upon the occurrence of an Event of Default, the Pledgee Representative, in its sole discretion shall be entitled to receive all distributions with respect to the Pledged Collateral, to cause the Pledged Collateral to be transferred into the name of Pledgee or its nominee, to dispose of the Pledged Collateral, and to realize upon any and all rights in the Pledged Collateral then held by Pledgee. Section 5.2 Method of Realizing Upon the Pledged Collateral; Other Remedies. Upon the occurrence of an Event of Default, in addition to any rights and remedies available at law or in equity, the following provisions shall govern Pledgee's right to realize upon the Pledged Collateral: (a) Any item of the Pledged Collateral may be sold for cash or other value in any number of lots at brokers board, public auction or private sale and may be sold without demand, advertisement or notice (except that Pledgee shall give Pledgor ten (10) business days prior written notice of the time and place or of the time after which a private sale may be made (the "Sale Notice"), which notice shall be in any event commercially reasonable. At any sale or sales of the Pledged Collateral, Pledgor may bid for and purchase the whole or any part of the Pledged Collateral and, upon compliance with the terms of such sale, may hold, exploit and dispose of the same without further accountability to Pledgee. Pledgor will execute and deliver, or cause to be executed and delivered, such instruments, documents, assignments, waivers, certificates, and affidavits and supply or cause to be supplied such further information and take such further action as Pledgee reasonably shall require in connection with any such sale. (b) Any cash being held by Pledgee as Pledged Collateral and all cash proceeds received by Pledgee in respect of, sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied as follows: (i) to the payment of all amounts due the Pledgee Representative and the Holders for the expenses reimbursable to it or them hereunder or owed to it pursuant to Section 8.3 hereof; (ii) to the payment of the amounts then due and unpaid for principal of and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably among all the Holders in accordance with the ratio of the principal amount of the Notes held by a Holder to the total principal amount of all of the Notes then outstanding, without preference or priority of an kind, according to the amounts due and payable on such for principal and interest, respectively; and (iii) the balance, if any, to the person or persons entitled thereto, including, without limitation, Pledgor. (c) It is understood that if all or any part of the Pledged Collateral is sold as a private sale, Pledgee will sell such Collateral to the person making the highest bid for such Pledged Collateral, provided that Pledgee shall not be required to conduct an auction or otherwise solicit any specific number of offers for the Pledged Collateral or any part thereof. (d) In addition to all of the rights and remedies which Pledgor and Pledgee may have pursuant to this Agreement, Pledgor and Pledgee shall have all of the rights and remedies provided by law, including, without limitation, those under the Uniform Commercial Code and as set forth in Section 5(e) hereof. (e) (i) If Pledgor fails to pay such amounts due upon the occurrence of an Event of Default which is continuing, then forthwith upon the Pledgee Representative's demand the Pledgee Representative, in any capacity as it may determine, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against Pledgor or any other obligor upon the Notes and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of Pledgor or any other obligor upon such Notes, wherever situated. (ii) Pledgor agrees that it shall be liable for any expenses incurred by the Pledgee Representative and the Holders in connection with enforcement, collection and preservation of the Notes, including, without limitation, legal fees and expenses, and such amounts shall be deemed included under Section 8.3 hereof. (iii) All rights of action and claims under this Agreement may be prosecuted and enforced by the Pledgee Representative without the possession of any of the Notes or the production thereof in any proceeding relating thereto, any such proceeding instituted by the Pledgee Representative may be brought in any capacity as it may determine and any recovery of judgment shall, after provision for the payment of the legal fees and expenses and other expenses paid or incurred by the Pledgee Representative as permitted hereunder, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered. Section 5.3 Proofs of Claim. (a) In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relating to Pledgor or any other obligor upon the Notes or the property of Pledgor or of such other obligor or their creditors, the Pledgee Representative (irrespective of whether the principal of the Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Pledgee Representative shall have made any demand on Pledgor for the payment of overdue principal, if any, or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, (i) to file and prove a claim for the whole amount of principal of the Notes and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Holders (including any claim for the legal fees and expenses and other expenses paid or incurred by the Pledgee Representative permitted hereunder and of the holders allowed in such judicial proceeding), and (ii) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Pledgee Representative and, in the event that the Pledgee Representative shall consent to the making of such payments directly to the Holders, to pay to the Agent any amounts for expenses due it hereunder. (b) Nothing herein contained shall be deemed to authorize the Pledgee Representative to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the rights of any holder thereof or to authorize the Pledgee Representative to vote in respect of the claim of any Holder in any such proceeding. Section 5.4 Duties Regarding Pledged Collateral. Pledgee shall have no duty as to the collection or protection of the Pledged Collateral or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody and reasonable care of any of the Pledged Collateral actually in Pledgee's possession. Section 5.5 Limitation on Suits. (a) No holder of the Notes shall have any right to institute any proceeding, judicial or otherwise, with respect to the Notes for any other remedy hereunder, if the Pledgee Representative has instituted a proceeding pursuant to Section 5.2(e) hereof. (b) Except as otherwise provided herein, every right and remedy given by this Agreement or by law to the Pledgee Representative or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Pledgee Representative or by the Holders, as the case may be. Section 5.6 Additional Remedies upon Certain Defaults. Notwithstanding anything contained in this Agreement to the contrary, if there is an event of default under Section 2.2(c)(v) hereof, Pledgor shall grant to each Pledgee his pro rata share (computed based on the ratio of the principal amount of his Note to the principal amount of all Notes originally issued) of additional warrants, substantially in the form attached hereto as Exhibit 2, to purchase additional shares of the common stock of Pledgor (the "Default Warrant Shares") at the rate of Three Hundred Thousand (300,000) Default Warrant Shares for each such event of default under Section 2.2(c)(v) hereof; provided, however, that the number of Default Warrant Shares shall not exceed Nine Hundred Thousand (900,000) of such shares in the aggregate. The representations and warranties of each Pledgee set forth in Section 3 of such Pledgee's Subscription Agreement shall be true and correct with respect to such Default Warrant Shares on the date of such grant. ARTICLE VI AFFIRMATIVE COVENANTS Pledgor covenants and agrees that, from the date hereof and until the Obligations have been fully paid and satisfied, unless Pledgee shall consent otherwise in writing (as provided in Section 8.4 hereof): Section 6.1 Existence, Properties, Etc. (a) Pledgor shall do, or cause to be done, all things, or proceed with due diligence with any actions or courses of action, that may be necessary (i) to maintain its due organization, valid existence and good standing under the laws of its state of incorporation, and (ii) to preserve and keep in full force and effect all qualifications, licenses and registrations in those jurisdictions in which the failure to do so could have a Material Adverse Effect (as defined in this Section 6.1(a)); and (b) Pledgor shall not do, or cause to be done, any act impairing its corporate power or authority (i) to carry on its business as now conducted, and (ii) to execute or deliver this Agreement, or any other loan instrument delivered pursuant to the Confidential Private Placement Memorandum of Pledgor dated May 14, 1999 (which other loan instruments collectively shall be referred to the "Loan Instruments") to which it is or will be a party, or perform any of its obligations hereunder or thereunder. For purposes of this Agreement, the term "Material Adverse Affect" shall mean any material and adverse affect, whether individually or in the aggregate, upon (a) Pledgor's assets, business, operations, properties or condition, financial or otherwise, (b) the ability of Pledgor to make payment as and when due of all or any part of the Obligations, or (c) the Pledged Collateral. Section 6.2 Payment of Debts, Taxes, Etc. Pledgor shall pay, or cause to be paid, all of its indebtedness and other liabilities and perform, or cause to be performed, all of its obligations in accordance with the respective terms thereof, and pay and discharge, or cause to be paid or discharged, all taxes, assessments and other governmental charges and levies imposed upon it, upon its income or receipts or upon any of its assets and properties on or before the last day on which the same may be paid without penalty, as well as pay all other lawful claims (whether for services, labor, materials, supplies or otherwise) as and when due; provided, however, that it shall not constitute a breach of this Section if Pledgor fails to perform any such obligation or to pay any such indebtedness or other liability (except for the Obligations), tax, assessment, or governmental or other charge, levy or claim (i) that is being contested in good faith and by proper proceedings diligently pursued and (ii) if the effect of such failure to pay or perform will not (A) accelerate the maturity thereof, or of any other debt or obligation of Pledgor, or (B) subject any part of the assets and properties of Pledgor to sale or forfeiture. Section 6.3 Accounts and Reports. Pledgor shall maintain a standard system of accounting in accordance with generally accepted accounting principles consistently applied and provide, at its sole expense, to Pledgee the following: (a) as soon as available and in any event within 90 days after the end of each fiscal year of Pledgor, commencing with the fiscal year ending December 31, 1999, a balance sheet of Pledgor as at the end of that fiscal year and the related statements of earnings, shareholders' equity and cash flow for such fiscal year, all with accompanying notes, in reasonable detail and stating in comparative form the figures as at the end of and for the previous fiscal year, prepared in accordance with generally accepted accounting principles consistently applied, and audited by a firm of independent certified public accountants of recognized standing designated by Pledgee in writing (including, without limitation, Hansen, Barnett & Maxwell) to audit Pledgor's books; (b) as soon as available, and in any event within 60 days after the end of each three-month period of each of its fiscal years (commencing with the quarter ending June 30, 1999), a balance sheet of Pledgor as at the end of such three-month period and the related statements of earnings, shareholders' equity and cash flow for such period, all with accompanying notes, in reasonable detail and stating in comparative form the figures as at the end of and for the previous fiscal year's applicable period, prepared in accordance with generally accepted accounting principles consistently applied, and compiled by a firm of independent certified public accountants of recognized standing designated by Pledgee in writing (including, without limitation, Hansen, Barnett & Maxwell) to review Pledgor's books; (c) as soon as available, a copy of any notice or other communication alleging any nonpayment or other material breach or default, or any foreclosure or other action respecting any material portion of its assets and properties, received respecting any of the indebtedness of Pledgor in excess of $25,000 (other than the Obligations), or any demand or other request for payment under any guaranty, assumption, purchase agreement or similar agreement or arrangement respecting the indebtedness or obligations of others in excess of $25,000, including any received from any person acting on behalf of the holder or beneficiary thereof; and (d) within 30 days after the making of each submission or filing, a copy of any report, registration statement, proxy statement, financial statement, notice or other document, whether periodic or otherwise, submitted to the shareholders of Pledgor, or submitted to or filed by Pledgor with any governmental authority involving or affecting (i) any registration of Pledgor or its securities, (ii) Pledgor that could have a Material Adverse Effect, (iii) the Obligations, (iv) any part of the Pledged Collateral or (v) any of the transactions contemplated in this Agreement or the Loan Instruments, including, without limitation, those submitted or filed pursuant to the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. Section 6.4 Compliance with Applicable Laws; Operations. Pledgor promptly and fully shall comply with, conform to and obey all current applicable laws and all future applicable laws in all material respects as the same shall take effect, the non-compliance with or violation of which could have a Material Adverse Effect. In any event, Pledgor shall procure, store, manufacture, distribute and dispose of all inventory and use and operate all machinery, equipment and real estate in full compliance with and conformity to all applicable laws in all material respects, including, without limitation, (i) all applicable permits, license, authorizations, consents or approvals of authorities and (ii) all applicable laws pertaining to employment, zoning, pollution, hazardous materials, toxic substances, public health or safety, occupational health or safety or the environment. Section 6.5 Maintenance and Insurance. (a) Pledgor shall maintain or cause to be maintained, at its own expense, all of its assets and properties in good working order and condition, making all necessary repairs thereto and renewals and replacements thereof. (b) Pledgor shall maintain or cause to be maintained, at its own expense, insurance in form, substance and amounts (including deductibles), which Pledgor deems reasonably necessary to Pledgor's business, (i) adequate to insure all assets and properties of Pledgor, which assets and properties are of a character usually insured by persons engaged in the same or similar business against loss or damage resulting from fire, flood, hurricanes or other risks included in an extended coverage policy, (ii) against public liability and other tort claims that may be incurred by Pledgor, (iii) as may be required by the Loan Instruments or applicable law and (iv) as may be reasonably requested by Pledgee, all with adequate, financially sound and reputable insurers, and all naming Pledgee as an additional insured and loss payee under a standard mortgagee's endorsement as Pledgee's interest may appear. Section 6.6 Contracts and Other Collateral. Pledgor shall perform all of its obligations under or with respect to each instrument, receivable, contract and other intangible included in the Pledged Collateral to which Pledgor is now or hereafter will be party on a timely basis and in the manner therein required, including, without limitation, this Agreement; and Pledgor shall enforce all of its rights under all such instruments, agreements and other receivable on a timely basis to the full extent permitted by applicable law. Section 6.7 Defense of Collateral, Etc. Pledgor shall defend and enforce its right, title and interest in and to any part of (a) the Pledged Collateral, and (b) if not included within the Pledged Collateral, those assets and properties whose loss could have a Material Adverse Effect, Pledgor shall defend Pledgee's right, title and interest in and to each and every part of the Pledged Collateral, each against all manner of claims and demands on a timely basis to the full extent permitted by applicable law. ARTICLE VII NEGATIVE COVENANTS Pledgor covenants and agrees that, from the date hereof until the Obligations have been fully paid and satisfied, unless Pledgee shall consent otherwise in writing (as provided in Section 8.4 hereof): Section 7.1 Indebtedness. Pledgor shall not directly or indirectly permit, create, incur, assume, permit to exist, increase, renew or extend on or after the date hereof any indebtedness on its part, including commitments, contingencies and credit availabilities, or apply for or offer or agree to do any of the foregoing, except that Pledgor may incur or permit to exist: (a) indebtedness owed to Pledgee; (b) indebtedness incurred in the ordinary course of business, including, without limitation, to suppliers, distributors, carriers, materialmen, laborers, counsel, accountants, advisors, sellers or lessors of machinery and equipment and real estate acquired or leased in connection with Pledgor's business; and (c) other indebtedness expressly subordinated to the Obligations by such creditor executing the standard form subordination agreement of the Pledgee attached hereto as Exhibit 3 (the "Subordination Agreement"), or otherwise as may be acceptable to Pledgee in its sole discretion and as to which it consents in writing. Pledgor shall not prepay or acquire, in whole or in part, any of its indebtedness except to Pledgee as permitted by agreement or consent or where any prepayments do not exceed the sum of $100,000 in any calendar year of Pledgor. The indebtedness permitted under clauses (b) and (c) hereof incurred after the date of this Agreement shall not exceed in the aggregate $3,800,000. Section 7.2 Liens and Encumbrances. Pledgor shall not directly or indirectly make, create, incur, assume or permit to exist any assignment, pledge, mortgage, security interest or other lien or encumbrance of any nature in, to or against any part of the Pledged Collateral, or offer or agree to do so, or own or acquire or agree to acquire any asset or property of any character subject to any of the foregoing encumbrances (including any conditional sale contract or other title retention agreement), or assign, pledge or in any way transfer or encumber its right to receive any income or other distribution or proceeds from any part of the Pledged Collateral, or enter into any sale-leaseback financing respecting any part of the Pledged Collateral as lessee, or cause or assist the inception or continuation of any of the foregoing; provided, however, that the foregoing restrictions shall not prohibit (to the extent otherwise not prohibited by this Agreement): (a) liens for taxes, assessments, governmental charges, levies or claims described in Section 6.2, if payment thereof shall not then be required to be made by this Section 7.2; (b) liens of carriers, warehousemen, mechanics, laborers and materialmen incurred in the ordinary course of business for sums not then required to be paid under Section 6.2, so long as there shall have been set aside on the books of Pledgor such reserve, if any, as shall be required by generally accepted accounting principles; (c) liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance, statutory obligation or social security legislation, or for any purpose at the time required by law as a condition precedent to the transaction of business or the exercise of any of the privileges or licenses of Pledgor; (d) liens incurred in respect of attachments discharged within 30 days from the making thereof or judgments or awards in force for less than 30 days or with respect to which Pledgor in good faith shall be prosecuting an appeal or proceeding for review and with respect to which a stay of execution upon appeal or proceeding for review shall have been secured if required; (e) the security interests and other liens and encumbrances granted from time to time to Pledgee; (f) with respect to indebtedness permitted under Section 7.1, liens incurred in respect of any financing of Pledgor's inventory, accounts receivable, machinery, equipment and automobiles with a bank or other financial institution, provided that the loan instruments evidencing such financing expressly provide that any lien arising from such financing is subordinate to the first security interest hereunder and, in the event of a default thereunder, no collection of the principal, interest and other charges and expenses thereunder will be made until the full payment of the Obligations, or otherwise as may be acceptable to Pledgee in its sole discretion and as to which it consents in writing; (g) liens incurred in respect of indebtedness on the Pledged Collateral which are subordinated to the Obligations by such creditor(s) executing the Subordination Agreement; and which are subordinated to the Obligations, or otherwise as may be acceptable to Pledgee in its sole discretion and as to which it consents in writing; and (h) with respect to indebtedness permitted under section 7.1, liens incurred in respect of indebtedness on machinery, equipment and automobiles purchased or leased by Pledgor after the date of the execution and delivery of this Agreement by Pledgor at the closing of the offering made pursuant to the Memorandum. Section 7.3 Securities Issuance. Pledgor shall not issue any of its stock for $0.25 per share or less, nor shall Pledgor issue any note, warrant, debenture or other security which may convert or be exercised to acquire Pledgor's stock for $0.25 per share or less, except as reflected in the securities issued pursuant to the Memorandum. ARTICLE VIII MISCELLANEOUS Section 8.1 Notices. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to Pledgor, World Wireless Communications, Inc., 2441 South 3850 West, West Valley City, Utah 84120, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, 3rd Floor, New York, New York 10020, Attn: Stephen R. Field, Esq., and if to Pledgee, at the addresses shown on the books of Pledgor. Any party may change its address by giving notice to the other party stating its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. Section 8.2 Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. Section 8.3 Expenses. In the event of an Event of Default, Pledgor will pay to Pledgee the amount of any and all reasonable expenses, including the reasonable fees and expenses of its counsel, which Pledgee or the Pledgee Representative may incur in connection with (i) the custody or preservation of, or the sale, collection from, or other realization upon, any of the Pledged Collateral, (ii) the exercise or enforcement of any of the rights of Pledgee hereunder or (iii) the failure by Pledgor to perform or observe any of the provisions hereof. Section 8.4 Waivers, Amendments, Etc.. Pledgee's delay or failure at any time or times hereafter to require strict performance by Pledgor of any undertakings, agreements or covenants shall not waive, affect, or diminish any right of Pledgee under this Agreement to demand strict compliance and performance herewith. Any waiver by Pledgee of any Event of Default shall not waive or affect any other Event of Default, whether such Event of Default is prior or subsequent thereto and whether of the same or a different type. None of the undertakings, agreements and covenants of Pledgor contained in this Agreement, and no Event of Default, shall be deemed to have been waived by Pledgee, nor may this Agreement be amended, changed or modified, unless such waiver, amendment, change or modification is evidenced by an instrument in writing specifying such waiver, amendment, change or modification and signed by the Holders of at least 75% of the principal amount of the Notes then outstanding. Section 8.5 Continuing Security Interest. This Agreement shall create a continuing security interest in the Pledged Collateral and shall (i) remain in full force and effect until payment in full of the Obligations or the conversion of all of the Notes as provided therein, and (ii) be binding upon Pledgor and its successors and (iii) inure to the benefit of Pledgee and its successors and permitted assigns. Upon the payment or satisfaction in full of the Obligations, or such conversion of the Notes, Pledgor shall be entitled to the return, at its expense, of such of the Pledged Collateral as shall not have been sold, returned in accordance with Section 5.2 hereof or otherwise applied pursuant to the terms hereof. Section 8.6 Applicable Law; Jurisdiction. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Utah, without regard to its conflicts of law principles. Pledgee and Pledgor hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted only in a federal or state court in Salt Lake City, Utah or in the State of Colorado, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the jurisdiction of any federal or state court in Salt Lake City, Utah or in the State of Colorado, in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. Pledgee and Pledgor hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal service thereof. Section 8.7 Entire Agreement. This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof. Section 8.8 Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. Section 8.9 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of such signature pages executed by the parties to one copy of the Agreement; all of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. Section 8.10 Rights to Participate in Board and Committee Meetings. Commencing with the date of the Closing, Borrower shall give Bruce D. Cowen full visitation rights at all meetings of the Board of Directors of Borrower and at all meetings of any committee thereof whether held in person or by conference call. Pledgor agrees to provide Bruce D. Cowen with the same notice and information that it gives to its directors in connection with any such meeting. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. WORLD WIRELESS COMMUNICATIONS, INC. PLEDGOR By: /s/ David D. Singer --------------------------- David Singer, President PLEDGEE: Each Holder listed on Schedule 1 attached hereto as reflected in the signature pages attached hereto from time to time at the end of such Schedule IN WITNESS WHEREOF, the undersigned Pledgee has signed this Agreement as of the date first above written. PLEDGEE: Signature of Individual Pledgee __________________________ Print Name of Individual or, if applicable, /s/ The Orbiter Fund --------------------------------------- Name of Partnership, Corporation, Trust or other Entity By: /s/ Michael Lauer ----------------------------------- Authorized Person Michael Lauer ----------------------------------- Print Name of Signer I Investment Manager ------------------------------------ Title Kaya Flamboyan 9 ------------------------------------ Street or Mailing Address Curacao, Netherlands Antilles ------------------------------------ City, State, Zip Code IN WITNESS WHEREOF, the undersigned Pledgee has signed this Agreement as of the date first above written. PLEDGEE: Signature of Individual Pledgee ____________________________ Print Name of Individual or, if applicable, /s/ Lancer Offshore Inc. --------------------------------------- Name of Partnership, Corporation, Trust or other Entity By: /s/ Michael Lauer --------------------------------------- Authorized Person Michael Lauer -------------------------------------- Print Name of Signer Investment Manager ------------------------------------- Title Kaya Flamboyan 9 ------------------------------------- Street or Mailing Address Curacao, Netherlands Antilles -------------------------------------- City, State, Zip Code PLEDGEE: Signature of Individual Pledgee -------------------------------------- Print Name of Individual or, if applicable, The McCloskey Trust --------------------------------------- Name of Partnership, Corporation, Trust or other Entity By: /s/ Thomas D. McCloskey, Jr. --------------------------------------- Authorized Person Thomas D. McCloskey, Jr. -------------------------------------- Print Name of Signer Trustee -------------------------------------- Title 132 West Main Street, Suite A -------------------------------------- Street or Mailing Address Aspen, CO 81611 -------------------------------------- City, State, Zip Code PLEDGEE: Signature of Individual Pledgee _______________________ Print Name of Individual or, if applicable, Frying Pan Partners, LLC ------------------------------------ Name of Partnership, Corporation, Trust or other Entity By: /s/ David Marrs ------------------------------------ Authorized Person David Marrs ------------------------------------ Print Name of Signer Member ------------------------------------ Title 132 W. Main St. ------------------------------------ Street or Mailing Address Aspen, CO. 81611 ------------------------------------ City, State, Zip Code PLEDGEE: Signature of Individual Pledgee __________________________ Print Name of Individual or, if applicable, CJL Investments LLC ------------------------------------- Name of Partnership, Corporation, Trust or other Entity By: /s/ John H. Perry ------------------------------------- Authorized Person John H. Perry, III ------------------------------------- Print Name of Signer Managing Member ------------------------------------- Title 564 Toro Cyn Rd. ------------------------------------- Street or Mailing Address Santa Barbara, CA 93108 ------------------------------------- City, State, Zip Code PLEDGEE: James T. Kelly ------------------------------------- Signature of Individual Pledgee James T. Kelly ------------------------------------ Print Name of Individual or, if applicable, ------------------------------------- Name of Partnership, Corporation, Trust or other Entity By:________________________ Authorized Person __________________________ Print Name of Signer ___________________ Title _____________________ Street or Mailing Address _______________________ City, State, Zip Code PLEDGEE: Signature of Individual Pledgee ______________________ Print Name of Individual or, if applicable, Sterling Technology Partners, LLC ------------------------------------- Name of Partnership, Corporation, Trust or other Entity By: /s/ Bruce D. Cowen ------------------------------------- Authorized Person Bruce D. Cowen ------------------------------------- Print Name of Signer Chairman & CEO ------------------------------------- Title 27241 Paseo Peregrino ------------------------------------- Street or Mailing Address San Juan Capistrano, CA 92675 ------------------------------------- City, State, Zip Code PLEDGEE: /s/ Kathyrn Braithwaite ------------------------------------- Signature of Individual Pledgee Kathryn Braithwaite ------------------------------------- Print Name of Individual or, if applicable, Name of Partnership, Corporation, Trust --------------------------------------- or other Entity By:___________________ Authorized Person ________________________ Print Name of Signer _________________ Title ______________ Street or Mailing Address _________________________ City, State, Zip Code EXHIBIT C PLEDGEE REPRESENTATIVE AGREEMENT This Agreement is entered into effective as of the 14th day of May, 1999 by and among the parties set forth below (individually a "Noteholder," and collectively the "Noteholders"). 1. RECITALS. The Noteholders each hold an interest in the Promissory Note from World Wireless Communications, Inc., a Nevada corporation (the "Borrower"), in the original principal amount of $2,000,000 of even date herewith (the "Note"). The Note is secured by a security interest in certain assets of the Borrower pursuant to a Pledge/Security Agreement of even date herewith (the "Pledge Agreement"). The parties desire to appoint and authorize one Noteholder to enforce their rights under the Note and/or the Pledge Agreement in accordance with the terms and conditions set forth herein. 2. APPOINTMENT. Sterling Technology Partners, LLC, is hereby appointed as the Noteholders' "Pledgee Representative," as defined and identified in the Pledge Agreement. By the execution and delivery of this Agreement, each Noteholder appoints Sterling Technology Partners, LLC, as its true and lawful attorney-in-fact in connection with all matters relating to the Notes and/or the Pledge Agreement. This appointment is coupled with an interest and is irrevocable. 3. AUTHORITY. The Pledgee Representative shall have the following powers and authority: a. all rights, powers and authority as expressly set forth in the Pledge Agreement; b. the right to institute any action to enforce the Noteholders' rights under the Pledge Agreement and/or the Notes, as the trustee of an express trust for all of the Noteholders, individually and as the agent of the Noteholders, or in such other capacity as Pledgee Representative may determine; c. the right to negotiate and settle any dispute arising under or relating to the Note and/or the Pledge Agreement, and the enforcement thereof, on such terms and conditions as the Pledgee Representative deems proper; and d. the right to negotiate, enter into and enforce the Noteholders' rights under any Subordination Agreement in favor of the Noteholders with other creditors of the Borrower. 4. OBLIGATIONS. Any amounts which the Pledgee Representative collects on behalf of the Noteholders shall be distributed to each Noteholder in portion to each Noteholder's interest in the principal outstanding under the Notes. The Pledgee Representative shall distribute all amounts collected under the Notes and/or the Pledge Agreement within five business days of collecting such amounts. 5. EXPENSES; INDEMNIFICATION. Each Noteholder, severally but not jointly, agrees to reimburse the Pledgee Representative for any expenses incurred in enforcing the Noteholders' rights under the Notes and/or the Pledge Agreement, including reasonably attorney fees, which reimbursements may be offset against amounts distributable to the Noteholders. Each Noteholder, severally but not jointly, agrees to indemnify and hold harmless the Pledgee Representative from any and all actions taken under this Agreement, provided that the Pledgee Representative is not acting intentionally, fraudulently or with gross negligence. Any indemnification obligation may be offset against the amounts collected under the Note and/or the Pledge Agreement. 6. RESIGNATION OR REPLACEMENT OF THE PLEDGEE REPRESENTATIVE. The Pledgee Representative may resign at any time by giving the Noteholders at least 20 days prior written notice of such resignation. The Noteholders may remove the Pledgee Representative upon a vote of the holders of a majority of the principal balance then owed under the Notes. A replacement Pledgee Representative shall be appointed upon a vote of the holders of a majority of the principal balance then owed under the Notes. The Pledgee Representative, its affiliates and assigns, may vote on the same basis as all the other Noteholders in any such vote. Upon such resignation or removal, the Pledge Representative shall be released and discharged from all further obligations and liabilities hereunder. 7. MISCELLANEOUS. a. Notices. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (i) the date of delivery, if delivered in person, by nationally recognized overnight delivery services or by facsimile or (ii) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to the Borrower, World Wireless Communications, Inc., 2441 South 3850 West, West Valley City, Salt Lake City, Utah 84120, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, New York, New York 10020, Attn: Stephen R. Field, Esq.; and if to a Lender, at his or its address as set forth in the books and records of the Lender. Any party may change his or its address by giving notice to the other party stating his or its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. b. Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Utah, without regard to its conflicts of law principles. All parties hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted only in a federal or state court in Salt Lake City, Utah or in the State of Colorado; (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding; and (iii) irrevocably submit to the jurisdiction of any federal or state court in Salt Lake City, Utah or in the State of Colorado in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal service thereof. c. Entire Agreement; Waiver of Breach. This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as provided herein; and no waiver of any breach or condition of this Agreement shall be deemed to have occurred unless such waiver is in writing, signed by the party against whom enforcement is sought, and no waiver shall be claimed to be a waiver of any subsequent breach or condition of a like or different nature. d. Binding Effect; Assignability. This Agreement and all the terms and provisions hereof shall be binding upon and shall insure to the benefit of the parties and their respective heirs, successors and permitted assigns. This Agreement and the rights of the parties hereunder shall not be assigned except with the written consent of all parties hereto. e. Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. f. Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. g. Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. h. Amendments. This Agreement may not be amended except in a writing signed by all of the parties hereto. i. Survival of Representations and Warranties. The representations and warranties of each party hereto shall survive the execution and the delivery of this Agreement until one year from the date hereof. j. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of such signature pages executed by the parties to one copy of the Agreement; all of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. IN WITNESS WHEREOF, the parties have read and executed this Agreement effective as of the date first above written. LANCER OFFSHORE, INC. STERLING TECHNOLOGY PARTNERS, LLC By: /s/ Michael Lauer By: /s/ Bruce D. Cowen ------------------------- ------------------------- Michael Lauer, President Bruce D. Cowen THE McCLOSKEY TRUST /s/ James T. Kelly ------------------------- By: /s/ Thomas D. McCloskey, Jr. James T. Kelly --------------------------------- Thomas D. McCloskey, Jr. DPM INVESTMENT CORP. /s/ K.R. Braithwaite ------------------------- K.R. Braithwaite By: /s/ Thomas D. McCloskey, Jr. ------------------------------ Thomas D. McCloskey, Jr. FRYING PAN PARTNERS, LLC ORBITER FUND LTD. By: /s/ David L. Marrs By: /s/ Michael Lauer ---------------------------- ----------------------- David L. Marrs, Member Michael Lauer, President CJL INVESTMENTS, LLC By: /s/ John H. Perry, III ----------------------------- John H. Perry, III, Managing-Member EXHIBIT 3 SUBORDINATION AGREEMENT This Subordination Agreement (this "Agreement"), dated as of _____________, _____ is made among World Wireless Communications, Inc., a Nevada corporation ("Borrower"), ____________________________ as the Pledgee Representative of the creditors (the "Lender") under the promissory note evidencing the Senior Debt (as hereafter defined), and ___________________ ("Subordinated Creditor"). The defined term "Lenders" shall include any successor or replacement senior lender or lenders of the Borrower. In order to induce Lenders to lend money to Borrower in such amounts, for such periods and such terms as Lenders and Borrower may agree upon, as a condition to such loans, and in consideration of any loan so made, Lenders, Borrower, and Subordinated Creditor agree as follows: 1. As used herein, and unless otherwise defined herein, the following terms shall have the following respective meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined) except as the context shall otherwise require: "Event of Default" shall mean an event which, with notice or lapse of time or both, automatically accelerates the maturity of the Senior Debt, or which permits either of the Lenders to accelerate the maturity of the Senior Debt. "Indefeasibly Paid in Full" or any similar term or phrase when used in this Agreement with respect to Senior Debt shall mean the final payment in full of all Senior Debt in cash. "Insolvency Proceeding" shall mean (i) any assignment for the benefit of creditors by Borrower or any other marshaling of the assets and liabilities of Borrower; or (ii) the institution by or against Borrower of any proceedings in insolvency, bankruptcy, receivership, liquidation, arrangement, reorganization, dissolution, winding up or other similar case or proceeding whether voluntary or involuntary. "Senior Agreement" shall mean the Note and Warrant Purchase Agreement dated as of May 14, 1999, between Borrower and Lenders as such agreement may be modified, amended, supplemented, restated, replaced, exchanged or refinanced from time to time in accordance with the terms thereof; in connection with any such replacement or refinancing, "Senior Agreement" shall mean the agreement(s) evidencing the obligations to the successor or replacement senior lender(s) thereunder and "Lenders" shall mean such successor or replacement senior lender(s). The Senior Agreement shall be deemed to be in effect hereunder for so long as Borrower has any obligation to Lenders thereunder or Lenders have any unexpired commitment to Borrower thereunder. "Senior Debt" shall mean all indebtedness, obligations, and liabilities of every nature of Borrower, including any subsidiary guarantees for the benefit of Lenders (including any successor or replacement senior lender), whether now existing or hereafter incurred, direct, indirect, or acquired, absolute or contingent, secured or unsecured, together with any extensions, renewals or modifications of any thereof, and shall include without limitation all obligations and liabilities of Borrower for the payment of principal, interest, penalties, fees (including without limitation reasonable attorneys' fees and disbursements and fees of in-house counsel) and other amounts under or in respect of the Senior Credit Agreement, including without limitation interest payments arising after the initiation of any Insolvency Proceeding whether or not such interest is an allowed claim in any Insolvency Proceeding. "Standstill Notice" shall mean a written notice given by the either of the Lenders to Subordinated Creditor of the occurrence of an Event of Default. "Subordinated Debt" shall mean all indebtedness, obligations, and liabilities of Borrower to Subordinated Creditor, whether now existing or hereafter incurred, direct, indirect, or acquired, absolute or contingent, secured or unsecured, together with all modifications, amendments, extensions, renewals, and refundings thereof or of any part of any thereof, and shall include without limitation the principal amount of indebtedness under the Subordinated Note, any right to interest from Borrower on account thereof, and any other charges and claims provided for thereunder. "Subordinated Note" shall mean the Promissory Note dated ____________, executed by Borrower in favor of Subordinated Creditor in the original principal amount of $________________. 2. Subordinated Creditor represents and warrants to the Lenders that: (i) as of the date of this Agreement, Borrower is indebted to Subordinated Creditor under the Subordinated Note in the aggregate principal amount of $________ and that there is no other Subordinated Debt currently outstanding between Borrower and Subordinated Creditor; (ii) it has not, either singly or collectively, sold, assigned, transferred or otherwise disposed of any right it or they may have to repayment of the Subordinated Debt or any security thereof; (iii) Subordinated Creditor is a duly organized ______________, formed and existing under the laws of ___________, having full power and authority to own its properties and to carry on its business as now conducted; (iv) Subordinated Creditor has the requisite power and authority to enter into and perform its obligations under this Agreement; (v) this Agreement has been duly executed and delivered by Subordinated Creditor and is a valid, legal and binding obligation of Subordinated Creditor, subject to principles of equity and rights applicable to the rights of creditors generally, including bankruptcy laws; and (vi) the officer or officers who have executed this Agreement on behalf of such Subordinated Creditor are duly empowered and authorized to do so. 3. To the extent and in the manner set forth in this Agreement, notwithstanding anything to the contrary contained in the Subordinated Note and any related loan agreement, the Subordinated Debt and all rights and remedies of Subordinated Creditor with respect thereto (including without limitation any lien securing payment thereof) is and shall continue to be subject and subordinate to the Senior Debt. 4. Borrower and Subordinated Creditor hereby covenant and agree as follows: (a) Borrower shall not make and Subordinated Creditor shall not receive, directly or indirectly, any payment, advance, credit, security or new or further evidence of any kind whatsoever on account of or with respect to the Subordinated Debt or any part thereof; provided, however, that Subordinated Creditor may receive from Borrower regularly scheduled installments of interest under the Subordinated Note (but no prepayments) on the stated dates of payment thereof so long as no Standstill Notice is then in effect. (b) Upon the maturity of any Senior Debt, whether by lapse of time, acceleration or otherwise, all amounts due or to become due in connection therewith shall first be Indefeasibly Paid in Full before any direct or indirect payment is made by or on behalf of Borrower or received by Subordinated Creditor on account of any Subordinated Debt. (c) Upon the occurrence of an Event of Default and during any period that a Standstill Notice is in effect, no direct or indirect payment shall be made on behalf of Borrower or received by Subordinated Creditor on account of the Subordinated Debt. A Standstill Notice issued upon any payment default or acceleration of the Senior Debt shall remain in effect until Lenders receive Indefeasible Payment in Full, as provided in paragraph 4(b) above. The Lenders will use commercially reasonable efforts to give Subordinated Creditor written notice upon the waiver and/or cure of the Event(s) of Default that gave rise to a Standstill Notice (without liability or penalty incurred by either of the Lenders for any failure to give such notice). After the Subordinated Creditor receives written notice of waiver and/or cure of the Event(s) of Default from the Lenders, the Borrower shall be free to continue to make regular interest payments to Subordinated Creditor as they come due, including those payments that are in arrears. (d) In the event that all or any portion of the Subordinated Debt shall have been declared to be due and payable by Subordinated Creditor, such declaration shall not be effective without both of the Lenders' written consent until the earliest to occur of: (i) an Insolvency Proceeding; or (ii) the default at scheduled maturity of, or the acceleration of the maturity of, any Senior Debt. (e) Subordinated Creditor may not commence suit or take any other action to seek or enforce collection of any Subordinated Debt after the Subordinated Creditor gives Lenders written notice that Subordinated Creditor has declared the Subordinated Debt to be due and payable. Any and all proceeds of or recoveries from enforcement proceedings by Subordinated Creditor shall be subject to all the provisions of this Agreement, including without limitation the provision of paragraph 9 hereof. The terms of this paragraph 4(e) are subject to the limitations contained in paragraph 6 herein. (f) Subordinated Creditor may not initiate or cooperate in the commencement of any Insolvency Proceeding. (g) Subordinated Creditor may not purchase, and shall not permit any affiliate of Subordinated Creditor to purchase, any goods or services from Borrower except for cash and without incurring trade debt. (h) Subordinated Creditor may not exercise, and shall not permit any affiliate of Subordinated Creditor to exercise, any right of offset against Borrower, until after the withdrawal of the Standstill Notice, and then subject to the requirements of paragraph 9 hereof. (i) Subordinated Creditor shall immediately notify Lenders of any default or breach of the Subordinated Debt. (j) The provisions of paragraph 4 shall continue to be effective until such time (if any) as the Senior Debt has been Indefeasibly Paid in Full. 5. Borrower and Subordinated Creditor agree as follows: (a) Upon any distribution of assets of Borrower and its subsidiaries to creditors of Borrower upon or in connection with an Insolvency Proceeding, any payment or distribution of any kind (whether in cash, property, or securities) which otherwise would be payable or deliverable upon or with respect to the Subordinated Debt shall be paid or delivered directly to the Lenders for application (in case of cash) to, or as collateral (in case of non-cash property or securities) for, the payment or prepayment of the Senior Debt until the Senior Debt has been Indefeasibly Paid in Full. (b) If any Insolvency Proceeding is commenced by or against Borrower, Lenders are hereby irrevocably authorized and empowered, but shall have no obligation, to: (i) demand, sue for, collect and receive every payment or distribution referred to in paragraph 5.1 above and give acquittance therefor; and (ii) file claims and proofs of claim and take such other action (including without limitation any voting rights in the Insolvency Proceeding related to the Subordinated Debt and enforcing any security interest or other lien securing payment of the Subordinated Debt) as it may deem necessary or advisable for the exercise of any of the rights or interests of Lenders hereunder. (c) If any Insolvency Proceeding is commenced by or against Borrower, Subordinated Creditor shall duly and promptly take such action as Lenders may request to: (i) collect the Subordinated Debt for account of Lenders, and file appropriate claims or proofs of claim in respect of the Subordinated Debt; (ii) execute and deliver to Lenders such powers of attorney, assignments or other instruments as Lenders may request in order to enable it to enforce any and all claims with respect to the Subordinated Debt and any security interests and other liens securing payment of the Subordinated Debt; and (iii) collect and receive any and all payments and distributions which may be payable or deliverable upon or with respect to the Subordinated Debt. (d) If any Insolvency Proceeding is commenced by or against Borrower or otherwise, Subordinated Creditor agrees not to: (i) contest, or join in any proceeding contesting, the creation, existence, validity, priority or perfection of any lien or security interest securing payment of the Senior Debt; (ii) without the prior written consent of Lenders, assert any rights or claims to adequate protection payments for the Subordinated Debt in any Insolvency Proceeding; (iii) object to or contest, or join in any proceeding objecting to or contesting, any "post petition financing" arrangement or agreement between the Lenders and Borrower, including without limitation, Borrower's use of "cash collateral" in any Insolvency Proceeding; (iv) assert any position or claim that is adverse to the interests of the Lenders in connection with any rights in or payments under the Senior Debt; (v) waive any rights to make an election under 11 U.S.C. Section 1111(b); (vi) seek participation or membership in any creditor's committee in any Insolvency Proceeding without the both of the Lenders' prior written consent; or (vii) oppose, or join in any proceeding opposing the sale or disposition of any property or collateral of the Borrower, if the Lenders have both consented to such sale or disposition. 6. To the extent that Subordinated Creditor now has or hereafter obtains a lien or security interest in any assets of Borrower: (a) Such lien or security interest shall be at all times subject and subordinate to any lien or security interest which Lenders now has or hereafter obtains in such assets of Borrower without regard to the time or manner in which the respective liens and security interests of the parties hereto may have been created or perfected; and (b) Except upon the written consent of the Lenders, Subordinated Creditor may not at any time exercise any rights or remedies with respect to or otherwise enforce any lien or security interest it now has or hereafter obtains in Borrower's assets, or apply any assets covered by any such lien or security interest to any claim now or hereafter existing against Borrower. 7. Borrower and Subordinated Creditor waive notice of acceptance of this Agreement by Lenders, and Subordinated Creditor waives notice of and consents to the making of: (i) any loans or other extensions of credit which Lenders (or any successor or replacement senior lender(s)) may make to Borrower from time to time; (ii) any renewal, replacement, refinancing or extension thereof; and (iii) any action which Lenders (or any successor or replacement senior lender(s)) may take or omit in its sole and absolute discretion with respect thereto. 8. This Subordination Agreement shall constitute a continuing agreement of subordination and Lenders (or any successor or replacement senior lender(s)) may, from time to time and without notice to Subordinated Creditor, lend money to or make other financing arrangements with Borrower in reliance hereon. 9. In the event that any payment or distribution, or any security, proceeds thereof or property or funds payable as adequate protection for use, sale or lease of such security, is received by Subordinated Creditor (other than those payments that Subordinated Creditor is entitled to receive pursuant to the provisions of and under the conditions specified by paragraph 4(a) of this Agreement), such property shall be received and held in trust for the benefit of Lenders, shall be segregated from other funds and property held by Subordinated Creditor, and shall be immediately paid over to Lenders in the form received (together with any endorsements or documents as may be necessary to effectively negotiate or transfer such property) for application (in case of cash) to, or as collateral (in case of non-cash property or securities) for, the payment or prepayment of the Senior Debt. 10. Subordinated Creditor authorizes Lenders (or any successor or replacement senior lender(s)), without notice or demand and without affecting or impairing Subordinated Creditor's obligations hereunder, from time to time to: (i) renew, compromise, extend, increase, accelerate or otherwise change the time for payment of, or otherwise change any of the other terms of the Senior Debt or any part thereof, including without limitation to increase or decrease the rate of interest thereon; (ii) take and hold security for the payment of the Senior Debt and exchange, enforce, waive, release, and fail to perfect any such security; (iii) apply such security and direct the order or manner of sale thereof as Lenders (or any successor or replacement senior lender(s)) in its sole discretion may determine; (iv) release and substitute any one or more endorsers, warrantors, Borrower, or other obligor. Lenders may assign their respective rights under this Agreement in whole or in part. 11. Subordinated Creditor acknowledges and agrees that it shall have the sole responsibility for obtaining from Borrower such information concerning Borrower's financial condition or business operations as Subordinated Creditor may require, and that Lenders have no duty at any time to disclose to Subordinated Creditor any information relating to the business, operations, or financial condition of Borrower. Borrower acknowledges and agrees that Subordinated Creditor and Lenders may freely share any information regarding Borrower. 12. Subordinated Creditor shall deliver to Lenders a copy of the executed Senior Subordinated Note which shall bear a conspicuous legend reading substantially as follows: THIS PROMISSORY NOTE IS SUBORDINATED TO ANY PRESENT OR FUTURE DEBT OWING FROM THE MAKER TO THE HOLDERS OF THE MAKER'S PROMISSORY NOTE DATED MAY 14, 1999 IN THE ORIGINAL PRINCIPAL AMOUNT OF $2,000,000 (THE "SENIOR NOTE") AND MAY BE ENFORCED ONLY IN ACCORDANCE WITH THAT CERTAIN SUBORDINATION AGREEMENT DATED ____________, _______ AMONG ___________________________________, THE PLEDGEE REPRESENTATIVE OF THE SENIOR NOTE AND WORLD WIRELESS COMMUNICATIONS, INC. Such copy shall be certified in writing as being a true, current, and complete copy of the original by a responsible officer of Subordinated Creditor. Any replacement or substituted note shall bear the foregoing legend. 13. Lenders may notify any assignee, trustee or interest trustee in bankruptcy, receiver, debtor in possession or other person or persons of their rights under this Agreement. 14. Neither Subordinated Creditor nor Borrower shall amend, extend or otherwise change the term of any Subordinated Debt without the consent of Lenders if the effect of such amendment would be to: (i) increase the principal amount of the Subordinated Debt; (ii) increase the rate of interest payable on the Subordinated Debt; or (iii) change the maturity date of the Subordinated Debt or accelerate the time for making any payment on the Subordinated Debt. 15. Any notice relating to this Agreement shall be in writing and shall be personally served, sent by certified mail, return receipt requested, with postage prepaid or sent by telecopy to the address of such party set forth on the signature page of this Agreement. Such notice shall be deemed given and received on the date so served, mailed or telecopied. 16. This Agreement is intended solely for the purpose of defining the relative rights of the Lenders and the Subordinated Creditor. Nothing contained in this Agreement is intended to or shall affect or impair: (i) as between Borrower, its creditors (other than Lenders) and Subordinated Creditor, the obligation of Borrower (which is absolute and unconditional) to pay the Subordinated Debt in accordance with the terms thereof; and (ii) the relative rights of Subordinated Creditor and creditors of Borrower other than Lenders. 17. Subordinated Creditor and Borrower agree to execute and deliver to Lenders any additional agreements reasonably deemed necessary by Lenders to effect or confirm the agreement set forth herein and to effect collection of any payments which may be made at any time on account of the Subordinated Debt. 18. After the Senior Debt has been Indefeasibly Paid in Full, the holders of Subordinated Debt shall be subrogated to the rights of holders of Senior Debt to receive payments or distributions applicable to Senior Debt, to the extent that distributions otherwise payable to the holders of Subordinated Debt have been applied to the payment of Senior Debt. Subordinated Creditor agrees that this Agreement shall not be affected by any action, or failure to act, by Lenders which results or may result, in impairing or extinguishing any right of reimbursement, subrogation or other right or remedy of Subordinated Creditor. 19. This Agreement shall be governed by the laws of the State of Colorado, and the parties hereto consent to the jurisdiction of the state and federal courts in and for the state of Colorado in connection with any dispute arising under or relating to this Agreement. The provisions of this Agreement are independent of and separable from each other. If any provision of this Agreement shall for any reason be held by any court or other authority of competent jurisdiction to be invalid or unenforceable, it is the intent of the parties that such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, and that this Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein. 20. This Agreement constitutes and expresses the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, inducements, or conditions, whether express, implied, oral or written. This Agreement shall extend to and be binding upon the successors, assigns, heirs and legal representative of each of the parties hereto; provided, however, that Subordinated Creditor may not assign, transfer, pledge, hypothecate, encumber, or endorse the Subordinated Debt or any part or evidence thereof unless such transaction is made expressly subject to the terms hereof. 21. In the event Subordinated Creditor or Borrower breaches any of their obligations hereunder to Lenders, the Lenders shall be entitled to recover their damages, costs and reasonable attorney fees which result from such breach. 22. Neither this Agreement nor any portion or provisions hereof may be changed, waived, or amended or in any manner other than by an agreement in writing signed by the parties to this Agreement. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any party hereto may execute this Agreement by signing any such counterparts. 23. Borrower agrees to use commercially reasonable efforts to give Subordinated Creditor copies of any written notice of an Event of Default that Lenders may provide to Borrower under the Senior Agreement. 24. Subordinated Creditor and any assignee of Lenders, successor or replacement lender shall reaffirm or reconfirm the provisions of this Agreement and acknowledge the substitution of parties in writing. 25. Whenever Lenders' consent is required hereunder, such consent may be given or withheld in the sole and absolute direction of Lender, unless otherwise noted herein. 26. To the extent that Lenders have any liability hereunder, such liability shall be several and not joint. Any payments to the Lenders hereunder shall be divided between the Lenders in proportion to their respective amounts of the Senior Debt or on such other basis as the Lenders may mutually agree in writing. IN WITNESS WHEREOF, the parties have read and executed this Agreement is executed as of the date stated at the top of the first page. STERLING TECHNOLOGY PARTNERS, LLC. WORLD WIRELESS COMMUNICATIONS, INC. By: ________________________________ By: _____________________________ Bruce D. Cowen, Chairman and CEO Name:______________________________ Title: ____________________________ Address where notices are to be sent: Address where notices are to be sent: 27241 Paseo Peregrino _______________________ San Juan Capistrano, CA 92675-5041 _______________________ _______________________ __________________________________ [Subordinated Creditor] By: _____________________________ Name: ___________________________ Title: __________________________ Address where notices to are to be sent: _______________________ _______________________ _______________________ EXHIBIT D REGISTRATION RIGHTS AGREEMENT OF WORLD WIRELESS COMMUNICATIONS, INC. Agreement made as of the 14th day of May 1999, by and among World Wireless Communications, Inc., a Nevada corporation currently having its office and principal place of business at 2441 South 3850 West, West Valley City, Utah 84120 (the "Corporation"), and each party hereto making a loan to the Corporation (each of the last named persons shall hereinafter be referred to individually as a "Noteholder" and collectively as the "Noteholders"). WHEREAS, upon the closing of the offering of up to $3,800,000 principal amount of Senior Secured Notes of the Company (the "Notes"), up to 950 shares of the Corporation's Preferred Stock and the Warrants (as defined below) pursuant to the Confidential Private Placement Memorandum dated May 14, 1999 (the "Offering") (the "Effective Date"), as defined in the Offering, the Noteholders will collectively own warrants to purchase up to 4,750,000 shares of common stock, $.001 par value per share, of the Corporation (shares of such common stock, together with share of common subsequently acquired by the parties, being referred to as the "Shares" and collectively as the "Stock") at an exercise price of $0.25 per share exercisable during a period of five years from the date of the Effective Date (the "Warrants"); -1- WHEREAS, upon the Effective Date, the Corporation and the Noteholders desire to provide for certain registration rights for the Stock of the Corporation or any interest therein now or hereafter owned by the Noteholders; NOW, THEREFORE, effective upon the Effective Date, in consideration of the mutual covenants and conditions herein contained, each of the parties hereby agrees as follows: 1. Piggyback and Demand Registration Rights. 1.1 (a) If the Corporation shall propose to file a registration statement under the Securities Act of 1933, as amended (the "Securities Act"), at any time during the 24-month period after the Effective Date, either on its own behalf or that of any of its shareholders for an offering of shares of the capital stock of the Corporation (including shares to be issued pursuant to the exercise of any warrants, including the Warrants) for cash or securities, the Corporation shall give written notice as promptly as possible of such proposed registration to each Noteholder and shall use reasonable efforts to include such number or amount of shares of the Stock owned by such Noteholders (including shares to be issued pursuant to the exercise of any warrants, including the Warrants) (each a "Seller" or "Registering Noteholder" and collectively, the "Sellers" or "Registering Noteholders") in such registration statement as such Seller or Sellers shall request within 10 days after receipt of such notice from the Corporation, provided, that (A) each Seller furnishes the Company with a written notice of its irrevocable exercise of the Warrants in whole or in part within 10 days after the receipt of such notice from the Corporation, (B) if shares of the Stock are being offered by the Corporation in an underwritten offering, any shares of the Stock proposed to be included in the registration statement on behalf of such Seller(s) shall be included in the underwriting offering on the same terms and conditions as the Stock being offered by the Corporation, and (C) each Seller shall be entitled to include such number of shares of the Stock owned by such Seller in such registration statement, one time only during the applicable period set forth herein, so that the proportion of shares of the Stock of each Seller to be included in such registration statement to the total number of shares of the Stock owned by him is equal to the proportion that the number of shares of the Stock of all Sellers to be included in such registration statement bears to the total number of shares of the Stock owned by all Sellers (except that each Seller shall have the right not to exercise such piggyback registration right set forth herein once, in which case such Seller shall have the right set forth in this Section 1.1 with respect to the next succeeding registration statement described in this Section 1.1 proposed to be filed by the Corporation during such 24-month period); and provided further, that (i) the Corporation shall not be required to include such number or amount of shares owned by such Seller(s) in any such registration statement if it relates solely to securities of the Corporation to be issued pursuant to a stock option or other employee benefit plan, (ii) the Corporation may, as to an offering of securities of the Corporation by the Corporation, withdraw such registration statement at its sole discretion and without the consent of any Seller and abandon such proposed offering and (iii) the Corporation shall not be required to include such number of shares of the Stock owned by such Seller in such registration statement if the Corporation is advised in writing by its underwriter or investment banking firm that it reasonably believes that the inclusion of such Seller's shares would have an adverse effect on the offering, provided that if such limitation is imposed, the effects of such limitation shall be allocated among the Sellers pro rata in proportion to the number of shares of the Stock as to which such Sellers have requested inclusion therein. -2- (b) A registration filed pursuant to this Section 1.1(a) shall not be deemed to have been effected unless the registration statement related thereto (i) has become effective under the Securities Act and (ii) has remained effective for a period of at least nine months (or such shorter period of time in which all of the Stock registered thereunder has actually been sold thereunder); provided, however, that if, after any registration statement filed pursuant to Section 1.1(a) becomes effective and prior to the time the registration statement has been effective for a period of at least nine months, such registration statement is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court solely due to actions or omissions to act of the Corporation, such registration statement shall not be considered one of the registrations applicable pursuant to Section 1.1(a). 1.2 (a) (i) If the Corporation fails to prepare and file a registration statement under Section 1.1 hereof within 24 months after the Effective Date which has become effective under the Securities Act and has remained effective for a period of at least six months (or such shorter period of time in which shares registered thereunder have been sold thereunder), then in the event that the Noteholders owning in the aggregate at least $1,500,000 original principal amount of the Notes acting jointly desire to sell, transfer or otherwise dispose of at least 33% of their Shares pursuant to an offering registered under the Securities Act, such Noteholder or Noteholders shall have the right, once during such three-year period commencing with the expiration of 24 months after the Effective Date and continuing until the expiration of 60 months after the Effective Date, to deliver a notice to the Corporation (the "Registration Notice") on behalf of all of the Noteholders (A) specifying the number of shares proposed to be sold or otherwise transferred by all the Noteholders (collectively the "Registration Shares") (which shall not be less than 1,082,250 Shares (the "Minimum Number")), (B) describing the proposed manner of sale or other transfer thereof and (C) requesting the registration of the Registration Shares under the rules and regulations of the Securities and Exchange Commission (the "Commission") pursuant to the Securities Act, provided that each Noteholder furnishes the Corporation with a written notice of its irrevocable exercise of the Warrants in at least the amount of the Minimum Number simultaneously with its delivery of the demand registration notice set forth herein. As promptly as practicable following its receipt of a Registration Notice, the Corporation shall prepare and file with the Commission a registration statement with respect to the Registration Shares pursuant to the rules and regulations of the Commission and use its reasonable best efforts to effect the registration under the Securities Act of any Registration Shares requested to be so registered by the Noteholder or Noteholders to the extent required to permit the sale or other transfer of the Registration Shares in the manner described in the Registration Notice. Notwithstanding the foregoing demand (but subject to the penultimate sentence of Section 1.2 (b)), the Corporation shall not be obligated to effect more than one registration pursuant to this Section 1.2(a) using the then applicable registration forms of the Commission, and the Noteholder or Noteholders shall not be entitled to request registration of the Registration Shares more than once under Section 1.2. A registration requested pursuant to this Section 1.2(a) shall not be deemed to have been effected unless the registration statement related thereto (i) has become effective under the Securities Act and (ii) has remained effective for a period of at least nine months (or such shorter period of time in which all Registration Shares registered thereunder have actually been sold thereunder); provided, however, that if, after any registration statement requested pursuant to this Section 1.2(a) becomes effective and prior to the time the registration statement has been effective for a period of at least nine months, such registration statement is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court solely due to actions or omissions to act of the Corporation, such registration statement shall not be considered one of the registrations which may be requested pursuant to this Section 1.2(a). -3- (ii) Notwithstanding anything contained in this Section 1.2 to the contrary, in the event that the Corporation defaults in the payment of principal or interest on any Note at the maturity date of any Note, then the Noteholders owning in the aggregate at least $1,500,000 original principal amount of the Notes shall have the right to exercise their demand registration right set forth in Section 1.2(a)(i) hereof, at their option, within 60 days after the occurrence of such default by delivering to the Corporation the written notice described in Section 1.2(a)(i) hereof. (b) Delay or Suspension of Registration. Notwithstanding any other provision of this Section 1.2 to the contrary, if the Corporation shall furnish to the Noteholder or Noteholders: (i) a certificate signed by the President of the Corporation stating that, in the good faith judgment of a majority of the members of the entire Board of Directors of the Corporation, it would adversely and materially affect the Corporation's ability to enter into an agreement with respect to, or to consummate, a bona fide material transaction to which it is or would be a party, or the Corporation has a plan to register Stock to be sold for its own account within a 90-day period after the receipt of the demand request under Section 1.2(a), for the Corporation to use its reasonable best efforts to effect the registration of the Registration Shares (following a demand therefor by the Noteholder or Noteholders pursuant to Section 1.2(a)); or (ii) both (A) a certificate signed by the President of the Corporation stating that, in the good faith judgment of a majority of the members of the entire Board of Directors of the Corporation, a material fact exists which the Corporation has a bona fide business purpose for preserving as confidential and (B) an opinion of counsel to the Corporation to the effect that the registration by the Corporation (following a demand for registration by the Noteholder or Noteholders pursuant to Section 1.2(a)) or the offer or sale by the Noteholder or Noteholders of the Registration Shares pursuant to an effective registration statement would require disclosure of the material fact which is referenced in the President's certificate required under Section 1.2(b)(ii)(A) and which, in such counsel's opinion, is not otherwise required to be disclosed, then the Corporation's obligations pursuant to Section 1.2(a) with respect to any such demand for registration shall be deferred or offers and sales of Registration Shares by the Noteholder or Noteholders shall be suspended, as the case may be, until the earliest of: (1) the date on which, as applicable (a) the Corporation's use of reasonable best efforts to effect the registration of the Registration Shares would no longer have such a material adverse effect or (b) the material fact is disclosed to the public or ceases to be material; (2) 135 days from the date of receipt by the Noteholder or Noteholders of the materials referred to in Section 1.2(b) (i) and (ii) above; and (3) such time as the Corporation notifies the Noteholder or Noteholders that it has resumed use of its reasonable best efforts to effect registration of the Registration Shares or that offers and sales of Registration Shares pursuant to an effective registration statement may be resumed, as the case may be. If the Noteholder or Noteholders receives the materials referred to in Section 1.2(b)(ii) above while a registration statement for the offer and sale of the Registration Shares is in effect, the Noteholder or Noteholders agree to terminate immediately any offer or sale of Registration Shares. If offers and sales of the Registration Shares are suspended and resumed following the effectiveness of a registration statement within the 135-day period set forth in clause (2) of the second preceding sentence, the six-month period set forth in Section 1.2(a) shall be extended for a number of days equal to the number of days for which offers and sales of Registration Shares were suspended. If offers and sales of the Registration Shares are suspended but not resumed within the 135-day period, the Corporation shall, at the request of the Noteholder or Noteholders, withdraw such registration and the Noteholder or Noteholders shall be entitled to one additional demand registration right under this Section 1.2(a). A particular material transaction to which the Corporation is or would be a party or a particular material fact shall not give rise to more than one deferral or suspension notice by the Corporation pursuant to the provisions of this Section 1.2(b). -4- 1.3 In connection with any registration or qualification pursuant to the provisions of this Article I, all Sellers, and the Corporation shall, except as prohibited under the blue sky or securities laws of any jurisdiction under which a registration or qualification is being effected, pay (pro rata based on the relative number of shares included in such registration) all of the fees and expenses, which shall not include fees and expenses of legal counsel for any Seller and any underwriting or selling discounts, fees, commissions or similar charges with respect to the shares of Stock as to which registration is requested; provided, however, that in the event the Corporation shall have incurred out-of-pocket expenses in connection with the preparation of any registration statement which shall be withdrawn prior to its effective date at the request of a Seller, such Seller shall promptly reimburse the Corporation for all out-of-pocket expenses including, without limitation, attorneys' fees and expenses, accounting costs and all fees and expenses relating to blue sky filings incurred by the Corporation in connection with such preparation (including any filing thereof); and provided further, however, that the Corporation shall not be required in the case of any registration hereunder to make blue sky filings in more than 10 states. 1.4 (a) In each case of registration of shares of Stock under the Securities Act pursuant to these registration provisions, the Corporation shall unconditionally indemnify and hold harmless each of the Sellers, each underwriter (as defined in the Securities Act), and each person who controls any such underwriter within the meaning of Section 15 of the Securities Act or Section 20(a) of the Securities Exchange Act of 1934 (the Sellers and each such underwriter, and each such person who controls any such underwriter being referred to for purposes of this Section 1.4, as an "Indemnified Person") from and against any and all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such shares of the Stock were registered under the Securities Act, any prospectus or preliminary prospectus contained therein or any amendment or supplement thereto (including, in each case, any documents incorporated by reference therein), or arising out of any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses arise out of any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any of the Sellers or any underwriter and furnished to the Corporation or the Registering Noteholder, as the case may be, in writing by any of the Sellers or such underwriter expressly for use therein; provided that the foregoing indemnification with respect to a preliminary prospectus shall not inure to the benefit of any underwriter (or to the benefit of any person controlling such underwriter) from whom the person asserting any such losses, claims, damages, liabilities or expenses purchased shares of the Stock to the extent such losses, claims, damages or liabilities result from the fact that a copy of the final prospectus had not been sent or given to such person at or prior to written confirmation of the sale of such shares to such person. -5- (b) In each case of a registration of shares of the Stock under the Securities Act pursuant to these registration provisions, each of the Sellers participating in the registration, severally and not jointly, shall unconditionally indemnify and hold harmless the Corporation (and its directors and officers) each underwriter and each person, if any, who controls the Corporation or such underwriter within the meaning of Section 15 of the Securities Act of Section 20(a) of the Securities Exchange Act of 1934, to the same extent as the foregoing indemnity from the Corporation to the Sellers but only with reference to information relating to such Seller and furnished to the Corporation by such Seller for use in the registration statement, any prospectus or preliminary prospectus contained therein or any amendment or supplement thereto. Each Seller will use all reasonable efforts to cause any underwriters of shares of Stock to be sold by any of the Sellers to indemnify the Corporation on the same terms as the Sellers agree to indemnify the Corporation or the Registering Noteholder, as the case may be, but only with reference to information furnished in writing by such underwriter for use in the registration statement. (c) In case any action or proceeding shall be brought against or instituted which involves any Indemnified Person, such Indemnified Person shall promptly notify the person against whom such indemnity may be sought (the "Indemnifying Person") in writing and the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such action or proceeding, any Indemnified Person shall have the right to obtain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person has agreed to the retention of such counsel at its expense or (ii) the named parties to any such action or proceeding include both the Indemnifying Person and the Indemnified Person, and the Indemnified Person has been advised by counsel that there may be one or more defenses available to such Indemnified Person which are different from or additional to those available to the Indemnifying Person (in which case, if the Indemnified Person notifies the Indemnifying Person that it wishes to employ separate counsel at the expense of the Indemnifying Person, the Indemnifying Person shall not have the right to assume the defense of such action or proceeding on behalf of such Indemnified Person). It is understood that the Indemnifying Person shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all such similarly situated Indemnified Persons. The Indemnifying Person shall not be liable for any settlement of any action or proceeding effected without its written consent. -6- (d) In the event the indemnifications provided for in this Article V are unavailable or insufficient, then the Sellers shall each contribute to the amount paid or payable as a result of such losses, claims, damages, liabilities, actions and expenses in such proportion as is appropriate to reflect (A) the relative benefits received by each Seller and (B) the relative fault of each Seller. (e) Notwithstanding anything in this Article V to the contrary, the Corporation shall not be liable to any Seller for any losses, claims, damages or liabilities arising out of or caused by (A) any reasonable delay (1) in filing or processing any registration statement or any preliminary or final prospectus, amendment or supplement thereto after the inclusion of such Seller's Stock in such registration statement, or (2) in requesting such registration statement be declared effective by the Commission and (B) the failure of the Commission for any reason to declare effective any registration statement. 2. MISCELLANEOUS. 2.1 Notices. All notices or other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be considered as duly given on (a) the date of delivery, if delivered in person, by nationally recognized overnight delivery service or by facsimile or (b) three days after mailing if mailed from within the continental United States by registered or certified mail, return receipt requested to the party entitled to receive the same, if to the Corporation, World Wireless Communications Corporation,2441 South 3850 West, West Valley City, Utah 84120, with a copy to Law Offices of Stephen R. Field, 620 Fifth Avenue, New York, New York, Attn: Stephen R. Field, Esq.; and if to any Noteholder, at his or its address as set forth in the books and records of the Corporation. Any party may change his or its address by giving notice to the other party stating his or its new address. Commencing on the 10th day after the giving of such notice, such newly designated address shall be such party's address for the purpose of all notices or other communications required or permitted to be given pursuant to this Agreement. -7- 2.2 Governing Law. This Agreement and the rights of the parties hereunder shall be governed by and construed in accordance with the laws of the State of Utah, without regard to its conflicts of law principles. All parties hereto (i) agree that any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted only in a federal or state court in Salt Lake City, Utah or in the State of Colorado, (ii) waive any objection which they may now or hereafter have to the laying of the venue of any such suit, action or proceeding, and (iii) irrevocably submit to the jurisdiction of any federal or state court in Salt Lake City, Utah or in the State of Colorado, in any such suit, action or proceeding, but such consent shall not constitute a general appearance or be available to any other person who is not a party to this Agreement. All parties hereto agree that the mailing of any process in any suit, action or proceeding in accordance with the notice provisions of this Agreement shall constitute personal service thereof. 2.3 Entire Agreement; Waiver of Breach. This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof, and it may not be modified or amended in any manner other than as provided herein; and no waiver of any breach or condition of this Agreement shall be deemed to have occurred unless such waiver is in writing, signed by the party against whom enforcement is sought, and no waiver shall be claimed to be a waiver of any subsequent breach or condition of a like or different nature. 2.4 Binding Effect; Assignability. This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties and their respective heirs, successors and permitted assigns. This Agreement and the rights of the parties hereunder shall not be assigned except with the written consent of all parties hereto. 2.5 Captions. Captions contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provision hereof. 2.6 Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine or the neuter gender shall include the masculine, feminine and neuter. 2.7 Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein. -8- 2.8 Amendments. This Agreement may not be amended except in a writing signed by all of the parties hereto. 2.9 Compliance with Securities Laws. Commencing with the Effective Date, the Corporation will use its best efforts to comply thereafter with the applicable provisions of the Securities Act and the Securities Exchange Act of 1934. 2.10 Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. In addition, this Agreement may contain more than one counterpart of the signature page and this Agreement may be executed by the affixing of such signature pages executed by the parties to one copy of the Agreement; all of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page. -9- IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date first above written. WORLD WIRELESS COMMUNICATIONS, INC. By: /s/ David D. Singer --------------------------- David D. Singer, President BORROWER LOAN AMOUNT WARRANTS LENDER ----------- -------- ------ $800,000 1,750,000 LANCER OFFSHORE, INC. By: /s/ Michael Lauer ---------------------------- Michael Lauer, President $600,000 -0- ORBITER FUND LTD. By: /s/ Michael Lauer --------------------------- Michael Lauer, President $440,000 550,000 THE McCLOSKEY TRUST By: /s/ Thomas D. McCloskey, Jr. ------------------------------ Thomas D. McCloskey, Jr., Trustee P.O. Box 7846 Aspen, CO 81612 $40,000 50,000 DPM INVESTMENT CORP. By: /s/ Thomas D. McCloskey, Jr. ------------------------------- Thomas D. McCloskey, Jr. , V.P. P.O. Box 7846 Aspen, CO 81612 $ 40,000 50,000 FRYING PAN PARTNERS, LLC. By: /s/ David L. Marrs -------------------------------- David L. Marrs, Member P.O. Box 7846 Aspen, CO 81612 $80,000 100,000 CJL INVESTMENTS, LLC By: /s/ John H. Perry, III ----------------------------------- John H. Perry, III, Managing-Member $200,000 250,000 STERLING TECHNOLOGY PARTNERS, LLC By: /s/ Bruce D. Cowan ----------------------------------- Mr. Bruce D. Cowan $200,000 250,000 /s/ James T. Kelly ----------------------------------- James T. Kelly 111 Veterans Square Media, PA 19063 $ 200,000 250,000 /s/ K.R. Braithwaite ----------------------------------- K.R. Braithwaite 3267 Paseo Gallita San Clemente, CA 92672-3514 -10- EX-27 3
5 This schedule contains summary financial information extracted from the balance sheet as of June 30, 1999, and statements of operations for the six months ended June 30, 1999, and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1999 JUN-30-1999 675,916 137,648 193,568 0 626,577 1,747,676 2,153,035 1,507,999 3,627,477 4,263,085 45,281 650,000 0 17,492 (1,348,381) 3,627,477 1,672,999 1,672,999 1,381,271 1,381,271 3,089,398 0 1,092,086 (3,889,756) 0 (3,889,756) 0 0 0 (3,889,756) (0.28) (0.28)
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