-----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, G5lm1250e5JwYRftjSdLy3eVrYBCoRRBS5km8pwIcl75DLSOe7CS1SGma39pczrt qmdOYOc9xp2WS/mi2X1KDQ== 0000897069-00-000620.txt : 20001218 0000897069-00-000620.hdr.sgml : 20001218 ACCESSION NUMBER: 0000897069-00-000620 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 20001215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WORLD WIDE WIRELESS COMMUNICATIONS INC CENTRAL INDEX KEY: 0001098207 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 860887822 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: SEC FILE NUMBER: 333-38158 FILM NUMBER: 790490 BUSINESS ADDRESS: STREET 1: 520 THIRD STREET SUITE 101 STREET 2: 510-839-6100 CITY: OAKLAND STATE: CA ZIP: 94607 BUSINESS PHONE: 5108396100 SB-2/A 1 0001.txt AMENDMENT NO. 1 As filed with the Securities and Exchange Commission on December 15, 2000 Registration No. 333-38158 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------ AMENDMENT NO. 1 TO FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 WORLD WIDE WIRELESS COMMUNICATIONS, INC. (Name of small business issuer in its charter) ----------------- Nevada 4812 860887822 (State or jurisdiction of (Primary Standard Industrial (IRS Employer incorporation or organization) Identification No.) Classification Code No.) DOUGLAS P. HAFFER Chief Executive Officer, World Wide Wireless Communications, Inc. 520 Third Street, Suite 101 Oakland, CA 94607 (510) 839-6100 (Name, Address and Telephone Number of Agent for Service) ----------------------- Copies to: WILLIAM D. EVERS, ESQ. Foley & Lardner One Maritime Plaza, Suite 600 San Francisco, CA 94111 Phone No.: 415-434-4484 Fax No.: 415-434-4507 ------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If this Form is filed to register additional securities for an offering pursuant to Rule 462 (b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462 (c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462 (d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434 check the following box. / / CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- Title of each Amount Proposed maximum Proposed maximum Amount of class of securities to be offering price aggregate registration to be registered registered(1) per share(2) offering price fee - -------------------------------------------------------------------------------- Common, $ .001 par value 3,996,113 $.42 $1,678,368 - -------------------------------------------------------------------------------- Common, $ .001 par value 953,861(3) $.42 $400,622 - -------------------------------------------------------------------------------- Total Registration Fee(4) $2,078,990 $549 - -------------------------------------------------------------------------------- (1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, there are included in this registration such additional number of shares of common stock or such shares that may be issuable in lieu of such common stock as may become issuable pursuant to anti-dilution provisions of the 4% Convertible Debenture and the warrants. (2) Calculated solely for the purpose of determining the registration fee pursuant to Rule 457(c) based on the average bid and asked price of the common stock on the over the Over the Counter Bulletin Board maintained by the National Association of Securities Dealers on December 13, 2000. (3) The number of shares being registered equals that number of shares that would be issuable upon the conversion of the 4% Convertible Debentures the selling shareholders own as of the date of this prospectus based on a conversion price of $.64 for each share. This conversion price is subject to change under an agreement between us and the debenture holders. (4) We previously paid a registration fee of $5,583.04 for the registration of 10,789,715 shares of our common stock. The above fee reflects payment for the shares added to this pre-effective amendment. World Wide Wireless Communications, Inc. 11,907,541 Shares of Common Stock We are registering 11,907,541 shares of common stock, which includes shares underlying 4% Convertible Debentures and certain presently outstanding warrants. We will only receive proceeds from the sale of common stock as a result of the exercise of the warrants if they are exercised for cash. We will use the proceeds, if any, for working capital. If and when the owners of the 4% Convertible Debentures or warrants convert or exercise any of these securities for shares of common stock, that stock may be resold to the public using this prospectus. We will pay all expenses of registration incurred in connection with this offering and certain expenses of the selling shareholders, including up to $25,000 in the legal fees of counsel the selling shareholders retain. The selling shareholders may offer and sell some, all or none of their common stock under this prospectus. The selling shareholders may determine the prices at which they will sell their shares, which may be at market prices prevailing at the time of the sale or some other price. The selling shareholders may use brokers or dealers to assist them in selling their shares, who may receive compensation or commissions for such sales. Our shares are currently traded on the OTC Bulletin Board under the trading symbol WLGS. ---------------------- Investing in our common stock involves a great amount of risk. See "Risk Factors" beginning on page 3. ---------------------- Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. The date of this prospectus is December 15, 2000 TABLE OF CONTENTS Page SUMMARY OF FINANCIAL DATA......................................................2 RISK FACTORS...................................................................3 FORWARD-LOOKING STATEMENTS.....................................................6 DIVIDEND POLICY................................................................7 USE OF PROCEEDS................................................................7 BUSINESS......................................................................10 MANAGEMENT....................................................................20 PRINCIPAL AND SELLING SHAREHOLDERS............................................23 CERTAIN RELATED PARTY TRANSACTIONS............................................27 DESCRIPTION OF SECURITIES.....................................................27 PLAN OF DISTRIBUTION..........................................................29 PRICE RANGE OF COMMON STOCK...................................................29 LEGAL MATTERS.................................................................30 EXPERTS.......................................................................30 ADDITIONAL INFORMATION........................................................30 FINANCIAL STATEMENTS..........................................................32 INFORMATION NOT REQUIRED IN PROSPECTUS........................................50 EXHIBITS......................................................................53 SIGNATURES....................................................................56 -i- You should rely only on the information contained in this prospectus. We have not authorized any person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information in this document may only be accurate on the date of this document. World Wide Wireless Communications, Inc. We provide high-speed broadband wireless Internet service in the United States and internationally. We are also developing a new technology, named the distributed wireless call system, which we believe may significantly enhance wireless communications in the future. We intend to license this technology to third parties in the future. This prospectus relates solely to the sale of securities by the selling shareholders listed on page 25. We are not selling any shares of our own stock pursuant to this prospectus. We are incorporated under the laws of the State of Nevada. Our offices are located at 520 Third Street, Suite 101, Oakland, CA 94607. Our telephone number is (510) 839-6100. Summary of the offering Type of security Common stock Common stock registered by company We are registering 11,907,541 shares of common stock, which includes shares underlying the 4% Convertible Debentures and certain presently outstanding warrants. Use of proceeds We will only receive cash proceeds upon exercise of the warrants if they are exercised for cash. Those proceeds, if any will be used for working capital. All proceeds from sales of common stock made by selling shareholders will go to the selling shareholders and not to us. -1- SUMMARY OF FINANCIAL DATA The summary financial data for the years ended September 30, 1999 and 2000 have been derived from the Financial Statements and Notes to Financial Statements, audited by Reuben E. Price & Co., San Francisco independent auditors. The selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Financial Statements and Notes thereto included elsewhere in this prospectus. Statements of Income Data: Year ended Sept. 30, Year ended 2000 Sept. 30, 1999 Audited Audited Revenue $ 524,246 $ -- Cost of Goods Sold 336,717 ------- Gross Profit 187,529 Operating Expenses 7,065,788 Impairment Loss 1,500,000 --------- Total Operating Expenses 8,565,788 2,383,330 --------- --------- Operating loss (8,378,259) (2,383,330) Rental Income 0 Interest Income 52,857 0 Interest Expense (70,706) ---------- --------- ---------- Net loss (8,396,108) (2,383,330) Balance Sheet Data: September 30, 2000 Working capital 2,460, 669 Total assets 9,703,562 Long-term debt, 5,285,338 Less current portion Minority Interest 115,150 Shareowners' equity 1,999,185 -2- RISK FACTORS An investment in our common stock is very risky. You should be aware that you could lose the entire amount of your investment. You should carefully consider the following risks before you decide to buy our common stock. Risks Related to Our Business We will require substantial additional capital in the short term to remain a going concern We will require substantial short term outside investment on a continuing basis to finance our current operations and capital expenditures as well as the acquisition of additional spectrum and licenses. Our revenues for the foreseeable future may not be sufficient to attain profitability. In the two years since we began operations, we have generated virtually no revenues and have incurred substantial expenditures. We expect to continue to experience losses from operations while we develop and expand our wireless Internet service system and other technologies. In view of this fact, our auditors have stated in their report for the period ended September 30, 2000 that our ability to meet our future financing requirements, and the success of our future operations, cannot be determined at this time. In order to finance our working capital requirements we are currently negotiating equity investments with several sophisticated investors, but there can be no assurance that we will obtain this capital or that it will be obtained on terms favorable to us. If we do not obtain short term financing we may not be able to continue as a viable concern. We do not have a bank line of credit and there can be no assurance that any required or desired financing will be available through bank borrowings, debt, or equity offerings, or otherwise, on acceptable terms. If future financing requirements are satisfied through the issuance of equity securities, investors may experience significant dilution in the net book value per share of common stock. We may not be able to obtain permission to use two-way transmission for our wireless service, thereby making our services significantly less attractive to potential customers. We believe that it is important for us to obtain the right to conduct two-way transmissions through the radio transmission frequencies for which we acquire licenses. None of our present channel leases in the United States allow for two-way transmissions. Permission to conduct two-way transmissions must be obtained from the Federal Communications Commission, and the rules of the FCC require that we file applications with the FCC to receive permission to conduct two-way transmissions through these frequencies. In August, we filed six applications for permission to conduct two way transmissions with the FCC for the areas of Vail and Aspen, Colorado, Grand Rapids, Michigan, Key West, Florida, Pierre, South Dakota and Ukiah, California, that are currently pending. We cannot be certain that the licenses will be granted. The application process required us to engineer a network configuration and channel-use plan for these frequencies in each market where we intend to launch a two-way system. The applications must meet FCC interference protection rules or contain the consent of other licensees in these markets and adjacent markets. We cannot be certain that: o We will be able to complete the necessary processes to enable us to complete two-way applications for each of our markets. o We will be able to obtain the necessary cooperation and consents from licensees in our markets or adjacent markets to enable us to use our spectrum for two-way communication services. o The FCC will approve our applications. If we do not receive the required consents from the FCC and other licensees within a market, or we are not able to design a two-way system that will meet the FCC's interference protection rules, we will be unable to obtain authorization to implement a two-way system in that market. If we are unable to obtain this authorization, we will be forced to operate our service as a one-way transmission service, which we believe would make our Internet access services significantly less attractive to prospective customers than two-way transmission services. -3- We are subject to other substantial governmental regulations that could adversely affect our business Our services are subject to current regulations of the FCC with respect to the use of our wireless access. We are required to use and maintain our licenses for certain frequencies and file reports with the FCC. If we fail to comply with these requirements, we may lose our licenses to operate such frequencies. The loss of licenses to operate our frequencies could lead to interruption of our wireless access services and materially adversely affect our business. For example, we currently have applications pending in Aspen and Vail, Colorado, Grand Rapids, Michigan, Key West, Florida, Pierre, South Dakota and Ukiah, California. Our ability to provide two way broadcasting authority in any of those markets depends on obtaining the necessary license from the FCC. In addition, changes in the regulatory environment relating to Internet access could affect the prices at which we may sell our services. These include regulatory changes that, directly or indirectly, affect telecommunications costs, limit usage of subscriber-related information or increase the likelihood or scope of competition from the regional Bell operating companies or other telecommunications companies. For example, regulations recently adopted by the FCC are intended to subsidize Internet connectivity rates for schools and libraries, which could affect demand for our services. The FCC has also stated its intention to consider whether to regulate certain transmission services over the Internet as "telecommunications," even though Internet access itself would not be regulated. Additionally, a number of state and local government officials have also asserted the right or indicated a willingness to impose taxes on Internet-related services, including sales, use and access taxes. We cannot predict the impact that future laws and regulations may have on our business. Our new distributed wireless call processing system technology is unproven and may not function as anticipated Our distributed wireless call processing system technology remains in the development phase and we have not yet developed a fully functional prototype of that technology. We cannot be certain when we will be able to complete development of that system and whether that system will work in the manner anticipated when development is completed. Furthermore, we cannot be certain whether the system will receive substantial market acceptance assuming that it is developed. For these reasons, although we believe that our distributed wireless call process system is promising, an investor should not assume that the system will be available or will contribute positively to our business prospects or financial condition. We are subject to the requirements that we receive regulatory approvals from those countries in which we do business, the delay or denial of which can reduce our revenues and adversely affect our foreign operations We anticipate that a substantial percentage of our revenues will be derived from operations outside of the United States. Our reliance on international operations to obtain consents of local regulatory authorities, some of which may significantly delay or deny permitting us to operate in those jurisdiction, might inhibit our efforts in certain markets. For example, we will not be able to generate revenues from our operations in Argentina until such time as the governmental regulatory authority, the CNC, reinstates our subsidiary's license. In early 2000, the government of Argentina announced that it was placing a freeze on all license transfer applications from foreign-owned firms, which has effectively delayed consideration of our application. In September 2000, the government of Argentina revoked licenses for lower transmission frequencies, those ranging between 2.5 and 4.0 Gigahertz or GHz, for all communication carriers, including those of the Company's subsidiary, Infotel Argentina, S.A. Although we have resubmitted the necessary paperwork to reinstate licenses in Argentina, it is unclear at this point when the licenses will be reissued. A denial of our most recent application or a significant delay in consideration of our application could either prevent us from conducting our planned operations in Argentina or materially adversely affect our ability to do so. Our prospective operations in other jurisdictions are also subject to receipt of government approval, which we cannot ensure that we will receive. -4- Problems with telecommunications infrastructure in countries in which we do business may substantially limit the effectiveness of our Internet services, thereby making those services less attractive The Internet access services we intend to conduct will require that there be a modern telecommunications infrastructure which allows for the fast and efficient transfer of data from the source of the data to the transmission towers we lease. Some of the countries in which we may conduct business lack the high speed cable or fiber optic wiring systems which may be necessary for high speed data transmission and in many of those countries it is not economically viable to install that infrastructure. This may limit our ability to provide high-speed Internet services efficiently, thereby making our services in those countries less attractive. Because we operate internationally, our operations are subject to unexpected political changes, changes in legal requirements and fluctuations in exchange rates, all of which may substantially increase our operating costs or make it difficult to do business there In addition to these international risks, we are also subject to the following risks in connection with our international operations that may substantially reduce our revenues, increase our operating and capital expenses, and otherwise materially affect our ability to conduct business: o unexpected changes in regulatory requirements, taxes, trade laws and tariffs, which can substantially increase the costs of doing business in other jurisdictions; o changes in a specific country's or region's political or economic conditions which may make it difficult or impossible to conduct business there; o lack of clear rules and regulations governing the issuance of licenses and standards for their operation; and o fluctuating exchange rates. By way of illustration, in order to provide our high-speed fixed wireless internet services in Thailand we are required to obtain an internet service provider license. Currently, the country is considering major revisions to the kingdom's telecommunications and Internet laws that may inhibit our ability in the future to obtain or maintain an Internet service provider license. Although we intend to pursue such a license, there can be no assurance that we will obtain the desired license or that the license will not be subsequently revoked due to further changes in the regulatory requirements. We cannot assure you that we will be able to conduct our operations profitably in these jurisdictions in view of these risks and cannot quantify the impact which these risks may have on our operations. We are inexperienced in operating a business internationally, which could cause us to fail to develop our international operations successfully We intend to expand our international sales efforts in the future. We have very limited experience in marketing, selling and supporting our products and services abroad. There is a risk that we will not be able to expand due to this inexperience. If we are unable to grow our international operations successfully and in a timely manner, our business and operating results could be seriously harmed. This could be reflected in a loss in your investment. If we do not develop system features in response to customer requirements, customers may not wish to use our services, which would seriously harm our business The broadband wireless access industry is rapidly evolving and is subject to technological change and innovation. These changes are requiring that providers of broadband services adopt new technologies quickly or modify existing technologies to maintain service and market products. Compliance with these changes may cause us to incur unexpected expenses or lose revenues. If we are unable to comply with diverse new or varying -5- governmental regulations or industry standards in each of the many worldwide markets in which we compete, we may not be able to respond to customers in a timely manner or market our products, which could seriously harm our business. We are dependent on the services of key individuals and the loss of any of these individuals could significantly effect our ability to operate our business Our development and success is significantly dependent upon Douglas P. Haffer, Chairman, President and Chief Executive Officer; Wayne Caldwell, Vice President and General Counsel; and Dana Miller, Vice President of Licensing and Systems Expansion. We do not currently have key man insurance for any of these officers. Any loss of the services of these members of our senior management personnel could seriously harm our business. We may be unable to protect our intellectual property rights Our success depends in part on our ability to protect our proprietary technologies. We rely on a combination of patent, copyright and trademark laws, trade secrets and confidentiality and other contractual provisions to establish and protect our proprietary rights. We have received one patent from the United States Patent and Trademark Office pertaining to the distributed wireless call processing system and may file for additional patents in the future. However, our patents may not be of sufficient scope or strength, others may independently develop similar technologies or products, duplicate any of our products or design around our patents, and the patents may not provide us competitive advantages. Litigation, which could result in substantial costs and diversion of effort by us, may also be necessary to enforce any patents issued or licensed to us or to determine the scope and validity of third-party proprietary rights. Any such litigation, regardless of outcome, could be expensive and time consuming, and adverse determinations in any such litigation could seriously harm our business. We have not yet sought patent protection for the distributed wireless call processing system in any country other than the United States, nor have we sought to register our trademarks in those countries in which we currently do or intend to do business. The laws of other countries vary with respect to intellectual property protection, and some jurisdictions may provide substantially less protection than those of the United States. As a consequence, our ability to protect our intellectual property and prevent competitors from using our intellectual property may be much more limited. We may not be able to obtain shareholder approval to increase the number of authorized shares of common stock thereby making it difficult to distribute additional shares to future purchasers As of November 30, 2000, we had 88,332,644 shares of common stock outstanding and have reserved for issuance an additional 9,324,917 shares. We have 100,000,000 shares currently authorized for issuance. We plan to have a shareholder's meeting in order to authorize more stock, however, we can make no assurances that the shareholder's will approve such action. We intend to explore other alternatives in an effort to increase the number of authorized shares, but at this point it is unclear whether additional shares will exist in the near future. We are required to receive shareholder approval to increase our common stock reserve by March 1, 2001 under a recent amendment to the securities purchase agreement signed with the selling shareholders herein. FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements. We intend to identify forward-looking statements in this prospectus using words such as "believes," "intends," "expects," "may," "will," "should," "plan," "projected," "contemplates," "anticipates," or similar statements. These statements are based on our beliefs as well as assumptions we made using information currently available to us. Because these statements reflect our current views concerning future events, these statements involve risks, uncertainties and assumptions. Actual future results may differ significantly from the results discussed in the forward-looking statements. Some, but not all, of the factors that may cause these differences include those discussed in the Risk Factors section. You -6- should not place undue reliance on these forward-looking statements, which apply only as of the date of this prospectus. DIVIDEND POLICY We have never declared or paid any cash dividends on our common stock and do not intend to pay dividends on our common stock in the foreseeable future. We intend to invest our future earnings, if any, to fund our growth. USE OF PROCEEDS We will not receive any proceeds from the sale of shares of our common stock pursuant to this offering. If all of the warrants for which shares of common stock issuable were exercised for cash, we would receive total proceeds of approximately $11,844,000. But these warrants may be exercised in exchange for shares of our common stock in which case we will receive no cash proceeds from the exercise. We will use these proceeds, if any, for general working capital. The amounts we actually expend for such working capital may vary significantly and will depend on a number of factors including, but not limited to, the actual net proceeds received, the amount of our future revenues and other factors described under "Risk Factors." Accordingly, our management will retain broad discretion in the allocation of net proceeds of this offering. -7- MANAGEMENT'S DISCUSSION AND ANALYSIS The following should be read in conjunction with the "Risk Factors" and the "Financial Statements" and the Notes thereto. Liquidity and Capital Resources We did not generate any revenues by providing wireless internet services during fiscal 1999 and we generated only approximately $550,000 in 2000, none of which was from internet related sources. We did not have enough subscribers in either period to generate revenues sufficient to cover our operating expenses which totaled $2,383,330 and $8,565,1982, respectively, in fiscal 1999 and 2000. Our operating expenses included service costs, programming and license fees, general and administrative expenses, and certain acquisition expenses resulting from acquiring spectrum. Our expenses increased substantially in 2000 over those in 1999 as we substantially increased the scope of our business operations during that period. As of September 30th, 2000 our total working capital was $2,460,669. During 1999 and 2000, we experienced continuing cash shortages due to an insufficient subscriber base. The resulting cash shortages rendered us unable to advertise and aggressively promote our services. Because we have not received sufficient revenues from operations and do not anticipate receiving sufficient revenues for the next 12 months from operations, we will need to obtain substantial funding from external sources over the next twelve months to finance our current operations. In the two years since we began operations, we have generated virtually no revenues and have incurred substantial expenditures. We expect to continue to experience losses from operations while we develop and expand our wireless Internet service system and other technologies. In view of this fact, our auditors have stated in their report for the period ended September 30, 2000 that our ability to meet our future financing requirements, and the success of our future operations, cannot be determined at this time. In order to finance our working capital requirements, we are currently negotiating equity investments with several sophisticated investors, but there can be no assurance that we will obtain this capital or that it will be obtained on terms favorable to us. If we do not obtain short term financing we may not be able to continue as a viable concern. We do not have a bank line of credit and there can be no assurance that any required or desired financing will be available through bank borrowings, debt, or equity offerings, or otherwise, on acceptable terms. If future financing requirements are satisfied through the issuance of equity securities, investors may experience significant dilution in the net book value per share of common stock. During the fiscal years ended September 30, 2000 and 1999, we received equity investment of $7,392,699 and $2,614,074, respectively. This investment was in the form of issuance of our common stock and /or debentures in various private placements. We have obtained financing primarily from the following sources, and believe that our primary source of financing during the next 12 months will come from similar sources. In October 1999, we received financing of $740,000 from Credit Bancorp, a Netherlands Antilles company, in the form of a convertible subordinated debenture. Under the terms of the debenture, we are to pay Credit Bancorp interest at a rate of 7% per annum over a period of three years. Principal and accrued interest is convertible into common stock at the option of Credit Bancorp. Credit Bancorp has notified us that it wants to convert the debentures into common stock. As of December 11, 2000, we have not issued the securities. On April 14, 2000, we entered into a Securities Purchase Agreement with six investors, for the purchase of investment units, consisting of common stock, common stock purchase warrants, 4% subordinated debentures and preferred stock, all which are described below. Pursuant to the Securities Purchase Agreement, these investors purchased 760,000 shares of common stock, warrants to purchase 3,600,000 shares of common stock and subordinated debentures with a principal amount of $3,280,000 for a total price of $4,800,000. -8- On October 4, 2000, we agreed with the related investors to modify certain terms of the earlier funding agreement. Under the new terms of this agreement, the investors agreed to extend the time in which we would need to meet the $13.5 million in revenue benchmark until March 31, 2001. We are required to report to the investors by May 14, 2001 whether we have met that goal. If we have received the required revenue by that time, the floor price will remain on the debentures until September 30, 2001 otherwise the floor will be removed on all outstanding debentures as of May 14, 2001. On November 15, 2000, the investors agreed to modify the transaction documents in accordance with our request and agreed to waive any breach of the original Securities Purchase Agreement by us which occurred prior to the Second Amendment Closing Date. In consideration for these concessions, we agreed to increase the principal amount of the debentures held by the investors to $6,720,000 and to issue 3,996,113 additional restricted shares of common stock to the investors. The investors have returned to the company 760,000 previously issued shares of common stock in exchange for the issuance of new debenture certificates reflecting the increase in the principal amount. The Second Amendment requires that the Registration Statement be filed by December 15, 2000 and must be made effective by May 15, 2001. As part of the amended agreement, the investors waived any previous breach by us of the Registration Rights Agreement or of the original Securities Purchase Agreement. We also agreed to hold a shareholder's meeting no later than March 1, 2001 to increase our common stock reserve. Plan of Operations We are considering alternatives to our present business strategy, which include, but are not limited to modifications of our business plan and the possible sale or licensing of certain assets. Specific components of the modified new business plan could include a significant reduction in our selling, general and administrative expenses, additional equity investment, a recapitalization and additions to the current management of the company. We cannot provide assurance that implementing the modified business plan, even with the successful execution of all the components of the new plan, will lead the company to profitability. Due to the substantial operating losses we incurred during the fiscal year ended September 30, 2000 and the current projected future operating losses, we will require new sources of funding in the form of equity or debt financing. However, there is no certainty that additional financing of any kind will be forthcoming in amounts sufficient to allow the company to continue to operate its business. As of December 11, 2000, we were current on our normal operating payables except for one trade payable where we currently owe approximately $2,000,000. During the next 12 months we intend to initiate and expand licensed operations in Ukiah, California, South Bend, Indiana, Grand Rapids, Michigan, Vail and Aspen, Colorado, Key West, Florida and Pierre, South Dakota. Internationally, we intend to focus primarily in Peru, India, Thailand and Argentina assuming that our license is restored. We anticipate that our expansion will involve the purchase of significant equipment in these markets and estimate that the expenditure will be approximately $15,000,000 to $25,000,000. We currently have 9 full-time employees at our headquarters office as well as numerous additional employees in the offices of our subsidiaries. We anticipate hiring more employees as we enter new markets. Based on our current plans, we anticipate that the number of our employees will at least double during the next 12 months. -9- BUSINESS Introduction In February of 1997, Worldwide Wireless, Inc., a Nevada corporation, was formed to coordinate the operations of TSI Technologies, Inc., a Nevada corporation, and National Micro Vision Systems, Inc., a Nevada corporation. Its purpose was to complete the development of its patented advanced distributed wireless telephone and network designs and to finance, manufacture, and market these units and systems. TSI Technologies, Inc. was the research and development company formed for the purpose of creating and developing the distributed wireless call processing system. National Micro Vision Systems, Inc. was formed to operate a network of wireless Internet sites. In April of 1998, World Wide Wireless, Inc., TSI Technologies and National Micro Vision Systems, Inc. acquired Upland Properties, Inc., a Nevada corporation, for stock and transferred their assets to Upland Properties, Inc. Upland Properties then changed its name to World Wide Wireless Communications, Inc. and began trading on the OTCBB under the symbol WLGS. World Wide Wireless, Inc. remains a significant shareholder in our company, but does not play a role in our current operations. National Micro Vision Systems, Inc. is now completely separate from and unrelated to us. We have purchased, leased or otherwise have acquired an interest in a substantial number of high-speed wireless Internet frequencies in the United States, Peru, and Thailand either ourselves or through our subsidiaries. We have also applied for reinstatement of our subsidiaries license in Argentina. We plan to purchase or lease additional wireless Internet frequencies in the United States and abroad. In addition to acquiring and developing wireless Internet frequencies, we have received a patent on a new generation of wireless cellular telephone technology that we have named the distributed wireless call processing system. We believe that this technology may significantly enhance wireless communications in the future by dramatically increasing cellular telephone network capacity. The Industry Use of the Internet and private communications networks has expanded and continues to expand rapidly. International Data Corporation estimates that there were 142 million Internet subscribers at the end of 1998, and projects that this number will grow to over 500 million subscribers by 2003. Businesses increasingly depend upon data networks, not only for communication within the office, but also to exchange information among corporate sites, remote locations, telecommuting employees, business partners, suppliers and customers. Consumers are also accessing the Internet to communicate, collect and publish information and conduct retail purchases. The growth in data traffic is resulting in an increase in the demand for high-speed access. To accelerate the speed at which data can be transmitted, service carriers are increasingly relying on broadband, which allows the transmission of multiple data channels through a single medium. One broadband medium consists of wireless frequencies which have large bandwidth, or an ability to transmit large amounts of data in a short period of time. The FCC has taken steps to increase the availability of frequencies and bandwidth that may be used by wireless carriers in the United States for such data transmission. In addition, an FCC ruling in September 1998 allowed license holders of various frequencies within the band of 2.15 to 2.68 Gigahertz, or GHz, to offer two-way broadband wireless data services. Previously, these frequencies had been restricted to one-way video transmissions which limited their effectiveness for data transmission. The FCC has also increased the availability of various higher frequencies within the bands of 24 to 40 GHz. Internationally, these frequencies vary slightly, with the lower frequency services being between 2.5 to 5.0 GHz and the higher frequency-type services being offered on frequencies similar to the higher frequencies used in the United States. The FCC has also adopted orders to allocate additional spectrum through auctions during 2000 which can be used by high-speed data transmission service providers. Opportunities in broadband wireless access are increasing globally as Europe, Latin America, Asia Pacific and Canada join the United States in promoting -10- competition in the local communications services market by allocating frequencies and bandwidth and issuing transmission licenses. In this regard, at least 26 countries have allocated broadband wireless frequency bands for use or trials in the last mile, according to Global Telephony. Deregulation has been a significant catalyst for increased competition in the long-haul segment of the market and massive spending on network infrastructure, as incumbent and emerging carriers have sought to address the growing demand for bandwidth. In the local access segment of the market, deregulation has also been a significant catalyst for the growing interest in providing broadband access directly to subscribers. Data services that historically were offered only by a single provider for a region now may be offered by a number of competing service providers. This increased competition has given local service providers compelling incentives to improve data transmission rates in order to offer additional value-added services to subscribers. However, bandwidth limitations of the existing infrastructure for the connection to the subscriber have constrained service providers from exploiting these opportunities. Links to subscribers typically consist of copper wires that operate at substantially lower transmission speeds than those offered in the long-haul segment of a network, or by some available broadband alternatives. These copper wires were originally intended to carry only analog circuit-switched, voice signals. As a result, the connection to the subscriber has become a bottleneck that limits high-speed data transmission. Alternative technologies for broadband access include: o Digital subscriber line, or DSL, technology improves the data transmission rates of a telephone company's existing copper wire network; o Cable modems, which are designed to provide broadband Internet access and are targeted primarily at the residential market; o Fiber-Based Solutions and high-capacity leased lines, which offer the highest data transmission rate of any of the alternative technologies for broadband access; o Point-to-point wireless technology enables data transmission using a dedicated radio link between two locations; and o Broadband point-to-multipoint wireless networks, which consist of a wireless hub that communicates over radio frequencies to transmit and receive network traffic to and from wireless modems installed at multiple subscriber locations. Both incumbent and emerging service providers are emphasizing broadband wireless technologies for Internet access. Established carriers are expected to use broadband wireless technology to reach new customers to whom they previously could not provide access, fill coverage gaps in their existing networks and deploy value-added services in a cost-effective manner. For example, International Data Corporation reports that in 1999, Sprint and MCI WorldCom spent over $1.5 billion to purchase companies holding licenses in these lower frequencies within the 2.15 to 2.68 GHz range. Emerging carriers may use this technology to bypass existing wire-based infrastructure and to compete with incumbent carriers. In addition, this technology may be used to deploy broadband services in regions where there is no wire-based communications infrastructure. Estimates of the revenue which lower frequency licenses will generate vary substantially, but International Data Corporation estimates that revenue generated by basic services delivered via fixed, non-satellite based wireless technologies will grow from $767 million last year to $7.4 billion in 2003. Lower and Higher Frequency Wireless Transmission Systems We have chosen to focus on acquiring licenses to transmit within the lower frequency ranges approved by the FCC and used internationally, which are generally between 2.15 and 2.68 GHz. Although the higher frequencies are large enough to transmit large amounts of data at once, the higher frequencies have severe limitations including high costs of build out, very short range of less than 5 kilometers and severe problems with -11- interference from weather and atmospheric conditions. Even though they have these limitations, higher frequency transmissions would appear to have major potential in wireless local loops, internal wireless networks and intranets. The lower frequencies approved by the FCC have less bandwidth than those in the higher frequencies. Nonetheless, we believe that the lower frequencies have more than enough bandwidth for the great majority of potential business and residential users. In the United States, which allows 10 watts of power in transmitting data, the range of the lower frequencies is at least 50 kilometers and transmissions within these frequencies are much less affected by atmospheric and meteorological phenomena. It is also much less expensive to install and operate lower frequency transmission services than at higher frequencies, in part because the greater range of the lower frequencies require the installation of fewer transmitters. Both high and low frequency transmissions are transmitted over a limited number of licensed frequencies that protect data from interference by other forms of radio or microwave transmitters. It is critical, therefore, that any company operating or attempting to develop a system of wireless Internet over these frequencies acquire them as quickly and as inexpensively as possible and for as many locations and as many channels/bands as possible in each location. Because of the limitations of higher frequencies as a means of transmissions for Internet access, and because we believe that the more viable market for wireless high-speed services is in the small to medium-size business and residential market, we have decided to concentrate exclusively on the lower frequencies for our Internet access service. In that context, we have been actively engaged in the acquisition of wireless Internet frequencies in the United States and especially abroad. One major technical problem with wireless transmissions within the lower FCC-approved frequencies has traditionally been that a clear line of sight was necessary between the transmission and the receiver. This limitation allowed these frequencies to be used only in areas with even terrain and no obstructions, insofar as buildings and hills would often disrupt transmissions. Although these problems persist with the lower frequencies, there have been recent developments which have shown a potential for reducing these problems. Cisco Systems, Inc. has recently announced the development of Vector Orthogonal Frequency Division Multiplexing, which purportedly has the ability to reassemble multi-path signals at the receiving point so that they appear to arrive in a single stream from one location, even if obstacles are in the path of the original signal. (Communications Daily, MMDS Industry Gears Up on Standards Issues, Spectrum Planning, April 3, 2000). This would have the effect of significantly reducing the line of sight problem and, we believe, will enhance lower frequency transmissions as a medium for Internet access. A part of the spectrum which the lower frequencies occupy consist of frequencies referred to as Instructional Television Fixed Service. These frequencies are reserved by federal law to television broadcasting by religious, educational or other nonprofit groups. An increasing number of providers of data transmission are leasing transmission rights of the holders of Instructional Television Fixed Service licenses. As we discuss below, we have leased a number of these frequencies from a nonprofit organization. International Broadband Use We believe that international markets offer enormous potential for growth. Although use of the Internet has grown substantially internationally, we believe that the combination of obsolete equipment and newly privatized systems in many countries provide us with great opportunity. The technology we employ allows countries such as Thailand and Peru to establish an up-to-date, high-speed, broadband wireless Internet system equal to any of the most developed nations with very little infrastructural costs. We believe the same will be true in the many other countries throughout Asia, Latin America, the Middle East and Europe in which we are actively seeking wireless frequencies. We believe that our approach to providing high-speed, broadband, fixed wireless Internet service will make our service available to a broader customer base than is possible with certain other fixed wireless services. -12- By concentrating on the acquisition of relatively low-frequency spectrum, we can provide service over a substantially larger market of customers, with enhanced propagation properties, and for substantially lower cost than can be offered by higher-frequency wireless services. It is our belief that the bandwidth and speed of our service will meet the requirements of at least 90% of the potential high-speed wireless Internet customer base, and we hope to be able to provide this service more economically and with greater reliability than our competition. In the international market, we should be able to provide a quantum leap in the quality of Internet service beyond that which currently exists and at a price point similar to that being charged by providers of the current service. Our strategy Our activities are currently divided into three categories: o Acquisition of Wireless Internet Frequencies - Spectrum; ------------------------------------------------------- o Development of Wireless Frequencies - Build Out; and ---------------------------------------------------- o Development and Licensing of Distributed Wireless Call Processing ----------------------------------------------------------------- System. ------ Acquisition of Wireless Internet Frequencies - Spectrum - ------------------------------------------------------- We have determined that our primary target for acquisition of wireless frequencies will be in the frequency range within the United States of 2.5GHz to 3.0GHz and in similar frequency ranges up to around 5.0GHz internationally. With these frequency ranges we believe that we will be able to provide the highest quality, broadest band, and fastest service and the most reasonable costs to the largest number of potential customers. By positioning ourselves to provide enhanced connectivity to the largest number of people, we believe that we will play a significant role in the expansion of this remarkable technological development in both the short and long term. Prior to 1999, we controlled licenses in only three locations - the East Bay region of San Francisco, California, northern San Diego County, California, and South Bend, Indiana. Since the beginning of 1999, we have acquired rights - either through long-term leases with options to purchase or outright purchases - to additional spectrum both in the United States and elsewhere. As of the date of this offering, we lease, own or possess reversionary rights to licensed frequencies in the following additional locations: Location State/Country Hot Springs Arkansas Aspen Colorado Vail Colorado Hilo Hawaii Grand Rapids Michigan Key West Florida Ukiah California La Grande Oregon Casper Wyoming Buenos Aires* Argentina, South America Bangkok Thailand. Asia Hat Yai Thailand, Asia Khon Kaen Thailand, Asia Nakhon Ratchasima Thailand, Asia Phuket Thailand, Asia Chiang Mai Thailand, Asia Lima/ Callao Peru, South America - ------------------- * At this point the license in Buenos Aires, Argentina has been revoked. Although the government in Argentina has informed us it will reissue the licenses we cannot provide assurance that this will occur. -13- The licenses in the United States listed in the above table are currently leased from Shekinah Networks. Pursuant to an Option Agreement with Shekinah Networks, we paid $500,000 to lease eight Instructional Television Fixed Service channels for our high-speed wireless Internet connections, as authorized by the FCC. This agreement also provides us an exclusive option to lease excess capacity on Shekinah's remaining thirty-two channels, as they become available. The monthly minimum transmission fee to be paid to Shekinah for each license or application leased, will be 5% of the gross system receipts or $500, whichever is greater. Each lease has a term of five years, which may be renewed at our election for an additional five-year term if the FCC renews the license. All of the United States licenses described above allow us to broadcast over frequencies using one-way transmissions only. With the exception of certain limited provisional licenses granted in various parts of the country, the FCC has not yet granted long-term two-way transmission licenses for the lower frequencies. We have submitted six applications for two way transmissions on our existing licenses to the FCC in the following markets: Aspen, Grand Rapids, Key West, Pierre, Ukiah and Vail. Each of those applications is currently pending. Development of Wireless Frequencies - Build Out ----------------------------------------------- As spectrum is acquired, we plan to provide high-speed Internet services, including telephony and videoconferencing services. We plan to join with local partners and other entities in the industry to form strategic alliances in connection with the use and implementation of high-speed wireless services. We may also provide services directly to users of Internet services. As of the date of this prospectus, and except as described below, we have not yet entered into any strategic alliances. We selected Andrew Corporation as our exclusive systems integrator worldwide. We anticipate that this association with Andrew Corporation will assist us in our effort to deploy our high speed wireless data systems throughout the world. Most recently, Andrew Corporation has provided significant assistance with our system build out in Lima/ Callao, Peru. We are currently operating a single system off of Mt. Diablo in Concord, California, an area some thirty miles east of San Francisco. The license at Mt. Diablo is one of only two one-channel licenses that we control, with all the remaining ones being at least four channels. Revenue generating service commenced in this location in December 1999. Because the high-speed wireless component of the Mt. Diablo operations is only available in downlink mode, we have been aware from the outset that the operations in the Concord area would not be typical for the more conventional two-way systems. However, because the FCC has not yet approved permit applications for two-way transmissions within these frequencies and because of the specific demographics within the potential Mt. Diablo transmission area, we decided to commence the limited-type of service close to our headquarters in Oakland. We intend to use this one-way wireless system in only one additional location - San Diego, California. The Concord and San Diego operations will use high-speed wireless transmissions to download information from the internet and similar data sources, but will use telephone lines, either normal or high-speed, for the uplink. While this one-way service will provide users with enhanced Internet connections, it will not offer full-time, always on, high-speed two way wireless service that our other locations will provide. In December 1999, we entered into an amended lease agreement regarding a lease for the license covering Concord, California and the surrounding area. We have recently received a Notice of Default from the lessor. The Notice of Default is based on a requirement in the Amendment that the balance of the purchase price for the assignment of the license be paid by December 1, 2000. Our management has been advised by counsel, that payment of the balance of the purchase price prior to the FCC's consent to the assignment of the license may constitute a premature assignment in violation of the FCC's rules. The assignment application has not been filed with the FCC for the FCC to make a definitive ruling on this issue. At this point, no formal legal action has been taken by the Lessor. We intend to build-out domestic systems in various areas including the small town of Ukiah, California, some ninety miles north of San Francisco. In addition to Ukiah, we plan to commence domestic build-out programs in northern San Diego County, South Bend, Indiana, Grand Rapids, Michigan, Vail and Aspen, Colorado, Key West, Florida, Pierre, South Dakota and Casper, Wyoming. We recently entered into an agreement with Shekinah Network to lease their excess airtime capacity in Hot Springs, Arkansas and Hilo, Hawaii. -14- We signed an agreement to acquire 51 % of Infotel Argentina, S.A. on December 1, 1999. We intend to commence operations in Buenos Aires, Argentina as soon as we obtain the necessary licenses. Preparations have commenced to secure the necessary backbone connections and transmitter locations in the Greater Buenos Aires metropolitan area, which contains more than 16 million people. Our ability to begin transmission over the frequencies is subject to approval of the Comision Nacional de Communicaciones, or CNC, the governmental agency primarily responsible for regulating telecommunications in Argentina. The Argentine government recently announced that it was revoking all license transfer requests and transfers of shares in entities holding these licenses. As a result our license transfer requests were revoked. The Argentine government has set forth criteria for the return of the licenses and we have submitted the necessary documentation. We expect that the CNC will ultimately approve our applications and allow for us to commence offering our wireless services. However, we have been informed that the government might not reissue the same lower frequency licenses for those cities outside Buenos Aires, but will instead issue a new series of licenses on a different frequency. We cannot provide assurance that a license from the Argentine government will be forthcoming. We acquired all of the shares of Digital Way, S.A., a Peruvian telecommunications company earlier this year. Digital Way presently owns a wireless transmission license in Lima/Callao and is in the process of attempting to secure additional licenses in that area as well as licenses for five different cities in Peru. We have received necessary governmental consent in Peru for the transfer of the control of Digital Way's licenses. Digital Way, S.A. recently launched its two way, high speed, broadband wireless internet operations in metropolitan Lima/ Callao Peru. This effort has generated interest from business customers in the region. This service is to be marketed under the name "Speedway" and is intended to provide high quality service to currently underserved sectors of the Peruvian market. We intend to increase our services in Thailand. Earlier this year, we entered into a joint venture with World T.V. Communication Co. Ltd, a Thai corporation, to provide high speed, wireless, broadband internet and related services in Bangkok and other major areas in Thailand. World T.V. Communication Co. currently owns frequencies in Bangkok and throughout "up-country" Thailand. In August 2000, we entered into a Letter of Intent with E-Z Net Company, Limited of Bangkok, Thailand. Under the agreement, E-Z Net will provide us with unlimited, nonexclusive internet service provider services. E-Z Net is one of a small number of companies licensed by the Thai government to provide such services. An internet service provider license is necessary in order to provide our high-speed fixed wireless internet services in Thailand. We believe execution of a final agreement with E-Z Net should expedite commencement of services in Thailand. Regulations surrounding internet service providers are currently in a state of flux within the country and might effect the speed with which operations commence in Thailand. We intend to commence a build out of our high speed broadband fixed wireless data service system in India. We have entered into an agreement with a group of Indian businessmen to establish such a system. Under the agreement, a new entity World Wide Wireless Communications (India) Ltd. was formed. World Wide Wireless Communications (India) has received internet service provider licenses in five cities in India. The success of this venture depends on obtaining a nationwide internet service provider license and an appropriate frequency license from the Indian government. We applied for the licenses and we are awaiting their approval by the government. We entered into a letter of intent with El Salvador Telecomuniciones S.A. de C.V. for the purpose of acquiring a 25% ownership interest in that company in El Salvador. Pursuant to the terms of the letter of intent, we have paid $1,000,000 to that company as an advance payment of the purchase price, which was to total $3,500,000. The purchase was conditioned upon that company's acquisition of certain licenses and the occurrence of certain other conditions which have not been met. As a result, we sought the return of the $1,000,000. Accordingly, we entered into an agreement with the company to rescind the previous contract. To date the company has returned $500,000 and has agreed to return the remaining $500,000 by January 1, 2001. The remaining $500,000 owed is secured by a guarantee from Lafise Bank Limited. -15- We previously applied for licenses in the 3.5 GHz range in Germany and the Czech Republic. We are still evaluating our options in Germany. We did not receive licenses in the Czech Republic, but we are currently negotiating with an individual who holds licenses in that country. In addition, we are exploring additional markets in Europe - including much of Eastern Europe - for expansion of our services. We expect that, in the case of any future acquisition of licensed frequencies, we will operate the systems alone, do so in joint ventures with local entities, or transfer the licenses to third parties for significant consideration. Although we initiated negotiations with businesses in Puerto Rico and Portugal in 1999, no further negotiations or affiliations are currently pending in those countries. Development and Licensing of Distributed Wireless Call Processing System ------------------------------------------------------------------------ We are completing the development of our distributed wireless call processing system. The major feature of this system is that it allows individual cell phones and other communication units to amplify signals, thereby reducing the need for repeater stations. The system allows every handset itself to serve as a mobile, low-power repeater site, and each unit facilitates the operation of the entire local network within a radius of 10-20 miles. A whole continent populated with these units would theoretically have no need for infrastructure support of any kind. In practice, we or parties to whom we license the system will build widely scattered gateway sites that will serve to introduce local signals into long lines, international and satellite service providers and introduce data signals into destination networks while providing a medium for our generation of an ongoing revenue stream. We expect that there will be a dramatic increase in total network capacity and in individual and traffic-form capacities resulting from the use of the distributed wireless call processing system. This transmission technique, implemented in the chipsets that are the core of the new technology, embodies very low power transmissions along multiple routes between two mobile or stationary points on the network. The result is a large group of transmission paths blanketing the entire cell compared to the hub and spoke transmissions between the central node and the multiple users of a traditional cellular system. The multiplicity of routes between any two points that is possible with this fabric generates an aggregate capacity for the network that far exceeds a hub and spoke system, where multiple transmission paths converge on a single hub, quickly consuming the available radio frequency in the cell. The low transmission power needed for this system has the further potential to allow this new technology to be overlaid on existing wireless cellular installations without interfering with existing signals in the same frequency. As a result, the new technology has the potential to provide overbuild capacity, incremental returns on investments in frequency, and introduction of new, high-value data and non-voice services on cellular franchises already in place. This new technology is currently being engineered to operate in, among other frequencies, the PCS frequency bands and in so-called free or unlicensed frequency bands in the United States. It is readily adapted to other frequencies - - military frequencies and frequencies that may be allocated by foreign governments. By licensing or otherwise transferring this technology to third parties and retaining a substantial royalty interest in it, we believe that we will be able to concentrate on our core business while retaining the potential for a significant revenue stream. Investors should be aware that this system is largely untested and is not widely used, and we cannot ensure that an increase in usage will actually result. We are currently having feasibility studies conducted on the distributed wireless call processing system to evaluate its capabilities and market potential. A recent test, conducted by the University of California, Los Angeles, concluded that the distributed wireless call processing system remains a viable adjunct or alternative to current mobile telephony technology. This review concluded that the new system may reduce the amount of blackout areas in a coverage zone, may serve a larger number of -16- users in a coverage area, and may improve the quality of service by increasing signal-to noise ratio and improving speech quality. Acquisitions On December 1, 1999, we signed an agreement to acquire 51% of Infotel Argentina, S.A., the owner of wireless transmission licenses in eight of the largest cities in Argentina, including Buenos Aires. Under the agreement, we will appoint the majority of Infotel's directors and will be in charge of its management. The purchase price for Infotel Argentina S.A. consisted of $900,000 in cash and 454,545 shares of common stock. The Agreement allows us to rescind the purchase in the event that the CNC does not approve the sale of Infotel Argentina S.A. to us and receive repayment of the purchase price. On February 10, 2000, we signed an agreement to purchase Digital Way, S.A., a Peruvian telecommunications company. Digital Way currently owns licenses for spectrum in the 2.3 to 2.5 GHz range, has national and international long-distance concessions as well as value added licenses for services in Peru. We sought and received approval for this acquisition from the Peruvian government. In March 2000, we signed an agreement to acquire 25% of El Salvador Telecom, S.A. de C.V. ("SalTel") a telecommunications company in El Salvador. Pursuant to the terms of the letter of intent, we paid $1,000,000 to that company as an advance payment of the purchase price. The agreement provided that the purchase was conditioned upon the company's acquisition of certain licenses and the occurrence of certain other conditions which have not been met. As a result we sought the return of the $1,000,000 payment. To date the company has returned $500,000 and has agreed to return the remaining $500,000 by January 1, 2001. The remaining $500,000 owed is secured by a guarantee from Lafise Bank Limited. Business Locations Our business headquarters is located at 520 Third Street, Oakland, California, 94607. We also have offices located in Concord, California, Buenos Aires, Argentina and Lima/Callao, Peru. Our office space at One Post Street, San Francisco, was leased on a month-to-month basis. We vacated these offices on August 31, 1999. The actual rent paid, for the fiscal year ended September 30, 1999, was $22,341. In April 1999, we entered into a 5-year lease for approximately 6,000 square feet of office space in Jack London Square, Oakland, California. The lease commenced on June 5, 1999. The triple net rental agreement is for $10,038 per month during the first year. The lease provides for an annual increase based on the indexed cost of living adjustments. Additionally, the lease provides for the landlord's participation in partial reimbursement over the terms of the lease to us for leasehold improvements for which we pay. We began to occupy this space on September 1, 1999. The minimum annual rent is $120,456 for the fiscal years ended September 30, 2000, 2001, 2002 and 2003, and $81,642 for the period October 1, 2003 to June 4, 2004. We also entered into a lease for office space to operate our network operation center at 2962 Treat Boulevard, Suite C, in Concord, California 94518. The triple net rental agreement is for $1,890 per month. The lease provides for an annual increase based on the indexed cost of living adjustments. Additionally, the lease provides for the landlord's participation in partial reimbursement over the terms of the lease to us for leasehold improvements we make. We commenced occupation of this 1680 square foot space on May 1, 1997. The lease expired on April 30, 2000. We are now occupying the premises on a month-to-month basis. We have lease space by virtue of our acquisition of Infotel Argentina, S.A. The lease is for approximately 1,500 square feet and is leased on a month-to-month basis. The monthly rent is approximately $2,000 per month. The lease started on January 1, 1999 and expires on December 31, 2003. We have leased space in Peru by virtue of our acquisition of Digital Way, S.A. The lease is for three office spaces within the same building approximately 4,350, 57.53 and 40.99 square feet respectively and is due to expire May 1, 2010. The monthly rent is approximately $4,444.06 per month with a nominal annual increase. -17- Regulation We intend to offer our services exclusively over licensed frequencies in each of the countries in which we operate. In the United States, our frequencies are licensed by the Federal Communications Commission, in Argentina, by the Comision Nacional de Comunicaciones, in Peru by the Telecommunications Concessions Department of the Ministry of Transport, Communciations, Housing and Construction. We are either applying directly for licenses in some countries or applying jointly with local partners in others. Some countries require, for example, domestic control of any entity licensed to use radio frequency within their territory. Within the United States, we operate under licenses issued by the FCC. These licenses are issued in the 2.5 GHz frequency range and can be revoked if the licensee or its assignee is in violation of any of the operation provisions under the license. The licenses are issued in the United States for a fixed time period and can be renewed. Yearly reports are required to be filed with the FCC to establish that the licensee or its assignee is complying with the requirements of the license. Outside the United States, rules and regulations are quite varied. In Argentina, the proposed frequencies for licenses are between 2.4 GHz and 2.6 GHz and are granted by the CNC. Licenses are granted for periods of 10 years, but may be extended for lengthier periods at the discretion of the CNC. In Peru, frequencies for licenses are also between 2.4 GHz and 2.6 GHz and are granted for periods of 20 years. As in the United States, licenses may be revoked if the licensee violates any of the license provisions. There are significant differences in the clarity of regulations as well as in the consistency of their enforcement by the regulatory authorities abroad, and changes in governments may result in substantial changes in the enforcement of regulations. For example, in September 2000, the government of Argentina revoked licenses for lower transmission frequencies, those ranging between 2.5 and 4.0 Gigahertz or GHz for all communication carriers, including those of the Company's subsidiary, Infotel Argentina, S.A. Although we have resubmitted the necessary paperwork to obtain licenses in Argentina, it is unclear at this point whether the government will decide whether to reissue the licenses. A denial of our most recent application or a significant delay in consideration of our application could either prevent us from conducting our planned operations in Argentina or materially adversely affect our ability to do so. In addition to these laws, our business operations also make us subject to laws pertaining to transmitters of information over the Internet. The law relating to liability of Internet service providers and online service providers for information carried on or disseminated through their networks is currently unsettled. A number of lawsuits have sought to impose liability for defamatory speech and indecent materials. A recent federal statute seeks to impose liability, in some circumstances, for transmission of obscene or indecent materials. In one case, a court has held that an online service provider could be found liable for defamatory matter provided through its service, on the ground that the service provider exercised active editorial control over postings to its service. Other courts have held that Internet service providers and online service providers may, under certain circumstances, be subject to damages for copying or distributing copyrighted materials. The Telecommunications Act of 1996 prohibits, and imposes criminal penalties and civil liability for using, an interactive computer service for transmitting indecent or obscene communications. Although we intend to conduct our operations in a manner which reduces the risk of liability under these laws, we cannot assure you that we will avoid liability entirely under these laws. Patents/Intellectual Property We recently received a patent from the United States Patent and Trademark Office for our distributed wireless call processing system, which has been issued patent number 6,055,429. We do not have other patents pending pertaining to other technologies. We currently use the service mark "World Wide Wireless Communications", however, this particular name is currently not protected by any trademark or copyright protection. We have applied to register the service mark consisting of both the name itself and a design logo with the United States Patent and Trademark Office. -18- We are currently considering changing our corporate name from World Wide Wireless Communications, Inc. to another name. Litigation On August 26, 1999, we filed suit against Credit Bancorp, in U.S. District Court in San Francisco, regarding improprieties on the part of Credit Bancorp relating to a loan. The case was settled on October 11, 1999. As part of the settlement agreement, Credit Bancorp agreed to convert the original loans granted to us to a convertible debenture in the amount of $740,000. On October 11, 1999, we issued a convertible unsecured debenture for $740,000 to Credit Bancorp in settlement of this obligation. The terms of this convertible unsecured debenture are 7% interest per annum payable, semiannually on the last day of February and September, with the principal due September 30, 2002. All amounts of unpaid principal and accrued interest of this debenture are convertible at any time at the conversion price of $1.60 per share of unregistered, restricted shares of our common stock. Credit Bancorp's receiver has agreed to convert principal and accrued interest owing on the debenture into 482,734 shares of our common stock. In November 1999, the SEC filed suit against Credit Bancorp alleging violations of various securities laws in connection with its actions in relation to us and others, and seeking various forms of relief including disgorgement of its illegal gains. A receiver has been appointed to administer the affairs of Credit Bancorp. At this time, management believes that if the suit is successful, certain benefits may accrue to us, including monetary remuneration. The Securities and Exchange Commission commenced an informal inquiry of us in August, 2000. We have voluntarily complied with their requests for information and we intend to fully cooperate with the inquiry. In December 1999, we entered into an amended lease agreement regarding a lease for the license covering Concord, California and the surrounding area. We have recently received a Notice of Default from the lessor. The Notice of Default is based on a requirement in the Amendment that the balance of the purchase price for the assignment of the license be paid by December 1, 2000. Our management has been advised by counsel, that payment of the balance of the purchase price prior to the FCC's consent to the assignment of the license may constitute a premature assignment in violation of the FCC's rules. The assignment application has not been filed with the FCC for the FCC to make a definitive ruling on this issue. At this point, no formal legal action has been taken by the Lessor. -19- MANAGEMENT Our executive officers and directors and their ages as of December 15 , 2000 are as follows: Name Age Position Period of Service - ---- --- -------- ----------------- Douglas P. Haffer.... 52 Chairman of the April 1998 to present Board, CEO and CFO Wayne Caldwell....... 49 Director, Vice Vice President: November 1, President and 1999 to present Secretary Secretary: December 1, 1999 to present Director: January 1, 2000 to present Dana Miller.......... 39 Vice president May 1998 to present Ramsey Sweis......... 35 Director May 1998 to present Robert Klein......... 52 Director May 1998 to present Mohammad Ali Guidfar. 40 Director August 2000 to present Douglas P. Haffer has practiced law in San Francisco, Beverly Hills, and Washington D.C. for twenty-five years. During that time he has served as general counsel and/or vice president, and on the Board of Directors, of several corporations, including Commercial Bank of San Francisco, Aca Joe Inc., Finet Holdings Corporation, Worldwide Wireless Inc. and Uniprise Systems, Incorporated. His legal practice concentrated primarily on providing legal counseling to small or start-up businesses. In addition, a significant part of his practice contained an international aspect involving foreign investors seeking investment platforms in the United States. Mr. Haffer attended the University of Wisconsin, Madison from 1965 to 1969 where he received his Bachelor of Arts degree with honors with a major in Latin American history, and was elected to Phi Beta Kappa. He then attended the Harvard Law School from which he graduated in 1972 with a Juris Doctor degree. Mr. Haffer lived in Latin America for seven years and reads, writes and speaks Spanish fluently. He has been a lecturer and adjunct professor of law at the University of San Francisco Law School and at the Law School at the University of California at Davis. Wayne Caldwell has served as Vice President and General Counsel since November 1999. Mr. Caldwell is responsible for legal, governmental and regulatory matters. Prior to joining World Wide Wireless Communications, Inc., Mr. Caldwell was in private practice for two decades specializing in business and regulatory law. Mr. Caldwell is a graduate of Stanford University in economics and received his law degree from the University of San Francisco. Dana Miller was Director of Licensing and Acquisitions for National Micro-Vision Systems, Inc. from 1995 to 1996. He worked extensively with the Federal Communications Commission and FCC legal counsel and was responsible for compliance with all FCC regulations. Mr. Miller also coordinated acquisitions of microwave television licenses throughout the United States. He has negotiated FCC lease agreements with educational institutions and nonprofit organizations. From 1996 to 1998 Mr. Miller was a self-employed telecommunications consultant. He is an expert in FCC license application, FCC petition, and license acquisition and maintenance. His accomplishments include resolution of a recent long-term, complex conflict between us and a second national wireless firm, freeing us up to implement high-speed wireless Internet operations in the San Francisco metropolitan area. Ramsey Sweis has had extensive experience in management and in the product design industry. He has been a leader and developer of high performance teams by enabling, training and motivating team members. In the recent past he has provided computer and engineering services to General Motors and Chrysler Corporation. In connection with those activities Mr. Sweis has developed designs between engineering, prototype models, tooling and vendor sources. Mr. Sweis resides in Roseville, Michigan. He currently serves as a Program Manager for Hanke Training & Design of Clawson Michigan. From 1997 to 1999 Mr. Sweis served as a designer for Computer and Engineering Services of Rochester Hills, Michigan. From 1991 to 1997, Mr. Sweis was a design leader for Megatech Engineering of Warren Michigan. -20- Robert Klein's experience includes an active twenty-year career in the securities industry handling a wide range of duties including management roles and institutional trading. For the past fifteen years a major emphasis has been placed on packaging complex transactions on behalf of corporate clients resulting in the creation and sale of marketable securities. The past five years has been spent on public company development. Since 1993, Mr. Klein has been self-employed through Weissgeld Capital Group, Ltd, a company he founded. In the past, he served as a director for three brokerage firms, including Yorkton Securities. He is currently a director of Asdar Inc. Mr. Klein has a degree in Applied Mathematics from the University of Waterloo, and an FCSI designation from the Canadian Securities Institute. Mohammad Ali Guidfar has been with the Abdul Latif Jameel Group ("ALJ") for over thirteen years, serving as the General Manager of ALJ's wholly owned Lebanese subsidiary Hartwell Middle East while at the same time holding the position of President and General Director of Jameel SAM of Monaco. ALJ is currently the largest privately owned company in Saudi Arabia. As Director of Jameel SAM, Mr. Guidfar has lead the company in its real estate, shipping and construction ventures. Recently, Mr. Guidfar was one of the select members of the "International Business Strategy Committee" at the ALJ's world headquarters in Jeddah, Saudi Arabia. Mr. Guidfar received his Bachelor of Science in Law at the University of Nice in 1982. Director Compensation Directors receive no compensation for serving as directors, except that: o Mr. Sweis received options to purchase 250,000 shares of common stock on October 22, 1998, at an exercise price of $0.095 per share. All of Mr. Sweis' options vested immediately upon the date of grant. The expiration date for Mr. Sweis to exercise the options is October 21, 2003. To date, Mr. Sweis has not exercised any options for shares of common stock. o Mr. Klein received options to purchase 250,000 shares of common stock on October 22, 1998, at an exercise price of $0.095 per share. All of Mr. Klein's options vested immediately upon the date of grant. The expiration date for Mr. Klein to exercise the options is October 21, 2003. To date, Mr. Klein has not exercised any options for shares of common stock. o Mr. Guidfar received options to purchase 100,000 shares of common stock in August, 2000, at an exercise price of $0.59 per share. All of Mr. Guidfar's options vested immediately upon the date of grant. The expiration date for Mr. Guidfar to exercise the options is August, 2005. To date, Mr. Guidfar has not exercised any options for shares of common stock. Employment Contracts We have entered into an employment agreement with Mr. Haffer, which provides for an initial term of three years commencing February 1, 2000 at an initial annual base salary of $230,000 plus an annual performance bonus of not less than $23,000. Any bonus in excess of $23,000 will be at the sole discretion of our Board and will not be tied to a fixed set of objective criteria. Mr. Haffer's employment agreement also contains a termination provision that requires us to pay him his annual compensation and minimum bonus amounts remaining on his three-year contract if he is terminated without cause. Executive Compensation The following table summarizes information regarding the salary and bonus we paid to Mr. Haffer, our Chief Executive Officer, during the fiscal year ended September 30, 2000. Mr. Haffer was the only officer who received a salary plus bonus that exceeded $100,000 during that period. -21- Summary Compensation Table
Annual Compensation Long-Term Compensation -------------------------------- --------------------------- Salary Awards --------------------------- Securities Restricted Underlying Stock Options and All Other Name and Principal Position Bonus Awards Warrants Compensation - -------------------------------------------------------------------------------------------------------------------------------- Douglas P. Haffer 2000 220,000 23,000* 800,000 Chairman, CEO and CFO 1999 106,000 16,017 800,000 * Bonus was earned in fiscal year 2000 but received in fiscal year 2001.
Option Grants The following table sets forth information concerning grants of stock options to Doug Haffer, Chief Executive officer. He is the only named executive officer for the fiscal year ended September 30, 2000. All options were granted under the 1998 Stock Option Plan. Shareholders never approved our 1998 Stock Option Plan, and therefore, all incentive stock options granted under the 1998 Stock Option Plan are classified and taxed as non-statutory stock options. Options Granted during Fiscal Year 2000
Percent of Number of options Fiscal Securities granted to Options Year Underlying employees Exercise Exercised Options Options from Price as of Expiration Granted Granted 9/30/99 ($/Share) 9/30/00 Date -------- ------- ------- --------- ------- ------ Douglas P. Haffer.... 2000 800,000 50% $1.62 0 2/1/05 Chairman, CEO & CFO 1998 800,000 43% $0.095 0 10/22/03
In October 1998, Mr. Haffer received an option to purchase 800,000 shares of our common stock at an exercise price of $0.095 per share. All 800,000 shares vested immediately. The expiration date is 5 years from the date of grant. The grant of shares was intended to be an incentive stock option, but our shareholders never approved the plan and therefore, the options are being classified as non-statutory stock options. On February 1, 2000, Mr. Haffer received another option to purchase 800,000 shares of our common stock at an exercise price "at the lowest price permitted under our 1998 Stock Option Plan such that the grant or exercise of the options will not create a taxable event." All 800,000 shares vested immediately. The expiration date of the option is 5 years from the date of grant. The option will be treated as non-statutory stock options. -22-
Number of Securities Value of Unexercised In- Underlying Unexercised the Money Options/ Options/SARS at SARS at September 30, 2000 September 30, 2000 Exercisable/Unexercisable Exercisable/Unexercisable Name Douglas P. Haffer.... 1,600, 000/0 0/0 Chairman, CEO & CFO
1998 Stock Option Plan Our Board of Directors adopted a 1998 Stock Incentive Plan in August 1998 reserving 3,000,000 shares for issuance. The Plan provides for the grant of incentive stock options, as defined in Section 422 of the Internal Revenue Code, to our officers and employees, and nonstatutory stock options to employees, directors and consultants. It may be administered by the Board of Directors or delegated to a committee. Shareholders never approved our 1998 Stock Option Plan, and therefore, all incentive stock options granted under the 1998 Stock Option Plan are classified and taxed as non-statutory stock options. The exercise price of incentive stock options granted under the 1998 Stock Option Plan must be at least equal to the fair market value of our common stock on the date of grant. However, for any employee holding more than 10% of the voting power of all classes of our stock, the exercise price will be no less than 110% of the fair market value on the date of grant. Nonstatutory stock options granted to a person who at the time the option is granted does not hold more than 10% of the voting power of all classes of our stock will have an exercise price of no less than 85% of the fair market value of the stock on the date of grant. Options granted to our employees will become exercisable over a period of no longer than 5 years, and no less than 20% of the shares covered will become exercisable annually. No options will be exercisable prior to one year from the date it is granted unless the Board specifically determines otherwise. In no event will any option be exercisable after the expiration of 10 years from the date it is granted, and no Incentive Stock Option granted to a holder of more than 10% of the voting power of all classes of our stock will be exercisable after the expiration of 5 years from the date it is granted. If an optionee's status as an employee with us terminates for any reason, other than death or disability, then the optionee may exercise Incentive Stock Options in the three-month period following such cessation. The three-month period is extended to 12-months for termination due to death or disability. In the event of a merger or consolidation in which we are not the surviving entity, or a sale of all or substantially all of our assets or capital stock, if the surviving entity does not tender to the optionees stock options or capital stock of substantially the same economic benefit as optionees unexercised options, then the Board may grant to optionees the right to exercise any unexpired options for a period of thirty days. The 1998 Stock Option Plan will terminate in July 2008, unless sooner terminated by the Board of Directors. PRINCIPAL AND SELLING SHAREHOLDERS The following table sets forth the beneficial ownership of our common stock as of November 30, 2000 and as adjusted to reflect the sale of the shares of common stock offered here by: o the chief executive officer, each of the executive officers named in the summary compensation table and each of our directors; -23- o all executive officers and directors as a group; o each person or entity who we know beneficially owns more than 5% of our outstanding shares of common stock. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock held by them. Applicable ownership is based on 88,332,644 shares of common stock outstanding as of November 30, 2000. Beneficial ownership is determined in accordance with the rules of the SEC. Shares of common stock subject to options or warrants that are presently exercisable or exercisable within 60 days of November 30, 2000 are deemed outstanding for the purpose of computing the percentage ownership of the person or entity holding options or warrants, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person or entity. If any shares are issued upon exercise of options, warrants or other rights to acquire our capital stock that are presently outstanding or granted in the future or reserved for future issuance under our stock plan, there will be further dilution to new public investors. Selling shareholders are under no obligation to sell all or any portion of their shares. Particular selling shareholders may not have a present intention of selling their shares and may sell less than the number of shares indicated. The following table assumes that the selling shareholders will sell all of their shares. The following table also sets forth the names of the selling shareholders, the number of shares of common stock beneficially owned by each selling shareholder as of November 30, 2000 the number of shares that each may offer, and the number of shares of common stock beneficially owned by each selling shareholder upon completion of the offering, assuming all of the shares are sold. The number of shares sold by each selling shareholder may depend upon a number of factors, including, among other things, the market price of the common stock. None of the selling shareholders has, or within the past three years has had, any position, office or other material relationship with us or any of our predecessor affiliates. -24-
Number of Percentage of Shares Shares Outstanding Number of Beneficially Prior to After Shares Being Name of Shareholder (1) Owned Offering Offering Offered ----- -------- -------- ------- Douglas P. Haffer (2)................................... 7,341,073 8.3% 8.3% 0 Wayne Caldwell (3)...................................... 1,000,000 * * 0 Ramsey Sweis (4)........................................ 250,000 * * 0 Robert Klein (5) ....................................... 250,000 * * 0 Mohammad Ali Guidfar (6) ............................... 300,000 * * 0 Executive Officers and Directors as a Group............. 10,370,073 1.2% 1.2% 0 World Wide Wireless, Inc. C/o Lofton & Associates, 3233 East Broadway Long Beach, CA 90803(7)................................ 17,315,170 1.96% 1.96% 0 Amro International S.A., c/o Ultra Finance Ltd. Grossmuenster Platz 26, P.O. Box 4401 Zurich, Switzerland CH8022(8) .......................... 4,959,000 5.6% 0% 4,959,000 Celeste Trust Reg., c/o Trevisa-Treuhand-Ansalt Landstrassse 8, 9496 Furstentums Balzers, Liechtenstien(8) .............................. 1,958,000 3.2% 0% 1,958,000 The Endeavor Capital Fund, S.A. 14/14 Divrea Chaim Street Jerusalem 94479, Israel(8) ............................. 2,834,285 * 0% 2,834,285 Nesher, Ltd., c/o Ragnall House 18 Peel Road, Doulgas, Isle of Man 1M1 4L2, United Kingdom(8) ............................. 291,800 * 0% 291,800 Keshet, L.P. Seameadow House, Blackburn Highway P.O. Box 173 Road Town, Tortola British Virgin Islands(8) .............................. 720,833 * 0% 720,833 The Keshet Fund, L.P., c/o KCM, LLC 135 W. 50th Street, Suite 1700 New York, NY 10020(8) .................................. 437,900 * 0% 437,900 Talbiya B. Investments Ltd. Ragnall House, 18 Peel Road Douglas, Isle of Man, IM1 4LZ(8) ....................... 123,523 * 0% 123,523 Esquire Trading & Finance, Inc. Schutzengelstrasse 36 Baar, Switzerland CH6242(8) ............................ 2,262,200 2.6% 0% 2,262,200 -25- Union Atlantic Capital LC 3300 PGA Boulevard, Suite 801 Palm Beach Gardens, FL 33410(8) ....................... 320,000 * 0% 320,000 * Less than 1% (1) The address for each of the named executive officers and directors is c/o World Wide Wireless Communications, Inc., 520 Third Street, Suite 101, Oakland, CA 94607. (2) Includes 1,600,000 shares subject to options that are immediately exercisable. (3) Includes 1,000,000 shares subject to options that are immediately exercisable. (4) Includes 250,000 shares subject to options that are immediately exercisable. (5) Includes 250,000 shares subject to options that are immediately exercisable. (6) We awarded him 200,000 shares in exchange for services rendered before he become a Director. The remaining shares include 100,000 shares subject to options that are immediately exercisable. (7) We believe that Michael Lynch is a majority owner of World Wide Wireless, Inc. and TSI Technologies, Inc. Mr. Lynch is not an officer or director of our company. (8) A portion of the shares listed as owned by each of these selling shareholders consists of shares underlying convertible debentures that are subject to variable conversion ratios. Therefore, the number of shares owned by these selling shareholders may change. Also, 5,040,00 of the shares listed as owned by these selling shareholders consist of shares underlying warrants.
-26- CERTAIN RELATED PARTY TRANSACTIONS As of September 2000, other than employment agreements and stock option plans, there have been no transactions to which we were a party involving $60,000 or more and in which any director, executive officer or holder of more than five percent of our capital stock had a material interest. DESCRIPTION OF SECURITIES Common Stock Our articles of incorporation authorize us to issue a maximum of 100,000,000 shares of common stock. As of November 30, 2000, there were 88,332,644 shares of common stock outstanding and 9,324,917 shares reserved for issuance. Owners of common stock are entitled to one vote for each share held of record on all matters to be voted on by shareholders, except that, upon giving the legally required notice, shareholders may cumulate their votes in the election of directors. Subject to the rights of any holders of preferred stock, the owners of common stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefore. In the event of a liquidation, dissolution or winding up of our business, the common stock shareholders are entitled to share ratably in all assets remaining which are available for distribution to them after payment of liabilities and preferences to holders of preferred stock. Holders of common stock have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock. We have reserved 3,000,000 shares of common stock for issuance under our 1998 Stock Option Plan. In addition, we are obligated to issue 3,600,000 shares of common stock pursuant to the terms of common stock purchase warrants, dated April 14, 2000, 304,000 shares of common stock pursuant to the terms of warrants to be issued as of the date of this prospectus, and an indeterminate number of additional shares of common stock to be issued pursuant to 4% Convertible Debentures described below to the selling shareholders. Under a recent agreement reached with the selling shareholders, we have issued 3,996,113 additional shares of restricted common stock to the selling shareholders. We plan to have a shareholder's meeting in order to authorize more stock, however, we can make no assurances that the shareholder's will approve such action. We are also exploring other alternatives in an effort to increase the number of authorized shares. Preferred Stock Our certificate of incorporation does not presently authorize us to issue any class of stock other than common stock. Warrants/Options We have issued warrants to purchase an aggregate of 3,600,000 shares to the selling shareholders. In addition, the selling shareholders have the right to acquire warrants to purchase an additional 1,440,000 shares of common stock as of the date of this prospectus. The warrants allow the holders to purchase shares of our common stock at a price of $3.23 per share. The warrants allow for the holders to exercise their warrants without the payment of cash by surrendering shares otherwise purchasable upon exercise of the warrant with a fair market value equal to the exercise price for the shares they are purchasing. The exercise price is subject to adjustments if we declare a stock split or dividend of our common stock and will be adjusted lower on a weighted average basis if we issue shares of our common stock at below the exercise price of the warrant then in effect. The warrants are exercisable when issued and have a term of five years. -27- Subordinated Debentures We originally entered into a securities purchase agreement dated April 14, 2000 to issue 4% Convertible Subordinated Debentures to the selling shareholders with a principal amount of $1,312,000. These debentures required the payment of interest at a rate of 4% per annum, payable semi-annually, and principal was due and payable on April 14, 2005. The selling shareholders could convert principal and interest owing under the debentures at any time at a conversion price equal to the lesser of 110% of the average of the closing trading prices of the common stock per share for the five trading days prior to the date on which the debentures were issued or 85% of the average of the closing trading prices of the common stock for five days immediately prior to the date of conversion. During the first six months after the debentures were issued, the conversion price would not be less than $2.00 per share and, during the following six months, would not be less than $1.27 per share. However, if revenues for the 12 month period ended December 31, 2000 were less than $13,500,000, there would be no minimum exercise price. There would be no minimum exercise price following the end of the second six-month period in any event. We recently reached an agreement with the selling shareholders whereby we amended the original securities agreement. In exchange for a waiver, by the selling shareholders, of any breach of the original securities agreement, we agreed to increase the principal amount of the debentures by $2,128,000 and to issue an additional 3,996,113 restricted shares of common stock to them. Under this agreement, the selling shareholders may convert the debentures at a conversion price equal to the lesser of $.64 and an amount equal to 85% of the average of the closing trading prices of the common stock for the five consecutive trading days immediately prior to the conversion. At no time shall the conversion price be below the floor price. The floor price is $.64 for the period between October 1, 2000 and October 14, 2000, $.50 for the period between October 14, 2000 and September 1, 2001 and zero thereafter. However, if our aggregate revenue for the last three quarters of the year 2000 and the first quarter of year 2001 is less than $13.5 million then as of May 14, 2001 the floor price shall be zero. The selling shareholders also agreed to waive any breach of the registration rights agreement. Accordingly, under the amendment we are required to file this registration statement by December 15, 2000. Under the amended agreement, we reserve the right to redeem the debentures if the per share market value of the common stock is less than $1.00. The redemption price is calculated at 120% of the principal amount and 100% of the unpaid interest accrued on those debentures being redeemed. Registration Rights We originally entered into a registration rights agreement, dated April 14, 2000, with the selling shareholders which required that we file a registration statement with the SEC to register under the Securities Act all shares of common stock issued to them or issuable upon the conversion of the subordinated debentures and certain series A preferred stock (if any is issued) and exercise of the common stock purchase warrants. We were obligated to file this registration statement by May 29, 2000. The registration rights agreement provided that we must pay all expenses incurred in the registration and certain expenses of the selling shareholders, including up to $25,000 in the legal fees of counsel the selling shareholders retain. We are obligated to keep the registration statement effective with respect to those shares until those shares are sold or until those shares may be sold pursuant to Rule 144(k) of the Securities Act. Unless all shares are sold prior to that time, this will require that the registration statement will need to remain effective for a period of at least two years under present SEC rules. We recently agreed to an amendment with the selling shareholders dated November 15, 2000, under which we must now file this registration statement by December 15, 2000 and the SEC must declare the registration statement effective by May 15, 2001. The selling shareholders agreed to this extension in exchange for our commitment to increase the principal amount of the debentures and to issue an additional 3,996,113 shares of common stock to them. The selling shareholders agreed to waive any previous breach of the original registration rights agreement. -28- PLAN OF DISTRIBUTION This prospectus relates to the resale of up to 11,907,541 shares of our common stock by the selling shareholders. Selling shareholders includes donees and pledges selling shares received from a named selling shareholder after the date of this prospectus. We will bear all costs, expenses and fees in connection with the registration of these shares. Selling shareholders will be responsible for brokerage commissions and similar selling expenses, if any, attributable to the sale of the common stock. Sales of common stock may be effected by selling shareholders from time to time in one or more types of transactions, which may include block transactions, in the over-the-counter market, in negotiated transactions, through put or call options transactions relating to the common stock, through short sales of shares, or a combination of such methods of sale, at market prices prevailing at the time of sale, or at negotiated prices. The selling shareholders may effect transactions by selling common stock directly to purchasers or to or through broker-dealers, which may act as agents or principals. Such broker-dealers may receive compensation in the form of discounts, concessions, or commissions from the selling shareholders or the purchasers of shares, or both, which compensation to a particular broker-dealer might be in excess of customary commissions. The selling shareholders and any broker-dealers that act in connection with the sale of shares might be deemed to be underwriters within the meaning of section 2(11) of the Securities Act, and any commission received by such broker-dealer and any profit on the resale of the shares sold by them while acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. We have agreed to indemnify each selling shareholder against certain liabilities, including liabilities arising under the Securities Act. The selling shareholders have agreed to indemnify us and our directors, officers and any controlling persons, as defined in section 15 of the Securities Act, against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities under the Securities Act may be permitted to our directors, officers and any controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressing in the Securities Act and is therefore unenforceable. Transfer Agent The transfer agent for our common stock is Manhattan Transfer Register Co., Post Office Box 361, Holbrook, New York, 11741-0361. PRICE RANGE OF COMMON STOCK Our common stock has been traded on the OTCBB from January 1998 to present under the symbol WLGS. The security traded under the symbol UPPI from October 1997 through July 1998. However, there were no inside quotes reported for 1997. The market for our common stock has often been sporadic and limited. The following table sets forth in the periods indicated the range of high and low bid prices per share of our common stock traded as reported by the OTCBB. ------------------------------------------------------------------- Quarter End Low Bid High Bid ----------- ------- -------- ------------------------------------------------------------------- 3/31/98 0.25 1.31 ------------------------------------------------------------------- 6/30/98 0.25 2.05 ------------------------------------------------------------------- 9/30/98 0.11 0.60 ------------------------------------------------------------------- 12/31/98 0.09 0.51 ------------------------------------------------------------------- 3/31/99 0.12 0.51 ------------------------------------------------------------------- 6/30/99 0.25 3.99 ------------------------------------------------------------------- 9/30/99 0.875 1.73 ------------------------------------------------------------------- 12/31/99 0.62 2.01 ------------------------------------------------------------------- 3/31/00 1.06 7.78 ------------------------------------------------------------------- 6/30/00 1.45 5.31 ------------------------------------------------------------------- 9/30/00 0.78 3.065 ------------------------------------------------------------------- -29- Since our shares began trading on the OTCBB in 1997, the prices for our shares have fluctuated widely. There may be many factors which may explain these variations, but we believe that among these factors include the following: o the demand for our common stock; o the number of market makers for our common stock; o developments in the market for broadband Internet access and wireless transmission in particular; and o changes in the performance of the stock market in general. In recent years, the stock market has experienced extreme price and volume fluctuations that have had a substantial effect on the market prices for many telecommunications, Internet and emerging growth companies such as ours, which may be unrelated to the operating performances of the specific companies. Companies that have experienced volatility in the market price of their stock have been the object of securities class action litigation. If we become the object of securities class action litigation, it could result in substantial costs and a diversion of our management's attention and resources and have an adverse effect on our business, financial condition and results of operations. In addition, holders of shares of our common stock could suffer substantial losses as a result of fluctuations and declines in the stock price. The trading of our shares is subject to limitations set forth in Rule 15g-9 of the Securities Exchange Act. This rule imposes sales practice requirements on broker-dealers who sell so-called penny stocks to persons other than established customers, accredited investors or institutional investors. Accredited investors are generally defined to include individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouses during the previous two years and expected annual income of that amount during the current year. For sales of shares to other persons broker-dealers must make special suitability determinations, must obtain the written consent of the purchaser to the sale prior to consummating the sale and is generally prohibited from making cold-calls or other unsolicited inquiries to purchasers without complying with these rules. These rules may adversely affect the ability broker-dealers and others to sell our shares or to sell shares in the secondary market. LEGAL MATTERS Certain legal matters in connection with the common stock being offered hereby will be passed upon by Foley & Lardner, One Maritime Plaza, San Francisco, California 94111. EXPERTS The summary financial data for the years ended September 30, 2000 and 1999 have been derived from the Financial Statements and Notes to Financial Statements, audited by Reuben E. Price & Co., San Francisco, independent auditors. These financial statements are included in reliance upon the authority of that firm as an expert in accounting and auditing. ADDITIONAL INFORMATION A registration statement on Form SB-2, including amendments, relating to the shares offered has been filed with the Securities and Exchange Commission, Office of Small Business Policy, Washington, D.C. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. Statements made in this prospectus as to the contents of any contract or other document are not necessarily complete and, in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each statement about those contracts and other documents is qualified in all respects. The registration statement and exhibits and schedules can be inspected -30- without charge and copies can be made at proscribed rates, at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0300. In addition the Commission maintains a World Wide Web site on the Internet at http://www.sec.gov that contains reports, proxy and information statements and other documents filed electronically with the Commission, including the registration statement. We intend to furnish our shareholders with annual reports containing financial statements audited by our independent public accountants and quarterly reports containing unaudited financial information for the first three quarters of each fiscal year. -31- REUBEN E. PRICE & CO. Public Accountancy Corporation 703 Market Street San Francisco, CA 94103 INDEPENDENT AUDITORS' REPORT Board of Directors World Wide Wireless Communications, Inc. We have audited the accompanying consolidated balance sheet of World Wide Wireless Communications, Inc., as of September 30, 2000, and the related consolidated statements of operations, consolidated statements of cash flows, and statement of stockholders' equity for the years ended September 30, 2000 and 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of World Wide Wireless Communications, Inc. as of September 30, 2000 and the consolidated results of its operations, cash flows, and stockholder's equity for the years ended September 30, 2000 and 1999 in conformity with generally accepted accounting principles of the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3, the Company has suffered recurring losses and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern. Realization of a major portion of the assets is dependent upon the Company's ability to meet its future financing requirements, and the success of future operations, the outcome of which cannot be determined at this time. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Reuben E. Price & Co. December 13, 2000 -32- World Wide Wireless Communications, Inc. Consolidated Balance Sheet
Assets September 30, 2000 Current Assets: Cash and cash equivalents $ 3,111,150 Refund receivable 500,000 Inventory 750,458 Prepaid and other 402,950 --------------- Total Current Assets 4,764,558 -------------- Operating Intangible Assets: Frequency licenses 1,175,067 Option on frequency licenses 500,000 --------------- Total Operating Intangible Assets 1,675,067 -------------- Fixed Assets: Equipment 2,466,736 Furniture and fixtures 91,938 Leasehold improvements 424,710 Less: Accumulated depreciation and amortization (176,234) ---------------- Total Fixed Assets 2,807,150 -------------- Other Assets: Intangibles, net of amortization 39,605 Deposits in acquisition 395,012 Rental deposits 22,170 ---------------- Total Other Assets 456,787 -------------- Total Assets $ 9,703,562 ============== Liabilities and Stockholders' Equity Current Liabilities: Accounts payable and accrued expenses $ 2,069,047 Current portion of contracts and note payable 89,375 Loan payable 145,467 --------------- Total Current Liabilities 2,303,889 --------------- Long-Term Liabilities: Contracts and note payable, net of current portion 57,660 Convertible debentures 5,227,678 --------------- Total Long-Term Liabilities 5,285,338 --------------- Total Liabilities 7,589,227 --------------- Commitments and Contigencies - Minority interest 115,150 -------------- Stockholders' Equity: Common stock, par value $ .001 per share, 100,000,000 shares authorized, 86,264,163 issued and outstanding at September 30, 2000 86,264 Additional paid-in capital 17,069,330 Accumulated deficit (15,155,249) Other comprehensive income (loss) (1,160) ------- Total Stockholders' Equity 1,999,185 --------------- Total Liabilities and Stockholders' Equity $ 9,703,562 ============== The accompanying notes are an integral part of these financial statements.
-35- World Wide Wireless Communications Inc. Consolidated Statements of Operations and Comprehensive Income
For the Year For the Year Ended Ended September 30, September 30, 2000 1999 Revenue $ 524,245 $ - Cost of goods sold 336,717 - ----------- ---------------- Gross Profit 187,529 - ----------- ---------------- Operating Expenses General and administrative expenses 7,065,788 2,383,330 Impairment loss 1,500,000 - --------- ---------------- Total Operating Expenses (8,378,259) 2,383,330 ---------- --------- Operating (Loss) (8,379,419) (2,383,330) ----------- ---------- Other Income and Expense Interest income 52,857 - Interest (expense) (70,706) ---------- Total Other Income & (Expense) (17,849) ---------- Net Loss $ (8,396,108) $ (2,383,330) ------------ ------------ Other Comprehensive Income (Loss) Foreign currency translation (1,160) -------------- Total Other Comprehensive Income (Loss) (1,160) -------------- Total Comprehensive Income (Loss) (8,397,268) (2,383,330) ============== ================ Loss Per Share (Basic and Diluted) $ (0.10) $ (0.04) Basic Weighted Average Shares Outstanding 81,656,614 56,113,645 The accompanying notes are an integral part of these financial statements.
-36-
World Wide Wireless Communications, Inc. Consolidated Statements of Cash Flows For the Year For the Year Ended Ended September 30, September 30, 2000 1999 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Total Comprehensive Income (Loss) $ (8,397,268) $ (2,383,330) Adjustments to reconcile net loss from operations to net cash used by operating activities: Common stock issued for services 1,142,445 615,996 Depreciation and amortization expense 164,450 13,506 Changes in operating assets and liabilities: (Increase) in inventory (750,458) (Increase) in prepaid and other (336,560) (62,740) (Increase) in other assets (5,742) (20,077) Increase in accrued expenses 1,577,578 4,321 ---------------- ---------------- Net Cash (Used) by Operating Activities (6,605,555) (1,832,324) ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Common stock issued for assets 1,500,000 (Increase) in purchase of fixed assets (2,531,850) (336,384) (Increase) in refund receivable (500,000) (Increase) in deposits in acquisition (395,012) (Increase) in frequency licenses (1,175,067) (Increase) in intangible assets (41,327) (Increase) in option on frequency licenses (500,000) ---------------- ---------------- Net Cash (Used) by Investing Activities (3,143,256) (836,384) ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible debentures 5,639,678 Proceeds from loans and installment contracts 292,502 328,000 Proceeds from issuance of common stock 6,652,699 2,614,074 ---------------- ---------------- Net Cash Provided by Financing Activities 12,584,879 2,942,074 ---------------- ---------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 2,836,068 273,366 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 275,082 1,716 ---------------- ---------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,111,150 $ 275,082 ================ ================ SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid $ - $ - Income taxes paid $ - $ - SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES: Interest accrued on debentures, added to the principal of the debentures $ 27,678 $ - Debentures converted to capital stock $ 740,000 $ - Capital stock issued in acquisition of subsidiaries $ 1,500,000 $ -
-37- WORLD WIDE WIRELESS COMMUNICATIONS, INC. STATEMENTS OF SHAREHOLDERS' EQUITY
Common Stock Accumulated ------------------------------------------- Additional Other Paid-in Accumulated Comprehensive Total Shares Amount Capital Deficit Income Equity ------------------------------------------- -------------- ----------------- ------------- Balance, September 30, 1998 47,341,993 $ 47,342 $ 3,843,038 $ (4,375,811) $ $ (485,431) Common stock issued in private placement between $0.05 and $0.435 per share 19,303,950 19,304 2,594,770 2,614,074 Common stock issued for services 4,538,000 4,538 611,458 615,996 Net loss for the fiscal year ended, September 30, 1999 (2,383,330) (2,383,330) --------------- ----------- --------------- -------------- ------------- Balance, September 30, 1999 71,183,943 71,184 7,049,266 (6,759,141) 361,309 Common stock issued in private placement between $0.25 and $6.125 per share 11,548,745 11,549 6,641,150 6,652,699 Common stock issued in conversion of debentures at $0.625 per share 462,500 462 739,538 740,000 Common stock issued for services 2,598,602 2,599 1,139,846 1,142,445 Common stock issued for acquisition of subsidiaries 470,373 470 1,499,530 1,500,000 Net loss for the fiscal year ended, September 30, 2000 (8,396,108) (8,396,108) Other comprehensive income: Foreign currency adjustment (1,160) (1,160) --------------- ----------- --------------- -------------- ----------------- ------------- Balance, September 30, 2000 86,264,163 $ 86,264 $ 17,069,330 $ (15,155,249) $ (1,160) $ 1,999,185 =============== =========== =============== ============== ================= =============
-38- NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - ------------ The consolidated financial statements presented are those of World Wide Wireless Communications, Inc., (the Company) and its subsidiaries, Infotel Argentina, S.A. (Argentina) and Digital Way, S.A. (Peru). The Company is engaged in activities related to advanced wireless communications, including the acquisition of radio-frequency spectrum both in the United States and internationally. The Company also plans to license its Distributed Wireless Call Processing System technology. Basic and Diluted Net Loss Per Share - ------------------------------------ The calculation of basic and diluted net loss per share is in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share", except where the effect would be anti-dilutive. Cash Equivalents - ---------------- For purposes of the Statement of Cash Flows, the Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Balances in bank accounts may, from time to time, exceed federal insured limits. The Company has never experienced any loss, and believes its credit risk to be limited. Operating Intangible Assets - --------------------------- The frequency licenses are not yet placed in service and consequently are not being amortized. Fixed Assets - ------------ Furniture, fixtures and equipment are depreciated over their useful lives of 5 to 10 years, using the straight-line method of depreciation. Leasehold improvements are amortized over a 5-year period that coincides with the initial period of the lease, using the straight-line method of amortization. Amortizable intangibles, consisting primarily of software, are amortized over a two year period. Long-Lived Assets - ----------------- The Company reviews its long-lived assets on a quarterly basis to determine any impairment in accordance with Statement of Financial Accounting Standards No. 121. Estimates - --------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments - ----------------------------------- For cash and cash equivalents and accrued expenses, the carrying amounts in the Balance Sheet represent their fair market value. The carrying amount of the debentures payable approximates fair value because of similar current rates at which the Company could borrow funds with consistent remaining maturities. -39- NOTE 1-- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Segment Information - ------------------- The Company adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related information" (SFAS No. 131) in 1999. This statement establishes standards for the reporting of information about operating segments in annual and interim financial statements and requires restatement of prior year information. The company has three geographic reportable operating segments: United States, Peru, and Argentina. Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. SFAS No. 131 also requires disclosures about products and services, geographic areas and major customers. Consolidated Financial Statements - --------------------------------- The accounts of the Company and its consolidated subsidiaries are included in the consolidated financial statements after elimination of significant intercompany accounts and transactions. The consolidated subsidiaries are Infotel Argentina, S.A. of Argentina and Digital Way S.A. of Peru. Comprehensive Income and Foreign Currency Transactions - ------------------------------------------------------ As of October 1, 1999 the Company adopted FASB Statement No. 130, Reporting Comprehensive Income. The financial statements of the Company's foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities of these subsidiaries are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average rates of exchange in effect during the year. The resulting cumulative translation adjustments have been recorded as a separate component of stockholder's equity. The sole component of other comprehensive income is a foreign currency translation adjustment related to the subsidiary Digital Way in Peru. NOTE 2 -- GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has experienced losses since inception, and had an accumulated deficit of $15,085,703 at September 30, 2000. Net losses are expected for the foreseeable future. Management plans to continue the implementation of its business plan to place the Company's assets in service to generate related revenue. Simultaneously, the Company is continuing to secure additional capital through sales of common stock through the current operating cycle. NOTE 3 -- ACQUISITIONS Argentina - --------- On December 31, 1999, the Company acquired a 51% interest in Infotel Argentina S.A., a Buenos Aires based company which owns Multi-channel Multipoint Distribution Service (MMDS) licenses in eight of the largest Argentine cities including Buenos Aires. The price was $1,500,000, made up of 600,000 in cash and $900,000 in company stock. Infotel also engages in telephone system integration and engineering projects. The minority interest in net loss is not recognized, because the Company anticipates being fully responsible for the subsidiaries losses. -40- NOTE 3 -- ACQUISITIONS (continued) Peru - ---- On February 29, 2000, the Company purchased 100% of Digital Way S.A., a Peruvian telecommunications company. The price was $1,200,000, made up of $600,000 cash and $600,000 in company stock. Digital Way S.A., holds MMDS licenses in the Lima-Callao area. It holds local and international long distance telephone licenses. India - ----- In June 2000, the Company entered into an agreement with a group of Indian businessmen to establish a joint venture, World Wide Wireless Communications (India) Ltd., to establish fixed wireless data service in India. A refundable deposit of $ 248,350 (shown as part of Deposits in Acquisitions) was posted with the Indian government as part of the process of applying for both frequency and internet service provider licenses. These license applications are pending. Thailand - -------- In May 2000, the Company entered into a joint venture with World Star T.V. Communication Co. Ltd. (WSTV), a Thai corporation, to provide fixed wireless data services in Thailand. WSTV currently owns frequency licenses in Bangkok and other major areas in Thailand. As of September 30, 2000, $146,662 has been invested, and is shown as part of Deposits in Acquisition. In August 2000 the Company entered into a Letter of Intent with E-Z Net Co. Ltd. of Bangkok for E-Z Net to provide internet service provider services to the new joint venture. The required governmental approvals are pending. El Salvador - ----------- On March 11, 2000, the Company entered into a letter of intent with El Salvador Telecomuniciones S.A. de C.V. for the purpose of acquiring a 25% ownership interest in that company in El Salvador. Pursuant to the terms of the letter of intent, the Company paid $1,000,000 to that company as an advance payment of the purchase price, which was to total $3,500,000. The agreement provided that the purchase was conditioned upon the company's acquisition of certain licenses, and the occurrence of certain other conditions that were not met. As a result, the Company has entered into an agreement for the refund of the advance payment. The Company has received $500,000, and is scheduled to receive the remainder in January 2001. This amount is shown as an account receivable and is secured by a bank letter of credit. Pro Forma Data - -------------- The following pro forma data is presented on a combined basis, as if Infotel Agentina S.A. and Digital Way S.A.(Peru) had been acquired at the date of their formation, January 18,1999 and March 28, 1999, respectively: September 30, 2000 1999 ---- ---- Total Assets $ 9,703,562 $ 1,472,125 Total Liabilities 7,633,671 979,553 Total Shareholders Equity 2,156,033 3,275,626 For the Year Ended September 30, 2000 1999 ---- ---- Revenues $ 671,907 $ 135,690 Expenses 9,010,946 2,479,874 Net (Loss) $ (8,339,039) $ (2,344,184) ========= ========= -41- NOTE 3 -- ACQUISITIONS (continued) Impairment Loss - --------------- The Argentine government has revoked all MMDS licenses, including those held by the Company's subsidiary, Infotel. The Company and Infotel have taken all prescribed steps in order to secure the re-issuance of the licenses, and talks are on-going with the appropriate Argentine government agencies. However, there is no guarantee that the licenses will be reissued to Infotel. Therefore, management is recognizing an impairment of the frequency licenses asset in the amount of the Company's investment of $1,500,000. NOTE 4 -- COMMITMENTS AND CONTIGENCIES Litigation - ---------- In November 1998, the Company and its predecessor affiliates filed an action against the lessor of its leases for the Concord and San Marcos, California multipoint distribution service channels. The complaint alleged breach of contract as well as intentional and negligent interference with prospective economic advantage. The Company also sought a preliminary injunction as a result of the lessor's assertion that the predecessor companies and the Company were in default on said leases. The Superior Court of California for the County of Los Angeles issued a preliminary injunction against the lessor to restrain it from taking any further action against the Company and its predecessors. Thereafter, the lessor cross-complained against the Company and its predecessors alleging breach of contract. The preliminary injunction of the Company against the lessor remained in effect until December 9, 1999, when a settlement agreement was signed. The settlement provided for the Company to pay $27,375 to the lessor, relating to lease obligations. This amount is recorded as an expense in the financial statements for the fiscal years ended September 30 1998 and 1999. The Company further agreed to sign a consulting agreement with the lessor for one year, whereby the Company will issue the equivalent of $20,000 of its restricted common stock, the value of which is to be computed at 80% of the market value of the Company's unrestricted shares. Additionally, under this consulting agreement, the Company agreed to execute a promissory note in favor of the lessor in the amount of $40,000, payable at $1,000 per month, commencing December 1, 1999, with a final payment of $28,000 on December 1, 2000. Under terms of the settlement agreement, the Company also has option to purchase the Concord and San Marcos leases for a price of $250,000 each, less lease payments already made. The Company elected to exercise the option to purchase the Concord lease, and the appropriate transfer procedure has been initiated with the U.S. Federal Communications Commission (FCC). The Company believes that under current FCC regulations it is not required to pay the $250,000 purchase price until such time as the FCC has approved the transfer of the license. The Company borrowed from Credit Bancorp $328,000 in August 1999 and $412,000 in October 1999. The terms of this loan are 7% interest per annum payable, semiannually on the last day of February and September, with the principal due September 30, 2002. On August 26, 1999, the Company filed suit against Credit Bancorp, in U.S. District Court in San Francisco, regarding improprieties on the part of Credit Bancorp relating to the August 1999 loan. The case was settled on October 11, 1999. As part of the settlement agreement, Credit Bancorp agreed to convert the original loans granted to the Company to a convertible debenture in the amount of $740,000. On October 11, 1999, the Company issued a convertible unsecured debenture for $740,000 to Credit Bancorp in settlement of this obligation. The terms of this convertible unsecured debenture are 7% interest per annum payable semiannually on the last day of February and September, with the principal due September 30, 2002. All amounts of unpaid -42- NOTE 4--COMMITMENTS AND CONTINGENCIES (continued) principal and accrued interest of this debenture are convertible at any time at the conversion price of $1.60 per share of unregistered, restricted shares of the Company's stock, adjusted for any stock splits. In November 1999, the Securities and Exchange Commission (SEC) filed suit against Credit Bancorp alleging violations of various securities laws in connection with its actions in relation to the Company (and others), and seeking various forms of relief including disgorgement of its illegal gains. At this time, management believes that if the suit is successful, certain benefits may accrue to the Company, including the cancellation of the $740,000 convertible debenture. Operating Leases - ---------------- The Company's office space at One Post Street, San Francisco, was leased on a month to month basis. The Company vacated these offices on August 31, 1999. The actual rent paid, for the fiscal year ended September 30, 1999, was $22,341. In April 1999, the Company entered into a 5-year lease for approximately 6,000 square feet of office space in Jack London Square, Oakland, California. The lease commenced on June 5, 1999. The triple net rental agreement is for $10,038 per month during the first year, with a rental deposit of $20,077 shown as an Other Asset on the financial statements. The lease provides for an annual increase based on the indexed cost of living adjustments. Additionally, the lease provides for the landlord's participation in partial reimbursement over the terms of the lease to the Company for leasehold improvements paid by the Company. The Company commenced its occupancy of this space on September 1, 1999. The minimum annual rent is $120,456 for the fiscal years ended September 30, 2000, 2001, 2002 and 2003, and $81,642 for the period October 1, 2003 to June 4, 2004. The Company leases (under assignment) all of the channel capacity for certain multipoint distribution service (MDS) and multi-channel multipoint distribution service (MMDS) channels from three carriers that are licensed by the FCC as specified in 47 C.F.R. Paragraph 21.901(b). These MDS/MMDS leases provide for a monthly lease fee of 2% of gross subscriber revenue or a minimum monthly rental aggregating approximately $1,150. The minimum aggregate annual rent is $13,800 for 1999, $67,160 for 2000, and $9,500 for 2001, adjusted annually by changes in the Consumer Price Index. Each of the leases contain three ten-year renewal options, and an option to purchase each license for $225,000, adjusted upon changes in the Consumer Price Index since lease inception. In conjunction with the multi-point distribution service and multi-channel multi-point distribution service licenses, the Company has acquired (under assignment) transmission sites in the geographical areas covered by the licenses. These site leases have varying terms and conditions, and at September 30, 2000, the minimum annual rental is $42,000 per fiscal year ending September 30, 2001 through 2004. The company has based eight Instructional Television Fixed Service channels for use as MMDS channels from the Shekinah Network, as described more fully in Note 5 below. These leases provide for a monthly lease fee of 5% of gross system receipts, with a minimum of $500 per channel. The minimum aggregate annual fee is $48,000 per fiscal year ending September 30, 2000 through 2004. -43- NOTE 4 COMMITMENTS AND CONTINGENCIES (continued) Rents paid for fiscal years ended September 30, 2000 and 1999 are as follows: 2000 1999 ---- ---- Former office location, San Francisco $ - $ 22,341 Current office location, Oakland 128,460 38,814 Current office location, Concord 22,412 - Distribution service channel leases 98,110 21,300 Transmission sites 85,501 42,000 Total $ 334,483 $ 124,455 ======= ======= The minimum annual rentals under current lease obligations for future fiscal years ended September 30 are as follows:
2001 2002 2003 2004 Remainder ---- ---- ---- ---- --------- Office location, Oakland $ 128,460 $ 128,460 $ 128,460 $ 74,935 None Office location, Concord 23,916 23,916 13,951 None None Distribution service channel leases 57,600 48,000 48,000 48,000 None Transmission sites 42,000 42,000 42,000 42,000 None Total $ 251,976 $ 242,376 $ 232,411 $ 164,936 None ======= ======= ======= ======= ====
NOTE 5 -- STOCKHOLDERS EQUITY During the fiscal year ended September 30, 2000, the Company sold 12,011,245 shares of its common stock for net cash proceeds of $7,342,699. The company issued 2,598,602 shares of its common stock for services at an aggregate value of $1,142,445. Stock issued for services was at the cash price for the shares at the time of issuance. The Company issued 470,373 shares of its common stock for other assets at an aggregate value of $1,500,000. Stock issued for assets was at the cash price for the shares at the time of issuance. During the fiscal year ended September 30, 1999, the Company sold 19,303,950 shares of its common stock for net cash proceeds of $2,614,074. The Company also issued 4,538,000 shares of its common stock for services at an aggregate value of $615,996. Stock issued for services was at the cash price for the shares at the time of issuance. NOTE 6 -- OPTIONS ON FREQUENCY LICENSES On November 25, 1998, the Company entered into an option agreement with Shekinah Network to pay $500,000 to lease eight Instructional Television Fixed Service channels for the Company's high-speed wireless internet connections, as authorized by the Federal Communication Commission. This agreement also provides the Company an exclusive option to lease excess capacity on Shekinah's remaining thirty-two Instructional Television Fixed Service channels, as they become available. The monthly minimum transmission fee to be paid to Shekinah for each license or application optioned, will be five percent (5%) of the gross system receipts or five hundred dollars, whichever is greater. Amortization of the licenses will begin when the available channels are placed in service, which management expects to begin sometime in the calendar year 2000. Instructional Television Fixed Service licenses can only be owned by Federal Communication Commission approved educational, religious or non-profit entities. In the event that the Federal Communication Commission rules and regulations change to allow commercial companies to own these licenses or the Company establishes an educational, religious or non-profit affiliate, the agreement also provides the Company an option to pay Shekinah $150,000 per-market or channel group on an individual -44- NOTE 6- OPTIONS OF FREQUENCY LICENSES (continued) basis or $3,500,000 for all forty channels. The option period extends for ten years, with three additional ten-year term renewals. NOTE 7 -- INCOME TAXES A reconciliation between the actual income tax benefit and the federal statutory rate follows:
Fiscal years ended September 30, 2000 1999 ---- ---- Amount % % % ------ - - - Computed income tax benefit at statutory rate $ 128,460 $ 128,460 $ 128,460 $ 128,460 Operating loss with no current tax benefit (2,848,407) (34)% (34)% (34)% ---------- Income tax benefit None None ---- ----
At September 30 1999, the Company had a net operating loss carryforward for federal tax purposes of approximately $6,760,000 which if unused to offset future taxable income, will expire between the years 2010 to 2019, and approximately $2,154,000 for state tax purposes, which will expire if unused in 2004 and 2005. A valuation allowance has been recognized to offset the related deferred tax assets due to the uncertainty of realizing any benefit therefrom. During 2000 and 1999, no changes occurred in the conclusions regarding the need for a 100% valuation allowance in all tax jurisdictions. Under section 382 of the Internal Revenue Code, the utilization of net operating loss carryforwards is limited after an ownership change, as defined, to an annual amount equal to the market value of the loss corporation's outstanding stock immediately before the date of the ownership change multiplied by the highest Federal long-term tax exempt rate in effect for any month in the 3 calendar month period ending in the calendar month in which the ownership change occurred. Due to the ownership changes as a result of the May 1998 reorganization and subsequent stock issuances, any future realization of the Company's net operating losses will be severely limited. Significant components of the Company's deferred tax assets are as follows: 2000 1999 ---- ---- Net operating loss carryforwards $14,999,561 $6,759,141 Valuation allowance (14,999,561) (6,759,141) Net deferred tax assets None None ---- ---- -45- NOTE 8 -NET LOSS PER COMMONS SHARE Net loss per common share, basic and diluted, has been computed using weighted average common shares outstanding. The effect of outstanding stock options and warrants has been excluded from the dilutive computation, as their inclusion would be anti-dilutive. NOTE 9 - STOCK OPTION PLANS Nonstatutory Stock Options -------------------------- The Company has issued stock options under nonstatutory stock option agreements. The options are granted at the fair market value of the shares at the date the option is granted. The options are granted for a period of 5 years, and are fully exercisable during the term of the option period or within thirty (30) days of the participant's resignation or termination. Combined transactions in non-employee options for the fiscal years ended September 30, 2000 and 1999 are as follows:
2001 1999 ---- ---- Average Number of Exercise Number of Average Shares Price Shares Exercise Price Options outstanding October 1 - - - - Granted 1,800,0000 0.059 500,000 0.095 Cancelled - - - - Exercised - - - - ------------------------------------------------------- Options outstanding, September 30 1,800,000 0.59 500,000 0.095 ========== ==== ======= =====
Combined transactions in employee options for the fiscal years ended September 30, 2000 and 1999 are as follows:
2001 1999 ---- ---- Average Number of Exercise Number of Average Shares Price Shares Exercise Price Options outstanding October 1 - - - - Granted 100,000 1.62 2,700,000 0.095 Cancelled - - - - Exercised - - - - ------------------------------------------------------- Options outstanding, September 30 100,000 1.62 2,700,000 0.095 ======= ==== ========= =====
-46- NOTE 9 - STOCK OPTION PLANS (continued) Incentive Stock Plan -------------------- The Company adopted an incentive stock plan on August 5, 1998, which has not yet been approved by the shareholders. The options are granted at the fair market value of the shares at the date that the option is granted. The options are granted for a period of 10 years, and are exercisable after one year from the date of grant, at a vested rate of 20% per year during the term of the option period or within thirty (30) days of the participant's resignation or termination. The Company has limited the number of shares under this plan to 3,000,000 shares of its capital stock for this plan. The number of shares of stock covered by each outstanding option, and the exercise price per share thereof set forth in each such option, shall be proportionately adjusted for any stock split, and or, stock dividend. All such options are being treated as nonstatutory stock options until the incentive stock plan is approved by the shareholders. Compensation Costs ------------------ The Company applies APB Opinion 25 in accounting for its stock compensation plans discussed above. Accordingly, no compensation costs have recognized for these plans in 2000 or 1999. Had compensation costs been determined on the basis of fair value pursuant to FASB Statement No. 123, net loss and loss per share would have been increased as follows: 2000 1999 ---- ---- Net loss: $(8,326,562) $(2,383,330) =========== ========== Pro forma $(8,391,562 $(2,441,575) =========== ========== Basic loss per share: $(0.10) $(0.04) ======= ======= As reported Pro forma $(0.10) $(0.04) ======= ======= Diluted loss per share: $(0.09) $(0.04) ======= ======= As reported Pro forma $(0.09 $(0.04) ====== ======= The fair value of each option granted is estimated on the grant date using the Black-Scholes model. The following assumptions were made in estimating fair value: Assumption Plans Dividend yield 0% Risk-free interest rate 7% Expected life 5 years Expected volatility 97% -47- NOTE 10 - SEGMENT INFORMATION
September 30, 2000 USA Argentina Peru Total Assets $9,691,532 $544,692 4494,430 Total Liabilities & Minority Interest 7,170,914 485,492 764,273 Total Shareholders Equity 2,520,617 59,200 (269,843) For the Year Ended September 30, 2000 Revenue 2,903 521,343 - Cost of Goods Sold -------- 336,717 - -------- ------- Gross Profit 2,903 184,626 - Expenses 7,875,836 (360,426) 274,926 --------- --------- ------- Net Loss $(7,875,836) $(175,800) $(274,926) =========== ========= =========
NOTE 11 - SECURITIES PURCHASE AGREEMENT On April 14, 2000, the Company entered into a Securities Purchase Agreement with six investors, for the purchase of investment units, consisting of common stock, common stock purchase warrants, 4% subordinated debentures and preferred stock. Pursuant to the Securities Purchase Agreement, the investors purchased 760,000 shares of common stock, warrants to purchase 3,600,000 shares of common stock, and subordinated debentures with a principal amount of $3,280,000, for a total amount of $4,800,000. The investors have the option to purchase additional shares of common stock, warrants and series A preferred stock (when authorized) from the Company for a maximum amount of $1,920,000. The investors will be required to purchase these securities if an effective registration statement under the Securities Act is in effect with respect to all the common stock issued and issuable upon the exercise of the warrant and conversion of the subordinated debentures and series A preferred stock. The company recently reached an agreement with the selling shareholders amending the original securities agreement. In exchange for a waiver, by the selling shareholders, for any breach of the original agreement, the Company agreed to increase the principal amount of the debentures by $2,128,000 and to issue an additional four million restricted shares of common stock to them. Under this agreement, the selling shareholders may convert the debentures at a conversion price equal to the lesser of $.64 and an amount equal to 85% of the average of the closing trading prices of the common stock for the five consecutive trading days immediately prior to the conversion. At no time shall the conversion price be below the floor price. The floor price is $.64 for the period between October 1, 2000 and October 14, 2000, $.50 for the period between October 14, 2000 and September 1, 2001, and zero thereafter. However, if the Company's aggregate revenue for the last three quarters of the year 2000 and the first quarter of the year 2001 is less than $13.5 million, then as of May 14, 2001, the floor price shall be zero. Under the amended agreement, the Company reserves the right to redeem the debentures if the per share market value of the common stock is less than $1.00. The redemption price is calculated at 120% of the principal amount and 100% of the unpaid interest accrued on those debentures being redeemed. Pursuant to the most recent amended agreement, the Company must file a SB-2 registration statement on December 15, 2000 which must be made effective by May 15, 2001. If the Company fails to abide by these amendments, the Company will be required to pay certain liquidated damages. -48- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS Our Bylaws provide that we may indemnify any director, officer, agent or employee against all expenses and liabilities, including counsel fees, reasonably incurred by or imposed upon them in connection with any proceeding to which they may become involved by reason of their being or having been a director, officer, employee or agent of our Company. Moreover, our Bylaws provide that we shall have the right to purchase and maintain insurance on behalf of any such persons whether or not we would have the power to indemnify such person against the liability insured against. Insofar as indemnification for liabilities arising under the Securities Act, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Expenses of the Registrant in connection with the issuance and distribution of the securities being registered are estimated as follows: Securities and Exchange Commission filing fee $ 6,583 Accountant's fees and expenses $10,000 Legal fees and expenses $25,000 Postage $ 1,000 Miscellaneous $ 1,000 ------- Total $43,583 The Registrant will bear all expenses shown above. Item 26. Recent Sales of Unregistered Securities The following is a list of our sales of our common stock during the past three years which were not registered under the Securities Act. None of these sales involved the use of or payments to an underwriter. In all instances in which we issued shares under the exemption from the registration requirements of the Securities Act under Section 4(2) of the Securities Act, all purchasers had access to the type of information found in a registration statement and all purchasers were sophisticated investors. On July 21, 1998, as part of a corporate reorganization, we issued 1,724,138 shares of our common stock to TSI Technologies, Inc. and 5,275,662 shares to Worldwide Wireless, Inc., both at a per share price of $0.0947. These shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. No underwriters were involved in the issuance and no commissions were paid. On October 15, 1998, under terms of a Settlement and General Release, we issued 50,000 shares of common stock to a former consultant in compensation for services rendered, approximating $2,450, at a per share price of $0.050. The shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. Also on October 15, 1998, as part of a corporate reorganization, we issued 1,724,138 shares of our common stock to TSI Technologies, Inc. and 5,275,662 shares to Worldwide Wireless, Inc., both at a per share price of $0.0947. These shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. On December 8, 1998, we completed a private placement of 16,285,000 shares of our common stock to a group of accredited investors. Our common stock was sold for between $0.0027 and $0.1394 per share. In addition, approximately 1,543,000 shares of the total number of shares issued were granted to one individual in consideration of consulting services. We raised approximately $736,380. No underwriters were used in completing these transactions. We believe that we have satisfied the exemption from the securities registration -49- requirements provided by Section 3(b) of the Securities Act and Rule 504 of Regulation D promulgated thereunder in that offering. The aggregate offering price received in the offering did not exceed $1,000,000 within the twelve months before the start of and during the offering. The securities were sold in a private placement to only accredited investors, all of whom had a pre-existing personal or business relationship with us or our officers or directors and each of whom provided representations that they were accredited investors and were purchasing for investment and not with a view to resale in connection with a public offering. On April 2, 1999, under terms of a Settlement and General Release, we issued 800,000 shares of common stock to a former employee in compensation for services rendered, approximating $75,200, at a per share price of $0.095. This per share price is in line with the sale of common stock for cash at this period of time. The shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. On April 2, 1999, under terms of a Settlement and General Release, we issued 25,000 shares of common stock to another former employee in compensation for services rendered, approximating $2,350, at a per share price of $0.095. This per share price is in line with the sale of common stock for cash at this period of time. The shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. No underwriters were involved in the issuance and no commissions were paid. On April 12, 1999, under terms of a Settlement and General Release, we issued 825,000 shares of common stock to a former director and a former employee in compensation for services rendered, approximating $81,000, at a per share price of $0.098. This per share price is in line with the sale of common stock for cash at this period of time. The shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. No underwriters were involved in the issuance and no commissions were paid. On May 6, 1999, as part of a corporate reorganization, we issued 2,593,744 shares of our common stock to TSI Technologies, Inc. and 8,969,355 shares to Worldwide Wireless, Inc., both at a per share price of $0.0947. These shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. No underwriters were involved in the issuance and no commissions were paid. On May 14, 1999, under terms of a Compromise and Settlement Agreement, we issued 600,000 shares of common stock to cover approximately $56,400 of various outstanding obligations to Corporate Architects for consulting services rendered, at a per share price of $0.095. The shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. No underwriters were involved in the issuance and no commissions were paid. On May 25, 1999, under terms of a Compromise and Settlement Agreement, we issued 750,000 shares of common stock as settlement of obligations owing to Corporate Solutions, LLC for consulting services rendered. The amount of the outstanding claims was approximately $310,000, at a per share price of $0.40. The shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. On December 31, 1999, we completed a private placement of 19,164,452 shares of our common stock to a group of accredited purchasers as defined under Rule 502 of Regulation D. Our common stock was sold for between $0.05 and $0.435 per share. No underwriters were used in completing these transactions. We raised approximately $4,310,505. In addition, approximately 2,377,340 shares of the total number of shares issued were granted to one individual in consideration of consulting services. The shares were issued in reliance upon the exemption to registration provided by section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. On March 1, 2000, we issued 181,100 shares of common stock to four individuals in connection with the purchase of all outstanding shares of Digital Way, S.A., a Peruvian company. These shares were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. On March 17, 2000, we issued 1,763,372 shares of common stock to Douglas Haffer. Mr. Haffer was entitled to receive a similar number of shares for services rendered to Worldwide Wireless, Inc. in 1998. Mr. Haffer transferred his right to receive those shares from Worldwide Wireless, Inc. to us in exchange for the 1,763,372 shares of common stock we issued to him. We retain the right to receive shares from Worldwide -50- Wireless, Inc. - Worldwide Wireless, Inc. has yet to satisfy this obligation. The shares we issued to Mr. Haffer were issued in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. On March 21, 2000, we completed a private placement of 3,687,000 shares of our common stock to a group of accredited investors. Our common stock was sold for between $0.30 and $3.20 per share. We raised $3,861,280. We believe that we have satisfied the exemption from the securities registration requirements provided by section 4(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder in this offering. The securities were sold in a private placement to only accredited investors. On April 14, 2000, we sold $1,312,000 of 4% convertible subordinated debentures and related warrants to seven investors pursuant to the exemption from the securities regulation requirement provided by section 4(2) of the Securities Act. The convertible debentures are convertible at the election of the holders into shares of common stock. In connection with this offering, the seven investors also received warrants to purchase a total of 3,600,000 shares of our common stock at an exercise price equal to 120% of the market price of our common stock as of the date the warrants were issued. The warrants are exercisable when issued and have a term of five years. The securities were sold in a private placement to only accredited investors pursuant to 4(2) of the Securities Act. On November 15, 2000, we agreed to amend the Securities Purchase Agreement to issue 3,996,113 restricted shares of common stock to the selling shareholders and to increase the principal amount of the debentures held by the selling shareholders in consideration for the selling shareholders' waiver of any of our defaults and breaches of the prior Securities Purchase Agreement. During the period from our incorporation through the present we have granted options to purchase common stock to our employees, officers and consultants pursuant to our 1998 stock option plan. These options were granted pursuant to the exemption from the registration requirements set forth in Section 3(b) of the Securities Act and Rule 701 promulgated thereunder. The option share exercise prices between $0.095 and $1.62 per share. No payment was received by the company in connection with the grant of the options. -51- Item 27. EXHIBITS EXHIBIT NUMBER DOCUMENT -------------- -------- * 3.1 Articles of Incorporation. * 3.2 Amendment to Articles of Incorporation * 3.3 Amendment to Articles of Incorporation. * 3.4 By-laws. * 4.1 Form of Certificate Evidencing shares of Common Stock of World Wide Wireless Communications, Inc. * 4.2 Convertible Unsecured Debenture for $740.000 issued by World Wide Wireless Communications, Inc. to Credit Bancorp. *** 5.1 Opinion of Foley & Lardner with respect to the legality of the shares being registered. * 10.1 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network. * 10.2 South Bend MMDS Lease Agreement. * 10.3 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Vail, Colorado. * 10.4 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Aspen, Colorado * 10.5 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Casper, Wyoming. * 10.6 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Grand Rapids, Michigan. * 10.7 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network La Grande, Oregon, * 10.8 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Pierre, South Dakota. * 10.9 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Ukiah, California. * 10.10 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Key West, Florida. 10.11 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Hilo, Hawaii. 10.12 Lease Agreement Between World Wide Wireless Communications, Inc. and Shekinah Network Hot Springs, Arkansas. 10.13 Supply Agreement between World Wide Wireless Communications, Inc. and Andrew Corporation dated March 13, 2000. * 10.14 Stock Purchase Agreement dated November 30, 1999 Between Infotel Argentina S.A. and World Wide Wireless Communications, Inc. * 10.15 Agreement for Purchase of All Outstanding Shares of digital Way, S.A. by World Wide Wireless Communications, Inc., dated February 29, 2000. * 10.16 Letter of Intent dated March 22, 2000 Between SALTEL and World Wide Wireless Communications, Inc. * 10.17 Security Purchase Agreement Among World Wide Wireless Communications, Inc. and the Purchasers Named Therein. -52- EXHIBIT NUMBER DOCUMENT -------------- -------- * 10.18 Registration Rights Agreements Among World Wide Wireless Communications, Inc. and the Purchasers Named Therein. * 10.19 Escrow Agreement Among the Purchasers Named Therein, the Representative of the Purchasers and the Escrow Agent. * 10.20 Form of Debenture of World Wide Wireless Communications, Inc. with Respect to the 4% Convertible Debenture Due 2005. * 10.21 Form of Warrant to Purchase Shares of World Wide Communications, Inc. Issued in the Offering. 10.22 Second Amendment dated November 15, 2000 to the Securities Purchase Agreement between World Wide Wireless Communications, Inc. and the Purchases Named Therein. ** 10.23 Compromise and Settlement Agreement between World Wide Wireless Communications, Inc. and Corporate Solutions LLC, dated May 25, 1999. 10.24 Written Agreement between Jorge Emilio Zedan and Douglas Haffer. 10.25 Employment Agreement between Douglas Haffer and World Wide Wireless Communications, Inc. 10.26 World Wide Wireless Communications, Inc. Incentive Stock Option Plan * 21.1 Subsidiaries *** 23.1 Consent of Foley & Lardner. 23.2 Consent of Reuben E. Price & Co. 27.1 Financial Data Schedule. * Filed with the registration statement on Form SB-2 filed with the Securities and Exchange Commission on May 31, 2000. ** Filed with the registration statement on Form SB-2 filed with the Securities and Exchange Commission on June 30, 2000. *** To be filed by Pre-effective Amendment. -53- UNDERTAKINGS a) The Registrant hereby undertakes that it will: 1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) Include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and (iii) Include any additional or changed material information on the plan of distribution. 2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the bona fide offering. 3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the Offering. b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. c) The Registrant hereby undertakes that: 1) For the purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be a part of this registration statement as of the time it was declared effective. 2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. -54- SIGNATURES In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe the registrant meets all of the requirements of filing on Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned on December 14, 2000. World Wide Wireless Communications, Inc. By /s/ DOUGLAS P. HAFFER ----------------------------------------- Douglas P. Haffer President, Chief Executive Officer and Chief Financial Officer In accordance with the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date - --------- ------ ---- /s/DOUGLAS P. HAFFER President & CEO, CFO and Chairman December 15, 2000 - -------------------- Douglas P. Haffer /s/WAYNE CALDWELL Vice President and Director December 15, 2000 - ----------------- Wayne Caldwell Director December 15, 2000 - ----------------------- Mohammad Ali Guidfar /s/RAMSEY SWEIS Director December 15, 2000 - ----------------------- Ramsey Sweis Director December 15, 2000 - ----------------------- Robert Klein -55- EX-10.11 2 0002.txt LEASE AGREEMENT, HILO, HAWAII ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT THIS AGREEMENT is made this 1st. day of July 2000 by Shekinah Network (hereinafter referred to as "Lessor") having its principal place of business at 2995 Ardilla Road, Atascadero, CA 93422 and World Wide Wireless Communications, Inc.,(hereinafter referred to as "Lessee") having its principal place of business at 520 Third Street, Suite 101 Oakland, CA 94607 WHEREAS, the Federal Communications Commission ("FCC") has authorized licenses for Instructional Television Fixed Service ("ITFS") channels and has authorized the licensee to lease excess capacity to non-ITFS users; and WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-810 (the "License") for the Channel Group D1-4 (the "ITFS Channels" in Hilo, Hawaii ("The Market"); and WHEREAS, Lessee is in the business of providing voice, video, data and other services via microwave transmission in the Market Area and desires to lease the excess ITFS capacity of the ITFS channels; and WHEREAS, Lessor has determined that there will be excess airtime capacity available on the ITFS Channels and desires to lease this excess airtime capacity to Lessee. NOW, THEREFORE, in consideration of the mutual promises, undertakings, covenants and conditions set forth herein, the Lessor and Lessee do hereby agree and warrant as follows: 1. TERM OF AGREEMENT. A) Initial Term. This Agreement shall be effective upon the date of its execution and shall extend for an initial term of five (5) years. (the "Initial Term"). B) Renewal Term Provided that the License is renewed by the FCC, Lessee shall have the right to extend this Agreement on its then existing terms and conditions for one (1) additional five (5) year term (the "Renewal Term"). The Renewal Term shall automatically go into effect upon the conclusion of the Initial Term unless Lessee notifies Lessor at least one hundred eighty days (180) before the end of the Initial Term that Lessee does not wish to extend this Agreement. C) New Lease Agreement/Right of First Refusal. (1) Providing that Lessor's FCC license remains in good standing and/or Lessor seeks to renew such license, Lessee and Lessor shall negotiate in good faith for a new excess capacity airtime lease agreement (hereinafter referred to as "New Lease Agreement") no later than one hundred eighty days (180) prior to the end of the latter of (i) Initial Term or (ii) the Renewal Term if the Agreement is extended for the Renewal Term. (2) If Lessor elects to not reasonably pursue a New Lease Agreement with Lessee, then Lessor shall so notify Lessee in writing of such intent no later than one hundred eighty (180) days prior to the end of the Renewal Term. (3) If Lessor and Lessee do not enter into a New Lease Agreement, Lessor grants Lessee a right of first refusal on any competing proposals for lease agreements or transfers or assignments of any part of the ITFS Channels received by Lessor during the twelve (12) months following the expiration of the latter of (i) the Initial Term or (ii) the Renewal Term, if the Agreement is extended for the Renewal Term. If any acceptable offer to lease or acquire the ITFS Channels is made to Lessor, Lessor shall give written notice to Lessee describing the person to whom the proposed lease or transfer is to be made, the fees, charges, rental or other consideration to be received for the lease or transfer, the terms thereof and generally the relevant other terms and conditions of the lease or transfer. Lessee shall have a period of thirty (30) days after its receipt of such notice from Lessor in which to elect, by giving written notice to Lessor, to lease or, if eligible, obtain any or all of the ITFS Channels for the same fees, charges, rental or other consideration for which Lessor proposed to lease or transfer to the third person. (i) The fees, charges, rental or consideration shall be paid by such third person or Lessee in cash. (ii) If Lessor does not believe Lessee's stated offer is in an amount fairly equivalent to the fair value of the consideration payable by the third person and so notifies Lessee in writing within seven (7) days after Lessor's receipt of Lessee's notice of election to so lease or purchase, Lessee may within five (5) days after its receipt of such notice from Lessor elect to refer such question for determination by an impartial arbitrator and the right of first refusal of Lessee shall then be held open until five (5) days after Lessee is notified of such determination. Such arbitrator shall be chosen either by agreement of Lessee and Lessor at the time such question arises, or, at the option of either party, by referring the question to the American Arbitration Association with instructions that the American Arbitration Association select a single arbitrator under a request from the parties for expedited and accelerated determination. The determination of the arbitrator chosen under either option contained in this subparagraph shall be final and binding upon Lessee and Lessor. The parties shall share equally in the costs and fees of the arbitration. (iii) In the event Lessee shall elect to exercise its right of first refusal, the lease agreement or other transfer or assignment shall be consummated within thirty (30) days of the latest of: (1) the day on which Lessor received notice of Lessee's election to exercise the right of first refusal; (2) the day upon which any question required to be determined by the arbitrator hereunder has been determined; or (3) the date of any FCC approval in the case of assignment or transfer; or at such other time as may be mutually agreed. The right of first refusal is terminated either by the lease or other transfer to Lessee as provided herein or by notice to Lessee of the Lessor's proposal to lease or otherwise transfer the ITFS Channels or -2- any part to a third person and Lessee's unwillingness or failure to meet and accept such a bona fide offer pursuant to the times and procedures as set forth above; provided that such proposed lease or transfer is consummated at the same fees, charges, rental or other consideration and upon the same terms as to which such right of first refusal applied, within thirty (30) days after Lessee's right of first refusal had expired or had been specifically waived by written notice given to Lessor by Lessee, or within thirty (30) days following FCC approval in the case of assignment or transfer. D) Operation During End of Term. If Lessor and Lessee do not enter into a New Lease Agreement before the end of the Initial Term, Lessee shall cease leasing the ITFS Channels on the last day of the Initial Term. E) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this Agreement shall not give rise to any rights or remedies beyond the expiration of any FCC license necessary for the continued operation of the ITFS Channels. Provided, however, that while this Agreement is in effect, Lessor shall obtain and maintain in force all licenses, permits and authorizations required or desired in connection with the use of the ITFS Channels. Lessor shall take all necessary steps to renew the licenses for the ITFS Channels and shall not commit any act or engage in any activity which could reasonably be expected to cause the FCC to impair, restrict, revoke, cancel, suspend or refuse to renew the ITFS licenses. Lessor shall take all reasonable steps to comply with the Communications Act of 1934, as amended and the rules and regulations of the FCC, and shall file all reports, schedules and/or forms required by the FCC to be filed by Lessor. All expenses, including attorneys fees and filing fees, incurred in preparing and filing such reports, schedules and/or forms required by the FCC shall be paid by the Lessee. 2. ALLOCATION OF AIRTIME. A) Excess Capacity Airtime. To the extent allowed by the FCC rules and regulations and any amendments thereof, Lessor agrees to lease to Lessee the exclusive use of all excess capacity not utilized by Lessor ("Excess Capacity Airtime"). B) Lessor's Primary Airtime. During analog transmission over the ITFS Channels, Lessor reserves for its exclusive use a minimum of twenty (20) hours of airtime per-channel per-week to be used for its ITFS scheduled programs. During digital transmission over the ITFS Channels, Lessor shall have the exclusive use of 12.5% of the total capacity available on the Lessor's ITFS Channels. This airtime shall be known as "Lessor's Primary Airtime". C) Schedule of Airtime. The schedule which depicts the agreement of the parties as to use of Lessor's Channels shall be attached hereto and made a part hereof as Exhibit A which is subject to change upon agreement by both parties. D) Lessee's Use of its Excess Capacity Airtime. Lessee shall have the right to utilize its Excess Capacity Airtime for any purpose allowed or authorized by the FCC including but not limited to voice, video and data transmission. -3- E) Alternate Use and Vertical Blanking Intervals. Lessor shall have the right to use the second audio carrier ("SAP") and vertical blanking intervals. ("VBI") on which Lessor's ITFS programming is being transmitted. Lessee shall at all times have the right to use the VBI and SAP not utilized by Lessor and 100% of the response frequencies associated with the ITFS Channels. Lessor shall be responsible for any equipment needed to utilize the VBI and/or SAP and such equipment shall be compatible with Lessee's system. F) Lessor's Use of ITFS Channels. Lessor agrees that its program services and airtime use will not harm or interfere with Lessee's current or future signal paths utilized within Lessee's System for program encryption, pilot carrier signaling and other technical needs utilized for the operation of and such services provided by Lessee's System. Nor will Lessor, by its own action, or through a third party, utilize any part of its licensed frequency spectrum to create or operate a service that is in competition with current, planned or future services provided by Lessee's System. Lessor agrees to use its Primary Airtime in accordance with the FCC's rules and regulations. Lessor shall not take or fail to take any action which may have a material adverse effect on Lessee's right to utilize its Excess Capacity Airtime. G) Expanded System Capacity. Lessee shall have the right at anytime to require Lessor to file with the FCC any necessary application to expand the channel capacity to Lessor's station to enable it to carry more than one video signal per channel or digital data services; provided however, before Lessee can exercise this right, it must demonstrate to the Lessor's reasonable satisfaction that such modification will not materially degrade the performance of the station nor impair signal quality at the registered ITFS receive sites. Once such modification has been constructed, the modified facilities shall automatically be considered a part of this agreement and subject to all terms and conditions hereof. It is understood that Lessee shall have the full-time use of the Expanded Channels to the extent permitted by FCC rules. 3. TRANSMISSION SITE AND FACILITIES. A) Primary Transmission Site. Lessor's ITFS Channels are located at Hilo. Lessee agrees to provide Lessor space at the Primary Transmission site for Lessor's audio and video transmission equipment which shall not exceed on rack. Such space shall be leased to Lessor pursuant to Exhibit D hereto. This site shall hereinafter be described as the "Primary Transmission Site". At Lessee's sole expense, Lessee shall contract for a lease of space at the Transmission Site upon such terms as the parties agree. The Transmission Site shall comply with the standards, specifications and regulations of the FCC rules and orders pertaining to Lessor's ITFS license. B) Relocation of Transmission Site. (1) Lessor acknowledges that the location of the Primary Transmission Site for ITFS Channels is critical to the Lessee's business and agrees that it will not relocate the transmission facilities for ITFS Channels from the Primary Transmission Site without Lessee's prior written consent, -4- (2) Lessor further acknowledges that possibility that, as a result of currently unforeseen events, the Primary Transmission Site may not be the optimum site for the location of the ITFS Channels or Lessee's business throughout the term of this Lease Agreement. Lessor therefore agrees that if at any time or from time to time Lessee requests in writing that the transmission facilities for the ITFS Channels be relocated, Lessor shall file with the FCC and any other regulatory body having jurisdiction over the ITFS Channels all applications, amendments, and requests for modification that may be necessary to obtain any necessary consents to permit such relocation to such location within or adjacent to the Market as may be requested by Lessee; provided, however, that Lessor shall not be obligated to submit or prosecute any application, amendment, or request for modification that Lessor reasonably determines, upon advice of counsel contained in a written opinion, would be in violation of the terms of the License, any statute, rule, or regulations regarding the operation of the ITFS Channels or the submission of materials to the FCC, or any of its obligations as an ITFS licensee; and provided, further, that any such relocation will not result in loss of service to Lessor's registered receive sites served by the transmission facilities in the event that the authorization is obtained to relocate the ITFS Channels to the location requested by Lessee, Lessor shall relocate such channels to such new location as soon as reasonably possible after authorization is obtained. Lessee shall bear reasonable costs associated with such relocation, including engineering and construction, and all reasonable costs associated with obtaining FCC or any other regulatory approval therefor. (3) Lessor agrees to file modification applications requested by Lessee. Such modifications may include but shall not be limited to the following: power increase or decrease, polarization, transmit antenna patterns, digital, two-way (return path) use of the ITFS Channels, boosters, beam benders or repeaters, cells, sectorization, channel swaps, channel loading, channel shifting and applications for secondary transmission sites. Lessor agrees to file any modification application within five (5) business days of receipt of the modification application from Lessee or during any FCC designated filing window. Lessee will use reasonable efforts to provide Lessor with the engineering for the modification thirty (30) days prior to the request for filing. If Lessor believes that such modification will have an adverse effect on Lessor's ability to provide its services to its receive sites, Lessor agrees to file the modification application as presented by Lessee and within the time limit requested by Lessee; however, Lessee agrees not to implement construction and Lessor agrees not to withdraw the application until the parties have adequately addressed and resolved the potential material adverse effect or the matter has been submitted to arbitration pursuant to Section 16 and a final decision has been rendered by the arbitrator. Although Lessee intends to file such modification applications, it may elect not to construct the Channels in that manner and may desire to utilize the Channels as currently licensed. A copy of the modification application, bearing the FCC's date stamp, shall be mailed to Lessee by Lessor, within fourteen (14) days of the filing of the modification application. Lessee shall be solely responsible for all engineering and legal costs associated with the preparation, review and filing of the modification application. In the event that any license modification requested by Lessee requires receive site upgrades in order for Lessor's receive sites to continue to receive Lessor's services, then Lessee agrees to pay for all costs to complete such upgrade prior to implementing the license modification. -5- C) System Construction. Lessee shall within a reasonable period of time, but not later than six (6) months after the FCC grant of digital authority for the ITFS Channels, purchase equipment such as the antenna, waveguide or transmitters specified on the authorization for the ITFS Channels. At Lessee's expense, Lessee shall purchase and install such transmitters, transmission line, modulators, antennas and other equipment as required to operate the ITFS Channels in accordance with the provision of such authorization. Any equipment so used in such construction shall be leased to Lessor pursuant to Paragraph 5 hereof. Such equipment is hereinafter referred to as the "Leased Equipment". Lessee shall retain title to the Leased Equipment except as noted by Paragraph 15 herein. D) Maintenance of Transmission Equipment. At Lessee's expense and subject to Lessor's right to supervise the maintenance of this equipment, Lessee shall maintain and operate the Leased Equipment during the terms of this Agreement for a nominal fee. Lessee shall also pay all taxes and other charges assessed against the Leased Equipment. E) Transmission of Programming. At no cost or expense to Lessor, Lessee shall provide the necessary labor and equipment capabilities to transmit on the ITFS Channels programming required to be carried pursuant to this Agreement such as Lessor's ITFS programming and TBN. Lessee shall also comply with Lessor's instructions regarding the transmission of such programming such as the dates and times to transmit programming. F) Interference. Lessee shall operate the Leased Equipment so that such operation does not create or increase interference with electronic transmission of any other FCC licensees entitled to protection under FCC rules and regulations. If Lessee's operation of the Leased Equipment does so create or increase interference, Lessee shall pay all of the reasonable engineering and legal fees necessary to resolve the interference problem so created. G) Alterations and Attachments. Lessee, at its own expense, may make alterations of or attachments to the ITFS equipment or the common equipment as defined in Exhibit C (including the installation of encoding and/or addressing equipment) as may be reasonably required from time to time by the nature of its business; provided however, that such alterations or attachments do not interfere with Lessor's signal or ongoing operations or violate any FCC rules or regulations; and provided further that FCC authorization, if required, is obtained in advance of any such alteration or attachment at the sole cost of Lessee. To the extent any FCC authorization pertaining to the ITFS equipment is required, Lessor agrees to use its best efforts to obtain such authorization. H) Licensee Control and Liability. Nothing herein shall derogate from such licensee control of operations of the ITFS Channels that Lessor, as an FCC licensee, shall be required to maintain and Lessee acknowledges the reservation by Lessor of such control. Lessor shall at all times retain ultimate and exclusive responsibility for the operation and control of the ITFS Channels including policy decisions. 4. LESSOR'S RECEIVE SITES. Attached hereto as Exhibit B is a list of the registered receive sites designated by Lessor to receive its ITFS programming and to be installed at the expense of Lessee. Those -6- receive sites so listed shall be installed with a Standard Installation. If as the result of any relocation of the Primary Transmit Site, the equipment at Lessor's existing registered receive sites must be reoriented, Lessee shall pay the cost of same. As used herein for the purposes of this Agreement, the phrase "Standard Installation" shall mean an installation consisting of the placement of the ITFS/MMDS receiving antenna at an elevation (not to exceed thirty [30] feet above the base mounting location), which could normally receive the line-of-sight transmission from the Transmission Site; the coupling thereto of a block-down converter; and a sufficient amount of transmission line (coaxial cable) to connect the received ITFS programming to the input of (i) one classroom designated by Lessor to receive the ITFS programming or (ii) the receive site internal/external distribution system. Also, if as the result of any relocation of the Transmit Site, the equipment at Lessor's existing receive sites must be reoriented, Lessee shall pay the cost of same. Lessee also agrees that for digital transmission of the ITFS Channels Lessee will purchase and install at Lessee's expense, one single-point modem to receive its ITFS programming. 5. LEASE OF EQUIPMENT. A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall lease from Lessee the Leased Equipment during the terms of this Agreement. A list of this equipment is attached hereto as Exhibit C and incorporated by reference herein. Lessor shall have no responsibility for the loss of or damage to the Leased Equipment during the terms of this Agreement and Lessee shall bear all such responsibility. 6. FEES. A) Lessor's Service Fee. In consideration of the lease of the Leased Equipment, and for its share of the projected costs to maintain the Transmission Site and the Leased Equipment, Lessor shall pay Lessee an annual service fee provided for in Exhibit D. B) Subscriber Royalty Fees or Percentage. Beginning on the Execution Date of this Agreement and continuing thereafter during the Initial Term of this Agreement, Lessee shall pay to Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum, whichever is greater as set out in Exhibit D which is attached herewith and incorporated by reference herein. If the Execution Date shall be a date other than the first day of a calendar month or this Agreement shall be terminated on a date other than the last day of a calendar month, then the Subscriber Royalty Fee for that partial month shall be paid on a proportionate basis. A late fee of 10% (ten percent) will be assessed to past due accounts, and a finance charge of one and one-half percent (1.5%) per month will be assessed in addition to the late fee until paid. C) Notice of Construction and Required Certificate. Within thirty (30) days of completion of construction at the Transmission Site, Lessee shall notify Lessor of such completion of construction in writing. Within thirty (30) days of the end of each month in which Excess Capacity Airtime is leased hereunder, Lessee shall provide Lessor with a certificate, certified as accurate and correct by an authorized agent of Lessee, showing the number of subscribers served during such month. -7- D) Right to Audit. Lessee shall for a period of three (3) years after their creation, keep, maintain and preserve complete and accurate records and accounts, including all invoices, correspondence, ledgers, financial and other records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's charges hereunder; and such records and corporate accounts shall be available for inspection and audit at Lessee's corporate offices or at Lessee's offices in the Market, as designated by Lessee, at any time or times during the term of this Agreement or within ninety (90) days thereafter, during reasonable business hours, by Lessor or its nominee. In the event that there is discovered an underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above, Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of each such underpayment. All information obtained by Lessor during any audit herein shall be maintained by Lessor in strict confidence. 7. PROGRAMMING. A) Control Over Programming. (1) Program Content. Lessee intends that only programming of a sort which would not serve to place Lessor's reputation in the community in jeopardy will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize disputes, recognizing the difficulties inherent in specifying exact standards herein, it is agreed that Lessee shall have the right to market the programming provided by the networks and services listed on Exhibit E. If, however, the programming content of any of the networks and services listed on Exhibit E materially changes, Lessor shall have the right, upon ninety (90) days notice, to deny Lessee the right to continue transmitting such programming if Lessor would have the right to deny Lessee the right to transmit such programming under the provisions of this paragraph in the first instance. If Lessee proposes to transmit the programming of any new programming service, the Lessee shall notify Lessor in writing specifying in detail the nature of the new programming service and Lessor shall have the right, upon written notice served upon Lessee within thirty (30) days after Lessor's receipt of any such notice from Lessee, to deny to Lessee the right to transmit such service if such programming is obscene and/or contradicting local, state and/or federal laws or otherwise violates any federal, state or local laws or regulations. If no such denial notice is received by Lessee within such thirty (30) days, Lessee shall be authorized to transmit all such services for which no denial notice is received. There shall be no reduction in fees required under this Agreement for any such programming not permitted to be transmitted. B) Availability of Programming. It is understood by Lessee and Lessor that there is expected to be no direct out-of-pocket annual costs for the acquisition of the qualified ITFS educational programming for Lessor's use during Lessor's Primary Airtime on the ITFS Channels, based on current plans. In the event that this ITFS educational programming either; (1) ceases to be available, or, (2) becomes available only at a fee, then Lessor may incur direct out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees to provide its best efforts to assist Lessor in the acquisition of alternative programming, if necessary. Additionally, Lessee agrees to make payment to Lessor for the actual, direct programming costs incurred, if any; If Lessor, after expending its best efforts, is unable to obtain suitable ITFS programming for a cost equal to the amount to be paid by Lessee, Lessor and Lessee -8- shall use their best efforts to reach agreement on modifications to this Agreement to avoid any unreimbursed ITFS programming costs to Lessor. If no such agreement can be reached, Lessor may terminate this agreement. In the case of such termination, Lessor shall use its best efforts (with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior approval) to transfer the license for the ITFS Channels to another qualified educational entity, subject to FCC approval, with the intent of assigning this Agreement from Lessor to the new educational entity. C) Integration of Lessor's Programming. Lessee agrees to integrate Lessor's programming into the overall communications service offered to subscribers, without cost to Lessor. This integration shall include, but not be limited to, listing Lessor's material in any program guides produced by Lessee for subscribers. D) Carriage of TBN. In the event that Lessor's ITFS Channels are used for analog video transmission and TBN is not transmitted on a local VHF or UHF station, with a market coverage equivalent to both area and signal quality of our ITFS channels, and Lessee does not have local off-air insertion as part of its standard installation, then, if so designated by Lessor, Lessee agrees to transmit on one of the ITFS Channels the programming of Trinity Broadcasting Network ("TBN") during those time periods such channel is not used for Lessor's ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a fee for carriage of TBN. In the event that Lessee is permitted to program the hours previously occupied by TBN, then Lessee shall increase, in proportion to the increase in Excess Capacity Airtime, the amount of minimum fees and subscriber royalty fees payable under the provision 6 (B) of this agreement during the remainder of the term(s) of the agreement. For purposes of calculating any such proportionate increase, the parties acknowledge and agree that the minimum fee and subscriber royalty fee agreed to herein are based on Lessee's equivalent use of three full-time ITFS channels. E) Station Identification. During Lessee's use of Lessor's excess channel capacity, Lessee shall transmit Lessor's call sign for each respective station as required by the FCC. 8. PROSECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES. A) Best Efforts to Secure Approval of this Agreement. The parties recognize that certain approvals will be required from the FCC in order to effectuate this Agreement. Both parties shall use their best efforts to prepare, file and prosecute before the FCC all petitions, waivers, applications and other documents necessary to secure any FCC approval required to effectuate this Agreement. Lessee shall assist in the preparation and prosecution of such applications and as provided for herein, shall pay all filing fees, attorneys' fees, engineering fees, and all other expenses in connection therewith. Lessor also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDS and MMDS operators to co-locate at the Transmission Site. Notwithstanding anything in this Agreement to the contrary, it is understood that no filing shall be made with the FCC with respect to this Agreement unless both parties have reviewed such filing and consented in writing to its submission, such consent not to be unreasonably withheld. -9- B) Further Efforts. Throughout the Initial Term of this Agreement, Lessor shall use its best efforts to obtain and maintain in force all licenses, permits and authorizations required for Lessee and Lessor to use the ITFS Channels as contemplated by this Agreement. Lessee shall be responsible for all cash expenses incurred to obtain and maintain in force such licenses, permits and authorizations. When mutually agreed by the parties and at Lessee's sole expense, Lessor shall apply for, and use its best efforts to obtain those reasonable license modifications which would assist Lessee in its business. Lessor also shall consider filing, at Lessee's sole expense, such reasonable protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or OFS applications or amendments as may be requested by Lessee in the mutual best interests of the parties and the public. Lessor and Lessee shall promptly notify each other of any event of which it has knowledge that may affect any of the licenses, permits or authorizations affecting the ITFS Channels. C) Attorney's Fees. With respect to any legal work conducted pursuant to Paragraphs 8(A) and (B) above, Lessee shall be responsible for all attorneys' fees in connection therewith and shall make payments directly to the attorney. However, any attorney fees paid by Lessee shall be approved in advance by Lessee. 9. REPRESENTATIONS AND WARRANTIES. A) Representations and Warranties of Lessor. Lessor represents and warrants to Lessee as follows: (1) Organization. Lessor is a non-profit organization duly organized and existing in good standing under the laws of the State of California, and it has full power and authority to carry out all of the transactions contemplated by this Agreement and all other agreement, certificates or instruments executed and delivered in connection herewith. (2) No Violation. Neither the execution nor delivery of this agreement or any other agreements, certificates or instruments executed and delivered herewith, nor the performance of the transactions contemplated hereby constitute or will constitute a violation of, be in conflict with, or a default under any term or provision of the governing instruments of Lessor or any agreement or commitment to which Lessor is bound, or any judgment, decree, order, regulation or rule of any court or governmental authority, or consent of any federal, state or local authority is required in connection with the execution and delivery of this Agreement or any other agreements, certificates or instruments executed and delivered herewith or with the performance of the transactions contemplated hereby. B) Representations and Warranties of Lessee. Lessee represents and warrants to Lessor as follows: (1) Organization. Lessee is duly organized, validly existing and in good standing under the laws of the State of its incorporation and it has full power and authority to own property and carry out all of the transactions contemplated by this Agreement, and all other agreements, certificates or instruments executed and delivered by Lessee in connection herewith. -10- (2) Corporation Action; Valid and Binding Agreements. Lessee has taken all corporate action necessary to authorize the execution and delivery of this Agreement and all other agreements, certificates or instruments executed and delivered in connection herewith. Upon execution and delivery, this Agreement and all other agreements, certificates or instruments executed and delivered by Lessee in connection herewith will constitute valid and binding agreements of Lessee enforceable in accordance with their respective terms. (3) Litigation and investigations. There is no action, suit, proceeding or investigation pending or, to the best of Lessee's knowledge, threatened against Lessee, its principals or related entities before any court, administrative agency or other governmental body, and Lessee does not know nor is aware of any reason for commencement of any such action, proceeding or investigation. (4) Misrepresentation of Material Fact. To the best of Lessee's knowledge, information and belief, no document or contract that was shown to Lessor and which in any way affects any of the properties, assets or proposed transactions of Lessee as such relates to this Agreement, no certificate or statement furnished by or on behalf of Lessee in connection with this Agreement, nor this Agreement itself contains any untrue statement of material fact or omits to state a material fact which would make the statements contained herein misleading. C) Survival or Representations and Warranties. The representations and warranties contained in this Agreement shall be deemed to be continuing during the Initial terms of this Agreement, and each Party shall have the duty promptly to notify the other of any event or circumstance which might reasonably be deemed to constitute a breach of or lead to a breach of its warranties or representations hereunder. The waiver by either Party of any breach of any representation or warranty under this Agreement shall not constitute a waiver of any other representation or warranty or of any failure in the future by the other Party to fulfill such representation or warranty. 10. TERMINATION. A) Termination of FCC Authorization. Without further liability to either Lessor or Lessee, this Agreement shall terminate in the event that for any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii) the FCC shall terminate or diminish Lessor's authority to lease the ITFS Channels in accordance with the terms of this Agreement. B) Termination by Reason of Default or Nonperformance. At the option of the non-defaulting party, this Agreement may be terminated upon the material breach or default by the defaulting party of its duties and obligations hereunder if such breach or default is not cured by such defaulting party and if such breach or default shall continue for a period of thirty (30) consecutive days after such defaulting party's receipt of notice thereof from the non-defaulting party. It is understood and agreed that any failure on the part of Lessee to make any payment required under Paragraph 6 hereof shall be a material breach of default of its duties and obligations hereunder. It is also understood and agreed that any consequences resulting from the loss of local participating receive sites shall not be considered a material breach or default by Lessor of its duties and obligations hereunder. -11- C) Remedies to Continue. In the event of termination of this Agreement pursuant to Paragraph 10(B), such termination shall not affect or diminish the rights or claims or remedies available in equity or at law to the non-defaulting party arising by reason of a breach or default of this Agreement. However, no liability shall arise on the part of Lessor or Lessee upon termination of this Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license occurs as a result of the default of either party. 11. TRANSFER OF RIGHTS AND OBLIGATIONS. Lessee shall have the right to assign its rights under this lease as collateral for any financing arrangements it makes. Lessee shall also have the right to pledge the Leased Equipment as collateral security for any loans it makes; provided, however, that any pledge of the Leased Equipment shall be made subject to the provisions of this lease. Lessee shall further have the right to subcontract any portion of its obligations under this Agreement to any partnership, joint venture, corporation or entity which Lessee may choose, provided that Lessee gives Lessor notice of any proposed subcontracting and, provided further, that no such subcontracting shall release Lessee from fulfilling all of its obligations under this Agreement. Lessee shall have the right to assign or transfer its rights, benefits, duties and obligations under this Agreement to a commonly-owned company without the prior consent of Lessor. Apart from the foregoing, neither party may assign or transfer its rights, benefits, duties or obligations under this Agreement without the prior written consent of the other, which consent shall not be unreasonably withheld. 12. INDEMNIFICATION. A) By Lessor. To the extent permitted by state and federal law and its charter or by-laws, Lessor shall forever protect, save and keep Lessee and its permitted successors and assigns harmless and indemnify Lessee against and from any and all claims, demands, losses, costs, damages, suits, judgments, penalties, expenses and liabilities of any kind or nature whatsoever, including reasonable attorneys' fees, arising directly or indirectly out of (i) the willful misconduct of Lessor, its agents or employees in connection with the performance of this Agreement, or (ii) any programming transmitted by Lessor during any of Lessor's Airtime. B) By Lessee. To the extent permitted by state and federal law and its charter or by-laws, Lessee shall forever protect, save and keep Lessor and its permitted successors and assigns harmless and indemnify Lessor against and from any and all claims, demands, losses, costs, damages, suits, judgments, penalties, expenses and liabilities of any kind or nature whatsoever, including reasonable attorneys' fees, which arise directly and indirectly out of (i) the negligence or willful misconduct of Lessee, its agents or employees, in connection with the performance of this Agreement; (ii) any programming transmitted by Lessee pursuant to this Agreement; (iii) any and all dealings by Lessee or any of its authorized agents or subcontractors with the public, third parties and subscribers to the Lessee's programming service; or (iv) any maintenance, installation or other work performed by Lessee or any authorized agent or subcontractor under this Agreement. -12- C) Notice of Claim; Defense of Claim. Each party shall notify the other of any such claim promptly upon receipt of same. Either party (hereinafter referred to as appropriate the "Indemnitor" or the "Indemnitee") shall have the option to defend, at its own expense, any claims arising under this Paragraph. If Indemnitor assumes the defense of any such claim, Indemnitee shall delegate complete and sole authority to the Indemnitor to defend or settle same and Indemnitee shall cooperate with Indemnitor in the defense thereof. 13. INSURANCE. A) Policies Required. At its expense, Lessee shall secure and maintain with financially reputable insurers, one or more policies of insurance insuring the Leased Equipment and Lessee's utilization of the ITFS Channels against casualty and other losses of the kinds customarily insured against by firms of established reputations engaged in the same or similar line of business, or such types and in such amounts as are customarily carried under similar circumstances by such firms, including, without limitation: (i) "All Risk" property insurance covering the ITFS Equipment and the common Equipment to the extent of one hundred percent (100%) of its full replacement value without deduction for depreciation: (ii) comprehensive general public liability insurance covering liability resulting from Lessee's operation of the ITFS equipment on an occurrence basis having minimum limits of liability in an amount of not less than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or death to any person or persons in any one occurrence, and not less than Two Million Dollars ($2,000,000.00) in the aggregate for all such losses during each policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with respect to damage to property; (ii) all workers compensation, automobile liability and similar insurance required by law. B) Insurance Policy Forms. All policies of insurance required by this Paragraph shall, where appropriate, designate Lessor as either the insured party or as a named additionally insured party, shall be written as primary policies, not contributory with and not in excess of any coverage which Lessor shall carry, and shall contain a provision that the issuer shall give to Lessor thirty (30) days prior written notice of any cancellation or lapse of such insurance or of any change in the coverage thereof. C) Proof of Insurance. Executed copies of the policies of insurance required under this section or certificates thereof shall be delivered to Lessor not later than ten (10) after execution of this agreement. Lessee shall furnish Lessor evidence of renewal of each such policy not later than thirty (30) days prior to the expiration of the term thereof. 14. RELATIONSHIP OF PARTIES. By the provisions of this Agreement, Lessor and Lessee intend to enter an airtime lease relationship and not a joint venture. They will carry out this Agreement to preserve that intent. Neither party shall represent itself as the other party, nor as having any relationship with one another, except as Lessor and Lessee under the terms of this Agreement. -13- 15. EQUIPMENT PURCHASE. A) Lessor's Option to Purchase. In the event that this Agreement is terminated, Lessor shall have the option to purchase the Leased Equipment used exclusively for Lessor's ITFS license. Any equipment which is used in a shared fashion (such as transmit antenna, decoders, and combiners) in providing signals other than Lessor's signals are excluded from this option to purchase. The intent of the purchase option provided for in Paragraphs 16(A) is to provide Lessor with the capability to continue to perform on Lessor's ITFS license. The purchase price shall be the market value of such equipment noted above as determined by mutual agreement or by averaging the values obtained from two (2) appraisals, with one appraiser each chosen by Lessor and Lessee. B) Lessee's Option to Purchase. If during the terms of this Agreement the FCC modifies its rules so as to enable Lessee to be licensed to operate the ITFS frequencies, Lessee shall have a right of first refusal to acquire such licenses subject to the same terms and conditions as the right provided for in Paragraph 1(B). 16. NON-DISCLOSURE. Lessor acknowledges that there may be made available to it pursuant to this Agreement proprietary information of Lessee relating to the encoding and/or decoding system associated with the ITFS channel equipment and its patented processes including, but not limited to, improvements, innovations, adaptation, inventions, results of experimentation, processes and methods, whether or not deemed patentable, and certain business and marketing techniques (all herein referred to as "Confidential Information"). Lessor acknowledges that this Confidential Information has been developed by Lessee at considerable effort and expense and represents special, unique and valuable proprietary assets of Lessee, the value of which may be destroyed by unauthorized dissemination. Accordingly, Lessor covenants and agrees that, except as may be required for the performance of this Agreement or by law or court order, neither it nor any of its agents or affiliates shall disclose such Confidential Information to any third person, firm, corporation or other entity for any reason whatsoever, such undertaking to be enforceable by injunctive or other equitable relief to prevent any violation or threatened violation thereof. 17. NON-COMPETITION. During the term of this Agreement, Lessor agrees not to transmit programming or to lease or sublease any channel capacity on its ITFS Facilities for the transmission of programming that is competitive with the programming transmitted by Lessee. 18. FORCE MAJEURE. If by reason of Force Majeure either party is unable in whole or in part to perform its obligations hereunder, the party shall not be deemed in violation of default during the period of such inability. As used herein, the phrase "Force Majeure", shall mean the following: act of God, acts of public enemies, orders of any branch of the government of the United States of America, any state or any political subdivisions, thereof which are not the result of a breach of this Agreement, orders of any military authority, insurrections, riots, epidemics, fires, civil -14- disturbances, explosions, or any other cause or event not reasonably within the control of the adversely affected party. 19. CONDITION PRECEDENT. This Agreement is conditional on the issuance of a Final Order by the FCC granting Lessor a construction permit for the ITFS Channels in the Market from the Transmission Site. By "Final Order" the parties mean an action or order of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled or suspended and with respect to which no timely-filed request for administrative or judicial review is pending and as to which the time for filing any such request, or for the FCC to set aside the action on its own motion, has expired. 20. NOTICE. Any notice required to be given to Lessor under any provision of this Agreement shall be delivered personally or by certified mail to Lessor at the address first written above. Any notice required to be given to Lessee under any provision of this Agreement shall be delivered personally or by certified mail to Lessee at the address first written above. 21. SEVERABILITY. Should any court or agency determine that any provision of this Agreement is invalid, the remainder of the Agreement shall remain in effect. 22. WAIVER. A waiver by either Lessor or Lessee of a breach of any provision of this Agreement shall not be deemed to constitute a waiver of any preceding or subsequent breach of the same provision or of any other provision. 23. PAYMENT OF EXPENSES AND SIGNING FEES. A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall pay all costs and expenses incident to fulfilling or modifying this Agreement, such as, attorneys' fees or, if necessary, any travel expenses approved in advance by Lessee, FCC filing fees, and engineering costs. 24. VENUE AND GOVERNING LAW. Venue for any cause of action brought by or between Lessor and/or Lessee relating to this Agreement shall be in California and all provisions of this Agreement shall be construed under the laws of the State of California and County of Lessor. 25. COUNTERPARTS. This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument, and shall -15- become effective when each of the parties hereto shall have delivered to it this Agreement duly executed by each of the other parties hereto. 26. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral or written provisions of any kind. The parties further agree that this Agreement may only be modified by written Agreement signed by both parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this day of July 1st, 2000. SHEKINAH NETWORK By: ------------------------------------------ Name: Charles J. McKee -------------------------------------- Title: President -------------------------------------- World Wide Wireless Communications, Inc. By: ----------------------------------------- Name: Douglas P. Haffer -------------------------------------- Title: President -------------------------------------- Address for Notices: Shekinah Network 2995 Ardilla Road, Atascadero, CA. 93422 (805) 466-7770 (805) 460-9292 Fax E-Mail cm@shekinahnetwork.org Attn: Charles McKee, President -16- Gardner, Carton & Douglas Attn: Laura Mow 1301 K Street, N. W. Suite. 900 Washington, DC 20005 Phone: (202) 408-7100 Fax: (202) 289-1504 World Wide Wireless Communications, Inc. 520 Third Street Suite 101 Oakland, CA 94607 (510) 839-6100 (510) 530-5700 -17- EXHIBIT A --------- Schedule of Airtime ------------------- -18- EXHIBIT B --------- Receive Sites ------------- There shall be attached hereto and incorporated by reference a copy of FCC Form 330 Section IV listing Lessor's receive sites. -19- EXHIBIT C --------- Leased Equipment ---------------- Noted below is a list of equipment that Lessee is leasing to Lessor. (1) Four (4) ITFS transmitters and related hardware (2) Lessor's ITFS receive site antennas and related hardware. *(3) Combining network, transmission line and antenna *Common Equipment -20- EXHIBIT D --------- Service and Royalty Fees ------------------------ 1. Lessor's Service Fee -------------------- Services Provided Annual Fee - ----------------- ---------- (a) Lease of Leased Equipment [6(A)] $1.00 (b) Maintenance of Leased Equipment [3(D)] $1.00 (c) Lease of space at Primary Transmission Site [3(A)] $1.00 2. Lessee's Subscriber Royalty Fee ------------------------------- Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's Gross receipts or a monthly minimum payment of $500 per month whichever is greater. Payment shall be as follows: Commencing on the Execution (Effective) Date and as defined in Paragraph 6) B, payments for each month shall be made by the twentieth (20th) day of the following month. -21- EXHIBIT E --------- Programming ----------- In addition to digital data services, such as the Internet or Intranet, the following is a list of video programming services Lessee may provide over Lessee's System. TLC - The Learning Channel TWC - The Weather Channel Lifetime ESPN - Sports AMC - American Movie Classics SCOLA WHTN - World Harvest Television Network ECO - Galavision CNN - Cable News Network CNN - Headline News C-Span I C-Span II BET - Black Entertainment Network CNBC - Consumer News & Business Channel Nickelodeon The Discovery Channel A&E - Arts & Entertainment The Family Channel The Disney Channel PBS - Public Broadcasting Service TBN - Trinity Broadcasting Network TNIN - The New Inspirational Network ME/U - Mind Extension Network The International Channel BRAVO Network The Travel Channel Family Network Keystone Inspirational Network WwwcEclaFinal 7-1-00 -22- EX-10.12 3 0003.txt LEASE AGREEMENT, HOT SPRINGS, ARKANSAS ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT THIS AGREEMENT is made this 1st. day of July 2000 by Shekinah Network (hereinafter referred to as "Lessor") having its principal place of business at 2995 Ardilla Road, Atascadero, CA 93422 and World Wide Wireless Communications, Inc.,(hereinafter referred to as "Lessee") having its principal place of business at 520 Third Street, Suite 101 Oakland, CA 94607 WHEREAS, the Federal Communications Commission ("FCC") has authorized licenses for Instructional Television Fixed Service ("ITFS") channels and has authorized the licensee to lease excess capacity to non-ITFS users; and WHEREAS, Lessor has been granted an FCC License for (call sign) WND-348 (the "License") for the Channel Group B1-4 (the "ITFS Channels") in Hot Springs, Arkansas ("The Market"); and WHEREAS, Lessee is in the business of providing voice, video, data and other services via microwave transmission in the Market Area and desires to lease the excess ITFS capacity of the ITFS channels; and WHEREAS, Lessor has determined that there will be excess airtime capacity available on the ITFS Channels and desires to lease this excess airtime capacity to Lessee. NOW, THEREFORE, in consideration of the mutual promises, undertakings, covenants and conditions set forth herein, the Lessor and Lessee do hereby agree and warrant as follows: 1. TERM OF AGREEMENT. A) Initial Term. This Agreement shall be effective upon the date of its execution and shall extend for an initial term of five (5) years. (the "Initial Term"). B) Renewal Term Provided that the License is renewed by the FCC, Lessee shall have the right to extend this Agreement on its then existing terms and conditions for one (1) additional five (5) year term (the "Renewal Term"). The Renewal Term shall automatically go into effect upon the conclusion of the Initial Term unless Lessee notifies Lessor at least one hundred eighty days (180) before the end of the Initial Term that Lessee does not wish to extend this Agreement. C) New Lease Agreement/Right of First Refusal. (1) Providing that Lessor's FCC license remains in good standing and/or Lessor seeks to renew such license, Lessee and Lessor shall negotiate in good faith for a new excess capacity airtime lease agreement (hereinafter referred to as "New Lease Agreement") no later than one hundred eighty days (180) prior to the end of the latter of (i) Initial Term or (ii) the Renewal Term if the Agreement is extended for the Renewal Term. (2) If Lessor elects to not reasonably pursue a New Lease Agreement with Lessee, then Lessor shall so notify Lessee in writing of such intent no later than one hundred eighty (180) days prior to the end of the Renewal Term. (3) If Lessor and Lessee do not enter into a New Lease Agreement, Lessor grants Lessee a right of first refusal on any competing proposals for lease agreements or transfers or assignments of any part of the ITFS Channels received by Lessor during the twelve (12) months following the expiration of the latter of (i) the Initial Term or (ii) the Renewal Term, if the Agreement is extended for the Renewal Term. If any acceptable offer to lease or acquire the ITFS Channels is made to Lessor, Lessor shall give written notice to Lessee describing the person to whom the proposed lease or transfer is to be made, the fees, charges, rental or other consideration to be received for the lease or transfer, the terms thereof and generally the relevant other terms and conditions of the lease or transfer. Lessee shall have a period of thirty (30) days after its receipt of such notice from Lessor in which to elect, by giving written notice to Lessor, to lease or, if eligible, obtain any or all of the ITFS Channels for the same fees, charges, rental or other consideration for which Lessor proposed to lease or transfer to the third person. (i) The fees, charges, rental or consideration shall be paid by such third person or Lessee in cash. (ii) If Lessor does not believe Lessee's stated offer is in an amount fairly equivalent to the fair value of the consideration payable by the third person and so notifies Lessee in writing within seven (7) days after Lessor's receipt of Lessee's notice of election to so lease or purchase, Lessee may within five (5) days after its receipt of such notice from Lessor elect to refer such question for determination by an impartial arbitrator and the right of first refusal of Lessee shall then be held open until five (5) days after Lessee is notified of such determination. Such arbitrator shall be chosen either by agreement of Lessee and Lessor at the time such question arises, or, at the option of either party, by referring the question to the American Arbitration Association with instructions that the American Arbitration Association select a single arbitrator under a request from the parties for expedited and accelerated determination. The determination of the arbitrator chosen under either option contained in this subparagraph shall be final and binding upon Lessee and Lessor. The parties shall share equally in the costs and fees of the arbitration. (iii) In the event Lessee shall elect to exercise its right of first refusal, the lease agreement or other transfer or assignment shall be consummated within thirty (30) days of the latest of: (1) the day on which Lessor received notice of Lessee's election to exercise the right of first refusal; (2) the day upon which any question required to be determined by the arbitrator hereunder has been determined; or (3) the date of any FCC approval in the case of assignment or transfer; or at such other time as may be mutually agreed. The right of first refusal is terminated either by the lease or other transfer to Lessee as provided herein or by notice to Lessee of the Lessor's proposal to lease or otherwise transfer the ITFS Channels or -2- any part to a third person and Lessee's unwillingness or failure to meet and accept such a bona fide offer pursuant to the times and procedures as set forth above; provided that such proposed lease or transfer is consummated at the same fees, charges, rental or other consideration and upon the same terms as to which such right of first refusal applied, within thirty (30) days after Lessee's right of first refusal had expired or had been specifically waived by written notice given to Lessor by Lessee, or within thirty (30) days following FCC approval in the case of assignment or transfer. D) Operation During End of Term. If Lessor and Lessee do not enter into a New Lease Agreement before the end of the Initial Term, Lessee shall cease leasing the ITFS Channels on the last day of the Initial Term. E) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this Agreement shall not give rise to any rights or remedies beyond the expiration of any FCC license necessary for the continued operation of the ITFS Channels. Provided, however, that while this Agreement is in effect, Lessor shall obtain and maintain in force all licenses, permits and authorizations required or desired in connection with the use of the ITFS Channels. Lessor shall take all necessary steps to renew the licenses for the ITFS Channels and shall not commit any act or engage in any activity which could reasonably be expected to cause the FCC to impair, restrict, revoke, cancel, suspend or refuse to renew the ITFS licenses. Lessor shall take all reasonable steps to comply with the Communications Act of 1934, as amended and the rules and regulations of the FCC, and shall file all reports, schedules and/or forms required by the FCC to be filed by Lessor. All expenses, including attorneys fees and filing fees, incurred in preparing and filing such reports, schedules and/or forms required by the FCC shall be paid by the Lessee. 2. ALLOCATION OF AIRTIME. A) Excess Capacity Airtime. To the extent allowed by the FCC rules and regulations and any amendments thereof, Lessor agrees to lease to Lessee the exclusive use of all excess capacity not utilized by Lessor ("Excess Capacity Airtime"). B) Lessor's Primary Airtime. During analog transmission over the ITFS Channels, Lessor reserves for its exclusive use a minimum of twenty (20) hours of airtime per-channel per-week to be used for its ITFS scheduled programs. During digital transmission over the ITFS Channels, Lessor shall have the exclusive use of 12.5% of the total capacity available on the Lessor's ITFS Channels. This airtime shall be known as "Lessor's Primary Airtime". C) Schedule of Airtime. The schedule which depicts the agreement of the parties as to use of Lessor's Channels shall be attached hereto and made a part hereof as Exhibit A which is subject to change upon agreement by both parties. D) Lessee's Use of its Excess Capacity Airtime. Lessee shall have the right to utilize its Excess Capacity Airtime for any purpose allowed or authorized by the FCC including but not limited to voice, video and data transmission. -3- E) Alternate Use and Vertical Blanking Intervals. Lessor shall have the right to use the second audio carrier ("SAP") and vertical blanking intervals. ("VBI") on which Lessor's ITFS programming is being transmitted. Lessee shall at all times have the right to use the VBI and SAP not utilized by Lessor and 100% of the response frequencies associated with the ITFS Channels. Lessor shall be responsible for any equipment needed to utilize the VBI and/or SAP and such equipment shall be compatible with Lessee's system. F) Lessor's Use of ITFS Channels. Lessor agrees that its program services and airtime use will not harm or interfere with Lessee's current or future signal paths utilized within Lessee's System for program encryption, pilot carrier signaling and other technical needs utilized for the operation of and such services provided by Lessee's System. Nor will Lessor, by its own action, or through a third party, utilize any part of its licensed frequency spectrum to create or operate a service that is in competition with current, planned or future services provided by Lessee's System. Lessor agrees to use its Primary Airtime in accordance with the FCC's rules and regulations. Lessor shall not take or fail to take any action which may have a material adverse effect on Lessee's right to utilize its Excess Capacity Airtime. G) Expanded System Capacity. Lessee shall have the right at anytime to require Lessor to file with the FCC any necessary application to expand the channel capacity to Lessor's station to enable it to carry more than one video signal per channel or digital data services; provided however, before Lessee can exercise this right, it must demonstrate to the Lessor's reasonable satisfaction that such modification will not materially degrade the performance of the station nor impair signal quality at the registered ITFS receive sites. Once such modification has been constructed, the modified facilities shall automatically be considered a part of this agreement and subject to all terms and conditions hereof. It is understood that Lessee shall have the full-time use of the Expanded Channels to the extent permitted by FCC rules. 3. TRANSMISSION SITE AND FACILITIES. A) Primary Transmission Site. Lessor's ITFS Channels are located at Hot Springs Lessee agrees to provide Lessor space at the Primary Transmission site for Lessor's audio and video transmission equipment which shall not exceed on rack. Such space shall be leased to Lessor pursuant to Exhibit D hereto. This site shall hereinafter be described as the "Primary Transmission Site". At Lessee's sole expense, Lessee shall contract for a lease of space at the Transmission Site upon such terms as the parties agree. The Transmission Site shall comply with the standards, specifications and regulations of the FCC rules and orders pertaining to Lessor's ITFS license. B) Relocation of Transmission Site. (1) Lessor acknowledges that the location of the Primary Transmission Site for ITFS Channels is critical to the Lessee's business and agrees that it will not relocate the transmission facilities for ITFS Channels from the Primary Transmission Site without Lessee's prior written consent, -4- (2) Lessor further acknowledges that possibility that, as a result of currently unforeseen events, the Primary Transmission Site may not be the optimum site for the location of the ITFS Channels or Lessee's business throughout the term of this Lease Agreement. Lessor therefore agrees that if at any time or from time to time Lessee requests in writing that the transmission facilities for the ITFS Channels be relocated, Lessor shall file with the FCC and any other regulatory body having jurisdiction over the ITFS Channels all applications, amendments, and requests for modification that may be necessary to obtain any necessary consents to permit such relocation to such location within or adjacent to the Market as may be requested by Lessee; provided, however, that Lessor shall not be obligated to submit or prosecute any application, amendment, or request for modification that Lessor reasonably determines, upon advice of counsel contained in a written opinion, would be in violation of the terms of the License, any statute, rule, or regulations regarding the operation of the ITFS Channels or the submission of materials to the FCC, or any of its obligations as an ITFS licensee; and provided, further, that any such relocation will not result in loss of service to Lessor's registered receive sites served by the transmission facilities in the event that the authorization is obtained to relocate the ITFS Channels to the location requested by Lessee, Lessor shall relocate such channels to such new location as soon as reasonably possible after authorization is obtained. Lessee shall bear reasonable costs associated with such relocation, including engineering and construction, and all reasonable costs associated with obtaining FCC or any other regulatory approval therefor. (3) Lessor agrees to file modification applications requested by Lessee. Such modifications may include but shall not be limited to the following: power increase or decrease, polarization, transmit antenna patterns, digital, two-way (return path) use of the ITFS Channels, boosters, beam benders or repeaters, cells, sectorization, channel swaps, channel loading, channel shifting and applications for secondary transmission sites. Lessor agrees to file any modification application within five (5) business days of receipt of the modification application from Lessee or during any FCC designated filing window. Lessee will use reasonable efforts to provide Lessor with the engineering for the modification thirty (30) days prior to the request for filing. If Lessor believes that such modification will have an adverse effect on Lessor's ability to provide its services to its receive sites, Lessor agrees to file the modification application as presented by Lessee and within the time limit requested by Lessee; however, Lessee agrees not to implement construction and Lessor agrees not to withdraw the application until the parties have adequately addressed and resolved the potential material adverse effect or the matter has been submitted to arbitration pursuant to Section 16 and a final decision has been rendered by the arbitrator. Although Lessee intends to file such modification applications, it may elect not to construct the Channels in that manner and may desire to utilize the Channels as currently licensed. A copy of the modification application, bearing the FCC's date stamp, shall be mailed to Lessee by Lessor, within fourteen (14) days of the filing of the modification application. Lessee shall be solely responsible for all engineering and legal costs associated with the preparation, review and filing of the modification application. In the event that any license modification requested by Lessee requires receive site upgrades in order for Lessor's receive sites to continue to receive Lessor's services, then Lessee agrees to pay for all costs to complete such upgrade prior to implementing the license modification. -5- C) System Construction. Lessee shall within a reasonable period of time, but not later than six (6) months after the FCC grant of digital authority for the ITFS Channels, purchase equipment such as the antenna, waveguide or transmitters specified on the authorization for the ITFS Channels. At Lessee's expense, Lessee shall purchase and install such transmitters, transmission line, modulators, antennas and other equipment as required to operate the ITFS Channels in accordance with the provision of such authorization. Any equipment so used in such construction shall be leased to Lessor pursuant to Paragraph 5 hereof. Such equipment is hereinafter referred to as the "Leased Equipment". Lessee shall retain title to the Leased Equipment except as noted by Paragraph 15 herein. D) Maintenance of Transmission Equipment. At Lessee's expense and subject to Lessor's right to supervise the maintenance of this equipment, Lessee shall maintain and operate the Leased Equipment during the terms of this Agreement for a nominal fee. Lessee shall also pay all taxes and other charges assessed against the Leased Equipment. E) Transmission of Programming. At no cost or expense to Lessor, Lessee shall provide the necessary labor and equipment capabilities to transmit on the ITFS Channels programming required to be carried pursuant to this Agreement such as Lessor's ITFS programming and TBN. Lessee shall also comply with Lessor's instructions regarding the transmission of such programming such as the dates and times to transmit programming. F) Interference. Lessee shall operate the Leased Equipment so that such operation does not create or increase interference with electronic transmission of any other FCC licensees entitled to protection under FCC rules and regulations. If Lessee's operation of the Leased Equipment does so create or increase interference, Lessee shall pay all of the reasonable engineering and legal fees necessary to resolve the interference problem so created. G) Alterations and Attachments. Lessee, at its own expense, may make alterations of or attachments to the ITFS equipment or the common equipment as defined in Exhibit C (including the installation of encoding and/or addressing equipment) as may be reasonably required from time to time by the nature of its business; provided however, that such alterations or attachments do not interfere with Lessor's signal or ongoing operations or violate any FCC rules or regulations; and provided further that FCC authorization, if required, is obtained in advance of any such alteration or attachment at the sole cost of Lessee. To the extent any FCC authorization pertaining to the ITFS equipment is required, Lessor agrees to use its best efforts to obtain such authorization. H) Licensee Control and Liability. Nothing herein shall derogate from such licensee control of operations of the ITFS Channels that Lessor, as an FCC licensee, shall be required to maintain and Lessee acknowledges the reservation by Lessor of such control. Lessor shall at all times retain ultimate and exclusive responsibility for the operation and control of the ITFS Channels including policy decisions. 4. LESSOR'S RECEIVE SITES. Attached hereto as Exhibit B is a list of the registered receive sites designated by Lessor to receive its ITFS programming and to be installed at the expense of Lessee. Those -6- receive sites so listed shall be installed with a Standard Installation. If as the result of any relocation of the Primary Transmit Site, the equipment at Lessor's existing registered receive sites must be reoriented, Lessee shall pay the cost of same. As used herein for the purposes of this Agreement, the phrase "Standard Installation" shall mean an installation consisting of the placement of the ITFS/MMDS receiving antenna at an elevation (not to exceed thirty [30] feet above the base mounting location), which could normally receive the line-of-sight transmission from the Transmission Site; the coupling thereto of a block-down converter; and a sufficient amount of transmission line (coaxial cable) to connect the received ITFS programming to the input of (i) one classroom designated by Lessor to receive the ITFS programming or (ii) the receive site internal/external distribution system. Also, if as the result of any relocation of the Transmit Site, the equipment at Lessor's existing receive sites must be reoriented, Lessee shall pay the cost of same. Lessee also agrees that for digital transmission of the ITFS Channels Lessee will purchase and install at Lessee's expense, one single-point modem to receive its ITFS programming. 5. LEASE OF EQUIPMENT. A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall lease from Lessee the Leased Equipment during the terms of this Agreement. A list of this equipment is attached hereto as Exhibit C and incorporated by reference herein. Lessor shall have no responsibility for the loss of or damage to the Leased Equipment during the terms of this Agreement and Lessee shall bear all such responsibility. 6. FEES. A) Lessor's Service Fee. In consideration of the lease of the Leased Equipment, and for its share of the projected costs to maintain the Transmission Site and the Leased Equipment, Lessor shall pay Lessee an annual service fee provided for in Exhibit D. B) Subscriber Royalty Fees or Percentage. Beginning on the Execution Date of this Agreement and continuing thereafter during the Initial Term of this Agreement, Lessee shall pay to Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum, whichever is greater as set out in Exhibit D which is attached herewith and incorporated by reference herein. If the Execution Date shall be a date other than the first day of a calendar month or this Agreement shall be terminated on a date other than the last day of a calendar month, then the Subscriber Royalty Fee for that partial month shall be paid on a proportionate basis. A late fee of 10% (ten percent) will be assessed to past due accounts, and a finance charge of one and one-half percent (1.5%) per month will be assessed in addition to the late fee until paid. C) Notice of Construction and Required Certificate. Within thirty (30) days of completion of construction at the Transmission Site, Lessee shall notify Lessor of such completion of construction in writing. Within thirty (30) days of the end of each month in which Excess Capacity Airtime is leased hereunder, Lessee shall provide Lessor with a certificate, certified as accurate and correct by an authorized agent of Lessee, showing the number of subscribers served during such month. -7- D) Right to Audit. Lessee shall for a period of three (3) years after their creation, keep, maintain and preserve complete and accurate records and accounts, including all invoices, correspondence, ledgers, financial and other records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's charges hereunder; and such records and corporate accounts shall be available for inspection and audit at Lessee's corporate offices or at Lessee's offices in the Market, as designated by Lessee, at any time or times during the term of this Agreement or within ninety (90) days thereafter, during reasonable business hours, by Lessor or its nominee. In the event that there is discovered an underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above, Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of each such underpayment. All information obtained by Lessor during any audit herein shall be maintained by Lessor in strict confidence. 7. PROGRAMMING. A) Control Over Programming. (1) Program Content. Lessee intends that only programming of a sort which would not serve to place Lessor's reputation in the community in jeopardy will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize disputes, recognizing the difficulties inherent in specifying exact standards herein, it is agreed that Lessee shall have the right to market the programming provided by the networks and services listed on Exhibit E. If, however, the programming content of any of the networks and services listed on Exhibit E materially changes, Lessor shall have the right, upon ninety (90) days notice, to deny Lessee the right to continue transmitting such programming if Lessor would have the right to deny Lessee the right to transmit such programming under the provisions of this paragraph in the first instance. If Lessee proposes to transmit the programming of any new programming service, the Lessee shall notify Lessor in writing specifying in detail the nature of the new programming service and Lessor shall have the right, upon written notice served upon Lessee within thirty (30) days after Lessor's receipt of any such notice from Lessee, to deny to Lessee the right to transmit such service if such programming is obscene and/or contradicting local, state and/or federal laws or otherwise violates any federal, state or local laws or regulations. If no such denial notice is received by Lessee within such thirty (30) days, Lessee shall be authorized to transmit all such services for which no denial notice is received. There shall be no reduction in fees required under this Agreement for any such programming not permitted to be transmitted. B) Availability of Programming. It is understood by Lessee and Lessor that there is expected to be no direct out-of-pocket annual costs for the acquisition of the qualified ITFS educational programming for Lessor's use during Lessor's Primary Airtime on the ITFS Channels, based on current plans. In the event that this ITFS educational programming either; (1) ceases to be available, or, (2) becomes available only at a fee, then Lessor may incur direct out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees to provide its best efforts to assist Lessor in the acquisition of alternative programming, if necessary. Additionally, Lessee agrees to make payment to Lessor for the actual, direct programming costs incurred, if any; If Lessor, after expending its best efforts, is unable to obtain suitable ITFS programming for a cost equal to the amount to be paid by Lessee, Lessor and Lessee -8- shall use their best efforts to reach agreement on modifications to this Agreement to avoid any unreimbursed ITFS programming costs to Lessor. If no such agreement can be reached, Lessor may terminate this agreement. In the case of such termination, Lessor shall use its best efforts (with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior approval) to transfer the license for the ITFS Channels to another qualified educational entity, subject to FCC approval, with the intent of assigning this Agreement from Lessor to the new educational entity. C) Integration of Lessor's Programming. Lessee agrees to integrate Lessor's programming into the overall communications service offered to subscribers, without cost to Lessor. This integration shall include, but not be limited to, listing Lessor's material in any program guides produced by Lessee for subscribers. D) Carriage of TBN. In the event that Lessor's ITFS Channels are used for analog video transmission and TBN is not transmitted on a local VHF or UHF station, with a market coverage equivalent to both area and signal quality of our ITFS channels, and Lessee does not have local off-air insertion as part of its standard installation, then, if so designated by Lessor, Lessee agrees to transmit on one of the ITFS Channels the programming of Trinity Broadcasting Network ("TBN") during those time periods such channel is not used for Lessor's ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a fee for carriage of TBN. In the event that Lessee is permitted to program the hours previously occupied by TBN, then Lessee shall increase, in proportion to the increase in Excess Capacity Airtime, the amount of minimum fees and subscriber royalty fees payable under the provision 6 (B) of this agreement during the remainder of the term(s) of the agreement. For purposes of calculating any such proportionate increase, the parties acknowledge and agree that the minimum fee and subscriber royalty fee agreed to herein are based on Lessee's equivalent use of three full-time ITFS channels. E) Station Identification. During Lessee's use of Lessor's excess channel capacity, Lessee shall transmit Lessor's call sign for each respective station as required by the FCC. 8. PROSECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES. A) Best Efforts to Secure Approval of this Agreement. The parties recognize that certain approvals will be required from the FCC in order to effectuate this Agreement. Both parties shall use their best efforts to prepare, file and prosecute before the FCC all petitions, waivers, applications and other documents necessary to secure any FCC approval required to effectuate this Agreement. Lessee shall assist in the preparation and prosecution of such applications and as provided for herein, shall pay all filing fees, attorneys' fees, engineering fees, and all other expenses in connection therewith. Lessor also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDS and MMDS operators to co-locate at the Transmission Site. Notwithstanding anything in this Agreement to the contrary, it is understood that no filing shall be made with the FCC with respect to this Agreement unless both parties have reviewed such filing and consented in writing to its submission, such consent not to be unreasonably withheld. -9- B) Further Efforts. Throughout the Initial Term of this Agreement, Lessor shall use its best efforts to obtain and maintain in force all licenses, permits and authorizations required for Lessee and Lessor to use the ITFS Channels as contemplated by this Agreement. Lessee shall be responsible for all cash expenses incurred to obtain and maintain in force such licenses, permits and authorizations. When mutually agreed by the parties and at Lessee's sole expense, Lessor shall apply for, and use its best efforts to obtain those reasonable license modifications which would assist Lessee in its business. Lessor also shall consider filing, at Lessee's sole expense, such reasonable protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or OFS applications or amendments as may be requested by Lessee in the mutual best interests of the parties and the public. Lessor and Lessee shall promptly notify each other of any event of which it has knowledge that may affect any of the licenses, permits or authorizations affecting the ITFS Channels. C) Attorney's Fees. With respect to any legal work conducted pursuant to Paragraphs 8(A) and (B) above, Lessee shall be responsible for all attorneys' fees in connection therewith and shall make payments directly to the attorney. However, any attorney fees paid by Lessee shall be approved in advance by Lessee. 9. REPRESENTATIONS AND WARRANTIES. A) Representations and Warranties of Lessor. Lessor represents and warrants to Lessee as follows: (1) Organization. Lessor is a non-profit organization duly organized and existing in good standing under the laws of the State of California, and it has full power and authority to carry out all of the transactions contemplated by this Agreement and all other agreement, certificates or instruments executed and delivered in connection herewith. (2) No Violation. Neither the execution nor delivery of this agreement or any other agreements, certificates or instruments executed and delivered herewith, nor the performance of the transactions contemplated hereby constitute or will constitute a violation of, be in conflict with, or a default under any term or provision of the governing instruments of Lessor or any agreement or commitment to which Lessor is bound, or any judgment, decree, order, regulation or rule of any court or governmental authority, or consent of any federal, state or local authority is required in connection with the execution and delivery of this Agreement or any other agreements, certificates or instruments executed and delivered herewith or with the performance of the transactions contemplated hereby. B) Representations and Warranties of Lessee. Lessee represents and warrants to Lessor as follows: (1) Organization. Lessee is duly organized, validly existing and in good standing under the laws of the State of its incorporation and it has full power and authority to own property and carry out all of the transactions contemplated by this Agreement, and all other agreements, certificates or instruments executed and delivered by Lessee in connection herewith. -10- (2) Corporation Action; Valid and Binding Agreements. Lessee has taken all corporate action necessary to authorize the execution and delivery of this Agreement and all other agreements, certificates or instruments executed and delivered in connection herewith. Upon execution and delivery, this Agreement and all other agreements, certificates or instruments executed and delivered by Lessee in connection herewith will constitute valid and binding agreements of Lessee enforceable in accordance with their respective terms. (3) Litigation and investigations. There is no action, suit, proceeding or investigation pending or, to the best of Lessee's knowledge, threatened against Lessee, its principals or related entities before any court, administrative agency or other governmental body, and Lessee does not know nor is aware of any reason for commencement of any such action, proceeding or investigation. (4) Misrepresentation of Material Fact. To the best of Lessee's knowledge, information and belief, no document or contract that was shown to Lessor and which in any way affects any of the properties, assets or proposed transactions of Lessee as such relates to this Agreement, no certificate or statement furnished by or on behalf of Lessee in connection with this Agreement, nor this Agreement itself contains any untrue statement of material fact or omits to state a material fact which would make the statements contained herein misleading. C) Survival or Representations and Warranties. The representations and warranties contained in this Agreement shall be deemed to be continuing during the Initial terms of this Agreement, and each Party shall have the duty promptly to notify the other of any event or circumstance which might reasonably be deemed to constitute a breach of or lead to a breach of its warranties or representations hereunder. The waiver by either Party of any breach of any representation or warranty under this Agreement shall not constitute a waiver of any other representation or warranty or of any failure in the future by the other Party to fulfill such representation or warranty. 10. TERMINATION. A) Termination of FCC Authorization. Without further liability to either Lessor or Lessee, this Agreement shall terminate in the event that for any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii) the FCC shall terminate or diminish Lessor's authority to lease the ITFS Channels in accordance with the terms of this Agreement. B) Termination by Reason of Default or Nonperformance. At the option of the non-defaulting party, this Agreement may be terminated upon the material breach or default by the defaulting party of its duties and obligations hereunder if such breach or default is not cured by such defaulting party and if such breach or default shall continue for a period of thirty (30) consecutive days after such defaulting party's receipt of notice thereof from the non-defaulting party. It is understood and agreed that any failure on the part of Lessee to make any payment required under Paragraph 6 hereof shall be a material breach of default of its duties and obligations hereunder. It is also understood and agreed that any consequences resulting from the loss of local participating receive sites shall not be considered a material breach or default by Lessor of its duties and obligations hereunder. -11- C) Remedies to Continue. In the event of termination of this Agreement pursuant to Paragraph 10(B), such termination shall not affect or diminish the rights or claims or remedies available in equity or at law to the non-defaulting party arising by reason of a breach or default of this Agreement. However, no liability shall arise on the part of Lessor or Lessee upon termination of this Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license occurs as a result of the default of either party. 11. TRANSFER OF RIGHTS AND OBLIGATIONS. Lessee shall have the right to assign its rights under this lease as collateral for any financing arrangements it makes. Lessee shall also have the right to pledge the Leased Equipment as collateral security for any loans it makes; provided, however, that any pledge of the Leased Equipment shall be made subject to the provisions of this lease. Lessee shall further have the right to subcontract any portion of its obligations under this Agreement to any partnership, joint venture, corporation or entity which Lessee may choose, provided that Lessee gives Lessor notice of any proposed subcontracting and, provided further, that no such subcontracting shall release Lessee from fulfilling all of its obligations under this Agreement. Lessee shall have the right to assign or transfer its rights, benefits, duties and obligations under this Agreement to a commonly-owned company without the prior consent of Lessor. Apart from the foregoing, neither party may assign or transfer its rights, benefits, duties or obligations under this Agreement without the prior written consent of the other, which consent shall not be unreasonably withheld. 12. INDEMNIFICATION. A) By Lessor. To the extent permitted by state and federal law and its charter or by-laws, Lessor shall forever protect, save and keep Lessee and its permitted successors and assigns harmless and indemnify Lessee against and from any and all claims, demands, losses, costs, damages, suits, judgments, penalties, expenses and liabilities of any kind or nature whatsoever, including reasonable attorneys' fees, arising directly or indirectly out of (i) the willful misconduct of Lessor, its agents or employees in connection with the performance of this Agreement, or (ii) any programming transmitted by Lessor during any of Lessor's Airtime. B) By Lessee. To the extent permitted by state and federal law and its charter or by-laws, Lessee shall forever protect, save and keep Lessor and its permitted successors and assigns harmless and indemnify Lessor against and from any and all claims, demands, losses, costs, damages, suits, judgments, penalties, expenses and liabilities of any kind or nature whatsoever, including reasonable attorneys' fees, which arise directly and indirectly out of (i) the negligence or willful misconduct of Lessee, its agents or employees, in connection with the performance of this Agreement; (ii) any programming transmitted by Lessee pursuant to this Agreement; (iii) any and all dealings by Lessee or any of its authorized agents or subcontractors with the public, third parties and subscribers to the Lessee's programming service; or (iv) any maintenance, installation or other work performed by Lessee or any authorized agent or subcontractor under this Agreement. -12- C) Notice of Claim; Defense of Claim. Each party shall notify the other of any such claim promptly upon receipt of same. Either party (hereinafter referred to as appropriate the "Indemnitor" or the "Indemnitee") shall have the option to defend, at its own expense, any claims arising under this Paragraph. If Indemnitor assumes the defense of any such claim, Indemnitee shall delegate complete and sole authority to the Indemnitor to defend or settle same and Indemnitee shall cooperate with Indemnitor in the defense thereof. 13. INSURANCE. A) Policies Required. At its expense, Lessee shall secure and maintain with financially reputable insurers, one or more policies of insurance insuring the Leased Equipment and Lessee's utilization of the ITFS Channels against casualty and other losses of the kinds customarily insured against by firms of established reputations engaged in the same or similar line of business, or such types and in such amounts as are customarily carried under similar circumstances by such firms, including, without limitation: (i) "All Risk" property insurance covering the ITFS Equipment and the common Equipment to the extent of one hundred percent (100%) of its full replacement value without deduction for depreciation: (ii) comprehensive general public liability insurance covering liability resulting from Lessee's operation of the ITFS equipment on an occurrence basis having minimum limits of liability in an amount of not less than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or death to any person or persons in any one occurrence, and not less than Two Million Dollars ($2,000,000.00) in the aggregate for all such losses during each policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with respect to damage to property; (ii) all workers compensation, automobile liability and similar insurance required by law. B) Insurance Policy Forms. All policies of insurance required by this Paragraph shall, where appropriate, designate Lessor as either the insured party or as a named additionally insured party, shall be written as primary policies, not contributory with and not in excess of any coverage which Lessor shall carry, and shall contain a provision that the issuer shall give to Lessor thirty (30) days prior written notice of any cancellation or lapse of such insurance or of any change in the coverage thereof. C) Proof of Insurance. Executed copies of the policies of insurance required under this section or certificates thereof shall be delivered to Lessor not later than ten (10) after execution of this agreement. Lessee shall furnish Lessor evidence of renewal of each such policy not later than thirty (30) days prior to the expiration of the term thereof. 14. RELATIONSHIP OF PARTIES. By the provisions of this Agreement, Lessor and Lessee intend to enter an airtime lease relationship and not a joint venture. They will carry out this Agreement to preserve that intent. Neither party shall represent itself as the other party, nor as having any relationship with one another, except as Lessor and Lessee under the terms of this Agreement. -13- 15. EQUIPMENT PURCHASE. A) Lessor's Option to Purchase. In the event that this Agreement is terminated, Lessor shall have the option to purchase the Leased Equipment used exclusively for Lessor's ITFS license. Any equipment which is used in a shared fashion (such as transmit antenna, decoders, and combiners) in providing signals other than Lessor's signals are excluded from this option to purchase. The intent of the purchase option provided for in Paragraphs 16(A) is to provide Lessor with the capability to continue to perform on Lessor's ITFS license. The purchase price shall be the market value of such equipment noted above as determined by mutual agreement or by averaging the values obtained from two (2) appraisals, with one appraiser each chosen by Lessor and Lessee. B) Lessee's Option to Purchase. If during the terms of this Agreement the FCC modifies its rules so as to enable Lessee to be licensed to operate the ITFS frequencies, Lessee shall have a right of first refusal to acquire such licenses subject to the same terms and conditions as the right provided for in Paragraph 1(B). 16. NON-DISCLOSURE. Lessor acknowledges that there may be made available to it pursuant to this Agreement proprietary information of Lessee relating to the encoding and/or decoding system associated with the ITFS channel equipment and its patented processes including, but not limited to, improvements, innovations, adaptation, inventions, results of experimentation, processes and methods, whether or not deemed patentable, and certain business and marketing techniques (all herein referred to as "Confidential Information"). Lessor acknowledges that this Confidential Information has been developed by Lessee at considerable effort and expense and represents special, unique and valuable proprietary assets of Lessee, the value of which may be destroyed by unauthorized dissemination. Accordingly, Lessor covenants and agrees that, except as may be required for the performance of this Agreement or by law or court order, neither it nor any of its agents or affiliates shall disclose such Confidential Information to any third person, firm, corporation or other entity for any reason whatsoever, such undertaking to be enforceable by injunctive or other equitable relief to prevent any violation or threatened violation thereof. 17. NON-COMPETITION. During the term of this Agreement, Lessor agrees not to transmit programming or to lease or sublease any channel capacity on its ITFS Facilities for the transmission of programming that is competitive with the programming transmitted by Lessee. 18. FORCE MAJEURE. If by reason of Force Majeure either party is unable in whole or in part to perform its obligations hereunder, the party shall not be deemed in violation of default during the period of such inability. As used herein, the phrase "Force Majeure", shall mean the following: act of God, acts of public enemies, orders of any branch of the government of the United States of America, any state or any political subdivisions, thereof which are not the result of a breach of this Agreement, orders of any military authority, insurrections, riots, epidemics, fires, civil -14- disturbances, explosions, or any other cause or event not reasonably within the control of the adversely affected party. 19. CONDITION PRECEDENT. This Agreement is conditional on the issuance of a Final Order by the FCC granting Lessor a construction permit for the ITFS Channels in the Market from the Transmission Site. By "Final Order" the parties mean an action or order of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled or suspended and with respect to which no timely-filed request for administrative or judicial review is pending and as to which the time for filing any such request, or for the FCC to set aside the action on its own motion, has expired. 20. NOTICE. Any notice required to be given to Lessor under any provision of this Agreement shall be delivered personally or by certified mail to Lessor at the address first written above. Any notice required to be given to Lessee under any provision of this Agreement shall be delivered personally or by certified mail to Lessee at the address first written above. 21. SEVERABILITY. Should any court or agency determine that any provision of this Agreement is invalid, the remainder of the Agreement shall remain in effect. 22. WAIVER. A waiver by either Lessor or Lessee of a breach of any provision of this Agreement shall not be deemed to constitute a waiver of any preceding or subsequent breach of the same provision or of any other provision. 23. PAYMENT OF EXPENSES AND SIGNING FEES. A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall pay all costs and expenses incident to fulfilling or modifying this Agreement, such as, attorneys' fees or, if necessary, any travel expenses approved in advance by Lessee, FCC filing fees, and engineering costs. 24. VENUE AND GOVERNING LAW. Venue for any cause of action brought by or between Lessor and/or Lessee relating to this Agreement shall be in California and all provisions of this Agreement shall be construed under the laws of the State of California and County of Lessor. 25. COUNTERPARTS. This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall constitute one and the same instrument, and shall -15- become effective when each of the parties hereto shall have delivered to it this Agreement duly executed by each of the other parties hereto. 26. ENTIRE AGREEMENT. This Agreement constitutes the entire Agreement between the parties and supersedes all prior oral or written provisions of any kind. The parties further agree that this Agreement may only be modified by written Agreement signed by both parties. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on this day of July 1st, 2000. SHEKINAH NETWORK By: -------------------------------------------- Name: Charles J. McKee ---------------------------------------- Title: President ---------------------------------------- World Wide Wireless Communications, Inc. By: ------------------------------------------- Name: Douglas P. Haffer ---------------------------------------- Title: President ---------------------------------------- Address for Notices: Shekinah Network 2995 Ardilla Road, Atascadero, CA. 93422 (805) 466-7770 (805) 460-9292 Fax E-Mail cm@shekinahnetwork.org Attn: Charles McKee, President -16- Gardner, Carton & Douglas Attn: Laura Mow 1301 K Street, N. W. Suite. 900 Washington, DC 20005 Phone: (202) 408-7100 Fax: (202) 289-1504 World Wide Wireless Communications, Inc. 520 Third Street Suite 101 Oakland, CA 94607 (510) 839-6100 (510) 530-5700 -17- EXHIBIT A --------- Schedule of Airtime ------------------- -18- EXHIBIT B --------- Receive Sites ------------- There shall be attached hereto and incorporated by reference a copy of FCC Form 330 Section IV listing Lessor's receive sites. -19- EXHIBIT C --------- Leased Equipment ---------------- Noted below is a list of equipment that Lessee is leasing to Lessor. (1) Four (4) ITFS transmitters and related hardware (2) Lessor's ITFS receive site antennas and related hardware. *(3) Combining network, transmission line and antenna *Common Equipment -20- EXHIBIT D --------- Service and Royalty Fees ------------------------ 1. Lessor's Service Fee -------------------- Services Provided Annual Fee - ----------------- ---------- (a) Lease of Leased Equipment [6(A)] $1.00 (b) Maintenance of Leased Equipment [3(D)] $1.00 (c) Lease of space at Primary Transmission Site [3(A)] $1.00 2. Lessee's Subscriber Royalty Fee ------------------------------- Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's Gross receipts or a monthly minimum payment of $500 per month whichever is greater. Payment shall be as follows: Commencing on the Execution (Effective) Date and as defined in Paragraph 6) B, payments for each month shall be made by the twentieth (20th) day of the following month. -21- EXHIBIT E --------- Programming ----------- In addition to digital data services, such as the Internet or Intranet, the following is a list of video programming services Lessee may provide over Lessee's System. TLC - The Learning Channel TWC - The Weather Channel Lifetime ESPN - Sports AMC - American Movie Classics SCOLA WHTN - World Harvest Television Network ECO - Galavision CNN - Cable News Network CNN - Headline News C-Span I C-Span II BET - Black Entertainment Network CNBC - Consumer News & Business Channel Nickelodeon The Discovery Channel A&E - Arts & Entertainment The Family Channel The Disney Channel PBS - Public Broadcasting Service TBN - Trinity Broadcasting Network TNIN - The New Inspirational Network ME/U - Mind Extension Network The International Channel BRAVO Network The Travel Channel Family Network Keystone Inspirational Network WwwcEclaFinal 7-1-00 -22- EX-10.13 4 0004.txt SUPPLY AGREEMENT SUPPLY AGREEMENT between Andrew Corporation and World Wide Wireless Communications, Inc. This Supply Agreement ("Agreement"), effective this _(13th)__ day of March, 2000, is entered into by and between Andrew Corporation, a Delaware corporation with offices located at 10500 West 153rd Street, Orland Park, Illinois 60462 ("Andrew"), and World Wide Wireless Communications, Inc., a Nevada corporation with offices located at 520 3rd Street, Suite 101, Oakland, California 94607 ("WWWC"). RECITALS: Andrew is a global manufacturer of communication products and systems, including those utilized for Broadband Fixed Wireless Internet and Data Transmission. WWWC is an operator-provider of Broadband Fixed Wireless Internet and Data Transmission services worldwide. WWWC desires that Andrew be its exclusive systems integrator and technical provider for WWWC's fixed broadband wireless network systems and operations on a worldwide basis, and Andrew desires the same, on the terms and subject to the conditions of this Agreement. NOW THEREFORE, the parties, intending to be legally bound, agree as follows: 1. SCOPE (a) During the term of this Agreement, Andrew will be the exclusive provider of broadband wireless network systems and related technical expertise for WWWC on a global basis. In this regard, Andrew will perform the following from time to time: (i) design, analyze and engineer broadband wireless network systems ("Broadband Wireless Network Systems") applications in various geographic locations in consultation with WWWC; (ii) use its commercially reasonable efforts to supply the required component products (e.g., main transmit antenna, sectorized antenna, transmitters or other base station equipment and related subscriber equipment, including transceivers and modems) to WWWC for each location based upon specifications approved by WWWC on the terms set forth in this Agreement; and (iii) provide estimates and develop specifications in consultation with WWWC for network operation centers. For each project undertaken by Andrew pursuant to this Agreement, a specific scope of work ("Scope of Work") (including, timing, price, deliverables, etc.) will be developed and agreed upon by the parties and attached to this Agreement as Exhibit A. Upon acceptance and approval of the project design and specifications by WWWC for a particular project, Andrew will install the Broadband Wireless Network Systems or network operation center, as applicable, in accordance with the agreed upon design and specifications and the terms and conditions contain in this Agreement and the applicable Scope of Work. (b) Andrew will not provide installation of any modems, transceivers or other products or systems to subscribers or customers of WWWC, although Andrew will provide training to WWWC and its installers of such modems, transceivers or other products or systems at rates agreed upon by the parties from time to time. (c) In accordance with each Scope of Work, preliminary system specifications will be developed by Andrew based on the engineering analysis of data by WWWC and system operation requirements determined by WWWC. Andrew will present the preliminary design and specifications of each Broadband Wireless Network System to WWWC for its review and approval prior to initiating any final design or manufacturing efforts. Upon WWWC's approval of preliminary specifications for a specific system, such specifications will be considered finalized and will be used as the baseline for inspection and final acceptance of the delivered Broadband Wireless Network System. (d) WWWC agrees to use its commercially reasonable efforts to build Broadband Wireless Network Systems and enlist subscribers as soon as reasonably practicable. WWWC anticipates building six Broadband Wireless Network Systems during the first 12 months of the term of this Agreement. WWWC anticipates purchasing from Andrew an aggregate minimum of $2,000,000 of products and services under this Agreement in each 12 month period during the term of this Agreement. 2. SYSTEMS AND PRODUCTS Andrew will make its products, Broadband Wireless Network Systems and other services available for purchase by WWWC in accordance with the terms of this Agreement. Except as provided in paragraph 1 above, WWWC is not obligated to purchase any minimum quantity of products, Broadband Wireless Network Systems or services. However, for each Broadband Wireless Network System designed or built by WWWC during the term of this Agreement, WWWC agrees that it will purchase such Broadband Wireless Network System and related products only from Andrew. In the event that a given Scope of Work requires a component product that cannot be readily procured by Andrew in a commercially reasonable manner (e.g., acceptable timing or quantity), WWWC may procure such component part and supply it for such Scope of Work. 3. PRICES (a) Unit prices for standard Andrew products ordered separately by WWWC from time to time (and not as components of an Andrew supplied Broadband Wireless Network System under this Agreement) will be at prices, as may be modified by Andrew from time to time, no less favorable than prices charged to other customers of Andrew similar to WWWC who purchase like products in like quantities. (b) Pricing for Broadband Wireless Network Systems and other services will be determined for each individual system based on Andrew's preliminary engineering design and specifications as approved by WWWC. Such prices will include the engineering design, system specifications, manufacturing, installation and system testing and any other items detailed in the applicable Scope of Work. 2 (c) Prices for Broadband Wireless Network Systems, products and services under this Agreement will not include sales, use, privilege, excise or any other tax, duty, tariff or assessment that may arise from the sale of products or services as described in this Agreement. In the event Andrew becomes liable to pay or bear the burden of any such taxes (excluding income tax), the amount will be added to the sale price of the product or service being purchased. 4. ORDERING (a) Broadband Wireless Network Systems, products and services to be purchased under this Agreement will be identified on purchase orders issued by WWWC and accepted in writing by Andrew. Each purchase order will reference this Agreement and clearly identify Andrew's specification number for the WWWC approved preliminary specifications, price and requested delivery date. The Broadband Wireless Network Systems specifications will be attached to the purchase order and become a part of the order. (b) The terms and conditions contained in this Agreement will be applicable to and govern each purchase order issued by WWWC pursuant to this Agreement. Any preprinted terms and conditions appearing on WWWC's purchase order form which are in addition to, in conflict with, or contrary in any way to the terms of this Agreement, will have no force or effect on the performance or completion of work as required by the purchase order. (c) In the event WWWC cancels any purchase order for any reason after Andrew has accepted or commenced performance on such order or for any reason determines not to purchase any Broadband Wireless Network System, product or service under this Agreement (excluding, however, any such cancellation due to Andrew's breach or default under this Agreement), WWWC agrees to compensate Andrew for the amount of all recorded project time for its engineering analysis and design efforts and the amount of any non-recurring engineering costs for the given Broadband Wireless Network System, product or service, in addition to any other documented costs or expenses and any other remedies Andrew may have at law or in equity. Such amount will be paid by WWWC within 10 days after WWWC's receipt of documentation from Andrew that substantiates such incurred costs and expenses. 5. DELIVERY (a) Delivery dates will be as agreed between WWWC and Andrew and set forth on each purchase order. (b) Delivery terms will be F.O.B., Origin, Andrew's manufacturing facility. Andrew will arrange for, at WWWC's cost and expense, transportation of the products and systems to locations specified by WWWC using its regular carrier or a WWWC specified carrier on a prepay and bill basis. 3 (c) Title to products shipped against product only orders (not as part of a Broadband Wireless Network System) will pass upon shipment from the F.O.B. point and title to the Broadband Wireless Network Systems will pass to WWWC upon successful completion of installation and system testing. 6. INVOICING AND PAYMENT TERMS (a) Andrew will invoice product only orders upon shipment. Invoices for Broadband Wireless Network Systems will be invoiced in progress payments as provided in the applicable Scope of Work or purchase order. Each invoice will include the purchase order number, Invoice number, quantity and price of products shipped (for product only orders) or the progress payment price for Broadband Wireless Network Systems or services, as the case may be, and applicable sales or other tax, and total invoice price. (b) Payment terms are Net 45 days from date of invoice or as otherwise specified in the Scope of Work with respect to Broadband Wireless Network Systems or services. All prices and payments will be in United States Dollars. (c) Past due payments are subject to a service charge of 1.5% per month (18% annual) on the unpaid balance or the maximum rate permitted by state law, whichever is lower. (d) In the event any legal action or other proceeding is brought for the enforcement of this Agreement, or as a result of the breach of any of the provisions hereof, the prevailing party will be entitled to recover reasonable attorneys' fees and other costs incurred in such action or proceeding, in addition to any relief to which such party may be entitled. 7. INSPECTION AND FINAL ACCEPTANCE (a) For standard product orders, as promptly as practicable, but in no event longer than 45 days following delivery of products, WWWC will inspect the products and either accept or reject the products as nonconforming to the product specifications or defective in material or workmanship. Unless WWWC notifies Andrew in writing of any rejected products within this 45 day period, products will be deemed final accepted and, except as provided in Andrew's warranty stated elsewhere herein, WWWC waives all claims of nonconformity of the products. (b) For Broadband Wireless Network Systems or custom products, WWWC will have the right to witness installation acceptance testing or other testing as set forth in the Scope of Work and will receive test reports provided by Andrew. Except as otherwise provided in the applicable Scope of Work, within 30 days after successful completion of installation testing or such other testing, unless WWWC notifies Andrew of any discrepancies or deficiencies in the system determined during the acceptance test, the system will be deemed final accepted and, except as provided in Andrew's warranty stated elsewhere herein, WWWC waives all claims of nonconformity of the system. In the event of acceptance test delays in excess of 90 days following installation and such 4 delays are not the fault of Andrew or in the event the system is used by WWWC for 30 days, the system will be considered finally accepted. 8. WARRANTY Andrew warrants that it has the right to enter into and perform this Agreement and that its products and systems are transferred rightfully and with good title; that its products and systems will be free from any lawful security interest or other lien or encumbrance upon payment in full; and that for a period of twelve (12) months after the date of final acceptance, such products and systems will be free from defects in material and workmanship which arise under proper and normal use and service and will perform in accordance with the agreed upon specifications for the Broadband Wireless Network Systems. WWWC's sole and exclusive remedy hereunder is limited to Andrew's repair or replacement, at Andrew's election (either at its plant or at such other place as may be agreed upon between Andrew and WWWC) of such defects at no cost to WWWC. Transportation costs in connection with the return of products or systems to Andrew's plant or designated facility will be paid by WWWC. The provisions of this warranty will be applicable with respect to any product or system that Andrew repairs or replaces pursuant to it. ANDREW MAKES NO WARRANTY, EXPRESS OR IMPLIED, OTHER THAN AS STATED ABOVE. EXPRESSLY EXCLUDED ARE THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR PURPOSE. THE FOREGOING WILL CONSTITUTE ALL OF ANDREW'S LIABILITY (EXCEPT AS TO PATENT INFRINGEMENT, WHICH IS ADDRESS IN A PARAGRAPH BELOW) WITH RESPECT TO THE PRODUCTS AND SYSTEMS. IN NO EVENT WILL ANDREW BE LIABLE FOR SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES, INSTALLATION COSTS, LOST REVENUE OR PROFITS, OR ANY OTHER COSTS OF ANY NATURE AS A RESULT OF THE USE OF PRODUCTS OR SYSTEMS MANUFACTURED BY THE ANDREW, WHETHER USED IN ACCORDANCE WITH INSTRUCTIONS OR NOT. IN NO EVENT WILL ANDREW'S MAXIMUM AGGREGATE LIABILITY EXCEED THE PAYMENTS RECEIVED BY IT UNDER THIS AGREEMENT. No representative is authorized to assume for Andrew any other liability in connection with the equipment. 9. PATENT, COPYRIGHT AND TRADEMARK INFRINGEMENT ASSURANCE Andrew will, at its own expense, indemnify, hold harmless, and settle or defend any claim, suit or action which may be brought against WWWC for infringement of US registered copyrights, trademarks or patents arising out of WWWC's use of standard products manufactured by Andrew. This paragraph will not apply to infringement arising out of features of construction incorporated in any product or system under this Agreement or from the use of the product or system for purposes other than as advertised, sold or intended by Andrew. The foregoing states the entire warranty by Andrew for patent infringement under this Agreement. 5 10. SOFTWARE All software (including firmware) created and owned by Andrew and furnished to WWWC as part of a Broadband Wireless Network Systems is on a licensed basis and Andrew grants to WWWC a non-exclusive license to use such software or firmware delivered with the Broadband Wireless Network System. Such license may not be assigned, sublicensed or otherwise transferred by WWWC without the prior written consent of Andrew. WWWC will not decompile, copy, disassemble, decode, or reverse engineer any software delivered to WWWC as part of a Broadband Wireless Network System or product. WWWC is limited to one archival copy of any software delivered hereunder. 11. FORCE MAJEURE Neither party will be held liable for delays in performing its obligations under this Agreement or any purchase order issued hereunder if such delays are due to causes beyond its reasonable control, including, without limitation, acts of God, acts of the public enemy, acts of any government or government entity, fires, floods, strikes, freight embargoes, unusually severe weather conditions, inadequate transportation facilities or any other cause whatsoever beyond the reasonable control and without the fault or negligence of the party being delayed, whether similar to or dissimilar from the causes enumerated herein. In the event of any such delay, the delayed party will be given a reasonable extension of time within which to perform its obligations. 12. TERM AND TERMINATION (a) This Agreement will become effective as of the date first written above and will remain in effect for a period of two (2) years therefrom unless earlier terminated in accordance with the provisions stated herein; provided, however, that this Agreement will thereafter renew for successive one (1) year renewal terms, unless either party gives the other party written notice for any reason at least sixty (60) days prior to the expiration of the then current term or renewal term, as the case may be. (b) If either party at any time defaults in fulfilling any of its obligations under this Agreement or under any purchase order issued pursuant to this Agreement, and fails to commence and continue such appropriate actions as are necessary to remedy or cure the default situation promptly after receiving written notice to do so, but in any event within 90 days, then the non-defaulting party may give written notice to the defaulting party terminating this Agreement or any individual purchase order issued hereunder, but without prejudice to the remedies of either party for the recovery of any monies due or to the rights of either party with respect to any breach of any terms of this Agreement or any individual purchase order issued hereunder. 6 13. GOVERNING LAW This Agreement will be subject to the laws of the State of Illinois and its interpretation, construction and the remedies for its enforcement will be governed in accordance with Illinois law. 14. FINANCIAL INFORMATION Until such time as WWWC has filed periodic and annual reports pursuant to Section 13 of the Securities Exchange Act of 1934, as amended, and is current in its obligations under such act, WWWC will provided to Andrew internally prepared balance sheets as at the last day of each fiscal quarter and the related statements of income and cash flows for each such period. Andrew agrees to keep such financial information confidential in accordance with the terms of paragraph 15 below. 15. CONFIDENTIALITY The parties agree that the terms of this agreement and all data or information (including, without limitation, financial information) provided by one party to the other that the disclosing party identifies as proprietary or confidential ("Confidential Information") will be used only in connection with the performance of obligations under this Agreement and will not be further disclosed or provided to any third party without the express written consent of the disclosing party. The term "Confidential Information" does not include any information that is (i) already available or becomes available (other than through fault of the receiving party) after disclosure within the public domain, (ii) already known by the receiving party prior to receipt, (iii) disclosed to another unaffiliated party by the disclosing party without similar restrictions, (iv) independently developed by the receiving party, or (v ) required by court order, governmental agency or applicable law to be disclosed. The receiving party will treat such Confidential Information with the same degree of care and safeguards that it uses to protect its own proprietary or confidential information. 16. NOTICES All notices, correspondence or other documentation required under this Agreement will be deemed validly delivered when sent by registered, certified mail or overnight mail, postage prepaid, to the party's principal place of business stated on page 1 herein or to such other address as the party may designate in writing to the other. 17. ASSIGNMENT Neither party will assign, delegate or otherwise transfer by operation of law or otherwise this Agreement, in whole or in part to a third party, without the prior written consent of the other party, which consent will not to be unreasonably withheld, except that either party may assign its rights and delegate its obligations hereunder to wholly owned inter-entities or sub-entities within its own organization. 7 18. DISPUTES AND ARBITRATION Any controversy or claim arising out or relating to this Agreement, including the construction and application of this Agreement, which cannot be amicably resolved between the parties following good faith negotiations, will be settled by arbitration in accordance with the then current rules of the Center for Public Resources Rules for Non-Administered Arbitration of Business Disputes. The arbitration will be held in Chicago, Illinois and conducted by a single neutral arbitrator appointed in accordance with such rules; however, such arbitrator shall be a retired state or federal court (trial) judge with alternative dispute resolution service. The parties acknowledge that the decision of the arbitrator will be final and binding, and judgement may be entered thereon, with respect to findings of both law and fact and will not be appealable to any court in any jurisdiction. The cost of any arbitration will be allocated to each party by the arbitrator. 19. UNITED STATES EXPORT REGULATIONS WWWC agrees to strictly adhere to all applicable export regulations as published by the United States Department of Commerce from time to time that may pertain to the Broadband Wireless Network Systems and products purchased from Andrew, specifically the prohibitions against re-export of technical data, hardware or software included as integral to the Broadband Wireless Network Systems delivered hereunder. 20. SEVERABILITY In the event any clause, provision or paragraph of this Agreement is held to be illegal, invalid or otherwise unenforceable by any court of competent jurisdiction, such clause, provision or paragraph will be deemed severed from the Agreement but will not affect the validity of the remaining clauses of the Agreement. 21. ENTIRE AGREEMENT This Agreement and the exhibits contain the entire understanding of the parties and supersedes all previous oral and written communications, agreements and understandings between the parties with respect to the subject matter herein. No change, modification or amendment of this agreement will be binding unless made in writing and signed by authorized representatives of both parties. 22. PUBLICITY Except as otherwise required by applicable law or the rules of The Nasdaq Stock Market, Inc., National Market, neither Andrew nor WWWC shall, or shall permit any of their respective affiliates to, issue or cause the publication of any press release or other public announcement with respect to, or otherwise make any public statement concerning, the transactions contemplated by this Agreement without the prior consent of the other party, 8 which consent shall not be unreasonably withheld. The parties agree to promptly issue a joint press release regarding this Agreement following the execution of this Agreement. 23. MISCELLANEOUS All rights and remedies of either party are cumulative (and not alternative) of each other and of every other right or remedy such party may otherwise have at law or in equity. The parties have participated jointly in the drafting of this Agreement. Therefore, no presumptions or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. No amendment, supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. This Agreement may be executed and delivered with counterpart signature pages of the parties and by facsimile transmission. 24. NON-SOLICITATION During the term and any renewal term of this Agreement, and for a period of eighteen months thereafter, WWWC will not, or attempt to, at any time in any capacity, directly or indirectly, (a) induce or solicit any employee (including leased employees) or consultants of Andrew or its affiliates to leave his or her employment, (b) hire any such persons or interfere with the relationship between Andrew or its affiliates and any such persons, (c) solicit or interfere with the relationship between Andrew or its affiliates and any then existing customer, supplier, licensee, licensor, franchisee or other business relation of Andrew or its affiliates. [SIGNATURE PAGES FOLLOWS] 9 IN WITNESS WHEREOF, the parties have executed this Supply Agreement as of date first written above. ANDREW CORPORATION WORLD WIDE WIRELESS COMMUNICATIONS - ------------------------------------- ------------------------------------- Signature Signature - ------------------------------------- ------------------------------------- Name Name - ------------------------------------- ------------------------------------- Title Title 10 EXHIBIT A Scope of Work [See Attached] EX-10.22 5 0005.txt SECOND AMENDMENT SECOND AMENDMENT SECOND AMENDMENT dated November 15, 2000 (the "Second Amendment") to the Securities Purchase Agreement dated April 14, 2000 (the "Purchase Agreement") and related Transaction Documents (as defined in the Purchase Agreement) between World Wide Wireless Communications, Inc. (the "Company") and each of: Esquire Trading & Finance, Inc. ("Esquire"), Amro International, S.A. ("Amro"), Celeste Trust Reg. ("Celeste"), The Endeavour Capital Investment Fund, S.A. ("Endeavour"), Nesher, Ltd. ("Nesher"), The Keshet Fund, L.P. ("Keshet Fund") Talbiya B. Investments, Ltd. ("Talbiya"), and Keshet, L.P. ("Keshet"). Esquire, Amro, Celeste, Endeavour, Keshet Fund, Talbiya and Keshet are each referred to herein as a "Purchaser." All capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Purchase Agreement. The Transaction Documents have been previously amended by an amendment among the Purchasers and the Company dated August 10, 2000 (the "Amendment"). WHEREAS, the Purchasers desire to continue their investment in the Company as contemplated by the Purchase Agreement as amended hereby; WHEREAS, the Company seeks (i) additional time to perform certain obligations under the Transaction Documents, (ii) modification of certain terms and conditions of the Transaction Documents, and (iii) to gain the Purchasers' waivers of defaults and breaches with respect to the Company's failure to perform its obligations under the Transaction Documents in effect prior to the Second Amendment Closing Date; WHEREAS, the Company, as an inducement to the Purchasers to agree to the terms contained herein, has offered to increase the Principal Amount of the Debentures held by the Purchasers and issue additional restricted Common Stock to the Purchasers; and WHEREAS, the Purchasers agree to amend the Transaction Documents in accordance with the Company's requests and agree to waive any breach by the Company occurring prior to the Second Amendment Closing Date; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the Company and each Purchaser hereby restate their respective representations, warranties and covenants as contained in the Transaction Documents as of the date hereof, agree the following terms and conditions and agree to amend the Transaction Documents as follows: 1 In consideration of their entering this Second Amendment, the Company shall issue and deliver four million restricted shares of Common Stock (the "Amended Shares") to the Purchasers in the amounts listed next to each Purchaser's name on Amended Schedule 2 attached hereto. Such Amended Shares shall be included in the shares to be registered by the Company pursuant to the Registration Rights Agreement and shall be deemed "Registrable Securities" for all purposes under the Transaction Documents. The Company represents and warrants that such Amended Shares have been duly authorized, and when issued in accordance with the terms hereof, shall be validly issued, fully paid and nonassessable, free and clear of all liens, encumbrances, security interests, charges and rights of first refusal of any kind except as may be imposed by the restricting legend attached to said shares prior to their registration. 2 On the Second Amendment Closing Date, the Company shall issue and deliver to each Purchaser a new Debenture certificate (in the Principal Amount identified on Amended Schedule 2 attached hereto) reflecting the amendments identified in Paragraphs 6 and 7 below with an Original Issue Date (as defined therein) of April 14, 2000. Within 15 days of the Second Amendment Closing Date, each Purchaser shall return to the Company its Initial Shares and any shares acquired by exercise of the Initial Warrants previously issued to it by the Company pursuant to Article 1.2 of the Purchase Agreement. The aggregate number of shares thus returned to the Company in this manner will be 760,000. 3 The Amendment and this Second Amendment shall each be deemed, for all purposes, to be a "Transaction Document" as defined in the Securities Purchase Agreement. 4 The definitions of "Effectiveness Date" and "Filing Date" in the Registration Rights Agreement are hereby deleted and replaced with: "Effectiveness Date" means May 15, 2001. "Filing Date" means December 15, 2000. Each Purchaser hereby waives any remedies which may have accrued in favor of such Purchaser against the Company or its officers, directors or agents as a result of the Company's failure to comply, prior to the Second Amendment Closing Date, with the provisions of Sections 3(a), 3(b) and 7(e)(A) of the Registration Rights Agreement. Notwithstanding the foregoing, if the Company fails to comply with the provisions of Sections 3(a), 3(b) and 7(e)(A) by the amended Effectiveness Date, (i) such waiver shall be of no further force and effect, and (ii) all the rights and remedies available to the Purchasers shall be based upon the unamended Effectiveness Date (August 14th, 2000). 5 The Company shall hold a shareholders' meeting no later than March 1, 2001 to obtain shareholder approval of the Company's agreement under the Transaction Documents to reserve authorized Common Stock in a number of shares no less than the sum of (a) 200% of the amount issuable to the Purchasers under the Debentures and (b) 100% of the amount issuable under the Warrants. Where shareholder approval is required, the Company and its officers and directors agree to use their best efforts to secure such approval. By letter agreement attached hereto as Exhibit A, certain of the Company's officers and directors have agreed to vote their shares in favor of this requirement. The -2- Company's failure to comply with the provisions of this Section 5 shall be deemed an event of default under the Debentures. 6 Paragraph 4(c)(i) of the Debentures shall be amended and restated as follows: "The conversion price for the Debentures (the "Conversion Price") in effect on any Conversion Date shall be the lesser of (A) $.64 (the "Fixed Conversion Price") and (B) an amount equal to 85% of the average Per Share Market Value for the five (5) consecutive Trading Days immediately prior to the Conversion Date subject to the following provisions: (a) in any Conversion Notice, a Holder may specify a Conversion Price higher than the Conversion Price then in effect; (b) if during any period (a "Black-out Period"), a Holder is unable to trade immediately any Common Stock issued or issuable upon conversion of Debentures due to the postponement of filing, or delay or suspension of effectiveness of a registration statement, or because the Company has otherwise informed such Holder that an existing prospectus cannot be used at that time in the sale or transfer of such Common Stock, such Holder shall have the option, but not the obligation, of using the Conversion Price applicable on any Conversion Date within ten Trading Days following the expiration of the Black-out Period, or of using any Price selected by such Holder that would have been applicable on any hypothetical Conversion Date earlier in the Black-out Period or within the ten Trading Days thereafter; and (c) in no event shall the Conversion Price be below the Floor Price. "Floor Price" shall mean the Fixed Conversion Price for the period beginning on October 1, 2000 and ending on October 14, 2000, $0.50 from the period beginning on October 14, 2000 and ending on May 30, 2001, and zero thereafter. Notwithstanding the foregoing, if the Company's aggregate revenues for the last three quarters of the year 2000 and the first quarter of the year 2001, based on the company's audited financial statements for the year 2000 and the unaudited statement for the first quarter of the year 2000, are less than $13.5 million, then from and after May 14, 2001 the Floor price shall be zero. Such revenues shall be presumed to be less than $13.5 million in the event the Company fails to provide the Purchasers with the audited statement for the year 2000 and the unaudited statement for the first quarter of 2001 by May 14, 2001. 7 Paragraph 4B is hereby added to the Debenture: -3- "4B. Redemption at the Company's Election. (a) At any time the Per Share Market Value of the Common Stock is less than $1.00, as long as the Company has not received a Conversion Notice from the holder and has not materially breached any of the material representations, warranties, and covenants contained herein or in any related agreements, the Company shall have the right, subject to the terms and conditions below, in its sole discretion, to redeem ("Redemption at Company's Election"), from time to time, any or all of the Debentures; provided the Company shall first provide five (5) days advance written notice as provided in subparagraph 4B(a)(ii) below. If the Company elects to redeem some, but not all, of the Debentures, the Company shall redeem a pro rata amount, based upon current holdings, from each holder of the Debentures. If the Company fails to complete a Redemption at Company's Election, the Company's right to that and any other such further redemption is forfeited. (i) Redemption Price At Company's Election. The "Redemption Price at Company's Election" shall be calculated as 120% of the Principal Amount of, and 100% of the unpaid interest accrued on, the Debentures being redeemed pursuant to this Section 5(a). Each holder shall be entitled to a pro-rated portion of the Redemption Price at Company's Election determined by the Principal Amount of Debentures held by such holder as a percentage of the aggregate Principal Amount of all Debentures outstanding as of the date the Company dispatches the notice pursuant to clause 4B(ii), below. (ii) Mechanics of Redemption at Company's Election. The Company shall effect a redemption by giving five (5) days prior written notice ("Notice of Redemption at Company's Election"), to all holders of the Debentures at the address listed next to such holders names on Schedule 2 attached to the Second Amendment between the Company and the Purchasers named therein dated November 15, 2000 (or such other address which has been notified to the Company in writing), which Notice of Redemption at Company's Election shall be deemed to have been delivered three (3) business days after the Company's mailing (by overnight or two (2) day courier, with a copy by facsimile) of such Notice of Redemption at Company's Election. Such Notice of Redemption at Company's Election shall indicate: (1) the total Principal Amount of Debentures to be redeemed, which amount shall not be less than $1,000,000.00; (2) the prorated amount of such Holder's Debentures being redeemed; (3) the date which such redemption is to become effective (the "Date of Redemption At Company's Election"), which date shall be no more than 5 -4- Business Days after the date of the Company's dispatch of the Notice of Redemption at Company's Election; (4) the Holder's pro-rata share of the Redemption Price At Company's Election; and (5) shall be accompanied by certificate executed by an officer of the Company confirming the availability of immediately available funds in respect of the redemption as required by paragraph (b) below. Notwithstanding the above, a Holder may convert into Common Stock, prior to the close of business on the Date of Redemption at Company's Election, any Debentures which it is otherwise entitled to convert, including Debentures that have been selected for Redemption at Company's Election pursuant to this Section 4B. (b) Company Must Have Immediately Available Funds or Credit Facilities. The Company shall not be entitled to send any Notice of Redemption at Company's Election and begin the redemption procedure under this Section 4B unless it has, in legally available funds: (i) the full amount of the redemption price in cash or cash equivalents, available in a demand or other immediately available account in a bank or similar financial institution; or (ii) immediately available credit facilities, in the full amount of the redemption price with a bank or similar financial institution; or (iii) a combination of the items set forth in (i) and (ii) above, aggregating the full amount of the aggregate redemption price. (c) Payment of Redemption Price. Each holder shall, upon receipt of such holder's prorated amount of the Redemption Price at Company's Election, deliver its Debenture to the Company, and, if the Company has not redeemed the total outstanding Principal Amount of such Debenture, the Company shall issue a new Debenture reflecting any unredeemed Principal Amount. (d) Failure to Redeem. If the Company sends a Notice of Redemption at Company's Election and fails to completely redeem Debentures in accordance with such notice, the Company shall thereby forfeit its right to redemption under the instant notice and the Company shall lose the right to issue any additional Notice of Redemption at Company's Election." -5- 8 Subject to the Company's performance of its obligations under the Transaction Documents as amended hereby, and the accuracy of the Company's representations and warranties made as of the Second Amendment Closing Date, the Purchasers, the agents, officers, directors, employees and assigns hereby release, waive and covenant not to sue the Company or any of its directors, officers, employees or agents in connection with any and all direct liability of the Company arising out of or related to the Transaction Documents for any act or omission which may have occurred at any time prior to the execution of this Second Amendment. 9 The Company shall pay the reasonable fees and expenses of Stroock & Stroock & Lavan, counsel for the Purchasers, in connection with the negotiation and performance of this Second Amendment. 10 As a condition precedent to the obligations of the Purchasers under this Second Amendment, the Company shall have delivered to the Purchasers opinions from outside counsel to the Company addressed to the Purchasers, in form and substance satisfactory to the Purchasers, opining as to (i) the Company's authority to execute and deliver this Second Amendment, (ii) the enforceability of this Second Amendment, (iii) the continued enforceability of the Transaction Documents (as amended hereby) to which the Company is a party, and (iv) such other customary legal matters as the Purchasers shall request. All provisions of the Transaction Documents as amended by the Amendment remain in full force and effect, except as explicitly amended hereby. This Second Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof. -6- IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed by their respective authorized persons as of the date first indicated above. WORLD WIDE WIRELESS COMMUNICATIONS, INC. By:____________________________________ Name: Title: ESQUIRE TRADING & FINANCE, INC. By:____________________________________ Name: Title: AMRO INTERNATIONAL, S.A. By: ------------------------------------- Name: Title: CELESTE TRUST REG. By: ------------------------------------- Name: Title: -7- THE ENDEAVOUR CAPITAL INVESTMENT FUND, S.A. By: Endeavour Management, Inc. By: -------------------------------- Name: Title: THE KESHET FUND, L.P. By: ------------------------------------- Name: Title: KESHET, L.P. By: ------------------------------------- Name: Title: NESHER, LTD. By: ------------------------------------- Name: Title: TALBIYA B. INVESTMENTS LTD. By: ------------------------------------- Name: Title: -8- AMENDED SCHEDULE 2 ------------------ Schedule 2: Securities Issuance Upon the Second Amendment Closing Date ----------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------ Increase in Principal Number of Principal Amount Name of Purchaser Address of Purchaser Amount Debentures Consideration Shares of Debenture to be - ----------------- -------------------- --------------------- -------------------- ------------------- to be Issued Issued ------------- ------ - ------------------------------------------------------------------------------------------------------------------------ Esquire Trading & Schutzengelstrasse 36 $412,000 640,000 $1,080,000 Finance Inc. Baar, Switzerland CH6342 Fax No.: 041-7601031 Amro c/o Ultra Finance Ltd. $900,000 1,428,000 $2,400,000 International S.A. Grossmuenster Platz 26, P.O. Box 4401 Zurich, Switzerland CH8022 Celeste Trust Reg. c/o Trevisa-Treuhand- $356,000 559,200 $940,000 Ansalt Landstrasse 8 9496 Furstentums Balzers, Liechtenstien The Endeavour Cumberland House, #27 $300,000 892,857 $1,500,000 Capital Investment Cumberland Street, P.O. Fund, S.A. Box N-10818, Nassau, New Providence, The Bahamas Fax No.: 972-2-500- 3318/9 Nesher, Ltd. c/o Ragnall House $28,000 83,200 $140,000 18 Peel Road Douglas, Isle of Man 1M1 4L2, United Kingdom Keshet, L.P. Seameadow House $70,000 208,333 $350,000 BlackBurn Highway P.O. Box 173 Road Town, Tortola British Virgin Islands The Keshet Fund, c/o KCM, LLC $42,000 125,000 $210,000 L.P. 135 W. 50th Street Suite 1700 New York, NY 10020 Talbiya B. Ragnall House, 18 Peel $20,000 59,523 $100,000 Investments Ltd. Road, Douglas, Isle of Man IM1 4LZ Total: $2,128,000 3,996,113 $6,720,000 ========= ========= ========== - ------------------------------------------------------------------------------------------------------------------------
EXHIBIT A --------- SHAREHOLDER UNDERTAKING(1) SHAREHOLDER UNDERTAKING dated November __, 2000 (the "Undertaking"), by _______________, ___________________, ___________________, ____________________, _______________________[...] (each a "Shareholder," and collectively the "Shareholders") pursuant to Paragraph 5 of the Second Amendment dated November __, 2000 between World Wide Wireless Communications, Inc. and the Purchasers named therein. WHEREAS, the undersigned Shareholders shall personally benefit from the Company's entering into the Second Amendment; and WHEREAS, the Company's achievement of such benefits is contingent on, among other things, the satisfaction of the conditions expressed in Paragraph 5 of the Second Amendment; NOW, THEREFORE, in consideration of the Purchasers entering into the Second Amendment with the Company, and for other good and valuable consideration, the adequacy and receipt of which are hereby acknowledged, the undersigned Shareholders certify and agree: 1. Representations of Shareholders. Each Shareholder represents that (a) he is the holder and/or beneficial owner of the number of shares (the "Shares") of common stock, par value $.[__] per share (the "Common Stock"), of World Wide Wireless Communications, Inc., set forth opposite his name on the signature page below, with sole and exclusive power to vote such shares, and (b) he has full power and authority to execute, deliver and carry out this Undertaking. 2. Agreement to Vote Shares. Each Shareholder shall vote, or cause to be voted, all such Shareholder's Shares, and any shares of Common Stock hereafter acquired, whether upon the exercise of options or otherwise, at any meeting of the shareholders of the Company called to vote thereon or at any adjournment thereof, in favor of the reserve of authorized Common Stock expressed in Paragraph 5 of the Second Amendment attached hereto, such reserve to be maintained at all times in an amount not less than the sum of (a) 200% of the amount issuable to the Purchasers under the Debentures and (b) 100% of the amount issuable under the Warrants. 3. Agreement Not to Transfer Shares. No Shareholder shall during the term of this Undertaking voluntarily sell, assign or otherwise dispose of any of such Shareholder's Shares, or any shares of Common Stock hereafter acquired, or enter into any agreement with respect to any such sale, assignment or other disposition to any person who has not: i) certified, in form satisfactory to the Purchasers, that they, as a transferee, have the power to sell, assign or dispose of the shares, and ii) executed, in form satisfactory to the Purchasers, this Undertaking, or - ------------------- (1) Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed thereto in the Second Amendment and the Purchase Agreement. alternatively, an agreement to be bound by the terms of this Undertaking. 4. Specific Performance. Each Shareholder acknowledges that it will be impossible to measure in money the damage to the Purchasers if he fails to comply with any of the obligations imposed by this Undertaking, that every such obligation is material and that, in the event of any such failure, the Purchasers will not have an adequate remedy at law or in damages. Accordingly, each Shareholder consents to the issuance of an injunction or the enforcement of other equitable remedies against such Shareholder at the suit of the Purchaser or Purchasers without bond or other security, to compel performance of all the terms hereof, and waives the defense of relief in damages. 5. Successors and Assigns. This Undertaking shall be binding upon and shall inure to the benefit of the Purchasers and their respective heirs, successors and assigns. 6. Notice. All notices hereunder shall be in writing and shall be deemed given, on the date received, if delivered by hand, or mailed by certified or registered mail (return receipt requested) to the Purchasers at the addresses provided therefor in the Second Amendment and, to the Shareholders, at the address provided next to each such Shareholder's name below. 7. Term. This Undertaking shall terminate upon the voting of the Common Stock by the Shareholders in accordance with Paragraph 2 hereof. 8. Miscellaneous. (a) This Undertaking shall be deemed a contract made under, and for all purposes shall be construed in accordance with, the laws of the State of New York without regard to principles of conflicts of law thereof. (b) If any provision of this Undertaking or the application of any such provision to any person or circumstance shall be held invalid by a court of competent jurisdiction, the remainder of this Undertaking including the remainder of the provision held invalid, or the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected. (c) This Undertaking may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. -2- IN WITNESS WHEREOF, the individual parties hereto have personally executed this Undertaking as of the date first above written. - ------------------------------------ ------------------------ Name: Number of Shares Owned Address: - ------------------------------------ ------------------------ Name: Number of Shares Owned Address: - ------------------------------------ ------------------------ Name: Number of Shares Owned Address: - ------------------------------------ ------------------------ Name: Number of Shares Owned Address: - ------------------------------------ ------------------------ Name: Number of Shares Owned Address: - ------------------------------------ ------------------------ Name: Number of Shares Owned Address: -3- EX-10.24 6 0006.txt WRITTEN AGREEMENT WRITTEN AGREEMENT BETWEEN JORGE EMILIO ZEDAN AND DOUGLAS HAFFER The undersigned, in relation to the Letter of Intent dated March 11, 2000, signed by Douglas P. Haffer, as President of World Wide Wireless Communications, Inc., and Jorge Emilio Zedan, President of El Salvador Telecom SA, DE C.V. and through which World Wide Wireless Communications Inc. agreed to pay the sum of three million five hundred thousand dollars in United States currency, of which to date World Wide Wireless has paid one million dollars, in exchange for twenty-five percent of the later company, they agree as follows: 1. The parties mutually voluntarily agree to leave without effect the relationship set forth in the Letter of Intent, ceasing and terminating it and in effect extinguishing all rights and obligations set forth in that document; 2. As a result of the foregoing, if either party has taken positions in incorporation of World Wide Wireless, Inc or in the books of SALTEL either party is authorized to make revisions and/or modifications as is necessary to abide by this agreement; 3. Without prejudice to the foregoing, World Wide Wireless Communications through its President and Jorge Emilio Zedan agree that a way to resolve this recession, is that the World Wide Wireless Communications agrees to sell and to transfer to Jorge Emilio Zedan the stock that constitutes the 25 percent of the social capital of SALTEL and the shares that are registered in the name of World Wide Wireless Communications Inc. 4. Before any of the mentioned events in paragraph two and three occurs, Jorge Emilio Zedan will have to pay World Wide Wireless Communications, the amount of one million dollars, under the following conditions a) within 180 days; at 10% annual interest. Form of Payment: Five hundred thousand dollars shall be paid within 90 days and an additional five hundred thousand shall be paid within 180 days, of July 1, 2000. Warranty: These payments shall be guaranteed by a national financial institution, Argentine or International with the understanding that this warranty will be processed in the least amount of time possible without exceeding 30 days. If there is breach of any of the foregoing obligations, the entire amount is due immediately. 5. Both parties agree that World Wide Communications, Inc. should have to announce to the public the contents of this agreement, this announcement will have to be done in a way that doesn't affect the position and image of SALTEL or the stockholders. World Wide Communications, Inc. should consult SALTEL regarding the terms of any announcement. In good faith, we are signing the present in the city of San Salvador on July 1, 2000. WORLD WIDE WIRELESS COMMUNICATIONS BY DOUGLAS HAFFER BY JORGE EMILIO ZEDAN EX-10.25 7 0007.txt EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement is made and entered into this 1st day of February, 2000, by and between World Wide Wireless Communications Inc., a Nevada corporation (the "Company"), and Douglas P. Haffer, an individual ("Executive"). RECITALS A. The Company desires to be assured of the association and services of Executive for the Company. B. Executive is willing and desires to be employed by the Company, and the Company is willing to employ Executive, upon the terms, covenants and conditions hereinafter set forth. AGREEMENT NOW, THEREFORE, in consideration of the mutual terms, covenants and conditions hereinafter set forth, the parties hereto do hereby agree as follows: 1. Employment. The Company hereby employs Executive as president and chief executive officer, subject to the supervision and direction of the Company's Board of Directors. 2. Term/Renewal. The term of this Agreement shall be for a period of three (3) years commencing on the date hereof, unless terminated earlier pursuant to Section 8 below; provided, however, that Executive's obligations in Section 7 below shall continue in effect after such termination. The Term of this Agreement shall be automatically extended for one year after completion of one-year service, and on each annual anniversary date thereof. 3. Compensation; Reimbursement. 3.1 Base Salary. For all services rendered by Executive under this Agreement, the Company shall pay Executive a base salary of Two Hundred Thirty Thousand Dollars ($230,000) per annum, payable twice monthly in equal installments (the "Base Salary"). The amount of the Base Salary shall be increased fifteen percent (15%) annually, and at any time and from time to time by the Board of Directors of the Company 3.2 Incentive Bonus. In addition to the Base Salary, Executive shall be eligible for an incentive bonus ("Incentive Bonus") each year in an amount not less than 10% of the Base Salary (the "Minimum Bonus") nor more than 100% of the Base Salary. The Incentive Bonus shall be based upon the operating results for that year of Executive's division or subsidiary, as the case may be, and shall be paid, if earned, within 30 days after such operating results have been determined by the Company's accountants. The criteria upon which the Incentive Bonus is awarded shall be -1- comparable to those applicable to the other chief operating officer of the Company's operating divisions or subsidiaries. 3.3 Additional Benefits. In addition to the Base Salary and the Incentive Bonus, Executive shall be entitled to all other benefits of employment provided to the Company's upper management. 3.4 Reimbursement. Executive shall be reimbursed for all reasonable "out of pocket" business expenses for business travel and business entertainment incurred in connection with the performance of his or her duties under this Agreement (1) so long as such expenses constitute business deductions from taxable income for the Company and are excludable from taxable income to the Executive under the governing laws and regulations of the Internal Revenue Code (provided, however, that Executive shall be entitled to full reimbursement in any case where the Internal Revenue Service may, under Section 274(n) of the Internal Revenue Code, disallow to the Company 20% of meals and entertainment expenses); and (2) to the extent such expenses do not exceed the amounts allocable for such expenses in budgets that are approved from time to time by the Company. The reimbursement of Executive's business expenses shall be upon monthly presentation to and approval by the Company of valid receipts and other appropriate documentation for such expenses. 4. Scope of Duties. 4.1 Assignment of Duties. Executive shall have such duties as may be assigned to him or her from time to time by the Company's Board of Directors commensurate with his experience and responsibilities in the position for which he is employed pursuant to Section 1 above. Such duties shall be exercised subject to the control and supervision of the Board of Directors of the Company. 4.2 General Specification of Duties. Executive's duties shall include, but not be limited to, the duties and performance goals as follows: (1) act as president and chief executive officer the Company and perform all duties, functions and responsibilities generally associated with the head of an operating division or subsidiary; (2) execute on behalf of the Company, in his capacity as president and chief executive all documents as requested by the Company; (3) employ, pay, supervise and discharge all employees of the Company, and determine all matters with regard to such personnel, including, without limitation, compensation, bonuses and fringe benefits, all in accordance with the Annual Plan (as defined in Section 4.3); (4) establish procedures for implementing the policies established by the Company; -2- (5) cause to be prepared, as directed by the Company, financial statements, tax returns and other similar items respecting the operation of the Company. The foregoing specifications are not intended as a complete itemization of the duties which Executive shall perform and undertake on behalf of the Company in satisfaction of his or her employment obligations under this Agreement. 4.3 Executive's Devotion of Time. Executive hereby agrees to devote his full time, abilities and energy to the faithful performance of the duties assigned to him or her and to the promotion and forwarding of the business affairs of the Company, and not to divert any business opportunities from the Company to himself or herself or to any other person or business entity. 4.4 Conflicting Activities. (1) Executive shall not, during the term of this Agreement, be engaged in any other business activity without the prior consent of the Board of Directors of the Company; provided, however, that this restriction shall not be construed as preventing Executive from investing his personal assets in passive investments in business entities which are not in competition with the Company or its affiliates, or from pursuing business opportunities as permitted by paragraph 4.5(b). (2) Executive hereby agrees to promote and develop all business opportunities that come to his attention relating to current or anticipated future business of the Company, in a manner consistent with the best interests of the Company and with his duties under this Agreement. Should Executive discover a business opportunity that does not relate to the current or anticipated future business of the Company, he shall first offer such opportunity to the Company. Should the Board of Directors of the Company not exercise its right to pursue this business opportunity within a reasonable period of time, not to exceed sixty (60) days, then Executive may develop the business opportunity for himself; provided, however, that such development may in no way conflict or interfere with the duties owed by Executive to the Company under this Agreement. Further, Executive may develop such business opportunities only on his own time, and may not use any service, personnel, equipment, supplies, facility, or trade secrets of the Company in their development. As used herein, the term "business opportunity" shall not include business opportunities involving investment in publicly traded stocks, bonds or other securities, or other investments of a personal nature. 5. Stock of Company. So long as this Agreement is in effect, Executive shall be entitled to purchase stock of the Company in the same amounts and for the same consideration, terms and conditions as provided to upper management of the Company. The manner of acquisition of stock shall be structured so as to minimize -3- adverse tax consequences to Executive. Company confirms that during August, 1998, Executive was granted options under the Company's Incentive Stock Option plan (ISOP) to purchase 800,000 shares with a strike price of 9.5 cents per share. Executive is further granted options under the ("The ISOP") to purchase 800,000 shares per year of the Company's stock at the lowest price permitted under the ISOP such that the grant or exercise of the Options will not create a current taxable event. 6. Severance. So long as this Agreement is in effect, Executive shall at all times be entitled to severance benefits equal to those provided to other chief operating officers of the Company's operating divisions or subsidiaries. These benefits shall include, without limitation, the Company's maintenance at its cost of a life insurance policy and disability policy on Executive payable to Executive and/or his or her legal representative or heirs as applicable, in amounts reasonably agreed to by Executive and the Company. 7. Confidentiality of Trade Secrets and Other Materials. 7.1 Trade Secrets. Other than in the performance of his or her duties hereunder, Executive agrees not to disclose, either during the term of his or her employment by the Company or at any time thereafter, to any person, firm or corporation any information concerning the business affairs, the trade secrets or the customer lists or similar information of the Company. Any technique, method, process or technology used by the Company shall be considered a "trade secret" for the purposes of this Agreement. 7.2 Ownership of Trade Secrets; Assignment of Rights. Executive hereby agrees that all know how, documents, reports, plans, proposals, marketing and sales plans, client lists, client files and materials made by him or her or by the Company are the property of the Company and shall not be used by him in any way adverse to the Company's interests. Executive shall not deliver, reproduce or in any way allow such documents or things to be delivered or used by any third party without specific direction or consent of the Board of Directors of the Company. Executive hereby assigns to the Company any rights which he or she may have in any such trade secret or proprietary information; provided, however, that such assignment does not apply to any right which qualifies fully under Cal Labor Code Sec. 2870]. 8. Termination. 8.1 Bases for Termination. (1) Executive's employment hereunder may be terminated at any time by mutual agreement of the parties. (2) This Agreement shall automatically terminate (a) on the last day of the month in which Executive dies or (b) Executive shall be relieved of his duties hereunder if he becomes permanently incapacitated. "Permanent incapacity" as used herein shall mean mental or physical incapacity, or both, -4- reasonably determined by the Company's Board of Directors based upon a certification of such incapacity by, in the discretion of the Company's Board of Directors, either Executive's regularly attending physician or a duly licensed physician selected by the Company's Board of Directors, rendering Executive unable to perform substantially all of his or her duties hereunder and which appears reasonably certain to continue for at least six consecutive months without substantial improvement. Executive shall be deemed to have "become permanently incapacitated" on the date the Company's Board of Directors has determined that Executive is permanently incapacitated and so notifies Executive (the "Notification Date"). Should Executive be relieved of his duties because of permanent incapacity, the Company shall continue to pay Executive's salary and benefits otherwise owing to Executive for the remainder of the Term of the Agreement then existing as of the date the Notification Date. (3) Executive's employment may be terminated by the Company "with cause," effective upon delivery of written notice to Executive given at any time (without any necessity for prior notice) upon Executive's felony criminal conviction or other criminal conviction involving Executive's lack of honesty or moral turpitude; (4) Executive's employment may be terminated by the Company "with out cause" (for any reason or no reason at all) at any time by giving Executive 60 days prior written notice of termination, which termination shall be effective on the 60th day following such notice. If Executive's employment under this Agreement is so terminated, the Company shall (a) make a lump sum cash payment to Executive within 10 days after termination of an amount equal to (i) Executive's Base Salary and minimum bonus for the balance of the term of the Employment Agreement (ii) any unreimbursed expenses accruing to the date of termination; and (b) make a lump sum cash payment equal to Executive's annual Base Salary, as increased pursuant to Section 3.1, on each anniversary date of this Agreement for the balance of the term specified in Section 2. For purposes of this provision, Executive's annual Base Salary and the remaining portion of the term of the Agreement shall be calculated as of the termination date. (5) Executive may terminate his employment hereunder by giving the Company 60 days prior written notice, which termination shall be effective on the 60th day following such notice. 8.2 Payment Upon Termination. Upon termination under paragraphs 8.1(1), (2a) , (3), or (5), the Company shall pay to Executive within 10 days after termination an amount equal to the sum of (1) Executive's Base Salary accrued to the date of termination; and (2) unreimbursed expenses accrued to the date of termination. After any such termination, the Company shall not be obligated to compensate Executive, his or her estate or representatives except for the foregoing -5- compensation then due and owing, nor provide the benefits to Executive described in Section 3.4 (except as provided by law). 8.3 Severance Provisions. The provisions of Sections 8.1 and 8.2 shall be subject to and deemed modified by the terms of any severance benefits granted to Executive as provided under Section 6. 8.4 Dismissal from Premises. At the Company's option, Executive shall immediately leave the Company's premises on the date notice of termination is given by either Executive or the Company. 9. Injunctive Relief. The Company and Executive hereby acknowledge and agree that any default under Section 7 above will cause damage to the Company in an amount difficult to ascertain. Accordingly, in addition to any other relief to which the Company may be entitled, the Company shall be entitled to such injunctive relief as may be ordered by any court of competent jurisdiction including, but not limited to, an injunction restraining any violation of Section 7 above and without the proof of actual damages. 10. Miscellaneous. 10.1 Transfer and Assignment. This Agreement is personal as to Executive and shall not be assigned or transferred by Executive without the prior written consent of the Company. This Agreement shall be binding upon and inure to the benefit of all of the parties hereto and their respective permitted heirs, personal representatives, successors and assigns. 10.2 Severability. Nothing contained herein shall be construed to require the commission of any act contrary to law. Should there be any conflict between any provisions hereof and any present or future statute, law, ordinance, regulation, or other pronouncement having the force of law, the latter shall prevail, but the provision of this Agreement affected thereby shall be curtailed and limited only to the extent necessary to bring it within the requirements of the law, and the remaining provisions of this Agreement shall remain in full force and effect. 10.3 Governing Law/ Venue. This Agreement is made under and shall be construed pursuant to the laws of the State of California. Any action to enforce any provision of this Agreement shall be maintained solely by the State or Federal courts at Oakland, California. 10.4 Counterparts. This Agreement may be executed in several counter parts and all documents so executed shall constitute one agreement, binding on all of the parties hereto, notwithstanding that all of the parties did not sign the original or the same counterparts. 10.5 Entire Agreement. This Agreement constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof -6- and supersedes all prior oral or written agreements, arrangements, and understandings with respect thereto. No representation, promise, inducement, statement or intention has been made by any party hereto that is not embodied herein, and no party shall be bound by or liable for any alleged representation, promise, inducement, or statement not so set forth herein. 10.6 Modification. This Agreement may be modified, amended, superseded, or cancelled, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, only by a written instrument executed by the party or parties to be bound by any such modification, amendment, supersesion, cancellation, or waiver. 10.7 Attorneys' Fees and Costs. In the event of any dispute arising out of the subject matter of this Agreement, the prevailing party shall recover, in addition to any other damages assessed, its attorneys' fees and court costs incurred in litigating or otherwise settling or resolving such dispute whether or not an action is brought or prosecuted to judgment. In construing this Agreement, none of the parties hereto shall have any term or provision construed against such party solely by reason of such party having drafted the same. 10.8 Waiver. The waiver by either of the parties, express or implied, of any right under this Agreement or any failure to perform under this Agreement by the other party, shall not constitute or be deemed as a waiver of any other right under this Agreement or of any other failure to perform under this Agreement by the other party, whether of a similar or dissimilar nature. 10.9 Cumulative Remedies. Each and all of the several rights and remedies provided in this Agreement, or by law or in equity, shall be cumulative, and no one of them shall be exclusive of any other right or remedy, and the exercise of any one of such rights or remedies shall not be deemed a waiver of, or an election to exercise, any other such right or remedy. 10.10 Headings. The section and other headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning and interpretation of this Agreement. 10.11 Notices. Any notice under this Agreement must be in writing, may be telecopied, sent by express 24 hour guaranteed courier, or hand delivered, or may be served by depositing the same in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with a return receipt requested. The addresses of the parties for the receipt of notice shall be as follows: -7- If to the Company: 520 - 3rd Street, Suite 101 Oakland, California 94607 If to Executive: 8485 Skyline Boulevard Oakland, CA 94611 Each notice given by registered or certified mail shall be deemed delivered and effective on the date of delivery as shown on the receipt, and each notice delivered in any other manner shall be deemed to be effective as of the time of actual delivery thereof. Each party may change its address for notice by giving notice in the manner provided above. 10.12 Survival. Any provision of this Agreement which imposes an obligation after termination or expiration of this Agreement shall survive to the termination or expiration of this Agreement and be binding on Executive and the Company. 10.13 Right of Set-Off. Upon termination of this Agreement the Company shall have the right to set-off against the amounts due Executive hereunder the amount of any outstanding loan or advance from the Company to the Executive. 10.14 Effective Date. This Agreement shall become effective as of the date set forth on page 1 when signed by the Executive and the Company. IT WITNESS WHEREOF, the parties hereto have caused this Employment agreement to be executed as of the date first set forth above. Executive Company - ----------------------------- Douglas P. Haffer World Wide Wireless Communications, Inc., a Nevada corporation By: --------------------------------------- Its: -------------------------------------- -8- EX-10.26 8 0008.txt INCENTIVE STOCK OPTION PLAN World Wide Wireless Communications, Inc A Nevada corporation INCENTIVE STOCK PLAN 1. Objectives. The WORLD WIDE WIRELESS COMMUNICATIONS 1998 Incentive Stock Plan (the "Plan") is designed to retain directors, executives and selected employees and consultants and reward them for making major contributions to the success of the Company. These objectives are accomplished by making long-term incentive awards under the Plan thereby providing Participants with a proprietary interest in the growth and performance of the Company. 2. Definitions. (a) "Board" - The Board of Directors of the Company. (b) "California Securities Rules" - The corporate securities rules of the state of California. (c) "Code" - The Internal Revenue Code of 1986, as amended from time to time. (d) "Committee" - The Executive Compensation Committee of the Company's Board, or such other committee of the Board that is designated by the Board to administer the Plan, composed of not less than two members of the Board all of whom are disinterested persons, as contemplated by Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The foregoing requirement for disinterested administration shall not apply prior to the date of the first registration of any of the securities of the Company under the Exchange Act. [The last sentence of this Section 3(d) should be deleted if the Company is a reporting company under the Exchange Act.] (e) "Company" - WORLD WIDE WIRELESS COMMUNICATIONS and its subsidiaries including subsidiaries of subsidiaries. (f) "Exchange Act" - The Securities Exchange Act of 1934, as amended from time to time. (g) "Fair Market Value" - The fair market value of the Company's issued and outstanding Stock as determined in good faith by the Board or Committee. (h) "Grant" - The grant of any form of stock option, stock award, or stock purchase offer, whether granted singly, in combination or in tandem, to a Participant pursuant to such terms, conditions and limitations as the Committee may establish in order to fulfill the objectives of the Plan. (i) "Grant Agreement" - An agreement between the Company and a Participant that sets forth the terms, conditions and limitations applicable to a Grant. (j) "Option" - Either an Incentive Stock Option, in accordance with Section 422 of Code, or a Nonstatutory Option, to purchase the Company's Stock that may be awarded to a Participant under the Plan. A Participant who receives an award of an Option shall be referred to as an "Optionee." (k) "Participant" - A director, officer, employee or consultant of the Company to whom an Award has been made under the Plan. (l) "Restricted Stock Purchase Offer" - A Grant of the right to purchase a specified number of shares of Stock pursuant to a written agreement issued under the Plan. (m) "Securities Act" - The Securities Act of 1933, as amended from time to time. (n) "Stock" - Authorized and issued or unissued shares of common stock of the Company. (o) "Stock Award" - A Grant made under the Plan in stock or denominated in units of stock for which the Participant is not obligated to pay additional consideration. 3. Administration. The Plan shall be administered by the Board, provided however, that the Board may delegate such administration to the Committee. Subject to the provisions of the Plan, the Board and/or the Committee shall have authority to (a) grant, in its discretion, Incentive Stock Options in accordance with Section 422 of the Code, or Nonstatutory Options, Stock Awards or Restricted Stock Purchase Offers; (b) determine in good faith the fair market value of the Stock covered by any Grant; (c) determine which eligible persons shall receive Grants and the number of shares, restrictions, terms and conditions to be included in such Grants; (d) construe and interpret the Plan; (e) promulgate, amend and rescind rules and regulations relating to its administration, and correct defects, omissions and inconsistencies in the Plan or any Grant; (f) consistent with the Plan and with the consent of the Participant, as appropriate, amend any outstanding Grant or amend the exercise date or dates thereof; (g) determine the duration and purpose of leaves of absence which may be granted to Participants without constituting termination of their employment for the purpose of the Plan or any Grant; and (h) make all other determinations necessary or advisable for the Plan's administration. The interpretation and construction by the Board of any provisions of the Plan or selection of Participants shall be conclusive and final. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Grant made thereunder. 4. Eligibility. (a) General: The persons who shall be eligible to receive Grants shall be directors, officers, employees or consultants to the Company. The term consultant shall mean any person, other than an employee, who is engaged by the Company to render services and is compensated for such services. An Optionee may hold more than one Option. Any issuance of a Grant to an officer or director of the Company subsequent to the first registration of any of the securities of the Company under the Exchange Act shall comply with the requirements of Rule 16b-3. (b) Incentive Stock Options: Incentive Stock Options may only be issued to employees of the Company. Incentive Stock Options may be granted to officers or directors, provided they are also employees of the Company. Payment of a director's fee shall not be sufficient to constitute employment by the Company. The Company shall not grant an Incentive Stock Option under the Plan to any employee if such Grant would result in such employee holding the right to exercise for the first time in any one calendar year, under all Incentive Stock Options granted under the Plan or any other plan maintained by the Company, with respect to shares of Stock having an aggregate fair market value, determined as of the date of the Option is granted, in excess of $100,000. Should it be determined that an Incentive Stock Option granted under the Plan exceeds such maximum for any reason other than a failure in good faith to value the Stock subject to such option, the excess portion of such option shall be considered a Nonstatutory Option. To the extent the employee holds two (2) or more such Options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such Option as Incentive Stock Options under the Federal tax laws shall be applied on the basis of the order in which such Options are granted. If, for any reason, an entire Option does not qualify as an Incentive Stock Option by reason of exceeding such maximum, such Option shall be considered a Nonstatutory Option. (c) Nonstatutory Option: The provisions of the foregoing Section 4(b) shall not apply to any Option designated as a "Nonstatutory Option" or which sets forth the intention of the parties that the Option be a Nonstatutory Option. (d) Stock Awards and Restricted Stock Purchase Offers: The provisions of this Section 4 shall not apply to any Stock Award or Restricted Stock Purchase Offer under the Plan. 5. Stock. (a) Authorized Stock: Stock subject to Grants may be either unissued or reacquired Stock. (b) Number of Shares: Subject to adjustment as provided in Section 6(i) of the Plan, the total number of shares of Stock which may be purchased or granted directly by Options, Stock Awards or Restricted Stock Purchase Offers, or purchased indirectly through exercise of Options granted under the Plan shall not exceed Three Million (3,000,000) shares. If any Grant shall for any reason terminate or expire, any shares allocated thereto but remaining unpurchased upon such expiration or termination shall again be available for Grants with respect thereto under the Plan as though no Grant had previously occurred with respect to such shares. Any shares of Stock issued pursuant to a Grant and repurchased pursuant to the terms thereof shall be available for future Grants as though not previously covered by a Grant. (c) Reservation of Shares: The Company shall reserve and keep available at all times during the term of the Plan such number of shares as shall be sufficient to satisfy the requirements of the Plan. If, after reasonable efforts, which efforts shall not include the registration of the Plan or Grants under the Securities Act, the Company is unable to obtain authority from any applicable regulatory body, which authorization is deemed necessary by legal counsel for the Company for the lawful issuance of shares hereunder, the Company shall be relieved of any liability with respect to its failure to issue and sell the shares for which such requisite authority was so deemed necessary unless and until such authority is obtained. (d) Application of Funds The proceeds received by the Company from the sale of Stock pursuant to the exercise of Options or rights under Stock Purchase Agreements will be used for general corporate purposes. (e) No Obligation to Exercise The issuance of a Grant shall impose no obligation upon the Participant to exercise any rights under such Grant. 6. Terms and Conditions of Options. Options granted hereunder shall be evidenced by agreements between the Company and the respective Optionees, in such form and substance as the Board or Committee shall from time to time approve. The form of Incentive Stock Option Agreement attached hereto as Exhibit "A" and the three forms of a Nonstatutory Stock Option Agreement for employees, for directors and for consultants, attached hereto as Exhibits "B-1," "B-2" and "B-3," respectively, shall be deemed to be approved by the Board. Option agreements need not be identical, and in each case may include such provisions as the Board or Committee may determine, but all such agreements shall be subject to and limited by the following terms and conditions: (a) Number of Shares: Each Option shall state the number of shares to which it pertains. (b) Exercise Price: Each Option shall state the exercise price, which shall be determined as follows: (i) Any Option granted to a person who at the time the Option is granted owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power or value of all classes of stock of the Company ("Ten Percent Holder") shall have an exercise price of no less than 110% of the Fair Market Value of the Stock as of the date of grant; and (ii) Incentive Stock Options granted to a person who at the time the Option is granted is not a Ten Percent Holder shall have an exercise price of no less than 100% of the Fair Market Value of the Stock as of the date of grant; and (iii) Nonstatutory Options granted to a person who at the time the Option is granted is not a Ten Percent Holder shall have an exercise price of no less than 85% of the Fair Market Value of the Stock as of the date of grant. For the purposes of this Section 6(b), the Fair Market Value shall be as determined by the Board in good faith, which determination shall be conclusive and binding; provided however, that if there is a public market for such Stock, the Fair Market Value per share shall be the average of the bid and asked prices (or the closing price if such stock is listed on the NASDAQ National Market System or Small Cap Issue Market) on the date of grant of the Option, or if listed on a stock exchange, the closing price on such exchange on such date of grant. (c) Medium and Time of Payment: The exercise price shall become immediately due upon exercise of the Option and shall be paid in cash or check made payable to the Company. Should the Company's outstanding Stock be registered under Section 12(g) of the Exchange Act at the time the Option is exercised, then the exercise price may also be paid as follows: (i) in shares of Stock held by the Optionee for the requisite period necessary to avoid a charge to the Company's earnings for financial reporting purposes and valued at Fair Market Value on the exercise date, or (ii) through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable written instructions (a) to a Company designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Company by reason of such purchase and (b) to the Company to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale transaction. At the discretion of the Board, exercisable either at the time of Option grant or of Option exercise, the exercise price may also be paid (i) by Optionee's delivery of a promissory note in form and substance satisfactory to the Company and permissible under the securities rules of the State of California and bearing interest at a rate determined by the Board in its sole discretion, but in no event less than the minimum rate of interest required to avoid the imputation of compensation income to the Optionee under the Federal tax laws, or (ii) in such other form of consideration permitted by the California corporations law as may be acceptable to the Board. (d) Term and Exercise of Options: Any Option granted to an employee of the Company shall become exercisable over a period of no longer than five (5) years, and no less than twenty percent (20%) of the shares covered thereby shall become exercisable annually. No Option shall be exercisable, in whole or in part, prior to one (1) year from the date it is granted unless the Board shall specifically determine otherwise, as provided herein. In no event shall any Option be exercisable after the expiration of ten (10) years from the date it is granted, and no Incentive Stock Option granted to a Ten Percent Holder shall, by its terms, be exercisable after the expiration of five (5) years from the date of the Option. Unless otherwise specified by the Board or the Committee in the resolution authorizing such Option, the date of grant of an Option shall be deemed to be the date upon which the Board or the Committee authorizes the granting of such Option. Each Option shall be exercisable to the nearest whole share, in installments or otherwise, as the respective Option agreements may provide. During the lifetime of an Optionee, the Option shall be exercisable only by the Optionee and shall not be assignable or transferable by the Optionee, and no other person shall acquire any rights therein. To the extent not exercised, installments (if more than one) shall accumulate, but shall be exercisable, in whole or in part, only during the period for exercise as stated in the Option agreement, whether or not other installments are then exercisable. (e) Termination of Status as Employee, Consultant or Director: If Optionee's status as an employee shall terminate for any reason other than Optionee's disability or death, then Optionee (or if the Optionee shall die after such termination, but prior to exercise, Optionee's personal representative or the person entitled to succeed to the Option) shall have the right to exercise the portions of any of Optionee's Incentive Stock Options which were exercisable as of the date of such termination, in whole or in part, not less than 30 days nor more than three (3) months after such termination (or, in the event of "termination for cause" as that term is defined in Code and case law related thereto, or by the terms of the Plan or the Option Agreement or an employment agreement, the Option shall automatically terminate as of the termination of employment as to all shares covered by the Option). With respect to Nonstatutory Options granted to employees, directors or consultants, the Board may specify such period for exercise, not less than 30 days (except that in the case of "termination for cause" or removal of a director, the Option shall automatically terminate as of the termination of employment or services as to shares covered by the Option, following termination of employment or services as the Board deems reasonable and appropriate. The Option may be exercised only with respect to installments that the Optionee could have exercised at the date of termination of employment or services. Nothing contained herein or in any Option granted pursuant hereto shall be construed to affect or restrict in any way the right of the Company to terminate the employment or services of an Optionee with or without cause. (f) Disability of Optionee: If an Optionee is disabled (within the meaning of Section 22(e)(3) of the Code) at the time of termination, the three (3) month period set forth in Section 6(e) shall be a period, as determined by the Board and set forth in the Option, of not less than six months nor more than one year after such termination. (g) Death of Optionee: If an Optionee dies while employed by, engaged as a consultant to, or serving as a Director of the Company, the portion of such Optionee's Option which was exercisable at the date of death may be exercised, in whole or in part, by the estate of the decedent or by a person succeeding to the right to exercise such Option at any time within (i) a period, as determined by the Board and set forth in the Option, of not less than six (6) months nor more than one (1) year after Optionee's death, which period shall not be more, in the case of a Nonstatutory Option, than the period for exercise following termination of employment or services, or (ii) during the remaining term of the Option, whichever is the lesser. The Option may be so exercised only with respect to installments exercisable at the time of Optionee's death and not previously exercised by the Optionee. (h) Nontransferability of Option: No Option shall be transferable by the Optionee, except by will or by the laws of descent and distribution. (i) Recapitalization: Subject to any required action of shareholders, the number of shares of Stock covered by each outstanding Option, and the exercise price per share thereof set forth in each such Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Stock of the Company resulting from a stock split, stock dividend, combination, subdivision or reclassification of shares, or the payment of a stock dividend, or any other increase or decrease in the number of such shares affected without receipt of consideration by the Company; provided, however, the conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration" by the Company. In the event of a proposed dissolution or liquidation of the Company, a merger or consolidation in which the Company is not the surviving entity, or a sale of all or substantially all of the assets or capital stock of the Company (collectively, a "Reorganization"), unless otherwise provided by the Board, this Option shall terminate immediately prior to such date as is determined by the Board, which date shall be no later than the consummation of such Reorganization. In such event, if the entity which shall be the surviving entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised Option a stock option or capital stock of such surviving of such surviving entity, as applicable, which on an equitable basis shall provide the Optionee with substantially the same economic benefit as such unexercised Option, then the Board may grant to such Optionee, in its sole and absolute discretion and without obligation, the right for a period commencing thirty (30) days prior to and ending immediately prior to the date determined by the Board pursuant hereto for termination of the Option or during the remaining term of the Option, whichever is the lesser, to exercise any unexpired Option or Options without regard to the installment provisions of Paragraph 6(d) of the Plan; provided, that any such right granted shall be granted to all Optionees not receiving an offer to receive substitute options on a consistent basis, and provided further, that any such exercise shall be subject to the consummation of such Reorganization. Subject to any required action of shareholders, if the Company shall be the surviving entity in any merger or consolidation, each outstanding Option thereafter shall pertain to and apply to the securities to which a holder of shares of Stock equal to the shares subject to the Option would have been entitled by reason of such merger or consolidation. In the event of a change in the Stock of the Company as presently constituted, which is limited to a change of all of its authorized shares without par value into the same number of shares with a par value, the shares resulting from any such change shall be deemed to be the Stock within the meaning of the Plan. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided in this Section 6(i), the Optionee shall have no rights by reason of any subdivision or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number or price of shares of Stock subject to any Option shall not be affected by, and no adjustment shall be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class. The Grant of an Option pursuant to the Plan shall not affect in any way the right or power of the Company to make any adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve, or liquidate or to sell or transfer all or any part of its business or assets. (j) Rights as a Shareholder: An Optionee shall have no rights as a shareholder with respect to any shares covered by an Option until the effective date of the issuance of the shares following exercise of such Option by Optionee. No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distributions or other rights for which the record date is prior to the date such stock certificate is issued, except as expressly provided in Section 6(i) hereof. (k) Modification, Acceleration, Extension, and Renewal of Options: Subject to the terms and conditions and within the limitations of the Plan, the Board may modify an Option, or, once an Option is exercisable, accelerate the rate at which it may be exercised, and may extend or renew outstanding Options granted under the Plan or accept the surrender of outstanding Options (to the extent not theretofore exercised) and authorize the granting of new Options in substitution for such Options, provided such action is permissible under Section 422 of the Code and the California securities rules. Notwithstanding the provisions of this Section 6(k), however, no modification of an Option shall, without the consent of the Optionee, alter to the Optionee's detriment or impair any rights or obligations under any Option theretofore granted under the Plan. (l) Exercise Before Exercise Date: At the discretion of the Board, the Option may, but need not, include a provision whereby the Optionee may elect to exercise all or any portion of the Option prior to the stated exercise date of the Option or any installment thereof. Any shares so purchased prior to the stated exercise date shall be subject to repurchase by the Company upon termination of Optionee's employment as contemplated by Section 6(n) hereof prior to the exercise date stated in the Option and such other restrictions and conditions as the Board or Committee may deem advisable. (m) Other Provisions: The Option agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the Options, as the Board or the Committee shall deem advisable. Shares shall not be issued pursuant to the exercise of an Option, if the exercise of such Option or the issuance of shares thereunder would violate, in the opinion of legal counsel for the Company, the provisions of any applicable law or the rules or regulations of any applicable governmental or administrative agency or body, such as the Code, the Securities Act, the Exchange Act, the California securities rules, California corporation law, and the rules promulgated under the foregoing or the rules and regulations of any exchange upon which the shares of the Company are listed. Without limiting the generality of the foregoing, the exercise of each Option shall be subject to the condition that if at any time the Company shall determine that (i) the satisfaction of withholding tax or other similar liabilities, or (ii) the listing, registration or qualification of any shares covered by such exercise upon any securities exchange or under any state or federal law, or (iii) the consent or approval of any regulatory body, or (iv) the perfection of any exemption from any such withholding, listing, registration, qualification, consent or approval is necessary or desirable in connection with such exercise or the issuance of shares thereunder, then in any such event, such exercise shall not be effective unless such withholding, listing registration, qualification, consent, approval or exemption shall have been effected, obtained or perfected free of any conditions not acceptable to the Company. (n) Repurchase Agreement: The Board may, in its discretion, require as a condition to the Grant of an Option hereunder, that an Optionee execute an agreement with the Company, in form and substance satisfactory to the Board in its discretion ("Repurchase Agreement"), (i) restricting the Optionee's right to transfer shares purchased under such Option without first offering such shares to the Company or another shareholder of the Company upon the same terms and conditions as provided therein; and (ii) providing that upon termination of Optionee's employment with the Company, for any reason, the Company (or another shareholder of the Company, as provided in the Repurchase Agreement) shall have the right at its discretion (or the discretion of such other shareholders) to purchase and/or redeem all such shares owned by the Optionee on the date of termination of his or her employment at a price equal to (A) the fair value of such shares as of such date of termination, or (B) if such repurchase right lapses at 20% of the number of shares per year, the original purchase price of such shares, and upon terms of payment permissible under the California securities rules; provided that in the case of Options or Stock Awards granted to officers, directors, consultants or affiliates of the Company, such repurchase provisions may be subject to additional or greater restrictions as determined by the Board or Committee. 7. Stock Awards and Restricted Stock Purchase Offers. (a) Types of Grants. (i) Stock Award. All or part of any Stock Award under the Plan may be subject to conditions established by the Board or the Committee, and set forth in the Stock Award Agreement, which may include, but are not limited to, continuous service with the Company, achievement of specific business objectives, increases in specified indices, attaining growth rates and other comparable measurements of Company performance. Such Awards may be based on Fair Market Value or other specified valuation. All Stock Awards will be made pursuant to the execution of a Stock Award Agreement substantially in the form attached hereto as Exhibit "C". (ii) Restricted Stock Purchase Offer. A Grant of a Restricted Stock Purchase Offer under the Plan shall be subject to such (i) vesting contingencies related to the Participant's continued association with the Company for a specified time and (ii) other specified conditions as the Board or Committee shall determine, in their sole discretion, consistent with the provisions of the Plan. All Restricted Stock Purchase Offers shall be made pursuant to a Restricted Stock Purchase Offer substantially in the form attached hereto as Exhibit "D". (b) Conditions and Restrictions. Shares of Stock which Participants may receive as a Stock Award under a Stock Award Agreement or Restricted Stock Purchase Offer under a Restricted Stock Purchase Offer may include such restrictions as the Board or Committee, as applicable, shall determine, including restrictions on transfer, repurchase rights, right of first refusal, and forfeiture provisions. When transfer of Stock is so restricted or subject to forfeiture provisions it is referred to as "Restricted Stock". Further, with Board or Committee approval, Stock Awards or Restricted Stock Purchase Offers may be deferred, either in the form of installments or a future lump sum distribution. The Board or Committee may permit selected Participants to elect to defer distributions of Stock Awards or Restricted Stock Purchase Offers in accordance with procedures established by the Board or Committee to assure that such deferrals comply with applicable requirements of the Code including, at the choice of Participants, the capability to make further deferrals for distribution after retirement. Any deferred distribution, whether elected by the Participant or specified by the Stock Award Agreement, Restricted Stock Purchase Offers or by the Board or Committee, may require the payment be forfeited in accordance with the provisions of Section 7(c). Dividends or dividend equivalent rights may be extended to and made part of any Stock Award or Restricted Stock Purchase Offers denominated in Stock or units of Stock, subject to such terms, conditions and restrictions as the Board or Committee may establish. (c) Cancellation and Rescission of Grants. Unless the Stock Award Agreement or Restricted Stock Purchase Offer specifies otherwise, the Board or Committee, as applicable, may cancel any unexpired, unpaid, or deferred Grants at any time if the Participant is not in compliance with all other applicable provisions of the Stock Award Agreement or Restricted Stock Purchase Offer, the Plan and with the following conditions: (i) A Participant shall not render services for any organization or engage directly or indirectly in any business which, in the judgment of the chief executive officer of the Company or other senior officer designated by the Board or Committee, is or becomes competitive with the Company, or which organization or business, or the rendering of services to such organization or business, is or becomes otherwise prejudicial to or in conflict with the interests of the Company. For Participants whose employment has terminated, the judgment of the chief executive officer shall be based on the Participant's position and responsibilities while employed by the Company, the Participant's post-employment responsibilities and position with the other organization or business, the extent of past, current and potential competition or conflict between the Company and the other organization or business, the effect on the Company's customers, suppliers and competitors and such other considerations as are deemed relevant given the applicable facts and circumstances. A Participant who has retired shall be free, however, to purchase as an investment or otherwise, stock or other securities of such organization or business so long as they are listed upon a recognized securities exchange or traded over-the-counter, and such investment does not represent a substantial investment to the Participant or a greater than 10 percent equity interest in the organization or business. (ii) A Participant shall not, without prior written authorization from the Company, disclose to anyone outside the Company, or use in other than the Company's business, any confidential information or material, as defined in the Company's Proprietary Information and Invention Agreement or similar agreement regarding confidential information and intellectual property, relating to the business of the Company, acquired by the Participant either during or after employment with the Company. (iii) A Participant, pursuant to the Company's Proprietary Information and Invention Agreement, shall disclose promptly and assign to the Company all right, title and interest in any invention or idea, patentable or not, made or conceived by the Participant during employment by the Company, relating in any manner to the actual or anticipated business, research or development work of the Company and shall do anything reasonably necessary to enable the Company to secure a patent where appropriate in the United States and in foreign countries. (iv) Upon exercise, payment or delivery pursuant to a Grant, the Participant shall certify on a form acceptable to the Committee that he or she is in compliance with the terms and conditions of the Plan. Failure to comply with all of the provisions of this Section 7(c) prior to, or during the six months after, any exercise, payment or delivery pursuant to a Grant shall cause such exercise, payment or delivery to be rescinded. The Company shall notify the Participant in writing of any such rescission within two years after such exercise, payment or delivery. Within ten days after receiving such a notice from the Company, the Participant shall pay to the Company the amount of any gain realized or payment received as a result of the rescinded exercise, payment or delivery pursuant to a Grant. Such payment shall be made either in cash or by returning to the Company the number of shares of Stock that the Participant received in connection with the rescinded exercise, payment or delivery. (d) Nonassignability. (i) Except pursuant to Section 7(e)(iii) and except as set forth in Section 7(d)(ii), no Grant or any other benefit under the Plan shall be assignable or transferable, or payable to or exercisable by, anyone other than the Participant to whom it was granted. (ii) Where a Participant terminates employment and retains a Grant pursuant to Section 7(e)(ii) in order to assume a position with a governmental, charitable or educational institution, the Board or Committee, in its discretion and to the extent permitted by law, may authorize a third party (including but not limited to the trustee of a "blind" trust), acceptable to the applicable governmental or institutional authorities, the Participant and the Board or Committee, to act on behalf of the Participant with regard to such Awards. (e) Termination of Employment. If the employment or service to the Company of a Participant terminates, other than pursuant to any of the following provisions under this Section 7(e), all unexercised, deferred and unpaid Stock Awards or Restricted Stock Purchase Offers shall be cancelled immediately, unless the Stock Award Agreement or Restricted Stock Purchase Offer provides otherwise: (i) Retirement Under a Company Retirement Plan. When a Participant's employment terminates as a result of retirement in accordance with the terms of a Company retirement plan, the Board or Committee may permit Stock Awards or Restricted Stock Purchase Offers to continue in effect beyond the date of retirement in accordance with the applicable Grant Agreement and the exercisability and vesting of any such Grants may be accelerated. (ii) Rights in the Best Interests of the Company. When a Participant resigns from the Company and, in the judgment of the Board or Committee, the acceleration and/or continuation of outstanding Stock Awards or Restricted Stock Purchase Offers would be in the best interests of the Company, the Board or Committee may (i) authorize, where appropriate, the acceleration and/or continuation of all or any part of Grants issued prior to such termination and (ii) permit the exercise, vesting and payment of such Grants for such period as may be set forth in the applicable Grant Agreement, subject to earlier cancellation pursuant to Section 10 or at such time as the Board or Committee shall deem the continuation of all or any part of the Participant's Grants are not in the Company's best interest. (iii) Death or Disability of a Participant. (1) In the event of a Participant's death, the Participant's estate or beneficiaries shall have a period up to the expiration date specified in the Grant Agreement within which to receive or exercise any outstanding Grant held by the Participant under such terms as may be specified in the applicable Grant Agreement. Rights to any such outstanding Grants shall pass by will or the laws of descent and distribution in the following order: (a) to beneficiaries so designated by the Participant; if none, then (b) to a legal representative of the Participant; if none, then (c) to the persons entitled thereto as determined by a court of competent jurisdiction. Grants so passing shall be made at such times and in such manner as if the Participant were living. (2) In the event a Participant is deemed by the Board or Committee to be unable to perform his or her usual duties by reason of mental disorder or medical condition which does not result from facts which would be grounds for termination for cause, Grants and rights to any such Grants may be paid to or exercised by the Participant, if legally competent, or a committee or other legally designated guardian or representative if the Participant is legally incompetent by virtue of such disability. (3) After the death or disability of a Participant, the Board or Committee may in its sole discretion at any time (1) terminate restrictions in Grant Agreements; (2) accelerate any or all installments and rights; and (3) instruct the Company to pay the total of any accelerated payments in a lump sum to the Participant, the Participant's estate, beneficiaries or representative -- notwithstanding that, in the absence of such termination of restrictions or acceleration of payments, any or all of the payments due under the Grant might ultimately have become payable to other beneficiaries. (4) In the event of uncertainty as to interpretation of or controversies concerning this Section 7, the determinations of the Board or Committee, as applicable, shall be binding and conclusive. 8. Investment Intent. All Grants under the Plan are intended to be exempt from registration under the Securities Act provided by Rule 701 thereunder. Unless and until the granting of Options or sale and issuance of Stock subject to the Plan are registered under the Securities Act or shall be exempt pursuant to the rules promulgated thereunder, each Grant under the Plan shall provide that the purchases or other acquisitions of Stock thereunder shall be for investment purposes and not with a view to, or for resale in connection with, any distribution thereof. Further, unless the issuance and sale of the Stock have been registered under the Securities Act, each Grant shall provide that no shares shall be purchased upon the exercise of the rights under such Grant unless and until (i) all then applicable requirements of state and federal laws and regulatory agencies shall have been fully complied with to the satisfaction of the Company and its counsel, and (ii) if requested to do so by the Company, the person exercising the rights under the Grant shall (i) give written assurances as to knowledge and experience of such person (or a representative employed by such person) in financial and business matters and the ability of such person (or representative) to evaluate the merits and risks of exercising the Option, and (ii) execute and deliver to the Company a letter of investment intent and/or such other form related to applicable exemptions from registration, all in such form and substance as the Company may require. If shares are issued upon exercise of any rights under a Grant without registration under the Securities Act, subsequent registration of such shares shall relieve the purchaser thereof of any investment restrictions or representations made upon the exercise of such rights. 9. Amendment, Modification, Suspension or Discontinuance of the Plan. The Board may, insofar as permitted by law, from time to time, with respect to any shares at the time not subject to outstanding Grants, suspend or terminate the Plan or revise or amend it in any respect whatsoever, except that without the approval of the shareholders of the Company, no such revision or amendment shall (i) increase the number of shares subject to the Plan, (ii) decrease the price at which Grants may be granted, (iii) materially increase the benefits to Participants, or (iv) change the class of persons eligible to receive Grants under the Plan; provided, however, no such action shall alter or impair the rights and obligations under any Option, or Stock Award, or Restricted Stock Purchase Offer outstanding as of the date thereof without the written consent of the Participant thereunder. No Grant may be issued while the Plan is suspended or after it is terminated, but the rights and obligations under any Grant issued while the Plan is in effect shall not be impaired by suspension or termination of the Plan. In the event of any change in the outstanding Stock by reason of a stock split, stock dividend, combination or reclassification of shares, recapitalization, merger, or similar event, the Board or the Committee may adjust proportionally (a) the number of shares of Stock (i) reserved under the Plan, (ii) available for Incentive Stock Options and Nonstatutory Options and (iii) covered by outstanding Stock Awards or Restricted Stock Purchase Offers; (b) the Stock prices related to outstanding Grants; and (c) the appropriate Fair Market Value and other price determinations for such Grants. In the event of any other change affecting the Stock or any distribution (other than normal cash dividends) to holders of Stock, such adjustments as may be deemed equitable by the Board or the Committee, including adjustments to avoid fractional shares, shall be made to give proper effect to such event. In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Board or the Committee shall be authorized to issue or assume stock options, whether or not in a transaction to which Section 424(a) of the Code applies, and other Grants by means of substitution of new Grant Agreements for previously issued Grants or an assumption of previously issued Grants. 10. Tax Withholding. The Company shall have the right to deduct applicable taxes from any Grant payment and withhold, at the time of delivery or exercise of Options, Stock Awards or Restricted Stock Purchase Offers or vesting of shares under such Grants, an appropriate number of shares for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. If Stock is used to satisfy tax withholding, such stock shall be valued based on the Fair Market Value when the tax withholding is required to be made. 11. Availability of Information. During the term of the Plan and any additional period during which a Grant granted pursuant to the Plan shall be exercisable, the Company shall make available, not later than one hundred and twenty (120) days following the close of each of its fiscal years, such financial and other information regarding the Company as is required by the bylaws of the Company and applicable law to be furnished in an annual report to the shareholders of the Company. 12. Notice. Any written notice to the Company required by any of the provisions of the Plan shall be addressed to the chief personnel officer or to the chief executive officer of the Company, and shall become effective when it is received by the office of the chief personnel officer or the chief executive officer. 13. Indemnification of Board. In addition to such other rights or indemnifications as they may have as directors or otherwise, and to the extent allowed by applicable law, the members of the Board and the Committee shall be indemnified by the Company against the reasonable expenses, including attorneys' fees, actually and necessarily incurred in connection with the defense of any claim, action, suit or proceeding, or in connection with any appeal thereof, to which they or any of them may be a party by reason of any action taken, or failure to act, under or in connection with the Plan or any Grant granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such claim, action, suit or proceeding, except in any case in relation to matters as to which it shall be adjudged in such claim, action, suit or proceeding that such Board or Committee member is liable for negligence or misconduct in the performance of his or her duties; provided that within sixty (60) days after institution of any such action, suit or Board proceeding the member involved shall offer the Company, in writing, the opportunity, at its own expense, to handle and defend the same. 14. Governing Law. The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by the Code or the securities laws of the United States, shall be governed by the law of the State of California and construed accordingly. 15. Effective and Termination Dates. The Plan shall become effective on the date it is approved by the holders of a majority of the shares of Stock then outstanding. The Plan shall terminate ten years later, subject to earlier termination by the Board pursuant to Section 9. The foregoing 1998 Incentive Stock Plan (consisting of 15 pages, including this page) was duly adopted and approved by the Board of Directors on August 5, 1998 and approved by the shareholders of the Corporation ______, 199--. ------ , Secretary EX-23.2 9 0009.txt CONSENT RUEBEN E. PRICE LETTERHEAD December 15, 2000 Mr. Douglas P. Haffer, President World Wide Wireless Communications, Inc. 520 Third Street, Suite 101 Oakland, California 94607 Dear Mr. Haffer: Please accept this letter as our consent to include in your disclosure document on Form SB-2 our reports on World Wide Wireless Communications, Inc.'s consolidated balance sheet dated September 30, 2000 and the related consolidated statements of operations, consolidated statements of cash flows, and statements of stockholders' equity for the years ended September 30, 2000 and 1999. Sincerely, REUBEN E. PRICE & CO. EX-27.1 10 0010.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED FINANCIAL STATEMENTS OF WORLD WIDE WIRELESS COMMUNICATIONS, INC. FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. AMOUNTS IN THOUSANDS (EXCEPT LOSS PER SHARE). 1000 12-MOS SEP-30-2000 SEP-30-2000 3,111 0 0 0 750 4,765 2,983 (176) 9,704 2,304 5,285 0 0 86 1,984 9,704 0 524 0 (337) (8,566) 0 (71) (8,378) 0 (8,378) 0 0 0 (8,378) (0.10) (0.10)
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