As filed with the Securities and Exchange Commission on August _____, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-------------------
WORLDWIDE WIRELESS, INC.
(Exact name of Small Business Issuer as specified in its Charter)
Delaware 4841 13-3831117
(State of (Primary standard industrial I.R.S. employer
Incorporation) classification code) identification No.
P.O. Box 470
Ascutney, VT 05030
(802) 674-2206
(Address and telephone number of Principal Offices)
Scott A. Wendel, President
P.O. Box 470
Ascutney, VT 05030
(802) 674-2206
(Name, address and telephone number of agent for service)
Copies To:
Peter S. Erly, Esq. Lester Morse, Esq.
Gravel and Shea Lester Morse, P.C.
76 St. Paul Street, 7th Floor 111 Great Neck Road
P.O. Box 369 Great Neck, NY 11021
Burlington, VT 05402-0369 Telephone: (516) 487-1446
Telephone: (802) 658-0220 Facsimile: (516) 487-1452
Facsimile: (802) 658-1456
Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 933, check
the following box:
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 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, please check the following box and list the
Securities Act registration number of the earlier effective registration
statement for the same offering.
If delivery of a Prospectus is expected to be made pursuant to Rule 434,
please check the following box.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed
Title of each class of maximum Amount to be Proposed Amount of
securities to be aggregate Offering registered maximum registration
registered price(1) (2) offering price(1) fee(2)
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value $ 8,750,000 1,250,000 $7.00 $2,651.51
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Redeemable Common Stock Purchase Warrants $ 125,000 1,250,000 $0.10 $ 37.88
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Common Stock, $.01 par value $10,500,000(3) 1,250,000 $8.40 $3,181.82
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Totals $19,375,000 3,750,000 $5,871.21
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<F1> Total estimated solely for the purpose of determining the registration
fee.
<F2> Calculated pursuant to Rule 457(a) based on a bona fide estimate of the
maximum offering price.
<F3> Issuable upon exercise of the Warrants, together with such indeterminate
number of securities as may be issuable by reason of the anti-dilution
provisions contained therein.
</TABLE>
Cross Reference Sheet Pursuant to Rule 404 (a)
Showing the Location In Prospectus of
Information Required by Items of Form SB-2
<TABLE>
<CAPTION>
Item in Form SB-2 Prospectus Caption
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<S> <C> <C>
1. Front of Registration
Statement and Outside Front
Cover Page of Prospectus Cover Page and Cover Page of Registration Statement
2. Inside Front and Outside
Back Cover Pages of
Prospectus Continued Cover Page, Table of Contents
3. Summary Information and
Prospectus Summary Prospectus Summary, Risk Factors, Financial Information
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page, Underwriting, Risk Factors
6. Dilution Dilution
7. Selling Securityholders Not Applicable
8. Plan of Distribution Cover Page, Underwriting
9. Legal Proceedings Business
10. Directors, Executive Officers,
Promoters, and Certain Control
Persons Management
11. Security Ownership of
Certain Beneficial Owners
and Management Principal Shareholders and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts
and Counsel Legal Opinions, Experts
14. Disclosure of Commission
Position on Securities
Act Liabilities Item 24. Indemnification of Directors and Officers
15. Organization Within Five Years Prospectus Summary, Business, Principal Shareholders,
Certain Relationships and Related Transactions, Risk
Factors
16. Description of Business Business
17. Management's Discussion
and Analysis or Plan of Operation Management's Discussion and Analysis of Financial
Condition and Results of Operations
18. Description of Property Business
19. Certain Relationships and Related
Transactions Certain Relationships and Related Transactions
20. Market for Common Equity
and Related Stockholder
Matters Not Applicable
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements
with Accountants and Financial
Disclosure Not Applicable
</TABLE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED _____________
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
WORLDWIDE WIRELESS, INC.
1,250,000 Shares of Common Stock and 1,250,000 Redeemable
Common Stock Purchase Warrants
Worldwide Wireless, Inc. (the "Company") hereby offers 1,250,000 units
(the "Units") each consisting of one share of Common Stock, $.01 par value
("Common Stock"), and one Redeemable Common Stock Purchase Warrant (the
"Warrant"). The Common Stock and the Warrants are being sold only together and
will be separately tradeable immediately upon issuance. It is currently
estimated that the initial public offering price will be between $6.00 and
$7.00 per Unit. Each Warrant entitles the holder to one share of Common Stock
at a price of $___ per share during the five year period commencing on the date
of this Prospectus. The Warrants are redeemable under certain circumstances.
See "DESCRIPTION OF SECURITIES".
Prior to this offering, there has been no public market for the Common
Stock or the Warrants. The offering price of the Common Stock and Warrants have
been arbitrarily determined by negotiation between the Company and DuPont
Securities, Inc. (the "Underwriter") and are not related to the Company's asset
value, net worth, or other established criteria of value. See "RISK FACTORS"
and "UNDERWRITING." It is anticipated that following this offering, the shares
of Common Stock and the Warrants will be quoted on the Boston Stock Exchange
and the NASDAQ Small Cap(TM) Market under the symbols "WWYD" and "WWYDW,"
respectively.
THESE ARE SPECULATIVE SECURITIES. THE SECURITIES OFFERED HEREBY INVOLVE A
HIGH DEGREE OF RISK AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND
"DILUTION."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS Prospectus. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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Underwriting
Price Discounts and Proceeds
to Public Commissions(1) to Company(2)
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<S> <C> <C> <C>
Per Unit $ $ $
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Total(3) $ $ $
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<F1> The Company has also agreed to pay the Underwriter a non-accountable
expense allowance equal to 3% of the aggregate purchase price of the
securities offered hereby and to issue Warrants to the Underwriter for
the purchase of up to 125,000 shares of Common Stock at an exercise price
equal to $_____ per share (the "Underwriter's Warrants"). For additional
information, including information regarding indemnification of the
Underwriter and other matters, see "UNDERWRITING."
<F2> Before deducting expenses of the offering payable by the Company,
estimated at $_____, including the Underwriter's non-accountable expense
allowance.
<F3> The Company has granted the Underwriter an option, exercisable within
forty-five (45) days of the date of this Prospectus, to purchase up to
187,500 additional shares of Common Stock and up to 187,500 additional
Warrants on the same terms and conditions as set forth above to cover
over-allotments, if any. If the over allotment option is exercised in
full, the Price to Public, Underwriting Discounts and Commissions and
Proceeds to Company will be increased to _____, _____ and _____
respectively. See "UNDERWRITING" below.
</TABLE>
The Common Stock and Warrants offered hereby by the Company are being
offered on a "firm commitment" basis by the Underwriter when, as and if
delivered to and accepted by the Underwriter, and subject to prior sale,
withdrawal or cancellation of the offer without notice. It is expected that
delivery of the certificates representing the shares of Common Stock and the
Warrants will be made at the offices of DuPont Securities, Inc., 111 South
Street, Suite 19, Oyster Bay, New York, on or about ____________, 1997.
DuPont Securities, Inc.
111 South Street
Suite 19 Townsend Square
Oyster Bay, NY 11771
The date of this Prospectus is ______________, 1997
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
Prospectus IN CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS
Prospectus DOES NOT CONSTITUTE AN OFFER BY WORLDWIDE WIRELESS, INC. TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER. THE DELIVERY
OF THIS Prospectus AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION STATED IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
UNTIL (25 DAYS AFTER THE DATE OF THIS Prospectus) ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A Prospectus. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A Prospectus WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
Prior to this offering, the Company has not been subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The Company will become subject to the Exchange Act reporting
requirements upon effectiveness of the Registration Statement of which this
Prospectus is a part. The Company intends to register the securities offered
hereby under the Exchange Act simultaneously with the effectiveness of the
Registration Statement. In accordance with the Exchange Act, the Company will
file reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy statements and
other information can be inspected and copied at the public reference
facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
and copies of such material can be obtained from the Public Reference Section
at prescribed rates.
The Company will furnish its shareholders with annual reports containing
audited financial statements and such interim reports as it deems appropriate.
The Company's fiscal year ends on June 30.
---------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON
STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE BOSTON STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME. PROSPECTUS SUMMARY
PROSPECTUS SUMMARY
All statements contained herein that are not historical facts, including
but not limited to, statements regarding the Company's plans for future
development and operation of its business, are based on current expectations.
These statements are forward looking in nature and involve a number of risks
and uncertainties. Actual results may differ materially. Among the factors that
could cause actual results to differ materially are the following: a lack of
sufficient capital to finance the Company's business plan on terms satisfactory
to the Company; pricing pressures which could affect demand for the Company's
services; changes in labor, equipment and capital costs; unavailability of
digital compression technology and equipment at reasonable prices; the
Company's inability to incorporate digital compression and other new technology
into its subscription television system in a cost efficient manner; the
Company's inability to develop and implement new services such as high-speed
Internet access and telephony; the Company's inability to obtain the necessary
authorizations from the Federal Communications Commission ("FCC") or state
regulatory authorities for such new services; competitive factors, such as the
introduction of new technologies and competitors into the wireless
communications business and a failure by the Company to attract strategic
partners; general business and economic conditions. The Company wishes to
caution readers not to place undue reliance on any such forward looking
statements, which statements are made pursuant to the Private Securities
Litigation Reform Act of 1995, and as such, speak only as of the date made.
The following summary information is qualified in its entirety by the
detailed information and financial statements (including the notes thereto)
appearing elsewhere in this Prospectus. Unless otherwise indicated, the
information in this Prospectus does not give effect to the exercise of (i) the
Underwriter's over-allotment option; or (ii) the Underwriters' Warrants.
THE COMPANY
Worldwide Wireless, Inc. (the "Company") is a Delaware corporation
organized in 1994 to act as a holding and strategic resource company for
wireless cable systems and advanced telecommunications systems. The Company has
built and operates a wireless cable system located on Mount Mansfield, Vermont.
The Company also seeks to support, finance and acquire new technologies for the
wireless telecommunications industry and to secure and assemble rights to
frequencies in other markets. It intends to transfer its technology to a
digital, multi-platform capability which allows for the provision of other
services, including wireless loop telephone service and Internet access
capability.
In March 1995, a wholly owned subsidiary of the Company, N.E.W.
Acquisition Co., Inc., merged with a Vermont corporation, New England Wireless,
Inc. ("NEW"). NEW was formed in 1991 to engage in wireless calbe television
activities. In connection with the merger, all of NEW's shares of outstanding
common stock were exchanged for 801,156 shares of the Company's common stock.
The merger was treated for accounting purposes as a capital transaction rather
than as a business combination. Concurrent with the merger, the Company and
creditors of NEW agreed to exchange certain notes in return for shares of the
Company's common stock. In addition, the Company issued notes payable to its
founder in exchange for debt of NEW owed to him.
The Company provides wireless cable television services for single family
residences, multiple dwelling units and commercial locations. The Company's
initial wireless cable television system is located on top of Mount Mansfield,
Vermont (the "Mount Mansfield System"). The Mount Mansfield System commenced
operations in August 1994. As of May 31, 1997, the Company had approximately
1,200 subscribers in the Mount Mansfield System. There are approximately
121,000 households within the area served by the Mount Mansfield System's
initial signal pattern. Of these households, approximately 65,300 54%
households are not served by hard-wire cable television. The Company currently
offers 23 channels through the Mount Mansfield System, consisting of 19
wireless cable channels and 4 local off-air VHF/UHF broadcast channels. The
wireless cable channels include 3 pay/premium cable channels.
On August 12, 1997, the Company entered into a Beta-Site Agreement with
InterDigital Communications Corporation ("IDC") pursuant to which IDC agreed to
use the Company's service territory and facilities for IDC's True L(TM)
Broadband Code Division Multiple Access(TM) (B-CDMA(TM)) Wireless Local Loop
product. See "BUSINESS - Other Technologies - InterDigital Communications
Corporation" below.
The Company intends to utilize certain of the net proceeds from the
Offering to expand its subscriber base and to implement digital technology in
connection with its operations. An additional portion of the proceeds will be
used to repay principal and interest accumulated in connection with prior notes
issued by the Company to fund its operations.
Wireless cable systems use microwave frequencies licensed by the FCC to
transmit signals over the air from a transmission tower to a microwave receiver
installed at the customer's home or business. Wireless cable systems transmit
signals over coverage areas of approximately 20 to 40 miles from their central
transmission point, although increases in transmission power and other factors
may expand the coverage area of a system to approximately 40 to 50 miles from
the central transmission point. Because microwave signals are transmitted over
the air, wireless cable technology does not require the large networks of cable
and amplifiers utilized by franchise cable operators to deliver services. Thus,
wireless cable technology has been developed as a reliable, yet relatively low
cost medium to provide service to customers in single family homes, multiple
dwelling units and commercial properties. In communities with dense foliage,
hilly terrain, tall buildings or other obstructions in the transmission path,
transmission may be blocked at certain locations. Wireless cable systems
compete directly with hard-wire cable and satellite pay television suppliers.
Traditional hard-wire cable systems deliver the television signal to a
subscriber's location through a network of coaxial cable and amplifiers and do
not require a direct line-of-sight or an antenna at the subscriber location.
Currently, the number of channels of cable television programming that
the Company can provide to subscribers of its wireless cable system in the
Mount Mansfield System is limited to 23 channels. The Company plans to employ
digital compression technology to expand the number of channels it provides to
56 or more. Hard-wire cable systems do not service substantial portions of the
areas served by the initial signal pattern of the Mount Mansfield System. The
Company estimates that only approximately 46% of the households within this
system area are served by hard-wire cable companies.
Because wireless cable television programming depends on line-of-site
transmission of its signal, certain areas within the initial signal pattern of
the Company's system are not able to receive the Company's broadcast signals.
The Company estimates that approximately 33% of the potential viewers in its
signal areas are not able to receive its signals.
Within the last few years, providers of satellite television services
have emerged. Those systems are capable of delivering over one hundred channels
of programming to any household. However, the fees and installation costs
associated with such systems considerably exceed those of the Company. In
addition, satellite systems are not able to provide local off-air VHF/UHF
broadcast channels unlike wireless cable television and hard-wire cable
television providers.
Programming is generally available to traditional hard-wire and wireless
cable operators on comparable terms, although operators that have a smaller
number of subscribers often are required to pay higher per subscriber fees. To
the best knowledge of the Company, the fees which it is required to pay for its
subscribers are approximately the same as those paid by comparable hard-wire
cable system operators.
Because of continuing technological and regulatory developments within
the telecommunications industry, management now believes that the most
promising use of the Company's wireless assets may be to provide a variety of
digital wireless services, instead of the traditional analog-based technology
utilized by the Company to date. Such digital wireless services could include
digital video (i.e. subscription television), high-speed Internet access, and
telephony services. A successful deployment of such service might include the
full bundle of broad band (i.e. video and high speed Internet) and narrow band
(i.e. telephony) services. The Company is considering using its wireless
spectrum to deliver telephony services. Although the development of such
telephony services is in its early stages, management believes its wireless
spectrum is capable of delivering wireless local loop (WLL) service in the
future through various means and technologies it is currently exploring.
The Company also intends to develop a role as a socially responsible
company. As an initial step in such direction, the Company has agreed to a
relationship with Project KidCare, a program sponsored by a joint venture
between Polaroid Corporation and the National Center for Missing and Exploited
Children. See "BUSINESS."
The Company's executive offices are located at P.O. Box 470, Ascutney,
Vermont 05030 and its telephone number is (802) 674-2206.
THE OFFERING
<TABLE>
<S> <C>
Securities Offered by the Company 1,250,000 Units consisting of 1,250,000 shares of Common Stock and
1,250,000 Redeemable Common Stock Purchase Warrants. See "DESCRIPTION
OF SECURITIES."
Common Stock Outstanding
before offering* 2,858,961 shares
Common Stock Outstanding
after offering 4,108,961 shares
Use of Proceeds The Company will use the proceeds to repay indebtedness, to
purchase additional capital equipment for the Mount Mansfield System for
implementation of digital compression technology, to acquire equipment
necessary to employ IDC's technology in its market area, and for working
capital and other general corporate purposes. The Company may use broad
discretion in the use of proceeds. Management has the right to re-allocate use
of such proceeds. See "USE OF PROCEEDS."
Risk Factors The securities offered hereby involve a high degree of risk and
immediate substantial dilution to the public investors. See "RISK FACTORS" and
"DILUTION."
Proposed NASDAQ Symbols(4) Common Stock WWYD, and Warrants WWYDW
- --------------------
<F*> Includes 70,000 shares of common stock to be issued in connection with
the conversion of outstanding indebtedness.
<F4> There is no assurance that a trading market will develop for the
Company's Common Stock or Warrants or that, if developed, it will be
sustained.
</TABLE>
SUMMARY FINANCIAL INFORMATION
Statement of Operations Data
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<TABLE>
<CAPTION>
Year
Ended Nine Months Ended March 31,
June 30, 1996 1996 1997
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(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenue $ 323,144 $239,021 $ 260,336
Service cost 91,606 67,877 76,623
Programming and license fee 799,285 594,430 631,212
Selling, general and
administrative expenses 384,140 292,331 449,292
(Loss) from operations (951,887) (715,617) (896,791)
Interest expense 172,410 98,494 282,515
Miscellaneous expense 6,948 3,766 41,696
Net (loss) ($1,131,245) ($817,877) ($1,221,002)
Net (loss) per common share ($ .40) ($ .29) ($ .43)
Weighted average number of
common shares outstanding 2,836,461 2,836,461 2,836,461
</TABLE>
RISK FACTORS
The securities offered hereby involve a high degree of risk, including,
but not necessarily limited to, the risk factors described below. Each
prospective investor should carefully consider the following risk factors
inherent in, and affecting, the business of the Company and this offering
before making an investment decision.
Limited Revenues; Accumulated Deficit
- -------------------------------------
The Company was organized in 1994 and its subsidiary, NEW, commenced
operations, on a limited basis, in August 1994. Currently, the Company has
developed its facilities, and is seeking to expand its customer base through
the application of new technologies. To date, the Company's operations have
been limited to the development of its Mount Mansfield System through its
subsidiary, NEW. The Company has no wireless cable operations in other markets.
During the year ending June 30, 1996, the Company had revenues of $323,144 and
a net loss of $1,131,245. For the 6 month period ended June 30, 1995, the
Company had revenues of $112,574 and a net loss of $517,943. At March 31, 1997
the Company had an accumulated deficit of $2,647,274 and a stockholders' equity
deficit of $2,755,424. As a result of such continuing losses, among other
factors, the Company's independent auditors indicate substantial doubt
about the Company's ability to continue as a going concern. The Company's
losses are attributable to the lack of a sufficient subscriber base on the
part of the Company to cover its ongoing programming, licensing and other
costs. The Company expects to continue experiencing net losses while it
develops and expands its wireless cable systems and implements other
technologies. No assurance can be given that the Company will generate
substantial revenues or that the Company's business operations will prove to
be profitable. The Company's operations are subject to all of the risks
inherent in the establishment of a new business, particularly one in the
highly competitive pay television industry. The likelihood of the
success of the Company must be considered in light of the problems, expense,
difficulties, complications, and delays frequently encountered in connection
with establishing a new business, including, without limitation, market
acceptance of the Company's services, regulatory problems, unanticipated
expenses and competition. There can be no assurances that the Company's
proposed business venture will be successful. See "BUSINESS."
Defaults Under Agreements
- -------------------------
NEW is currently in default of a number of its agreements because of
payment arrearages including its lease of tower space on Mount Mansfield,
Vermont where its transmitter is located. In addition, NEW is in default of its
obligations under various license agreements pursuant to which it obtains
broadcasting rights for frequencies covering its broadcast channels on its
Mount Mansfield location. Termination of certain of these agreements could have
a material negative impact on the Company and its business activities. The
Company intends to cure payment defaults under these agreements with the
proceeds of the offering. See "USE OF PROCEEDS."
Unpaid Indebtedness
- -------------------
In connection with prior financings of the Company, a total of $999,500
in indebtedness as of July 31, 1997 is due and payable on demand exclusive of
the Company's indebtedness to its principal shareholder, Alan R. Ackerman, and
the Company lacks assets to pay such indebtedness. Although the Company intends
to pay such indebtedness in full on completion of the offering, attempts to
compel repayment prior to that time could negatively impact the Company's
business operations. See "USE OF PROCEEDS."
Competition
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The pay television industry is highly competitive. Wireless cable
television systems face or may face competition from several sources, such as
traditional hard-wire cable companies, Satellite Receivers, Direct Broadcast
Satellites ("DBS") and other alternative methods of distributing and receiving
television transmissions. Further, premium movie services offered by cable
television systems have encountered significant competition from the home video
cassette recorder industry. In areas where several local off-air VHF/UHF
broadcast signals can be receiving without the benefit of cable television,
cable television systems have also experienced competition from the
availability of broadcast signals generally and have found market penetration
more difficult.
Wireless cable programming is transmitted through the air via microwave
frequencies that generally require a direct "line-of-sight" from the
transmitter facility to the subscriber's receiving antenna. In communities with
dense foliage, hilly terrain, tall buildings or other obstructions in the
transmission path, transmission is blocked at certain locations. Traditional
hard-wire cable systems deliver the signal to a subscriber's location through a
network of coaxial cable and amplifiers and do not require a direct
line-of-sight for transmission. Therefore, those systems may have a competitive
advantage over the Company in those areas where the reception of wireless cable
transmissions is difficult or impossible. In addition, in limited
circumstances, extreme adverse weather could damage wireless cable transmission
and receiving antennas as well as transmission site equipment. Such conditions
would not similarly affect hard-wire cable systems.
Wireless cable programming can only be transmitted on the frequencies
made available for wireless cable by the FCC. Currently, the number of channels
of cable television programming that can be provided to subscribers of wireless
cable systems is limited to 33. The Company plans to utilize the proceeds of
the offering to implement digital compression technology to allow it to expand
the number of channels it makes available to subscribers to 56, and thereby
compete more effectively with hard-wire cable systems. Current hard wire cable
companies in the Company's market area offer between 20 and 60 channels to
their subscribers compared to the 23 channels the Company currently offers
through its Mount Mansfield System. Satellite Receivers and D.S. have the
capability of delivering over 100 channels of programming. The Company expects
to be capable of delivering over 100 channels of programming through digital
technology.
Unlike hard-wire operations, wireless cable operators like the Company
generally have to lease the wireless cable channels on which they transmit
their programming from channel license holders. Leases generally require the
Company to pay the lessor a fee based on a percentage of subscription revenues,
averaging approximately 5%, or, if greater, a minimum monthly fee. Although
hard-wire operators do not have to lease channels, they do have to pay
franchise fees generally on all gross revenues from cable system operations and
leasing fees for cables on telephone poles (as compared to only subscription
revenues in the case of wireless cable), typically in the range of 3% to 5%, an
expense that is not incurred by wireless operators. Programming is generally
available to traditional hard-wire and wireless operators on comparable terms,
although operators that have a smaller number of subscribers often are required
to pay higher per subscriber fees. Accordingly, operators in the initial
operating stage generally pay higher programming fees on a per subscriber
basis.
Certain hard-wire cable operators have announced their intention to
develop interactive features for use by their subscribers, such as shopping via
video catalogs and playing video games with neighbors. Interactive services are
not currently available for wireless cable. The Company believes that the same
manufacturers who have developed digital compression converters for both
hard-wire and wireless cable will also make new developments in interactivity
available to both industry segments. The FCC has designated a return path
channel for use in connection with interactive services which may be offered by
wireless cable operators. The Company believes that, if it is economically
feasible to do so, wireless cable systems can include two-way interactivity.
There can be no assurance that interactive services will be made available for
wireless cable systems and, therefore, to the extent such services are
available on hard-wire cable systems, the Company could be at a competitive
disadvantage.
Legislative, regulatory, and technological developments may result in
additional and significant new competition, including competition from local
telephone companies. Many actual and potential competitors have greater
financial, marketing, and other resources than the Company. No assurance can be
given that the Company will compete successfully with hard-wire cable and other
pay television systems, or other companies engaged in providing the media
services provided by the Company. See "BUSINESS Competition."
Risks Associated with IDC
- -------------------------
Pursuant to its Beta-Site Agreement with the Company, IDC has agreed to
make available to the Company its prototype B-CDMA Wireless Local Loop
products. Those products are intended to be used by the Company to develop a
package of products which includes local telephone service, high speed Internet
access, and wireless cable television service. However, the products to be made
available by the Company have not been employed in any other markets and it can
be expected that the Company will encounter unforeseen technological challenges
in doing so. This will be the first beta test in the U.S. using IDC's B-CDMA
technology. IDC has made the Company a short term loan of $250,000. The Company
has not concluded other agreements necessary to implement these products in its
market area, and there can be no assurance that it will succeed in doing so on
favorable terms. See "BUSINESS - Other Technologies - InterDigital
Communications Corporation" below.
In addition to risks associated with the Company's use of such
technology, various risks are associated with IDC's B-CDMA technology. The
actual revenues to be derived from the utilization of that technology in the
Company's territory may vary due to a variety of factors unrelated to the
Company or its territory including difficulties or delays in design,
development, production, testing and deployment of products or underlying
communications technologies, failure to attain or maintain customer acceptance
of products or underlying technologies, changes in wireless market growth, lack
of adequate funding for IDC's product development, and inadequacy, inability or
failure of IDC's alliance partners to meet expectations.
Need for Additional Financing For Growth
- ----------------------------------------
The growth of the Company's business will require substantial investment
on a continuing basis to finance capital expenditures and related expenses for
subscriber growth and new system development. The Company will also require
capital to construct and develop its broadcasting network to accommodate its
activities as a beta-site for IDC's digital communications system, if
ultimately implemented. The level of capital which will be required for this
purpose has not been determined. Although the Company believes that the
proceeds from this offering, together with funds expected to be generated from
operations, will be sufficient to finance the Company's working capital
requirements for at least 12 months following completion of this offering,
there can be no assurance that the Company will generate sufficient revenues to
fund its operations after that date. The Company believes that the net proceeds
from this offering will be sufficient to achieve approximately 8,000
subscribers to the Mount Mansfield System over the next 5 years and to employ
digital compression technology for that system. Further significant growth in
that system or expansion into new markets will require additional financing,
which may not be available on satisfactory terms, if at all. Failure to obtain
such additional financing could adversely affect the growth of the Company. The
proceeds from this offering will not be sufficient to develop other wireless
cable systems. Although the Company believes that operating revenues will
enable it to expand the subscriber base for its existing system, there can be
no assurance that the Company will generate adequate revenues to fund its
growth. The Company does 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.
To the extent that 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. Additional debt could result in a
substantial portion of the Company's cash flow from operations being dedicated
to the payment of principal and interest on such indebtedness and may render
the Company more vulnerable to competitive pressures and economic downturns.
The Company's future capital requirements will depend upon a number of factors,
many of which are not within the Company's control, including programming
costs, capital costs, marketing expenses, staffing levels, subscriber growth
and competitive conditions. See "USE OF PROCEEDS," "BUSINESS," and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATIONS."
Inception of Telephone Operations
- ---------------------------------
The Company is only in the very preliminary stages of acquiring the
licenses and negotiating the contracts necessary to implement local wireless
loop telephone service. The Company has not yet obtained the licenses or
approvals necessary to commence such activities and there can be no assurance
that it will successfully do so. In addition, it is impossible to determine at
the current time what level of profits, if any, the Company will derive from
the implementation of such service.
Lack of Prior Experience of the Underwriter
- -------------------------------------------
DuPont Securities, Inc., the Underwriter, was formed in November 1996
and commenced operations in April 1997. It has never underwritten a public
offering of securities. There can be no assurance that the Underwriter will
be able to complete the offering successfully.
Impediments to Proposed Expansion
- ---------------------------------
The Company has adopted a business strategy which includes, in part,
growth through the development of additional wireless cable systems and the use
and acceptance of other wireless technologies and products. This may or may not
include technology developed by IDC. The Company's proposed wireless cable
expansion will be dependent on, among other things, the degree of competition
it encounters in its market area; its successful implementation of digital
compression technology in its market area; its ability to incorporate
technological changes into its product mix; the availability of suitable
management and other personnel; the Company's general ability to manage growth;
and the availability of adequate financing. The Company's management will be
responsible for the selection of expansion opportunities in its sole discretion
and shareholders will not be presented with advance information regarding
expansion opportunities or the ability to approve or disapprove expansion
opportunities. There can be no assurance that the Company will be successful in
its proposed business strategy. See "BUSINESS" and "RISK FACTORS - Need for
Additional Financing for Growth."
Termination or Expiration of Channel Leases
- -------------------------------------------
The Company is dependent on lease agreements with third parties for its
wireless cable channels in the Mount Mansfield System (the "Lease Agreements").
As indicated above under "RISK FACTORS - Defaults Under Agreements", the
Company is in default of several Lease Agreements which may cause their
termination. In addition, although the FCC does not have the authority to
terminate the lease of the channel licenses, the Company's ability to continue
to enjoy the benefits of the Lease Agreements will be dependent upon the
channel license holders' continuing compliance with applicable regulations.
Under the rules of the FCC, the term of a channel lease cannot exceed the term
of the license granted by the FCC to the license holder. FCC licenses for
wireless cable channels generally must be renewed every 10 years and there is
no automatic renewal of such licenses. The Lease Agreements were commenced in
1991 and 1993 and have terms (with renewal options) of 20 years. The channel
licenses leased to the Company pursuant to the Lease Agreements expire
beginning in 2001. Channel licenses are subject to non-renewal, revocation or
cancellation for violations of the Communications Act of 1934, as amended (the
"Communications Act") or the FCC's rules and policies. The termination of, or
failure to renew, a channel lease would result in the Company's inability to
deliver television programming on any such channel and could have a material
adverse effect on the Company.
Dependence on Key Individuals
- -----------------------------
The Company's development and success depends upon the continued
contributions of its executive officers, Alan R. Ackerman, Chairman of its
Board of Directors and Scott A. Wendel, President and Chief Executive Officer.
The Company has no keyman insurance on its officers. The loss of the services
of either Mr. Ackerman or Mr. Wendel could have a material, adverse effect on
the Company. The Company has not entered into an employment agreement with Mr.
Ackerman or Mr. Wendel although it intends to do so upon successful completion
of the offering described in this Prospectus. Only Mr. Wendel devotes full
business time to the Company. See "MANAGEMENT."
Limited Number of Experienced Management; Board Composition
- -----------------------------------------------------------
Of the executive officers of the Company, only Scott A. Wendel has had
extensive experience in the cable television business. In the event that the
Company were to lose the services of Mr. Wendel, the Company could experience a
material and adverse disruption in its business activities. See "MANAGEMENT."
In addition, upon completion of the offering, the Company will have 4
directors, only 1 of whom will be an outside director.
Additional Management
- ---------------------
Upon completion of the offering, the Company intends to retain a new
Chief Executive Officer and a new Chief Financial Officer. See "MANAGEMENT."
Consequently, investors will not have the opportunity to evaluate the
experience or qualifications of such persons prior to making an investment
decision as to the Units. Furthermore, the Company may experience delays in
retaining a qualified individual, and may not succeed in retaining such an
individual on favorable terms.
Conflicts of Interest
- ---------------------
To the extent that there are insufficient revenues from operations,
officers' salaries of up to approximately $200,000 will be paid from the
proceeds of this offering within the first 12 months after the closing of the
offering, and the principal amount of $1,200,000 will be repaid, from the
proceeds of this offering, to the Company's principal stockholder who
participated in a prior financing. Conflicts of interest could arise in the
negotiation of the terms of any transaction between the Company and its
shareholders, officers, directors, or affiliates. The Company has no plans or
arrangements, including the hiring of an independent third party, for the
resolution of disputes between the Company and such persons, if they arise. The
Company and its public shareholders could be adversely affected should such
individuals choose to place their own interests before those of the Company. No
assurance can be given that conflicts of interest will not cause the Company to
lose potential opportunities, profits, or management attention. The Company
could acquire wireless cable systems or assets from management, principal
shareholders or their affiliates or from entities in which management,
principal shareholders or their affiliates may hold an interest. Such persons
or entities could derive monetary or other benefits from such transactions.
Such benefits could include, without limitation, the assumption of, or release
from, liabilities incurred by such persons or result in increased control of
the Company by such persons.
Physical Limitations of Wireless Cable Transmission
- ---------------------------------------------------
Wireless cable programming is transmitted through the air via microwave
frequencies from a transmission facility to a small, Company-owned receiving
antenna at each subscriber's location and requires "line-of-sight"
transmission. Therefore, in communities with tall trees, hilly terrain, tall
buildings, or other obstructions in the transmission path, transmission can be
difficult or impossible to receive at certain locations without the use of
signal repeaters known as "beambenders". Traditional hard-wire cable systems do
not have a line-of-sight concern with transmission and, therefore, may have a
competitive advantage over the Company in those areas equipped with hard-wire
cable systems where the reception of wireless cable transmission is difficult
or impractical. See "BUSINESS."
Government Regulation
- ---------------------
The business of the Company is subject to regulation by the FCC and other
regulatory agencies. The right to transmit on wireless cable channels is
regulated by the FCC and the retransmission of local off-air VHF/UHF broadcasts
is regulated by the United States Copyright Office (the "U.S. Copyright
Office") pursuant to the Copyright Act of 1976, as amended (the "Copyright
Act").
Pursuant to the Cable Television Consumer Protection and Competition Act
of 1992 (the "Cable Act"), the FCC adopted rate regulations exclusively for
traditional hard-wire cable systems which provide for, among other things,
reductions in the basic service and equipment rates charged by most hard-wire
cable operators and FCC oversight of rates for all other services and
equipment. The Cable Act also provides for rate deregulation of a traditional
hard-wire cable operator in a particular market once there is "effective
competition" in that market. Effective competition exists, among other
circumstances, when another multi-channel video provider exceeds a 15%
penetration in that market. FCC regulations continue to apply to traditional
hard-wire cable operators as to price and service absent effective competition.
While current FCC regulations are intended to promote the development of a
competitive pay television industry, the rules and regulations affecting the
wireless cable industry may change, and any future changes in FCC rules,
regulations, policies and procedures could have an adverse effect on the
industry as a whole and on the Company in particular.
Secondary transmission of a broadcast signal is permissible only if
approved by the copyright holder or if subject to compulsory licensing under
the Copyright Act. The U.S. Copyright office has taken the position that,
effective January 1, 1995, wireless cable operators, unlike traditional
hard-wire cable operators, will not be "cable systems" entitled to a compulsory
license under the Copyright Act. Pursuant to the Cable Act, local broadcasters
may require that cable operators obtain their consent before retransmitting
local off-air VHF/UHF broadcasts. The Company has obtained such consent for the
23 broadcast channels in the Mount Mansfield System that the Company is
retransmitting on a wireless cable channel. See "BUSINESS - The Mount Mansfield
System - Programming."
Dependence on Programming Agreements
- ------------------------------------
In connection with its distribution of television programming, the
Company is dependent on fixed-term contracts with various program suppliers. If
such contracts are canceled or not renewed, the Company will have to seek
program material from other sources. There is no assurance that other program
material will be available to the Company's subscribers. The likelihood that
program material will be unavailable to the Company is significantly mitigated
by the Cable Act and various FCC regulations issued thereunder, which, among
other things, impose limits on exclusive programming contracts and generally
prohibit cable programmers in which a cable operator has an attributable
interest from discriminating against cable competitors with respect to price,
terms and conditions of sale of programming. See "BUSINESS - The Mount
Mansfield System - Programming."
Unproved Basis for Company Plans
- --------------------------------
The Company's plans for implementation of its proposed business
operations and achieving profitability from the application of digital
compression technology in its intended operations are based on the experience
and judgment of its management, and upon certain available information
concerning the wireless cable industry in general and the Company's potential
markets. No independent market studies have been conducted concerning the
extent to which customers will subscribe to the Company's wireless cable
services, as expanded through digital technology, nor are any such studies
planned. There can be no assurance that the Company's plans will materialize.
See "BUSINESS."
Voting Power of Present Management
- ----------------------------------
Upon completion of this offering, Alan R. Ackerman will own
approximately 39% of the outstanding Common Stock of the Company.
Consequently, Mr. Ackerman may be in a position to influence a majority of
the Company's Directors and generally to exercise control over the Company's
affairs. See "MANAGEMENT" and "PRINCIPAL STOCKHOLDERS."
Dividends Unlikely
- ------------------
The Company has not paid any dividends on its Common Stock and does not
intend to declare or pay cash dividends in the foreseeable future. Earnings are
expected to be retained to provide funds for operation and expansion. See
"DIVIDEND POLICY."
Risk of Future Sales of Common Stock
- ------------------------------------
Upon completion of this offering, members of management and the other
existing shareholders of the Company will own 2,858,961 shares of Common Stock
of the Company, representing approximately 70% of the outstanding shares of
Common Stock immediately following the offering Options to purchase an
additional 402,776 shares have been issued to Alan R. Ackerman, the Company's
Chairman. Another 296,875 shares of Common Stock are issuable by the Company
upon exercise of outstanding Warrants. All of these shares are deemed
"restricted securities" as defined by Rule 144 under the Securities Act of
1933, as amended (the "Securities Act") and were acquired or were derived
from securities purchased prior to the date hereof. In general, under Rule
144, a person (or persons whose shares are aggregated) who has satisfied a
1-year holding period may, under certain circumstances, sell within any
3-month period a number of restricted securities which does not exceed
the greater of one percent (1%) of the shares outstanding or the average
weekly trading volume during the four calendar weeks preceding the notice of
sale required by Rule 144. In addition, Rule 144 permits, under certain
circumstances, the sale of restricted securities by a person who is not an
affiliate of the Company and has satisfied a 2-year holding period without any
quantity limitations. Any sales of shares by shareholders pursuant to Rule 144
may have a depressive effect on the price of the Common Stock. The vast
majority of shares issued prior to inception of the offering (other than shares
held by affiliates and shares not issued yet pursuant to Warrants previously
issued) may be sold pursuant to Rule 144 immediately after completion of the
offering; however, the management shareholders of the Company have agreed with
the Underwriter not to offer or sell any shares of Common Stock for a period of
2 years following the date of this Prospectus. See "PRINCIPAL STOCKHOLDERS,"
"UNDERWRITING," and "DESCRIPTION OF SECURITIES."
No Prior Market
- ---------------
There has been no prior market for the Common Stock and there is no
assurance that an active public market for the Common Stock will develop or be
sustained after completion of this offering. The public offering price of the
Common Stock has been determined by negotiations between the Company and the
Underwriter and does not necessarily bear any relationship to the Company's
asset value, net worth or other generally accepted criteria of value. It is
anticipated that the Common Stock will be listed on the NASDAQ Small Cap(TM)
Market and the Boston Stock Exchange. Even if such securities are so listed,
there can be no assurance that the Company will continue to meet such listing
requirements.
Dilution
- --------
Purchasers who acquire Common Stock will incur immediate and substantial
dilution from the public offering price. Giving retroactive effect to the
consummation of the offering made hereby, the Company's pro forma net tangible
book value at March 31, 1997 would have been $__________ per share representing
an immediate increase in net tangible book value of $__________ per share to
the present shareholders and an immediate dilution of $__________ per share of
Common Stock, or approximately _____%, to public investors from the public
offering price. See "DILUTION."
Volatility of Stock
- -------------------
The market prices for securities of newly public companies have
historically been highly volatile. Future announcements concerning the Company
or its competitors, including operating results, technological innovation, and
government regulations, could have a significant impact on the market price of
the Common Stock.
Risk of Authorization of Preferred Stock
- ----------------------------------------
The Company's Certificate of Incorporation authorizes the issuance of
2,500,000 shares of "blank check" preferred stock with such designations,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without
stockholder approval (but subject to applicable government regulatory
restrictions), to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of the Company's Common Stock. In the event of issuance,
the preferred stock could be utilized, under certain circumstances, as a method
of discouraging, delaying or preventing a change in control of the Company.
Although the Company has no present intention to issue any shares of preferred
stock, there can be no assurance that the Company will not do so in the future.
See "DESCRIPTION OF SECURITIES."
Risk of Non-Registration of Securities in Certain Jurisdictions
- ---------------------------------------------------------------
The Company is required to have a current registration statement on file
with the Commission and to effect appropriate qualifications under the laws and
regulations of the states in which the holders of Warrants reside in order to
comply with applicable laws in connection with the exercise of Warrants and the
resale of the Common Stock issued upon such exercise. The Company, therefore,
will be required to file post-effective amendments to its registration
statement when subsequent events require such amendments in order to continue
the registration of the Common Stock underlying the Warrants and to take
appropriate action under state securities laws. There can be no assurance that
the Company will be able to keep its registration statement current or to
effect appropriate action under applicable state securities laws. Its failure
to do so may restrict the ability of the Warrant holders to exercise the
Warrants and resell or otherwise dispose of the underlying Common Stock.
DILUTION
As of March 31, 1997, the Company had a deficit net tangible book value
of $2,197,954 or approximately $0.79 per share of Common Stock. Net tangible
book value per share represents the amount of the Company's total tangible
assets, less liabilities, divided by the number of shares of Common Stock
outstanding. Giving retroactive effect to the consummation of the offering made
hereby, assuming an initial public offering price of $6.50 per share of Common
Stock and Warrants (which is the mid-point of the expected price range of the
offering, less underwriting discounts and estimated offering expenses), the pro
forma net tangible book value at March 31, 1997 should have been $____ per
share representing an immediate increase in net tangible book value of $____
per share to the present shareholders and an immediate dilution of $____ per
share of Common Stock, or approximately __%, to public investors from the
public offering price. Dilution per share represents the difference between the
public offering price and the pro forma net tangible book value per share after
the offering.
The following table illustrates the dilution per share of Common Stock to
be incurred by public investors from the public offering price:
<TABLE>
<CAPTION>
Approximate
Percentage
-----------
<S> <C> <C>
Assumed initial public offering price 100%
Net negative tangible book value before offering ($0.79)
Increase attributable to public investors
Pro forma net tangible book value after offering ___%
Dilution of net tangible book value to public investors ___%
</TABLE>
The following table sets forth the difference between the present
shareholders and the public investors with respect to the number of shares of
Common Stock purchased from the Company, the total consideration paid and the
average price per share:
<TABLE>
<CAPTION>
Weighted
Average
Shares Purchased Total Consideration Price
Number Percent Amount Percent Per Share
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Existing Shareholders(1)(2) 2,858,961 69.6% $ 2,657,671 26.2% $0.93
Public Investors(3) 1,250,000 30.4% $ 7,500,000 73.8% $6.00
------------------------------------------------------------------
4,108,961 100.0% $10,157,671 100.0%
- --------------------
<F1> Includes $1,059,109 paid by shareholders of NEW, the Company's
subsidiary.
<F2> Includes 70,000 shares issued in May 1997 in connection with conversion
of debt.
<F3> At assumed offering price.
</TABLE>
USE OF PROCEEDS
The net proceeds (after deducting underwriting discounts and other
expenses of the offering payable by the Company) from the sale of the Common
Stock offered hereby by the Company, are estimated to be approximately
$__________, and are expected to be used over approximately 12 months following
the completion of this offering for the following purposes:
<TABLE>
<CAPTION>
Approximate Percentage of
Application Amount of Net Proceeds Net Proceeds
- --------------------------------------------------------------------------------
<S> <C> <C>
Repay indebtedness(5) $ %
Capital expenditures(6) $ %
Personnel and installation expenses(7) $ %
Working capital(8) $ %
- -------------------------------------------------------------------------
Total $ 100.0%
- -------------------------------------------------------------------------
- --------------------
<F5> Consists of the repayment of (i) $999,500 (as of July 31, 1997) on
promissory notes issued in connection with private placements of the
Company's promissory notes (the "Notes"), (ii) repayment of
indebtedness to the Company's principal shareholder of
$1,200,000, and (iii) repayment of trade indebtedness of approximately
$__________. The Notes have matured and are currently payable. The
proceeds from the Notes were used primarily to pay costs associated with
the inception of the Company's broadcasting activities, including
compensation expenses, and to purchase transmission and other equipment.
<F6> To be used to expand and upgrade transmission equipment to incorporate
digital compression technology, and digital reception equipment at
subscriber locations. In addition, the Company also plans to make
additional investments in analog equipment where operating conditions or
other circumstances make digital equipment unavailable.
<F7> Includes expenses for outside contract labor for subscriber installations
and salaries and benefits for Company installation, administrative, and
sales personnel. To the extent that there are insufficient revenues from
operations, officers' salaries will be paid from the proceeds of this
offering allocated to personnel and installation expenses. See
"MANAGEMENT."
<F8> Proceeds allocated to working capital will be used to fund general
operations of the Company.
</TABLE>
The foregoing represents the Company's best estimate of the allocation of
the net proceeds of this offering based upon the current status of its business
operations, its current plans and current economic conditions. Future events,
including the problems, delays, expenses and complications frequently
encountered by early stage companies as well as changes in regulatory,
political and competitive conditions affecting the Company's business and the
success or lack thereof of the Company's marketing efforts, may make shifts in
the allocation of funds necessary or desirable.
Prior to expenditure, the net proceeds will be invested in short-term,
interest bearing securities or money market funds. Any proceeds received upon
exercise of the Underwriter's over-allotment option, as well as income from
investments, will be used to fund operations.
DIVIDEND POLICY
The Company has never paid a cash dividend and does not anticipate the
payment of cash dividends on its Common Stock in the foreseeable future as
earnings are expected to be retained to finance the Company's growth.
Declaration of dividends in the future will be at the discretion of the
Company's Board of Directors, which will review its dividend policy from time
to time.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997, and as adjusted to give effect to the issuance and sale of the
securities offered hereby:
<TABLE>
<CAPTION>
Actual As Adjusted(1)
--------------------------
<S> <C> <C>
Notes Payable, (net of unamortized debt discount of $3,046) $2,502,519
Preferred Stock, $.01 par value, 2,500,000 shares
authorized; none issued and outstanding
Shareholders' Equity:
Common Stock, $.01 par value, 20,000,000 shares authorized; 2,788,961
shares issued, outstanding and to be issued 27,890
Additional Paid-in Capital 687,357
Accumulated Deficit (2,755,424)
Total stockholders' equity (Capital Deficiency) (2,040,177)
----------
Total Capitalization 462,342
==========
- --------------------
<F1> Reflects the issuance of 70,000 shares of common stock which the Company
agreed to issue after March 31, 1997 in connection with conversion of
outstanding indebtedness.
</TABLE>
SELECTED FINANCIAL DATA
The following selected financial data are qualified in their entirety by,
and should be read in conjunction with, the Company's Financial Statements and
the notes thereto and "Management's Discussion and Analysis," included
elsewhere in this Prospectus. The selected financial data for periods ended
June 30, 1995 and June 30, 1996 have been derived from the Company's Financial
Statements, which have been audited by Richard A. Eisner & Company, LLP,
independent auditors, as indicated in their report included elsewhere in
this Prospectus.
Statement of Operations Data
- ----------------------------
<TABLE>
<CAPTION>
For The Periods Nine Months
Ended Ended Ended
June 30, 1995 June 30, 1996 March 31, 1997
-----------------------------------------------------
(Unaudited)
<S> <C> <C> <C>
Revenue $112,574 $ 323,144 $ 260,336
Service cost 27,712 91,606 76,623
Programming and license fees 276,953 799,285 631,212
Selling, general and administrative
expenses 267,488 384,140 449,292
(Loss) from operations (459,579) (951,887) (896,791)
Interest expense (50,083) (172,410) (282,515)
Miscellaneous expense (8,281) (6,948) (41,696)
Net (loss) (517,943) (1,131,245) (1,221,002)
=================================================
Net (loss) per share of Common Stock ($ .19) ($ .40) ($ .43)
Weighted Average Number of
shares of Common Stock outstanding 2,763,398 2,836,461 2,836,461
</TABLE>
Balance Sheet Data
- ------------------
<TABLE>
<CAPTION>
March 31, 1997
June 30, 1996 Actual As Adjusted
----------------------------------------------------------
<S> <C> <C> <C>
Working capital (deficit) ($2,891,784) ($3,478,037)
Total assets 1,938,316 1,591,393
Total liabilities 3,041,208 3,631,570
Accumulated deficit (1,534,422) (2,755,424)
Shareholders' equity (1,102,892) (2,040,177)
</TABLE>
The foregoing table gives effect to the sale of 1,250,000 shares of
Common Stock at $_____ per share and to the application of estimated net
proceeds therefrom. See "USE OF PROCEEDS."
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
- -------
The discussion set forth below with regard to the Company relates to the
business operations conducted by the Company from the time of its organization
in April 1994, through March 31, 1997. The operations in which the Company
engaged prior to March 11, 1995 were conducted on a limited basis while the
Company's management devoted the bulk of their time and resources to the
development of a relationship with NEW, which it acquired in March, 1995.
Subsequent to that acquisition, the Company has devoted its efforts to the
development of its wireless cable operations in Vermont, as well as the
exploration of other technological opportunities in the wireless arena. The
Company reported using a December 31 year end for its 1994 fiscal year and
converted to a June 30 year end for the period ended June 30, 1995.
Results of Operations
- ---------------------
Year Ended June 30, 1995 Compared With Six Months Ended June 30, 1996.
The Company generated revenues in the form of subscription revenues earned
from provision of its wireless cable television services during 1995 and
1996 in the amount of $112,574 and $323,144, respectively. However, the
Company lacked enough subscribers to generate revenues sufficient to cover
its operating expenses which were $572,153 and $1,275,031 realized during
fiscal years 1995 and 1996. These operating expenses consisted primarily of
programming and license fees and selling, general and administrative
expenses. During the periods in question, the level of operating revenue
remained at approximately 40% of programming and license fees. However,
general and administrative expenses were reduced from 238% of operating
revenue in 1995 to 119% of operating revenue in 1996. This decrease was due
primarily to reductions in operations and personnel. Nevertheless, the
levels of these expenses, together with the Company's interest expenses of
$50,083 and $172,410 during the respective periods resulted in operating
losses of $517,943 and $1,131,245 during 1995 and 1996 respectively.
Nine Months Ended March 31, 1996 Compared To The Nine Months Ended March
31, 1997. During the period ended March 31, 1997, the Company realized $260,336
in operating revenues as compared to $239,021 for the nine month period ended
March 31, 1996. During this period, the Company experienced continuing cash
shortages due to an insufficient subscriber base. The resulting cash shortages
made it unable to advertise or otherwise aggressively promote its services. It
also made the Company unable to pursue the acquisition of other cable
television systems or the implementation of new technologies which might have
improved its profitability.
As a result, programming costs and license fees remained at
disproportionately high levels of $594,430 and $631,212 for the periods ended
March 31, 1996 and March 31, 1997 respectively. In addition, general and
administrative expenses also remained at disproportionate levels during the
periods in question ($292,331 and $449,292 during the periods ended March 31,
1996 and March 31, 1997 respectively. As a result of such expenses, plus
increases in interest expenses (from $98,494 during the period ended March 31,
1996 to $282,515 during the period ended March 31, 1997) attributable to
indebtedness incurred to cover the Company's continued cash deficiencies, the
Company experienced losses of $817,877 during the period ending March 31, 1996
and $1,112,852 during the period ended March 31, 1997.
Liquidity and Capital Resources
- -------------------------------
The Company has financed its initial operations, and it has been
financing the activities it has been conducting, with debt and equity capital
that it has raised through private placements of its securities during the
period in question. The proceeds of the sale of such equity and indebtedness
have been used to defray the ongoing operating cash shortfalls experienced by
the Company. The major portion of finances have been made available through
loans from Alan R. Ackerman. As of July 31, 1997, Mr. Ackerman had made loans
to the Company which with an outstanding balance of $1,611,000. The Company
plans to retire $1,200,000 of such indebtedness out of the proceeds of the
offering. See "USE OF PROCEEDS."
During 1995, the Company issued 40,000 shares of its stock to 3
individuals at a price of $3.00 per share.
On August 21, 1995, the Company issued $150,000 of convertible promissory
notes to 5 accredited investors with annual interest rates of 8%. The notes
were due and payable on June 30, 1996. The notes afford the holders thereof
the right to convert into shares of the Company's common stock at $3.50, and
also afford the holders of the notes "piggy-back" registration rights with
respect to such shares as to any registration statements filed by the Company
after completion of its initial public offering.
On April 14, 1995 and August 22, 1995, the Company issued two promissory
notes to accredited investors in the aggregate amount of $175,000 due on
demand after 180 days. The notes carried an interest rate of 7.5%.
During December 21, 1995 through January 4, 1996, the Company issued
convertible promissory notes in an aggregate principal amount of $112,500 at an
annual interest rate of 7.5% (increasing to 12% if not timely paid) to 3
investors. Two notes aggregating $87,500 were converted into 25,000 shares
of the Company's Common Stock at a price of $3.50 per share.
On April 4, 1996, the Company issued a promissory note to a single
investor in the original principal amount of $100,000 with an annual interest
rate of 8.5%(increasing to 12% if not timely paid) due 180 days after issuance.
The note provided for the issuance of 25,000 Warrants (issued during April,
1997) to purchase the Company's common stock exercisable at $3.00 per share or
at a price to be determined in the absence of a public offering for a period
from the 13th month until the 36th month after completion of a public offering
of the Company's stock.
On August 29, 1996, the Company completed a private placement of $330,000
of convertible promissory notes with attached Warrants to five investors. The
notes provided an annual interest rate of 10%, and for conversion into the
Company's common stock at $3.00 per share. The notes were due on March 1, 1997.
The Warrants entitle the holders thereof to purchase an aggregate of 82,500
shares of the Company's common stock at $3.00 per share.
On December 19, 1996 and January 7, 1997, the Company issued 2 promissory
notes to 2 persons in the aggregate principal amount of $90,000 with an
interest rate of 10%. The notes were due on March 1, 1997.
From March 31, 1997 until April 23, 1997, the Company issued an aggregate
of $339,000 in promissory notes to 4 investors, including InterDigital
Communications Corporation ("IDC"). The notes carry annual interest rates of
7.5% or, in the case of the IDC note, prime plus 1%, and are due either 180
days from issuance or, in the case of the note to IDC, on December 31, 1997.
One note, in the original principal amount of $5,000 is convertible at
$3.00 per share of common stock. The Company also issued Warrants to
purchase 78,250 shares of its common stock exercisable at a price of 50%
of the price per share at which such stock is sold in a public offering of the
Company's securities during the period from the 13th month until the 36th
month after completion of the offering to the purchasers of the notes.
In May 1997, an investor converted $210,000 of indebtedness of the
Company in return for 70,000 shares of the Company's common stock.
In August, 1997, the Company made an offer to all existing note holders
to issue shares of its common stock in exchange for outstanding indebtedness at
a price of $3.00 per share. To date, noteholders have elected to convert
$304,500 in principal and $34,759.76 in interest into 113,087 shares of its
common stock.
In August, 1997, in consideration of delays which it has experienced in
securing financing necessary to pursue its operations, the Company has agreed
to issue Warrants to purchase 12,909 shares of its common stock to persons who
previously elected to exchange their indebtedness of NEW for shares of the
Company's common stock in connection with the Company's acquisition of NEW
through a merger with its subsidiary in March, 1995. The Warrants were issued
on the basis of one Warrant for every $4 of interest due but not paid in
connection with such exchange. The Company has also agreed to issue Warrants to
purchase 402,776 of its shares of common stock to Alan R. Ackerman, its
principal stockholder, in consideration of past services rendered to the
Company. The Warrants are exercisable during either: (i) the period commencing
on the 13th month and ending on the 36th month following the contemplated
offering; or (ii) January 1, 1998 through January 1, 2002 in the event the
offering has not been declared effective by the Securities and Exchange
Commission by December 31, 1997. The warrants are exercisable at $3.00 per
share.
BUSINESS
Background
- ----------
The Company is a developer, owner and operator of a wireless cable
television system in northern Vermont. Through its wholly owned subsidiary, New
England Wireless, Inc. ("NEW"), the Company has obtained wireless cable channel
(or frequency) rights in Vermont through leases of FCC licenses. Wireless cable
television is provided to subscribers by transmitting microwave frequencies
over the air to a small receiving antenna at each subscriber's location. The
Company currently operates a broadcasting system from Mount Mansfield, Vermont
(the "Mount Mansfield System").
In March 1995, a wholly owned subsidiary of the Company, N.E.W.
Acquisition Co., Inc. , merged with NEW. In connection with the merger, all of
NEW's shares of outstanding common stock were exchanged for 801,156 shares of
the Company's common stock. The merger was treated for accounting purposes as a
capital transaction rather than as a business combination. Concurrent with the
merger, the Company and creditors of NEW agreed to exchange certain notes
aggregating $1,164,000 in return for 388,007 shares of the Company's common
stock. In addition, the Company issued notes payable in the amount of $680,466
to its founder, Alan R. Ackerman, in exchange for debt of NEW owed to him.
The Company commenced operations of its wireless cable system in August
1994 and, as of July 31, 1997, the Company had approximately 1,200 subscribers.
There are approximately 121,000 households within the Mount Mansfield System's
signal patterns. The Company offers 23 channels in the Mount Mansfield System,
consisting of 19 satellite channels and 4 local off-air (UHF/VHF) broadcast
channels. The Company currently is offering to its subscribers in the Mount
Mansfield System network channels as well as FOX (which is not available
off-air in the Company's market areas), MTV, ESPN, CNN, USA, WPIX, WTBS, WSBK,
A&E, Nickelodeon, the Discovery Channel, TNN Nashville, the Family Channel,
Lifetime, the History Channel, and the SCI-FI Channel. In addition, the Company
offers NESN, Showtime, and the Movie Channel as premium channels. In part
through the addition of digital compression technology to its broadcast
capabilities, the Company anticipates servicing approximately 8,000 subscribers
through the Mount Mansfield System within the next 5 years. The number of
future subscribers and the timing of subscriber growth, however, will depend on
a number of factors, many of which are not within the Company's control. These
factors include future capital equipment costs, marketing expenses and
effectiveness, staffing levels, competitive conditions, cash flow from
operations and the Company's ability to raise additional capital. There can be
no assurance that the Company will achieve its subscriber goals.
Business Strategy - Wireless Cable Television
- ---------------------------------------------
The Company's business strategy is to expand operation of its existing
Mount Mansfield System through the addition of digital compression technology.
Following completion of this offering, the Company intends to purchase
upgraded digital transmission equipment and to purchase subscriber reception
equipment which will enable the Company to install and service approximately
3,600 additional subscribers in the system within the next 12 months. The
wireless cable television business is capital intensive. Since its inception,
the Company has expended funds to acquire channel rights in the systems,
construct an initial operating system and finance initial operating losses.
Transmission equipment expenditures and other start-up expenditures were made
by the Company before it could commence the delivery of programming to its
subscribers.
A significant portion of the Company's future investments in technology
will be directed towards its purchase of digital transmission and subscriber
equipment. Digital technology offers the potential for the Company to broadcast
over 100 different television channels over its existing broadcast frequencies.
However, implementation of digital technologies will require the Company to
invest additional funds to augment its transmission facilities as well as to
equip its existing subscribers with new receptors and equipment necessary to
accommodate digital transmission technology.
Certain of the Company's expected activities in its market area will
relate to the recent termination of transmission by one of its major
competitors in the local market area, the Vermont Wireless Cooperative ("VWC").
Pursuant to an order issued by the FCC in May 1997, the VWC has ceased
broadcasting wireless cable programming. To date, the Company has added 100
subscribers formerly served by VWC. The Company expects to add more former VWC
customers through the employment of beam-benders to transmit its signals to
additional subscribers. The Company has added 170 subscribers in total since
May 31, 1997.
In connection with VWC's termination of activities, the FCC revoked VWC's
rights to utilize the ITFS broadcasting licenses formerly utilized by VWC for
its broadcasting activities. Because those licenses are within the Company's
protected broadcast area for FCC purposes, the Company believes that those
licenses will not prove attractive for third parties. If the Company is
successful in leasing those licenses, it will be able to add broadcasting sites
in North Hero and Monkton, Vermont, as well as in other areas. These additional
sites are expected to enhance the Company's broadcasting capabilities. In
addition, these additional sites will facilitate its construction and
development of a transmission network necessary to satisfy its requirements in
connection with its activities as a beta- site for IDC.
Although incremental equipment and labor installation costs per
subscriber are incurred after a subscriber signs up for the Company's wireless
cable service, such costs are incurred by the Company before it receives fees
from the subscribers and are only partially offset by installation charges. To
sustain subscriber growth beyond its current base of approximately 1,200
subscribers, and subscribers which it is able to add with its implementation of
digital technology with the offering proceeds, the Company will need to
generate enough operating revenues to enable it to continue to invest in
subscriber reception equipment and installation or raise additional debt or
equity capital. In addition, in order to develop and launch additional wireless
cable systems, as well as pursue other technologies as described elsewhere
herein, the Company will need to raise additional capital. There can be no
assurance that operating revenues will be sufficient to sustain subscriber
growth or that additional financing, if required, will be available on terms
acceptable to the Company, if at all.
The Company's revenues will primarily be generated by subscription fees,
pay-per-view fees and installation charges. The Company's installation fees are
$49.95 per subscriber (for one television) with $15.00 for each additional
television. The Company's subscription fees currently are $9.95 for a basic
programming package which includes 4 off-air channels and 5 cable channels,
$24.95 per month for an expanded channel line-up (comparable to a hard-wire
cable basic package) including a premium movie channel and a premium sports
channel, plus $8.95 per month for an additional movie channel. The Company
expects to modify the rates to reflect its addition of digital technology.
Expenses will consist primarily of service costs, selling, general and
administrative expenses, and depreciation and amortization. Service costs
include programming costs, channel lease payments, if any, transmitter site
rentals, cost of program guides and repair and maintenance expenditures. Of
these, programming costs, channel lease payments and costs of program guides
will be variable expenses which increase as the number of subscribers increase.
The addition of subscribers will also increase depreciation expense. The
Company expends approximately $400 to purchase and install the wireless cable
receiving antenna and related equipment necessary at each subscriber's
location. The Company estimates that it will spend approximately $600 per
subscriber to switch such equipment to digital equipment. To install digital
equipment for new subscribers, the Company expects to spend approximately $740
per subscriber.
Profitability will be determined by the Company's ability to increase
revenue from subscribers while controlling variable expenses. Significant
increases in revenues have to come from subscriber growth. Currently, the
Company has 15 employees. In addition, the Company engages additional persons
as necessary as contract labor for installations. The Company may incur
research and development expenses for B-CDMA technology. Otherwise, the Company
does not intend to incur expenses relating to research and development during
the next 12 months, except for general market research in the ordinary course
of business.
In connection with its addition of digital capabilities, the Company
expects to offer 3 principal tiers of cable services. The highest tier,
expected to be called the "Ultra" service, is expected to offer 66 channels of
programming. The next tier, the Expanded Basic Tier, will offer 31 channels of
broadcasting, and the basic tier will offer 9 channels of broadcasting. The
growth of the Company's business beyond its Mount Mansfield System market, and
the implementation of additional cable technologies will require a substantial
investment on a continuing basis to finance capital expenditures and related
expenses for subscriber growth and new system development. The Company does 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 at all. See "RISK FACTORS -
Need for Additional Financing for Growth."
The Company may consider expansion of its activities into additional
markets. In doing so, it plans to rely on the experience and knowledge of its
management as well as third-party brokers to identify wireless cable system
expansion opportunities. The Company's management will be responsible for the
selection of other expansion opportunities in its sole discretion and
shareholders will not be presented with advance information regarding expansion
opportunities or the ability to approve or disapprove system expansion
opportunities. In addition to the size of the potential market and proximity to
existing systems, the Company intends to explore markets where it can contain
system launch costs by economically acquiring channel license rights and
initially utilizing lower power transmission equipment. The Company has not
currently identified other factors that it will consider in expanding into new
markets or in implementing new technologies. The Company has no specific
expansion plans, arrangements, understandings or commitments at the present
time and there can be no assurance that the Company will be successful in
expanding its operations into other markets.
The Company intends to develop its subscriber base in the Mount Mansfield
System and, potentially, to launch new technologies in that market or in other
markets by emphasizing the price-to-value relationship of the Company's
programming and other possible services; the reliability, service, and picture
quality of wireless cable; the advanced technical features of the Company's
standard subscriber equipment; and the competitive choice afforded consumers by
wireless cable.
The Cable Television Industry in General
- ----------------------------------------
The cable television industry began in the late 1940's and 1950's to
serve the needs of residents in predominately rural areas. Since that time, the
cable television industry has expanded to metropolitan areas due to, among
other things, the better reception cable television often provides and
increased programming alternatives. Today, pay television systems offer various
types of programming which generally include basic service, premium service,
and, in some instances, pay-per-view service.
A cable television subscriber generally pays an initial connection charge
and a fixed monthly fee for basic service. The amount of the monthly basic
service fee varies from one area to another and is a function, in part, of the
number of channels and services included in the basic service package and the
cost of such services to the cable television system operator. In most
instances, a separate monthly fee for each premium service and certain other
specific programming is charged to subscribers, with discounts generally
available to subscribers receiving multiple premium services. Monthly service
fees for basic and premium services constitute the major source of revenue for
cable television systems. Subscribers normally are free to discontinue any
cable service at any time. Converter rentals, remote control rentals,
installation charges, and reconnect charges for subscribers who were previously
disconnected are also included in a cable television system's revenues but
generally are not a major component of such revenues.
Wireless Cable Television Systems in General
- --------------------------------------------
Initially, all cable systems were "hard-wire" systems, using coaxial
cable to carry television signals. Over the past several years, wireless cable
has emerged as an alternative to the traditional hard-wire cable systems in the
provision of cable television programming. Wireless cable television is a
ground-based, microwave broadcast system. It is, in effect, analogous to a
satellite broadcasting system in which the satellite is replaced by a microwave
transmitter located on a ground-based antenna. Wireless cable programming is
transmitted through the air via microwave frequencies that generally require a
direct "line-of-sight" from the transmission facility to the subscriber's
receiving antenna. Traditional hard-wire cable systems transmit signals from a
transmission facility, but deliver the signal to a subscriber's location
through a network of coaxial cable and amplifiers. Since wireless cable systems
do not require an extensive network of coaxial cable and amplifiers, the
system's capital cost per installed subscriber can be significantly less than
for hard-wire cable systems. In addition, operating costs of wireless cable
systems can generally be lower than those of comparable hard-wire cable systems
due to lower network maintenance and depreciation expense.
The Company believes that wireless technology can effectively compete
with conventional hard-wire cable television distribution of entertainment.
Most programming that is available for purchase and resale on hard-wire cable
systems can be distributed over a wireless cable system. The factors
contributing to the increasing growth of wireless cable systems include:
Federal laws limiting the rates and practices of the hard-wire cable industry;
improved technology, particularly in signal encryption; regulatory reforms by
the FCC to facilitate the growth and competitive impact of the wireless cable
industry; and the increasing availability of programming for wireless cable
systems. A leading consulting firm to the cable industry estimates that
wireless cable systems served approximately 866,000 subscribers at the end of
1995 and as of December 1996, served approximately 1,000,000 subscribers.
Wireless cable subscribers can generally be served by a central
transmitting antenna, and 2 or 3 fill-in or repeating antennas. Microwave
powers involved are very low. Both outlying areas and customers in close
vicinity to the transmitting antenna can be served immediately following system
turn-on, whereas cable network installations could take years to reach these
same outlying areas. Wireless cable systems have no need for time-consuming and
disruptive excavation of public thoroughfares. Labor is required only at the
transmitting site, and for installation at the repeating antennas and end-user
locations. The receiving equipment consists of a small antenna that is cabled
to a converter at the subscriber's location, which is similar to a hard-wire
cable TV converter box.
Every subscriber has a unique, computerized "address" that the system
communicates with consistently during broadcast. In this manner, service can be
activated or canceled from the main control office at the flick of a switch,
thus reducing the need for service calls. Once a wireless transmission system
has been installed, signals can be delivered to multi-unit dwellings at
substantially lower costs than even signals received directly via satellite
receivers.
Digital Video Services
- ----------------------
Digital video is capable of delivering a significantly expanded number of
high quality channels of compressed video programming services, including
off-air programming. Digital compression allows the capacity of each wireless
cable channel to increase by 4 to 10 times. The first fully operational
commercial microwave digital video system in North America was launched in
Canada in late 1996. To date, no wireless cable operator has commercially
introduced digital video compression technology in the United States, although
a number of wireless cable operators, including the Company, have tested such
technology in their systems and have announced various plans for commercial
deployment. While management believes that the Company is generally prepared
for the introduction of digital video compression in certain of its markets,
the purchase of digital video compression transmission and receiving equipment
would involve substantial capital expenditures, which the Company is not in a
position to make at this time. In addition, although the FCC generally
authorized the use of digital technologies in 1996, further specific
authorizations must be obtained from the FCC and affected FCC licensees and
applicants on a market-by-market basis in order for the Company to begin
offering digital video service. See "REGULATION". To the extent that the
Company is able to implement digital compression technology in any of its
markets, management anticipates that this expanded channel capacity will
increase the Company's opportunities to compete with other providers of video
services. In addition, the application of digital compression may result in the
availability of channel capacity for other services, as described below.
Several equipment manufacturers have developed digital compression
technology, to allow several programs to be carried in the amount of bandwidth
where only one program is carried now. Manufacturers have projected varying
compression ratios for future equipment, in some cases as high as 16 to 1. More
conservative estimates are between 6 to 1 and 10 to 1, which could increase the
available channels for the Mount Mansfield System from 23 to over 100 channels.
Compression equipment is available to wireless cable operators and to hard-wire
cable operators.
Other Technologies - InterDigital Communications Corporation
- ------------------------------------------------------------
InterDigital Communications Corporation ("IDC") develops and markets
advanced digital wireless telecommunications systems using proprietary
technologies for voice and data communications. Pursuant to its Ultra Phone(R)
time division multiple access (TDMA) digital wireless radio telephone system,
it offers phone services in over 340 locations worldwide. In addition, it has
concluded a strategic alliance with Siemens AG and Samsung Electronics Company,
Ltd., to develop its proprietary Broadband Code Division Multiple Access(TM)
(B-CDMA(TM)) technology for use in Wireless Local Loop (WLL) products and
future Personal Communications Services (PCS) applications.
Pursuant to its Beta-Site Agreement with the Company, the Company will
acquire equipment from IDC and in connection therewith will also obtain the
right to employ IDC's technologies in its market area. Pursuant to the Beta
Site Agreement, the Company is required to pay IDC as the purchase price for
its True Link(TM) equipment including all services provided by IDC as follows:
(i) $1,500 for each for each Fixed Subscriber Unit ("FSU"); (ii) $80,000 for
all infrastructure equipment necessary to accommodate up to 10 FSUs; (iii)
$70,000 for all infrastructure equipment necessary to accommodate FSUs 11
through 100; and (iv) $100,000 for all infrastructure equipment necessary to
accommodate FSUs 100 through 500.
The Company is required to pay for such items 20% upon shipment, 30% upon
substantial completion of installation, and the remaining 50% on final
acceptance of the equipment. In addition, IDC is required to provide all
services required for an amount, in addition to the equipment amount described
above, which estimated is not exceeding $60,000 payable at a rate of $600 per
man-day plus travel costs. The Company estimates that the total costs of the
IDC Beta Site Agreement will likely be approximately $-----.
The purpose of such expeditures will be to enhance the Company's
subscriber base and revenues, through its addition of services using IDC's
B-CDMA WLL products. IDC's B-CDMA technology is designed to give users a
variety of capabilities including voice conversation, transmission of large
amounts of data at higher speed (instead of using conventional telephone or
wire technologies for such purposes), transmission of information via
facsimile, and video conference equipment. The technology is also designed to
enhance the ability of communications systems to handle multiple subscribers
simultaneously. The objective of the B-CDMA technology is to allow the user to
conduct these activities from home or office and, in the future, while the user
is mobile. This technology is designed to accommodate phone services and
Internet communications among other uses.
Other Technologies - Local Wireless Loop Telephone Service
- ----------------------------------------------------------
In connection with its application of technology made available to it by
IDC, the Company is considering using its wireless spectrum to deliver
telephony services. Although the development of such telephony services is in
its early stages, management believes that the Company's wireless spectrum may
be capable of providing "local loop" telephone service in the future.
While the Company intends to continue its development efforts with
respect to local loop telephone service, the introduction of such service in
any of the Company's markets would involve substantial capital expenditures,
which the Company is not in a position to make at this time. The Company's
ability to commence delivery of WLL service will also depend upon successful
development of WLL technology and equipment and the availability of appropriate
transmission and reception equipment on satisfactory terms. Regulatory
approvals and changes, especially routine 2-way licensing of the radio spectrum
used by the Company, also would be required before the Company could
commercially introduce WLL telephone service.
Other Activities - Social Responsibility
- ----------------------------------------
The Company also intends to develop a role as a socially responsible
company. As an initial step in such direction, the Company has agreed to a
relationship with Project KidCare, a program sponsored by a joint venture
between Polaroid Corporation and the National Center for Missing and Exploited
Children. The Company expects that its participation in the program will cost
$6,000 during the next 12 months. It plans to participate by allowing a
complimentary enrollment of one child per subscriber family into the KidCare
program for any new subscribers. The Company has no legally binding commitment
or agreement as to such participation.
Polaroid has stated that the purpose of the program is:
* To educate families about child safety, and
* To encourage parents to obtain personal safety documents with
current, instant photographs of their child.
By pursuing these objectives, the program is intended to reduce the
number of missing children.
Government Regulation
- ---------------------
General. The wireless cable industry is subject to regulation by the FCC
pursuant to the Communications Act of 1934, as amended (the "Communications
Act"). The Communications Act empowers the FCC, among other things: to issue,
revoke, modify and renew licenses within the spectrum available to wireless
cable; to approve the assignment and/or transfer of control over such licenses;
to determine the location of wireless cable systems; to regulate the kind,
configuration and operation of equipment used by wireless cable systems; and to
impose certain equal employment opportunity requirements on wireless cable
operators.
The FCC has determined that wireless cable systems are not "cable
systems" for purposes of the Communications Act. Accordingly, a wireless cable
system does not require a franchise from a local authority and is subject to
fewer local regulations than a hard-wire cable system. Wireless cable operators
are also not required to pay local franchise fees. In addition, utility poles
and dedicated easements are not necessary.
The FCC has authorized access for wireless cable service to a series of
channel groups, consisting of certain channel groups specifically allocated for
wireless cable ("MDS"), and other channels originally authorized for
educational purposes ("ITFS"), although excess capacity can be leased from ITFS
licensees by wireless cable providers. Currently, up to 33 total channels are
potentially available for licensing, lease or purchase by wireless cable
companies in each market. Up to 13 channels in any given market typically can
be owned by commercial operators for full-time usage without programming
restrictions. The remaining 20 channels in a given market generally are
allocated for ITFS use. FCC rules generally prohibit the ownership or leasing
of MDS and ITFS authorizations by cable companies if the MDS facility is
located within 35 miles, or the ITFS facility is located within 20 miles, of
the cable company's franchise or service areas. Pursuant to the
Telecommunications Act of 1996, the cable-MDS rule does not apply to a cable
operator in a franchise area in which the operator is subject to effective
competition.
Authorizations have been issued, or are currently pending, for the
majority of MDS wireless cable licenses in most major U.S. markets, and, as
discussed below, under the current regulatory structure, only holders of a
Basic Trading Area ("BTA") authorization may apply for available MDS
frequencies within the BTA. In a number of markets, certain ITFS frequencies
are still available. However, except as noted below, eligibility for ownership
of ITFS licenses is limited to accredited educational institutions,
governmental organizations engaged in the formal education of enrolled students
and non-profit organizations whose purposes are educational and include
providing educational and instructional television material to such accredited
institutions and governmental organizations ("qualified ITFS educational
entities"). Non-local applicants must demonstrate that they have arranged with
local educational entities to provide them with programming and that they have
established a local programming committee. On July 10, 1996, the FCC adopted an
Order in which it authorized the interim use of certain digital compression
technologies for the provision of video, voice and data services over MDS and
ITFS frequencies. Such technology may be utilized by a wireless cable operator
or an MDS or ITFS licensee, after applying for, and being granted, such an
authorization by the FCC. The Company has filed, and will continue to file,
applications for digital authorizations in its market. The FCC has begun
granting digital authorizations. Upon receiving a digital authorization, a
licensee also may transmit 1-way downstream Internet service. The Company,
along with other wireless cable industry companies, petitioned the FCC in March
1997 to expand its digital authorizations to permit the grant of applications
for 2-way transmission of interactive services over MDS and ITFS frequencies.
The petition proposes rule changes necessary for the FCC to routinely grant
wireless cable companies the right to implement 2-way wireless services without
licensing delays. There can be no assurance that the petition will be granted,
or if granted, that the Company will be able to develop commercially successful
products using 2-way transmission.
FCC rules require ITFS operators to transmit a minimum amount of
educational programming per channel per week. If the educational programming
minimums are met, remaining air time can be leased to wireless cable operators
for profit and used to transmit non-educational programming. ITFS licensees are
now entitled to meet their minimum educational programming requirements for all
licensed channels using only one channel via "channel mapping," if desired.
Beginning in November 1995, the FCC auctioned all available MDS rights on
the basis of BTA's, with one such authorization available per BTA. The winning
bidder acquired the right to apply to operate one or more MDS stations within
the BTA, as long as its station proposals complied with the FCC's interference
requirements and other rules. With regard to commercial ITFS channels, only the
BTA license holder may apply for available authorizations within the BTA. A BTA
licensee has a 5-year build-out period within which to expand or initiate new
service within its BTA. It may sell, trade or otherwise alienate all or part of
its rights in the BTA and may also partition its BTA along geopolitical
boundaries and contract with eligible parties to allow them to apply for MDS
authorizations within the partitioned area, and conversely, acquire such rights
from other BTA licensees. The license term for each station authorized under
these BTA procedures is 10 years, commencing on the date that the FCC announced
that the auction for the BTA had closed.
The Company is also subject to various FCC regulatory limitations
relating to ownership and control. The Communications Act and FCC rules require
the FCC's approval before a license may be assigned or control of the holder of
a license may be transferred. Moreover, the Communications Act provides that
certain types of licenses, including those for MDS stations, may not be held
directly by corporations of which non-U.S. citizens or entities ("Aliens") own
of record or vote more than 20% of the capital stock. In situations in which
such an FCC license is directly or indirectly controlled by another
corporation, Aliens may own of record or vote no more than 25% of the
controlling corporation's capital stock.
Telecommunications Act of 1996. On February 8, 1996, the
Telecommunications Act of 1996 (the "1996 Act") became law. Among other things,
the 1996 Act eliminates the cable/telephone cross-ownership restriction,
allowing a telephone company the option of providing video programming within
its telephone service area over a cable system or a video platform. Conversely,
cable companies are now permitted to provide telephone service. The 1996 Act
also limits, and in some cases eliminates, FCC regulation of cable rates
established by the Cable Television Consumer Protection and Competition Act of
1992 (the "1992 Cable Act"), depending upon the size of the cable system and
whether the system is subject to effective competition and the nature of the
rate. Specifically, regulation of upper tier rates is scheduled to end March
31, 1999. Moreover, small cable operators and systems subject to effective
competition are now exempt from rate regulation as a result of the 1996 Act.
The 1996 Act also vests the FCC with exclusive jurisdiction over the provision
of Direct Broadcast Satellite (DBS) service and preempts the authority of local
authorities to impose certain taxes on such services.
While current FCC regulations are intended to promote the development of
a competitive subscription cable television industry, there can be no assurance
that these regulations will have a favorable impact on the Company. Changes in
FCC policies or procedures could have a negative effect on the wireless cable
industry as a whole and/or the Company in particular. In addition, the FCC's
regulation of other spectrum could permit the operation of other wireless
services to interfere with MDS and ITFS frequencies.
Pending Legislation. Legislation has been introduced in several states
that would authorize state and local authorities to impose taxes on providers
of subscription television programming, including wireless cable operators,
based upon their gross receipts. Because the nature of any such legislation, if
enacted, is unknown, the Company cannot predict what impact such legislation
would have upon its operations.
Other Forms of Regulation. Federal law requires that all "cable
companies," as defined by Section 602 of the Communications Act, obtain local
or state franchises prior to constructing a subscription television
distribution system. Because wireless cable systems deliver programming to
subscribers by means of microwave facilities rather than through coaxial cable
and are not specifically defined as "cable systems" in Section 602 of the
Communications Act, the 1992 Cable Act, or in earlier statutes or FCC
regulations, they have not been considered cable companies under FCC rules in
this context. Accordingly, wireless cable companies generally are not required
to obtain franchises and are generally not subject to state regulation by
public utility or cable commissions.
Wireless cable operators also are subject to regulation by the Federal
Aviation Administration and the FCC with respect to construction of
transmission towers and certain local zoning regulations affecting construction
of such towers and other facilities. Additional restrictions may also be
imposed by local authorities, neighborhood associations and other similar
organizations limiting the use of certain types of reception equipment used by
the Company and its subscribers.
The Mount Mansfield System
- --------------------------
Background. The Company has entered into lease agreements which provide
for the lease of commercial channel licenses in Mount Mansfield, Vermont (the
"Mount Mansfield Lease Agreements"). The Company also has entered into channel
license agreements on which the Company makes monthly payments which currently
total $7,000. The Mount Mansfield Lease Agreements commenced in 1991 and 1993
and have terms of 10 years each. The Company has also entered into channel
license agreements which expire beginning in 2001. Channel licenses are subject
to non-renewal, revocation or cancellation for violations of the Communications
Act of 1934, as amended (the "Communications Act") or the FCC's rules and
policies. The termination of, or failure to renew, a channel lease would result
in the Company being unable to deliver television programming on any such
channel and could have a material adverse effect on the Company. The Company
has also entered into one 8 and one 10 year lease of space on a transmission
tower. The tower leases include the use of the tower, transmitter building and
electrical service.
Of the 23 channels the Company currently leases for its Mount Mansfield
System, 20 are educational ("ITFS") channels. Each ITFS channel must be used a
minimum of 12 hours per week for educational programming. The remaining "excess
air time" on an ITFS channel may be used by the Company without further
restrictions (other than the right of the ITFS license holder, at its option,
to recapture up to an additional 20 hours of air time per week for educational
programming). Certain programs (e.g., CNN and The Discovery Channel) qualify as
educational and thereby permit full-time usage of an ITFS channel.
The Market. The Mount Mansfield System began operations in August 1994
and currently broadcasts 23 channels in the local area. The 23 channels in the
Mount Mansfield System consist of 4 off-air, UHF/VHF channels and 19 satellite
channels. One transmitter is required to be placed in service for each channel
being broadcast. There are an estimated 121,000 households within the Company's
50-mile signal area for the Mount Mansfield System. Based upon the research of
its consulting engineers, the Company believes that its signal can be received
directly by approximately 67% of the households within the Company's signal
pattern in the local area. With the addition of beambenders, which could be
installed at additional cost to the Company, the Company's wireless cable
signals could reach a substantial portion of the remaining households in this
market.
Programming. The Company arranges for programming from 2 sources for the
Mount Mansfield System: (i) local affiliate stations for the retransmission of
their VHF/UHF signals, and (ii) suppliers of satellite programming typically
broadcast over cable systems.
Programming from off-air broadcasters is negotiated on a case-by-case
basis and may be available for no charge or for a minimal royalty payment. The
VHF and UHF broadcasters in Burlington, Vermont (CBS, ABC, NBC and Vermont
ETV), allow the Company's customers to receive their signals through the same
high grade microwave antenna as is provided by the Company.
In addition to off-air broadcasters, the Company has agreements with
program suppliers for FOX (which is not available off-air in the Company's
market area), ESPN, MTV, CNN, USA, WPIX, WSBK, WTBS, A&E, Nickelodeon,
Discovery, TNN Nashville, the History Channel, the Family Channel, Lifetime,
the Sci-Fi Channel, NESN, the Movie Channel and Showtime for broadcasting in
the Mount Mansfield System. The program agreements generally have 3-year terms,
with provisions for automatic renewals, and are subject to termination for
breach of the agreement, including non-payment. The programming agreements
generally provide for royalty payments based upon the number of Company
subscribers receiving the programming each month. Individual program prices
vary from supplier to supplier, and more favorable pricing sometimes is
afforded to operators with larger subscriber bases; however, the Cable Act
requires cable programming to be made available for purchase by all system
operators at competitive pricing.
The likelihood that program material will be unavailable to the Company
is significantly mitigated by the Cable Act and various FCC regulations issued
thereunder which, among other things, impose limits on exclusive programming
contracts and prohibit cable programmers in which a cable operator has an
attributable interest from discriminating against cable competitors with
respect to the price, terms and conditions of sale of programming. Although the
Company has no reason to believe that any existing contracts for programming
will be canceled or will not be renewed upon expiration. If any of such
contracts are canceled or are not renewed, the Company would have to seek
program material from other sources.
In addition to the programming alternatives described above, the Company
intends to introduce a "pay-per-view" service that enables customers to order,
and pay for, one program at a time. This pay-per-view service has been
successful for specialty events such as wrestling and heavyweight prize fights,
concerts, and early release motion pictures. This service can also be promoted
for the purchase of movies in competition with video rental stores.
Pay-per-view requires the subscriber to have an "addressable converter," which
each of the Company's subscribers already has. An addressable converter allows
the cable Company to control what the subscriber watches without having to
visit the subscriber location to change equipment. Subscribers in the Mount
Mansfield System are equipped with addressable converters. In order for
customers to more conveniently order pay-per-view events, however, an "impulse"
pay-per-view converter is required. An impulse pay-per-view converter, which
has a return line via phone or cable to the cable operator's computer system,
enables a subscriber to order pay-per-view events by pushing a button on a
remote control rather than requiring the subscriber to make a telephone call to
order an event. Subscribers in the Mount Mansfield System are equipped to take
advantage of this feature when offered by the Company.
Certain hard-wire cable operators have announced their intention to
develop interactive features for use by their subscribers, such as shopping via
video catalogs and playing video games with neighbors. Interactive services are
not currently available for wireless cable. The Company believes that the same
manufacturers who currently are developing digital compression converters for
both hard-wire and wireless cable will also make new developments in
interactivity available to both industry segments. The FCC has designated a
return path channel for use in connection with interactive services which may
be offered by wireless cable operators. The Company believes that, if it is
economically feasible to do so, wireless cable systems can include 2-way
interactivity. There can be no assurance that interactive services will be made
available for wireless cable systems and, therefore, to the extent such
services are available on hard-wire cable systems, the Company could be at a
competitive disadvantage.
Marketing and Customer Support. The Company intends to utilize media
advertising, telemarketing, direct mail, and door-to-door marketing to increase
its subscriber base in the Mount Mansfield System. The Company also intends to
run promotional pricing campaigns and take advantage of public relations
opportunities. The Company intends to emphasize the following themes in its
marketing:
1. Price/Value. The Company believes that it is offering its
subscribers competitively priced installation and subscription
fees. The Company's installation fees are $49.95 per subscriber for
a single television, with an additional $15.00 for each additional
television. (The fee for additional televisions increases to $30.00
after the initial installation). Subscription fees start at $9.95
per month for the Company's basic programming package, which
includes 9 channels, including 4 off-air VHF/UHF channels and 5
cable channels, and $24.95 for the Company's "expanded" package
which is comparable to commercial hard-wire cable service, which
includes 4 off-air channels, and 19 cable channels, including 1
pay-premium channel. An additional premium channel is available for
a cost of $8.95 per month. The major hard-wire cable companies in
the Burlington area currently offer installation for $35.00 to
$37.00, basic service for $9.17 to $34.70, and premium stations for
$11.25. Cable customer charges are subject to a 5% local franchise
tax. Wireless cable customers do not have to pay any franchise tax,
but are required to pay a regulatory fee of approximately $.04 per
subscriber. The Company tries to focus its customers on the value
received for the price paid and believes its product/pricing offers
a competitive choice.
With the implementation of digital compression technology,
the Company expects to offer three principal tiers of cable
services. The highest tier, the "Ultra" package, is expected to
offer 66 channels of programming. The next tier, the Expanded Basic
package, is expected to offer 31 channels of broadcasting, and the
basic package will offer 9 channels of broadcasting. The rates for
these services are expected to be increased for additional fees
payable on the addition of pay TV channels, extra TV sets hooked
into the service, and pay per view movies and other features.
2. Reliability, Service and Picture Quality. The Company provides
service within 24 hours of a repair request from a single
subscriber call, uniformed field personnel and flexible
installation scheduling. The Company emphasizes its picture quality
and the reliability of its wireless transmission and is able to
build out systems for multiple subscribers more quickly. The
Company competes with traditional hard-wire cable systems on a
quality of service basis. Within its signal coverage pattern, the
Company believes that the picture quality of the Company's service
is as good or better than that received by hard-wire cable
subscribers because, absent any line-of-sight obstruction, there is
less opportunity for signal degradation between transmitter and the
subscriber. Also, wireless cable service has proven very reliable,
primarily due to the absence of certain distribution system
components that can fail and thereby cause outages. The Company
believes that it has positioned itself as a reliable,
cost-effective alternative to traditional hard-wire cable
operations by delivering a high quality signal throughout its
signal area and personal service to its subscribers.
3. Equipment Reliability. A number of reputable manufacturers produce
the equipment used in wireless cable systems, from transmitters to
the set-top converters which feed the signal to the television set.
Because the signal is broadcast over the air directly to a
receiving antenna, wireless cable does not experience the problems
caused by amplifying signals over long distances experienced by
some hard-wire cable subscribers. This is particularly the case for
a signal delivered over longer distances. Amplification of signals
can lead to greater signal noise and, accordingly, a grainier
picture for some subscribers. Also, the transmission of wireless
signals is not subject to the problems caused by deteriorating
underground cables used in conventional systems. As a result,
wireless cable is often more reliable than conventional cable, and
picture quality is generally equal to or better than ordinary
cable.
Signal security is provided by encoding each wireless cable
channel and equipping the converter with a unique decoding device
that responds to a pilot signal carrying a data stream with
authorization instructions. Thus, the system is fully
"addressable." The converter boxes will not be usable until they
are authorized for service by the Company's central computer. All
channels, both basic and premium, are scrambled. Because the
wireless cable system is addressable, it can also accommodate
pay-per-view service.
Competition. In its Vermont markets, two traditional hard-wire cable
companies are the Company's primary direct competitors. The Company estimates
that within its expected signal pattern for Mount Mansfield, over 53% of the
households are hard-wire cable subscribers. The two hard-wire cable companies
within this same area currently offer 9 and 48 channels, respectively, to their
subscribers, compared to the 23 channels the Company currently offers. Of the
approximately 121,000 potential subscribers within the Mount Mansfield System's
signal pattern, approximately 25,900 are currently not wired for hard-wire
cable and approximately 29,800 do not subscribe to hard-wire cable service,
although they have access to such services. The Company intends to continue to
direct its marketing efforts toward potential subscribers who are either not
wired for hard-wire cable or are not presently hard-wire cable customers.
The subscription television industry is highly competitive. Currently,
the Company's existing and potential competitors consist of a broad range of
companies engaged in the communications and entertainment businesses, including
cable operators, digital satellite program providers, television networks and
home video products companies. The Company's strategy is to compete for cable
television subscribers by focusing on the price-to-value relationship of the
Company's programming services; the reliability, service and picture quality of
wireless cable; the advanced technical features of the Company's standard
equipment; and the competitive choice afforded consumers by wireless cable.
In addition to competition from traditional and established hard-wire
cable television systems, wireless cable television operators face competition
from a number of other sources. Premium movie services offered by cable
television systems have encountered significant competition from the home video
cassette recorder industry. In addition to the foregoing, wireless cable
systems face potential competition from emerging trends and technologies in the
cable television industry, including the following:
In the future, the Company expects to face intense competition from
numerous other companies offering video, audio and data products and services.
Many of the Company's existing or potential competitors have substantially
greater name recognition and financial, technical and human resources than the
Company and may be better equipped to develop and operate systems providing
subscription television service, high-speed Internet access and telephony
services. The Company's principal existing and potential competitors are
described below:
Franchise Cable Systems. Currently, the Company's principal competitors
are franchise cable companies that own local franchises to operate their
systems in the Company's markets. Cable television service is currently
available to the vast majority of U.S. television households. In most
instances, the franchise cable operators with which the Company competes serve
more subscribers on both a local and national level than the Company. Franchise
cable companies typically offer a larger selection of programming than the
Company. The Company seeks to compete with franchise cable companies by
offering the most widely demanded programming choices at lower prices, combined
with high-quality customer service.
The Company believes that a number of franchise cable operators will be
required to significantly upgrade their coaxial systems to provide digital
programming, which will involve a substantial investment of capital. Many cable
television providers are already in the process of upgrading their systems and
other cable operators have announced their intentions to make significant
upgrades. A number of proposed technological improvements, when fully
completed, will permit cable companies to increase channel capacity, thereby
increasing programming alternatives, and to deliver a better quality signal
without significant upgrades to their systems.
Many of the largest cable systems in the United States have announced
plans to offer data and telephony service through upgraded networks, and have
entered into agreements with major telephony providers to further these
efforts. In some cases, trials of data and telephony services are underway. In
the event that these trials are successful, the cable operators who are capable
of offering both data and telephony services will have a competitive advantage
over wireless companies if consumers choose to receive both their cable and
telephone service from the same operator.
Direct Broadcast Satellite ("DBS"). DBS involves the transmission of an
encoded signal directly from a satellite to the customer's home. Because the
signal is at a higher power level and frequency than most satellite-transmitted
signals, its reception can be accomplished with a relatively small (18-inch)
dish mounted on a rooftop or in the customer's yard. The cost of constructing
and launching the satellites used to distribute DBS programming is substantial.
When first introduced, DBS reception equipment for a single television set cost
approximately $650 per customer, plus installation fees, service charges and
off-air antenna installation, where applicable. Furthermore, each additional
independent outlet requires a separate descrambling device at additional cost
to the subscriber. These prices have decreased as additional competitors have
entered the DBS market. Recent promotions have offered DBS reception equipment
for less than $150 (exclusive of installation and other charges) when the
consumer agrees to prepay a 1-year subscription fee. The Company's principal
DBS competitors are described below.
DirecTV, Inc. DirecTV, Inc. ("DirecTV"), which is substantially owned by
GM-Hughes Electronics, successfully launched its first satellite in December
1993, its second satellite in August 1994, and a third satellite as an in-orbit
spare in June 1995. The third satellite may also be operated by DirecTV to
provide additional capacity. Each of DirecTV's satellites are high power
satellites. As of December 31, 1996, according to trade publications, DirecTV
served approximately 2.3 million subscribers. Recently, AT&T Corporation
("AT&T") and DirecTV entered into an exclusive agreement for AT&T to market and
distribute DirecTV's DBS service and related equipment to AT&T's large customer
base. As part of the agreement, AT&T made an initial investment of
approximately $137.5 million to acquire 2.5% of the equity of DirecTV, with an
option to increase its investment to up to 30% over five years. This agreement
provides a significant base of potential customers for DirecTV's DBS systems
and allows AT&T and DirecTV to offer customers a package of digital
entertainment and communications services. AT&T and DirecTV have also announced
plans to jointly develop new multimedia services for DirecTV under the
agreement.
United States Satellite Broadcasting Corporation ("USSB") owns and
operates DBS spectrum on DirecTV's first satellite and offers a programming
service separate from DirecTV's service. As of December 31, 1996, this
programming service had over 25 channels of premium video programming not
available from DirecTV. USSB's selection of programming services (and its use
of transponders on the same satellite used by DirecTV, which enables
subscribers to receive both DirecTV and USSB signals with a single satellite
receiver) allows it to be marketed as a complementary service to DirecTV,
partially offsetting the competitive handicap caused by its relatively limited
channel capacity. According to trade publications, as of December 31, 1996,
approximately one-half of DirecTV's 2.3 million subscribers received USSB
programming.
PrimeStar Partners ("PrimeStar") currently offers medium power Ku-band
programming service to customers using dishes approximately 3 feet in diameter.
PrimeStar is owned by a group of franchise cable operators and provides service
nationwide. According to trade publications, PrimeStar had approximately 1.6
million subscribers as of December 31, 1996.
EchoStar Communications Corporation ("EchoStar") launched a high power
satellite in December 1995, commenced national broadcasting of programming
channels in March 1996 and, as of December 31, 1996, broadcasted approximately
150 channels of programming. EchoStar has announced plans to increase its
program offering through the launch of two additional satellites (one in each
of 1997 and 1998). As of December 31, 1996, EchoStar had approximately 350,000
subscribers, according to trade publications.
During 1996, MCI Communications Corporation ("MCI") acquired high power
DBS spectrum with the capacity to offer over 200 channels of digital video
programming for $682.5 million in an FCC auction. Thereafter, MCI entered into
a joint venture with The News Corporation ("News Corp") to build and launch a
high power digital satellite system. On February 24, 1997, EchoStar and News
Corp announced that News Corp had agreed to acquire a 50% ownership interest in
EchoStar in exchange for aggregate consideration of approximately $1.0 billion
(such consideration consisting of cash and certain DBS assets). The EchoStar/
News Corp alliance, which will do business using the "Sky" brand name,
announced that it plans to provide approximately 500 channels of digital
programming, including local broadcast signals, by the end of 1998 to a
majority of the continental United States. As a result of its alliance with
News Corp, EchoStar will have substantially greater financial and other
resources than the Company and can be expected to increase the competition that
the Company encounters in the overall market for subscription television
customers.
C-band Satellite Program Distributors. The Company also competes with
C-band satellite program distributors (also referred to as "backyard dish" or
television receive only ("TVRO") systems). C-band systems have been popular
(mostly in rural and semi-rural areas) since the late 1970s, and currently
serve approximately 2.1 million subscribers in the aggregate, according to
trade publications. The primary advantages of wireless cable systems over TVRO
systems are lower equipment costs and broader availability of local
programming. TVRO systems, on the other hand, enjoy the advantage of access to
a wider variety of satellite programming and serve areas not served by
franchise or wireless cable systems. A conventional TVRO antenna system costs
in excess of $1,000 per subscriber, and subscribers are charged monthly fees
for access to certain programming. TVRO systems typically cannot receive local
off-air broadcast channels.
Telephone Companies. Certain regional and long distance telephone
companies could become significant competitors of the Company in the future,
not only with respect to the Company's potential provision of local telephone
services, but also because they have expressed an interest in becoming
subscription television providers. The 1996 Act removes barriers to entry that
previously inhibited telephone companies from competing, or made it more
difficult for telephone companies to compete, in the provision of video
programming and information services. Certain telephone companies have received
authorization to test market video and other services in certain geographic
areas using fiber optic cable and digital compression over existing telephone
lines. Estimates for the timing of wide-scale employment of such multichannel
video service vary, as several telephone companies have pushed back originally
announced deployment schedules.
As more telephone companies begin to provide subscription television
programming and other information and communications services to their
customers, significant additional competition for subscribers is expected to
develop. Among other things, telephone companies have an existing relationship
with substantially every household in their service area, substantial financial
resources and an existing infrastructure, and may be able to subsidize the
delivery of programming through their position as the sole source of telephone
service to the home.
VHF/UHF Broadcasters. Most areas of the United States are covered by
traditional territorial over-the-air VHF/UHF broadcasters. Consumers can
receive from 3 to 10 channels of over-the-air programming in most markets.
These stations provide local, network and syndicated programming free of
charge, but each major market is generally limited in the number of programming
channels. Congress is expected to consider the release of additional digital
spectrum for use by VHF/UHF broadcasters in the delivery of high definition
television services later in 1997.
Private Cable. Private cable is a multi-channel subscription television
service where the programming is received by a satellite receiver and then
transmitted via coaxial cable throughout private property, often multiple
dwelling units ("MDUs"), without crossing public rights of way. Private cable
operates under an agreement with a private landowner to service a specific MDU,
commercial establishment or hotel. The FCC recently amended its rules to allow
the provision of point-to-point delivery of video programming by private cable
operators and other video delivery systems in the 18 GHz bandwidth. Private
cable operators compete with the Company for exclusive rights of entry into
MDUs.
Local Multi-Point Distribution Service ("LMDS"). The Company does not
plan to offer LMDS services. On March 13, 1997, the FCC released service and
competitive bidding rules for LMDS, which is located at 27.5 to 28.35 GHZ, 29.1
to 29.25 GHZ and 31.0 to 31.3 GHZ in the frequency band. There will be one 1150
MHz LMDS license and one 150 MHz LMDS license awarded for each BTA, for a total
of 986 authorizations. There will be no restrictions on the number of licenses
an entity may hold, but incumbent licensees and cable companies will not be
able to obtain the 1150 MHz licenses in-region for 3 years. A simultaneous
multiple round auction will be scheduled for later this year. Certain issues
regarding geographic partitioning and spectrum disaggregation are the subject
of a pending rulemaking. The rules for use of the spectrum are relatively
broad, but it is expected that the spectrum will be used for multichannel video
programming, telephony, video communications and data services, including 2-way
video communications.
Legal Proceedings
- -----------------
On October 1, 1996, an ex-employee (the "Defendant") filed a counterclaim
against Scott A. Wendel and New England Wireless, Inc. ("NEW") in a defamation
suit initially brought by Mr. Wendel. In the counterclaim, the Defendant
alleges that NEW and Mr. Wendel created a hostile working environment which led
to the constructive discharge of the Defendant. The Defendant alleges that she
was constructively discharged because she notified him and other management of
NEW of various misconduct on the part of Mr. Wendel, including alleged
violations of "SEC Regulations". The suit is pending in Windham Superior Court,
State of Vermont. The Defendant is seeking damages in an unspecified amount for
humiliation, stress, mental anguish and lost wages. The Company believes that
the Defendant's counterclaims are without merit.
New England Wireless, Inc. ("NEW") and Scott A. Wendel have been sued by
one of the original investors in that corporation and the ex-wife of another
original investor in the State of Vermont, Windham Superior Court. The suit was
filed on April 9, 1997. Plaintiffs claim that Mr. Wendel misrepresented
material facts about himself and NEW and that they relied upon these
representations when deciding to invest in NEW. The Company believes that the
claims made by plaintiffs against Mr. Wendel and NEW are without merit, and
intends to defend the case vigorously. The proceedings are at an early stage
and the Company is not able to quantify the likelihood that it will prevail,
nor the likely magnitude of a damages award in the event it should not prevail.
A former administrative assistant with NEW filed a complaint on April 25,
1997 with the Vermont Attorney General's Office alleging sexual harassment in
the workplace The plaintiff raised the same claims with the Department of
Employment and Training when seeking unemployment compensation for constructive
discharge. After considering those claims, the Department of Employment and
Training denied her claim for unemployment compensation. NEW has indicated to
the Attorney General's Office a willingness to mediate the claims, but believes
the claims to be wholly without merit. No investigation has begun by the
Attorney General's Office except to request a response from NEW to the
Plaintiff's charges.
In addition, two persons who previously provided services to the Company
have advanced claims that the Company is obligated to issue up to 60,000 shares
of its common stock to them as consideration for such services. Management of
the Company believes that any obligation it may have had to issue such
compensation has expired. The Company intends to contest such claims if
asserted in formal legal proceedings, there can be no assurance that it will
prevail in doing so.
Employees
- ---------
As of December 31, 1996, the Company had a total of 15 full-time
employees and expects to have approximately 25 full-time employees in the next
12 months. In addition, the Company may engage up to 4 persons as contract
labor for installations in the Mount Mansfield System during the next 12
months. All of the Company's employees are working in the Mount Mansfield
System. None of the Company's employees is subject to a collective bargaining
agreement. The Company has experienced no work stoppages and believes that it
has good relations with its employees.
In January 1997, the Company settled a claim of wrongful termination
instituted by a former employee.
Properties
- ----------
The Company owns the real property where its headquarters are located in
Ascutney, Vermont. The Company's property consists of a building located on 4.6
acres which includes approximately 1,250 feet of office space. The Company
acquired the property in July 1994 for $106,000.
The Company also leases approximately 900 square feet for its executive
offices in Jericho, Vermont, for a monthly rental of $1,792. In addition to
office space, the Company leases space at the transmission site for the Mount
Mansfield System under 2 separate lease agreements for an aggregate monthly
rental of $1,728. The leases each have terms of 5 years with 2 renewal options
remaining of 5 years each. The leases include space on the top of a
transmission tower, a concrete block and brick building which houses
receiving and transmission equipment and space for an exterior pad which
supports 3 satellite dish receivers. The Company expects to lease additional
office and transmitter space when it launches additional wireless cable
systems.
MANAGEMENT
Directors and Executive Officers
- --------------------------------
The following table lists certain information about the directors and
executive officers of the Company and the person who has agreed to become a
director of the Company upon the closing of this offering:
<TABLE>
<CAPTION>
Name Age Position
------------------------------------------------
<S> <C> <S>
Alan R. Ackerman 66 Chairman of the Board
Scott A. Wendel 42 President, CEO, Director
Harold Doran 64 Secretary-Treasurer, Director
Jack Polak 85 Director
</TABLE>
Alan R. Ackerman is the founder and principal shareholder of the Company.
He served as Chief Executive Officer of the Company until August 1997. He is
also Executive Vice President of Investments for Fahnestock and Co., Inc., New
York, New York, a broker/dealer member of the National Association of
Securities Dealers, Inc. and a member of the New York Stock Exchange, a
position he has held since January 1993. From 1990 to 1993, Mr. Ackerman served
as Executive Vice President of Reich & Co., Inc., the predecessor to Fahnestock
and Co., Inc. Mr. Ackerman has also served on the Board of Directors of Asphalt
Green, a New York City non-profit corporation engaged in affording recreational
opportunities to underprivileged youth.
Scott A. Wendel was appointed as CEO and as a Director of the Company in
August 1997. He is a founder of and has served as Chief Operating Officer of
NEW since its inception in 1991. Mr. Wendel has served as NEW's President since
1995.
Harold Doran has served as Chief Financial Officer of NEW since 1991 and
was appointed a Director of the Company in August 1997.
Jack Polak is a member of the Board of Directors of K.T.I., Inc. of
Guttenberg, New Jersey, a computer and waste-to-energy company, and C.C.A.
Industries of Secaucus, New Jersey, which manufactures health and beauty aid
products. Mr. Polak also serves as a director of Omni Offices of Atlanta,
Georgia, a privately-held company which subleases offices and provides office
services in various cities across the United States. Mr. Polak was knighted by
Queen Beatrix of the Netherlands on December 31, 1992 for his work as President
of the Anne Frank Center, U.S.A. and for other activities. He was appointed to
the Board of Directors of the Company in August 1997.
Upon completion of the offering, the Company intends to hire a new Chief
Executive Officer and a new Chief Financial Officer.
Each Director of the Company holds such position until the next annual
meeting of shareholders and until his or her successor is duly elected and
qualified. The officers hold office until the first meeting of the Board of
Directors following the annual meeting of shareholders and until their
successors are chosen and qualified, subject to early removal by the Board of
Directors.
Advisory Board
- --------------
In addition to its Board of Directors, the Company expects to utilize an
advisory board to consult with it regarding salient business issues and
community affairs issues. Accordingly, the Company's Advisory Board is expected
to be divided into two committees, a Business Advisory Committee and a
Community Affairs Committee. The Company expects that the advisory board will
meet on a quarterly basis.
The following persons are expected to serve on the Business Committee of
the Advisory Board:
Gerald M. Dash. Gerald M. Dash has served as the director of Marketing
and Sales of Bell Atlantic Video Services, Inc., in Chesapeake, Virginia, since
September 1996. In that capacity, he assisted in the preparation and
development of a digital television system in Hampton Roads, Virginia. Prior to
that time, he served as a consultant (from February to September 1996) and as
Vice President, Sales (from 1992) of People's Choice-TV Inc. , a wireless cable
television company located in Tucson, Arizona.
Brian Kiernan. Brian Kiernan is Senior Vice President of InterDigital
Communications Corporation ("IDC") of King of Prussia, Pennsylvania with
responsibility for development of new market and product initiatives, a
position he had held since 1993. IDC is devoted to the development and use of
technologies to be employed in various communications activities. Prior to that
time, Mr. Kiernan was President of USTC World Trade Corporation, an
international sales and marketing subsidiary of IDC's predecessor company,
International Mobile Machines ("IMM") from 1991 to 1992. Prior to holding that
position, Mr. Kiernan was IMM's Vice President of Engineering and Operations
with responsibilities for areas of product development and sales engineering,
manufacture, product support and quality assurance.
William McLendon. William McLendon has been President and a director of
Sight Resources Corporation of Boston, Massachusetts, which provides eye care
products and services, since its inception in 1992 and Chief Executive Officer
since April 1994. Mr. McLendon serves as Vice President and Chief Financial
Officer of IBIS Technology Corporation, a manufacturer of silicone based
materials for semi-conductors, from 1990 to 1993. Prior thereto, Mr. McLendon
was the Vice President, Chief Financial Officer and Treasurer of Summit
Technology, Inc. from 1986 to 1990 and was Vice President and Chief Financial
Officer of Zymet, Inc. from 1983 to 1985.
Robert Morris. Robert Morris serves as a principal of the Strategic
Development Group of New York, New York. In that capacity, Mr. Morris provides
consulting services including profit and loss management, business development,
strategic planning, project management, and sales and marketing. Mr. Morris
previously served as director of marketing and sales for the media products
group of Memorex Corporation. Mr. Morris has also held director, vice-president
and president positions with NameBreak, Paro and Dimensional Visions Group.
Gregory W. Oswald. Gregory W. Oswald has served as President of Northstar
Communications, a company engaged in the wireless cable communications business
in the far western portions of the United States, since January 1994. Mr.
Oswald also serves as President of GWO Associates, a consulting firm located in
[?], engaged in financing, start-up and operations of broadcasting, cable
television and wireless cable television businesses. From July 1988 until
September 1992, Mr. Oswald served as President of Capital Wireless Corporation,
a wireless cable operator located in New York and Tennessee and also served as
President of Tri-Mark Communications, Ltd. a wireless cable operator with
operations in the western portion in the United States.
The members of the Community Affairs Committee of the Advisory Board are
as follows:
D. Thomas Burns. D. Thomas Burns is one of the founders of New England
Wireless, Inc. Mr. Burns is president of D. Thomas Burns Realty, Inc., a
commercial and residential real estate brokerage firm.
Nils Bonde-Henriksen. Nils Bonde-Henriksen serves as Manager of Corporate
Communications at Sight Resources Corporation of Burlington, Massachusetts, a
company which provides eye care products and services. Prior to that time, Mr.
Bonde-Henriksen served as a development consultant in Cambridge, Massachusetts
providing real estate appraisal, real estate marketing consultation and
associated services.
Albert Kalter. Albert Kalter is engaged in the private practice of law in
his own firm in New York, New York. Mr. Kalter specializes in taxation, with
particular focus on estate and gift tax issues. Mr. Kalter is also Chairman and
Professor of Taxation, Pace University Lubin School of Business, and Adjunct
Professor of Law, New York Law School.
Norman Segal. Norman Segal is a member of the Board of Directors of the
New College Library Association in Sarasota, Florida and served as Chairman of
the New College Book Fair and Reading Festival, an annual event promoting
reading skills for children and adults. He is also involved with fundraising on
behalf of Suncoast Gerontology of Tampa, Florida, which is engaged in research
activities regarding Alzheimer's Disease.
Executive Compensation
- ----------------------
Summary Compensation Table. The following table sets forth the
compensation awarded or paid to, or earned by, the Company's President. No
executive officer of the Company received compensation in excess of $100,000
during the Company's last completed fiscal year.
Annual Compensation
<TABLE>
<CAPTION>
Fiscal Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Compensation
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alan R. Ackerman CEO 1996 $ 0 0 0 0
1995 $ 0 0 0 0
Scott A. Wendel 1996 $62,000 0 0 0
1995 $62,000 0 0 0
Harold Doran 1996 $60,000 0 0 0
1995 $60,000 0 0 0
</TABLE>
Mr. Ackerman is not currently a full-time employee of the Company. In
August 1997, the Company declared a bonus to Mr. Ackerman in the form of
options to purchase 402,776 shares of its common stock. The warrants and
exercisable during either: (i) the period commencing on the thirteenth month
and ending on the thirty-six month following the Company's initial public
offering; or (ii) the five year period ended January 1, 2002 if the offering
has not been declared effective by the Securities and Exchange Commission on or
before December 31, 1997. The warrants are exercisable at $3.00 per share.
CERTAIN TRANSACTIONS
Upon its incorporation in April 1994, the Company issued 1,509,235 shares
of its Common Stock to Mr. Ackerman for total consideration of $15,000. In
addition, Mr. Ackerman exchanged $250,000 of prior indebtedness of New England
Wireless, Inc. ("NEW") to him for 83,334 shares of the Company's Common Stock
on the same terms and conditions as other note holders of NEW on March 11,
1995. Mr. Ackerman has made loans to the Company of approximately $1,611,065,
as to which approximately $30,000 in interest payments have been made to him.
The Company plans to repay $1,200,000 of such indebtedness out of the proceeds
of the offering. Mr. Ackerman has agreed to permit the repayment of the balance
of his loan over a 5 year period at an interest rate of 7.5%.
The Company has also agreed to issue to Mr. Ackerman Options to purchase
402,776 shares of the Company's common stock exercisable at the lesser of $3.00
per share or 50% of the price at which shares of common stock are issued in the
offering. The Company has agreed to issue such Warrants on the same basis as
Warrants it issued to other shareholders who acquired their shares through
conversion of indebtedness of NEW in connection with the Company's acquisition
of NEW through a merger with a subsidiary in March 1995, and other persons who
have extended loans to the Company.
Scott A. Wendel acquired all of his common stock in the Company through
his exchange of shares of common stock of NEW on the same terms and conditions
as other shareholders of NEW in connection with the merger of NEW with a
subsidiary of the Company in March 1995.
The Company also loaned $15,000 to another company in which Mr. Wendel
was an officer in 1996. The loan was repaid in full in October 1996.
Except as set forth, there are currently no proposed transactions between
the Company and its officers, directors, shareholders, and affiliates. Although
future transactions between the Company and such parties are possible,
including a transaction relating to a business opportunity, the Board of
Directors of the Company has adopted a policy regarding transactions between
the Company and any officer, director or affiliate, including loan
transactions, requiring that all such transactions be approved by a majority of
the independent and disinterested members of the Board of Directors and that
all such transactions be for a bona fide business purpose and be entered into
on terms at least as favorable to the Company as could be obtained from
unaffiliated independent third parties.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning beneficial
ownership of the Company's Common Stock by all persons known by the Company to
own beneficially 5% or more of the outstanding shares of the Company's Common
Stock, each director, and all officers and directors of the Company as a group,
as of the date of this Prospectus, and their percentage ownership of Common
Stock after completion of this offering:
<TABLE>
<CAPTION>
Name and Address of Beneficial Amount and Nature Percent of Outstanding Stock
Owner or Identity of Group of Beneficial Ownership(9) Before Offering After Offering(10)
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alan R. Ackerman 1,592,569
Scott A. Wendel 97,638
Harold Doran 36,052
Jack Polak 0
All officers and directors as 1,726,259
a group (4) persons
- --------------------
<F9> Except as otherwise indicated, all stockholders have sole voting and
investment power with respect to the shares of Common Stock set forth
opposite their respective names. In addition, the Company has agreed to
issue to Alan R. Ackerman Options to issue 402,776 shares of its common
stock at an exercise price of the lesser of $3.00 or 50% of the initial
public offering price per share.
<F10> Based on 4,108,961 shares of Common Stock outstanding immediately after
this offering. Accordingly, assumes no exercise of the Underwriter's
over-allotment option.
</TABLE>
UNDERWRITING
DuPont Securities, Inc. (the "Underwriter") has agreed, subject to the
terms and conditions of the Underwriting Agreement, to purchase 1,250,000
Units each consisting of one share of Common Stock and one redeemable Common
Stock Purchase Warrant from the Company and the Company has agreed to sell
such Units to the Underwriter. The Underwriter is committed to take and pay
for all such securities, if any are taken.
The Underwriter was formed in April, 1997, and has no prior experience in
connection with public offerings. See "RISK FACTORS".
The Underwriter proposes to offer the shares of Common Stock and the
Warrants to the public at the per Unit initial offering price set forth on the
cover page of this Prospectus and to offer part of such securities to certain
dealers at such prices, less concessions not exceeding $.60 per Unit.
The Underwriting Agreement provides for reciprocal indemnification
between the Company and the Underwriter against certain liabilities in
connection with the Registration Statement, including liabilities under the
Act. To the extent that this section may purport to provide exculpation from
possible liabilities arising under the federal securities laws, it is the
Commission that such indemnification is contrary to public policy and
unenforceable.
The Company has agreed to pay to the Underwriter a non-accountable
expense allowance of 3 percent (3%) of the gross proceeds of this offering
(including any securities purchased pursuant to the Underwriter's
over-allotment option).
Upon the exercise of any Warrants and to the extent not inconsistent with
the guidelines of the National Association of Securities Dealers and the Rules
and Regulations of the Commission the Company has agreed to pay the Underwriter
a commission equal to ten percent (10%) of the gross proceeds received by the
Company from the exercise of the Warrants. No compensation will be paid to the
Underwriter in connection with the exercise of the Warrants if (a) the market
price of the Common Stock is lower than the exercise price, (b) the Warrants
were held in discretionary accounts, (c) the Warrants are exercised in an
unsolicited transaction, (d) disclosure of compensation arrangements was not
made at the time of the offering and the exercise of the Warrant, or (e) the
solicitation of the exercise of the Warrant did not comply with Rule 10b-6
promulgated under the Securities Exchange Act of 1934.
The Company has agreed to sell to the Underwriter or its designees, at
nominal consideration, a total of 125,000 Warrants (the "Underwriter's
Warrants") to purchase a like number of Units of the Company. The Underwriter's
Warrants will be exercisable at a per Unit price of 120% of the public offering
price per Unit. The Underwriter's Warrants will be exercisable for a period of
5 years commencing on the date of this Prospectus. Such Warrants and their
underlying securities will not be transferable for 1 year from the date hereof
except to other underwriters, if any, and selected dealers, officers and
partners thereof. Any profit realized upon any resale of the Underwriter's
Warrants or upon any sale of the shares of Common Stock or Warrants underlying
the same may be deemed to be additional Underwriter's compensation. The Company
has agreed to register (or file a post-effective amendment with respect to any
registration statement registering) the Underwriter's Warrants and their
underlying securities under the Securities Act at its expense subject to the
rules and regulations of the National Association of Securities Dealers, Inc.
For the life of the Underwriter's Warrants, the holders are given, at
nominal cost, the opportunity to profit from a rise in the market price for the
Common Stock of the Company without assuming the risk of ownership, with a
resulting dilution in the interest of other security holder. As long as such
Warrants remain unexercised, the terms under which the Company could obtain
additional capital may be adversely affected. Moreover, the holder of such
Warrants might be expected to exercise them at a time when the Company would,
in all likelihood, be able to obtain any needed capital by a new offering of
its securities on terms more favorable than those provided by the Underwriter's
Warrants.
The Company has also agreed to pay to the Underwriter a mergers and
acquisitions finder's fee, ranging from five percent (5%) of the first $1
million to three percent (3%) of the excess over $2 million of the
consideration involved in any transaction consummated by the Company in which
the Underwriter introduced the other party.
The Company has agreed to provide to the Underwriter the right to
designate a member of its board of directors for a period of 3 years. The
Underwriter has not designated any such representative to date. Prior to this
offering, there has been no public market for the Common Stock. Accordingly,
the offering price of the shares of Common Stock was determined by negotiation
between the Company and the Underwriting. Factors considered in determining
such price, in addition to prevailing marketing conditions, included the
history of and the prospects for the industry in which the Company competes, an
assessment of the Company's management, the prospects of the Company, its
capital structure, the general condition of the securities market, and such
other factors as were deemed relevant.
DESCRIPTION OF SECURITIES
The Company will issue pursuant to the Offering, 1,250,000 Units each
consisting of one share of Common Stock and one Redeemable Common
Stock Purchase Warrant.
Common Stock
- ------------
The Company is authorized to issue 20,000,000 shares of Common Stock,
$.01 par value, of which 2,858,961 shares are issued (or to be issued) and
outstanding. The issued and outstanding shares of Common Stock are fully paid
and non-assessable. Holders of Common Stock are entitled to 1 vote for each
share held of record on all matters submitted to a vote of shareholders and
may not cumulate their votes for the election of directors. Shares of Common
Stock are not redeemable, do not have any conversion or preemptive rights and
are not subject to further calls or assessments once fully paid.
Holders of Common Stock will be entitled to share pro rata in such
dividends and other distributions as may be declared from time to time by the
Board of Directors out of funds legally available therefore, subject to any
prior rights accruing to any holders of preferred stock of the Company. Upon
liquidation or dissolution of the Company, holders of shares of Common Stock
will be entitled to share proportionately in all assets available for
distribution to such holders. As of July 31, 1997, there were 70 registered
holders of the Company's Common Stock, and the Company had agreed to issue its
shares to 1 additional person in conversion of indebtedness of the Company to
that person.
Common Stock Purchase Warrants
- ------------------------------
The following is a brief summary of certain provisions of the Warrants,
but such summary does not purport to be complete and is qualified in all
respect by reference to the actual text of the Warrant Agreement between the
Company and Continental Stock Transfer & Trust Company (the "Transfer and
Warrant Agent"). A copy of the Warrant Agreement has been filed as an exhibit
to the registration statement of which this Prospectus is a part. See
"ADDITIONAL INFORMATION."
The Company is offering hereby an aggregate of 1,250,000 Warrants
(1,437,500 if the Underwriter's over-allotment option is exercised in full).
Each Warrant entitles the holder thereof to purchase, at any time from the date
of this Prospectus through the fifth anniversary of the date of this
Prospectus, one share of Common Stock at a price of $__per share, subject to
adjustment in accordance with the anti-dilution and other provisions referred
to below.
The Warrants are subject to redemption by the Company, at any time
commencing 12 months after the date of this Prospectus, at a price of $.10 per
Warrant upon 30 days prior written notice if the closing sale or bid price per
share of the Common Stock equals or exceeds $9.00 per share for the 20 trading
days ending on the third trading day prior to the mailing of the notice of the
redemption. The exercise price of the Warrants should in no event be regarded
as an indication of any future market price of the securities offered hereby.
The exercise price and the number of shares of Common Stock purchasable
upon the exercise of the Warrants are subject to adjustment upon the occurrence
of certain events, including stock dividends, stock splits, combinations or
reclassification of the Common Stock. The Warrants do not confer upon holder
any voting or any other rights as shareholders of the Company.
The Company is required to have a current registration statement on file
with the Commission and to effect appropriate qualifications under the laws and
regulations of the states in which the holders of Warrants reside in order to
comply with applicable laws in connection with the exercise of Warrants and the
resale of the Common Stock issued upon such exercise. The Company, therefore,
will be required to file post-effective amendments to its registration
statement when subsequent events require such amendments in order to continue
the registration of the Common Stock underlying the Warrants and to take
appropriate action under state securities laws. There can be no assurance that
the Company will be able to keep its registration statement current or to
effect appropriate action under applicable state securities laws. Its failure
to do so may restrict the ability of the Warrant holders to exercise the
Warrants and resell or otherwise dispose of the underlying Common Stock. See
"RISK FACTORS - Non-Registration of Securities in Certain Jurisdictions."
Transfer Agent or Registrar
- ---------------------------
The Transfer Agent and Registrar for the Company is Continental Stock
Transfer & Trust Company, 2 Broadway, New York, New York 10004.
Shares Eligible for Future Sale
- -------------------------------
Upon completion of this offering, members of management and other
existing shareholders of the Company will own 2,858,961 shares of Common Stock
of the Company, representing approximately 70% of the outstanding shares of
Common Stock immediately following the offering. All of these shares are deemed
"restricted securities" as defined by Rule 144 under the Securities Act of
1933, as amended (the "Act") and were acquired or were derived from securities
purchased prior to the date hereof. In general, under Rule 144, a person (or
persons whose shares are aggregated) who has satisfied a 1-year holding period
may, under certain circumstances, sell within any 3-month period a number of
restricted securities which does not exceed the greater of one percent (1%) of
the shares outstanding or the average weekly trading volume during the 4
calendar weeks preceding the notice of sale required by Rule 144. In addition,
Rule 144 permits, under certain circumstances, the sale of restricted
securities by a person who is not an affiliate of the Company and has satisfied
a 2-year holding period without any quantity limitations. Any sales of shares
by shareholders pursuant to Rule 144 may have a depressive effect on the price
of the Common Stock. The vast majority of shares issued prior to inception of
the offering (other than shares held by affiliates and shares not issued yet
pursuant to Warrants previously issued) may be sold pursuant to Rule 144
immediately after completion of the offering; however, the management
shareholders of the Company have agreed with the Underwriter not to offer or
sell any shares of Common Stock for a period of 2 years following the date of
this Prospectus.
LEGAL MATTERS
The validity of the securities offered by this Prospectus will be passed
upon for the Company by Gravel and Shea, a Professional Corporation, of
Burlington, Vermont. Lester Morse, P.C. of Great Neck, New York, has served as
counsel to the Underwriter in connection with this offering.
EXPERTS
The consolidated financial statements of the Company and subsidiary as of
June 30, 1996 and for the year ended December 31, 1994, the 6-month period
ended June 30, 1995 and the year ended June 30, 1996, appearing in this
Prospectus and Registration Statement have been audited by Richard A. Eisner &
Company, LLP, independent auditors, as set forth in their report thereon (which
contains an explanatory paragraph with respect to the substantial doubt about
the Company's ability to continue as a going concern, as discussed in Note A to
the Financial Statements) appearing in the Registration Statement, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form SB-2 under the Securities Act of 1933, as amended, with respect to the
Common Stock and Warrants to which this Prospectus relates. As permitted by the
rules and regulations of the Commission, this Prospectus does not contain all
of the information set forth in the Registration Statement. For further
information with respect to the Company and the Shares and Warrants offered
hereby, reference is made to the Registration Statement, including the exhibits
thereto, which may be copied and inspected, without change, at the Public
Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Washington, D.C. and at the Commission's regional offices at 1801
California Street, Suite 4800, Denver, Colorado 80202-2648 and 7 World Trade
Center, Suite 1300, New York, NY 10048.Copies of such material also may be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, NW, Washington, DC 20549, upon payment of certain fees prescribed by
the Commission. Electronic registration statements made through the Electronic
Data Gathering, Analysis and Retrieval system are publicly available through
the Commission's Web site (http://www.sec.gov).
FINANCIAL STATEMENTS
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
- I N D E X -
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C>
REPORT OF INDEPENDENT AUDITORS F-2
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1996 AND MARCH 31, 1997
(UNAUDITED) F-3
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
1994, THE SIX-MONTH PERIOD ENDED JUNE 30, 1995, THE YEAR ENDED
JUNE 30, 1996 AND THE NINE-MONTH PERIODS (UNAUDITED) ENDED MARCH 31,
1996 AND 1997 F-4
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CAPITAL
DEFICIENCY) FOR THE YEAR ENDED DECEMBER 31, 1994, FOR THE SIX-MONTH
PERIOD ENDED JUNE 30, 1995, THE YEAR ENDED JUNE 30, 1996 AND FOR
THE NINE-MONTH PERIOD (UNAUDITED) ENDED MARCH 31, 1997 F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31,
1994, THE SIX-MONTH PERIOD ENDED JUNE 30, 1995, THE YEAR ENDED
JUNE 30, 1996, THE NINE-MONTH PERIODS (UNAUDITED) ENDED MARCH 31,
1996 AND 1997 F-6
NOTES TO FINANCIAL STATEMENTS F-7
</TABLE>
<PAGE> F-1
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Stockholders
Worldwide Wireless, Inc.
Ascutney, Vermont
We have audited the accompanying consolidated balance sheet of
Worldwide Wireless, Inc. and subsidiary (the "Company") as at June 30, 1996
and the related consolidated statements of operations and changes in capital
deficiency and cash flows for the year ended December 31, 1994, the six-
month period ended June 30, 1995 and the year ended June 30, 1996. These
financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present
fairly, in all material respects, the consolidated financial position of
Worldwide Wireless, Inc. and subsidiary at June 30, 1996 and the results of
its operations and its cash flows for the year ended December 31, 1994, the
six-month period ended June 30, 1995 and the year ended June 30, 1996 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note A to the
financial statements, the Company has sustained operating losses since
inception, has a working capital deficiency and is delinquent in making
certain lease payments to wireless channel license holders and sublessors.
These factors raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also
described in Note A. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
New York, New York
December 2, 1996
With respect to Note L
August 12, 1997
<PAGE> F-2
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
(Note A)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, March 31,
1996 1997
------------ ------------
(Unaudited)
A S S E T S
-----------
<S> <C> <C>
Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,396 $ 14,477
Accounts receivable . . . . . . . . . . . . . . . . . . . 8,407 6,340
Notes receivable (Note G) . . . . . . . . . . . . . . . . 20,000
Prepaid expenses and other current assets . . . . . . . . 47,073 62,827
----------------------------
Total current assets. . . . . . . . . . . . . . . . . 77,876 83,644
Property and equipment, net (Notes B[2], C and E[2]). . . . 1,669,657 1,334,196
Wireless channel rights (Notes B[3] and D). . . . . . . . . 133,323 117,771
Installation labor (Note B[6]). . . . . . . . . . . . . . . 36,610 40,006
Security deposits and other assets. . . . . . . . . . . . . 20,850 15,776
----------------------------
T O T A L . . . . . . . . . . . . . . . . . . . . . . $ 1,938,316 $ 1,591,393
============================
L I A B I L I T I E S
---------------------
Current liabilities:
Current portion of mortgages payable (Note E[2]). . . . . $ 2,069 $ 2,234
Accounts payable. . . . . . . . . . . . . . . . . . . . . 701,717 523,402
Accrued expenses. . . . . . . . . . . . . . . . . . . . . 353,289 533,526
Notes payable, net (Note J) . . . . . . . . . . . . . . . 1,912,585 2,502,519
----------------------------
Total current liabilities . . . . . . . . . . . . . . 2,969,660 3,561,681
Mortgages payable (Note E[2]) . . . . . . . . . . . . . . . 71,548 69,889
----------------------------
Total liabilities . . . . . . . . . . . . . . . . . . 3,041,208 3,631,570
----------------------------
Commitments and other matters (Notes D, E, F and K)
CAPITAL DEFICIENCY
------------------
Preferred stock - authorized 2,500,000 shares; none issued
and outstanding
Common stock - par value $.01 per share; authorized
20,000,000 shares; outstanding and to be issued, 2,763,398
and 2,788,961 shares, respectively . . . . . . . . . . . . 27,634 27,890
Additional paid-in capital. . . . . . . . . . . . . . . . . 403,896 687,357
Accumulated deficit . . . . . . . . . . . . . . . . . . . . (1,534,422) (2,755,424)
----------------------------
Total capital deficiency. . . . . . . . . . . . . . . (1,102,892) (2,040,177)
----------------------------
T O T A L . . . . . . . . . . . . . . . . . . . . . . $ 1,938,316 $ 1,591,393
============================
</TABLE>
Attention is directed to the foregoing accountants' report and
to the accompanying notes to financial statements.
<PAGE> F-3
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
(Note A)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Six Months Nine Months Nine Months
Year Ended Ended Year Ended Ended Ended
December 31, June 30, June 30, March 31, March 31,
1994 1995 1996 1996 1997
------------ ----------- ------------ ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Service revenues. . . . . . . . . . . . . . . . . . . $ 82,398 $ 112,574 $ 323,144 $ 239,021 $ 260,336
----------------------------------------------------------------------
Costs and expenses:
Service cost. . . . . . . . . . . . . . . . . . . . 8,930 27,712 91,606 67,877 76,623
Programming and license fees. . . . . . . . . . . . 552,905 276,953 799,285 594,430 631,212
Selling, general and administrative expenses. . . . 427,498 267,488 384,140 292,331 449,292
----------------------------------------------------------------------
Total costs and expenses. . . . . . . . . . . . 989,333 572,153 1,275,031 954,638 1,157,127
----------------------------------------------------------------------
(Loss) from operations. . . . . . . . . . . . . . . . (906,935) (459,579) (951,887) (715,617) (896,791)
Interest (expense). . . . . . . . . . . . . . . . . . (77,449) (50,083) (172,410) (98,494) (282,515)
Miscellaneous income (expense). . . . . . . . . . . . 271 (8,281) (6,948) (3,766) (41,696)
----------------------------------------------------------------------
NET (LOSS). . . . . . . . . . . . . . . . . . . . . . $ (984,113) $ (517,943) $ (1,131,245) $ (817,877) $ (1,221,002)
======================================================================
Net (loss) per common share . . . . . . . . . . . . . $ (.43) $ (.19) $ (.40) $ (.29) $ (.43)
======================================================================
Weighted average number of common shares
outstanding. . . . . . . . . . . . . . . . . . . . . 2,310,391 2,763,398 2,836,461 2,836,461 2,836,461
======================================================================
</TABLE>
Attention is directed to the foregoing accountants' report and
to the accompanying notes to financial statements.
<PAGE> F-4
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
(Note A)
CONSOLIDATED STATEMENTS OF CHANGES IN CAPITAL DEFICIENCY
<TABLE>
<CAPTION>
Additional
Paid-in Subscription Accumulated
Shares Amount Capital Receivable Deficit Total
--------- ------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1994. . . . . . . . . . . . . . 801,156 $ 8,012 $ 1,051,097 $ (998,282) $ 60,827
Founder's common stock. . . . . . . . . . . . . . . . 1,509,235 15,092 (92) $(15,000) -0-
Net (loss) for the year ended December 31, 1994 . . . (984,113) (984,113)
-------------------------------------------------------------------------
Balance at December 31, 1994. . . . . . . . . . . . . 2,310,391 23,104 1,051,005 (15,000) (1,982,395) (923,286)
Conversion of notes payable to common stock including
83,334 shares to be issued . . . . . . . . . . . . . 388,007 3,880 1,160,120 1,164,000
Restructuring expense . . . . . . . . . . . . . . . . 46,299 46,299
Collection of subscription. . . . . . . . . . . . . . 15,000 15,000
Common stock issued for services rendered . . . . . . 25,000 250 74,750 75,000
Common stock issued . . . . . . . . . . . . . . . . . 40,000 400 119,600 120,000
Cumulative loss of S corp. prior to conversion to C
corp. status . . . . . . . . . . . . . . . . . . . . (2,097,161) 2,097,161 -0-
Net (loss) for the six-month period ended
June 30, 1995. . . . . . . . . . . . . . . . . . . . (517,943) (517,943)
-------------------------------------------------------------------------
Balance at June 30, 1995. . . . . . . . . . . . . . . 2,763,398 27,634 354,613 -0- (403,177) (20,930)
Warrants issued in connection with financing. . . . . 49,283 49,283
Net (loss) for the year ended June 30, 1996 . . . . . (1,131,245) (1,131,245)
-------------------------------------------------------------------------
Balance at June 30, 1996. . . . . . . . . . . . . . . 2,763,398 27,634 403,896 (1,534,422) (1,102,892)
Litigation settlement paid by shareholders. . . . . . 108,150 108,150
Common stock issued on conversion of debt . . . . . . 25,000 250 87,250 87,500
Common stock issued on conversion of interest . . . . 563 6 1,964 1,970
Warrants issued in connection with financing. . . . . 86,097 86,097
Net (loss) for the period ended March 31, 1997
(unaudited). . . . . . . . . . . . . . . . . . . . . (1,221,002) (1,221,002)
-------------------------------------------------------------------------
BALANCE AT March 31, 1997 (Unaudited) . . . . . . . . 2,788,961 $27,890 $ 687,357 $ -0- $(2,755,424) $(2,040,177)
=========================================================================
</TABLE>
Attention is directed to the foregoing accountants' report and
to the accompanying notes to financial statements.
<PAGE> F-5
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
(Note A)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Nine Months Nine Months
Year Ended Ended Year Ended Ended Ended
December 31, June 30, June 30, March 31, March 31,
1994 1995 1996 1996 1997
------------ ----------- ------------ ----------- ------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net (loss) . . . . . . . . . . . . . . . . . . . . . . $ (984,113) $ (517,943) $(1,131,245) $(817,877) $(1,221,002)
Adjustments to reconcile net (loss) to net cash (used
in) provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . 135,783 130,253 395,783 294,127 305,309
Loss on disposal of equipment. . . . . . . . . . . . 50,500
Noncash restructuring charge . . . . . . . . . . . . 46,299
Noncash litigation settlement. . . . . . . . . . . . 108,150
Noncash compensation expense . . . . . . . . . . . . 75,000
Noncash interest expense . . . . . . . . . . . . . . 1,970
Amortization of debt discount. . . . . . . . . . . . 33,503 11,723 98,831
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable . . . . (3,367) (162) (4,878) (2,254) 2,067
(Increase) decrease in prepaid expenses and other
current assets. . . . . . . . . . . . . . . . . . (40,713) 12,954 6,653 (1,973) (15,754)
(Increase) decrease in security deposits and other
assets. . . . . . . . . . . . . . . . . . . . . . (3,885) (985) 1,435 1,435 2,500
Increase in accounts payable and accrued expenses. 358,417 90,436 422,432 677,104 1,922
---------------------------------------------------------------------
Net cash (used in) provided by operating
activities. . . . . . . . . . . . . . . . . . . (537,878) (164,148) (276,317) 162,285 (665,507)
---------------------------------------------------------------------
Cash flows from investing activities:
Additions to property and equipment. . . . . . . . . . (1,251,771) (136,049) (797,185) (786,641) (26,338)
Proceeds on disposals of property and equipment. . . . 29,600
Additions to wireless channel rights . . . . . . . . . (5,973) (6,856)
Proceeds on disposal of wireless channel rights. . . . 4,000
Additions to installation labor. . . . . . . . . . . . (21,000) (7,905) (16,485) (13,355) (8,880)
(Increase) decrease in notes receivable. . . . . . . . (15,000) (5,000) (5,000) 20,000
---------------------------------------------------------------------
Net cash (used in) provided by investing
activities. . . . . . . . . . . . . . . . . . . (1,293,744) (146,810) (818,670) (804,996) 14,382
---------------------------------------------------------------------
Cash flows from financing activities:
Repayment of debt. . . . . . . . . . . . . . . . . . . (5,976) (3,704) (3,910) (3,429) (1,494)
Property mortgages . . . . . . . . . . . . . . . . . . 77,273
Issuance of promissory notes . . . . . . . . . . . . . 1,712,466 182,500 1,097,399 646,799 664,700
Proceeds from issuance of common stock . . . . . . . . 135,000
Advances to stockholders . . . . . . . . . . . . . . . (9,300)
---------------------------------------------------------------------
Net cash provided by financing activities. . . . 1,774,463 313,796 1,093,489 643,370 663,206
---------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH. . . . . . . . . . . . . (57,159) 2,838 (1,498) 659 12,081
Cash - beginning of period . . . . . . . . . . . . . . . 58,215 1,056 3,894 3,894 2,396
---------------------------------------------------------------------
CASH - END OF PERIOD . . . . . . . . . . . . . . . . . . $ 1,056 $ 3,894 $ 2,396 $ 4,553 $ 14,477
=====================================================================
Supplemental disclosure of cash flow information:
Cash paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . $ 1,870 $ 28,907 $ 6,771 $ 28,714
======================================================
Supplemental schedule of noncash financing activities:
Conversion of notes payable to equity. . . . . . . . . $1,164,000 $ 87,500
========== ===========
</TABLE>
Attention is directed to the foregoing accountants' report and
to the accompanying notes to financial statements.
<PAGE> F-6
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE A) - The Company and Basis of Presentation:
Worldwide Wireless, Inc., a Delaware Corporation, ("Worldwide" or the
"Company"), through its wholly-owned subsidiary, is engaged in investing,
leasing, and purchasing wireless channel rights (including multi-channel,
multi-point distribution services ("MMDS") licenses and instructional
television fixed services ("ITFS") licenses) and operating wireless cable
systems. Substantial financing will be required by the Company to fund its
operating activities. There is no assurance that such financing will be
available when needed or that the Company's efforts to develop its business
will be successful.
Prior to March 1995 Worldwide had not commenced operations. In March,
1995, the Company's founder and sole stockholder approved a merger with New
England Wireless, Inc. ("NEWI"), a Vermont corporation through its wholly
owned subsidiary, N.E.W. Acquisition Co., Inc. Accordingly, NEWI is treated
as a predecessor entity and as the merger survivor, became the Company's
wholly owned operating subsidiary. In connection with the merger, all of
NEWI's 10,000 shares of outstanding common stock were exchanged for 801,156
shares of the Company's common stock. The merger was treated for accounting
purposes as a capital transaction rather than a business combination. In
connection with this recapitalization/reorganization, assets and liabilities
were recorded at their historical amounts. Concurrent with the merger, the
Company and creditors of NEWI agreed to exchange certain notes aggregating
$1,164,000 in consideration of receiving 388,007 shares of the Company's
common stock. In addition, Worldwide issued notes payable in the amount of
$680,466 to its founder in exchange for debt of NEWI owed to him. Selling,
general and administrative expenses for the six-month period ended June 30,
1995 include a charge of $46,299 in connection with this restructuring.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company has sustained
recurring operating losses since inception and such losses are expected to
continue. As a result, the Company has a substantial working capital
deficiency and a capital deficiency and lacks the resources to repay its
indebtedness which is due and payable on demand. In addition, the Company
is delinquent in making the monthly lease payments for its tower site and to
the wireless channel license holders and sublessors. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. Continuation of the Company is dependent upon its ability to
maintain its wireless channel rights under license, obtain additional debt
or equity financing and, ultimately, upon its ability to achieve profitable
operations.
(continued)
<PAGE> F-7
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE A) - The Company and Basis of Presentation: (continued)
The Company is currently seeking financing and is contemplating an
initial public offering of its securities (see Note L). There is no
assurance however, that such public offering will be consummated or that the
Company's efforts will ultimately be successful.
The financial information presented for the nine-month periods ended
March 31, 1996 and March 31, 1997 is unaudited, but in the opinion of
management contains all adjustments (consisting of normal recurring
adjustments) necessary for a fair presentation of such financial
information. Results of operations for interim periods are not necessarily
indicative of those to be achieved for full fiscal years.
(NOTE B) - Summary of Significant Accounting Policies:
[1] Basis of preparation and use of estimates:
The accompanying consolidated financial statements include the
accounts of Worldwide Wireless, Inc. and New England Wireless, Inc. in a
manner similar to a pooling of interests (see Note A). Intercompany accounts
and transactions between Worldwide, the parent and NEWI, its wholly owned
subsidiary are eliminated in consolidation.
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 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.
[2] Property and equipment:
Property and equipment are carried at cost. Depreciation is
computed on the straight-line method over the estimated useful lives of the
related assets ranging from 5 - 7 years.
[3] Wireless channel rights:
Wireless channel rights are carried at cost and amortized over
their ten-year terms. Accumulated amortization at June 30, 1996 and
March 31, 1997 is $30,121 and $41,173, respectively.
(continued)
<PAGE> F-8
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE B) - Summary of Significant Accounting Policies: (continued)
[4] Net (loss) per share:
Net (loss) per share has been computed based on the weighted
average number of shares outstanding during each period presented. Pursuant
to Securities and Exchange Commission rules, common shares issued and
warrants granted by the Company at prices below the anticipated public
offering price during the twelve months immediately preceding the filing
date of the initial public offering have been included in the calculation of
common shares as if they were outstanding for all periods presented (using
the treasury stock method and the anticipated public offering price). In
February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share" which will provide a simplified standard for
calculating basic earnings per share ("EPS"). When adopted, EPS
calculations for prior periods will be restated as provided in the
pronouncement.
[5] Revenue recognition:
Revenues from subscribers are recognized in the period that
service is rendered. Installation fees are recognized as revenues upon
subscriber hook-up to the extent of costs to obtain subscribers.
[6] Installation labor:
The Company capitalizes subcontractor and direct employee labor
costs incurred in connection with the installation of its television
reception equipment on subscriber premises. Amortization of such costs is
based on the subscriber turnover rate estimated to be three years.
[7] Credit and equipment concentration:
The Company's customers are primarily located in the State of
Vermont. Credit risk with respect to receivables is limited because of the
number of customers comprising the Company's customer base. All of the
Company's transmission equipment is located in the state of Vermont.
(continued)
<PAGE> F-9
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE B) - Summary of Significant Accounting Policies: (continued)
[8] Impairment of long-lived assets:
The Company adopted Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed of" ("SFAS 121"). During 1996, SFAS 121
established accounting standards for the impairment of long-lived assets,
certain identifiable assets and goodwill related to those assets. There was
no financial statement impact from the adoption of SFAS 121. The Company
periodically reviews wireless channel rights and other long-lived assets
whenever events or changes in circumstances indicate that the carrying
amount of such assets may not be recoverable. When such circumstances
occur, the Company will evaluate the possible effects on the carrying amount
of such assets.
[9] Fair values of financial instruments:
The estimated fair value of financial instruments has been
determined based on available market information and appropriate valuation
methodologies. The carrying amounts of cash, trade receivable, prepaid
expenses and other current assets, trade accounts payable, accrued expenses
and advances from investors approximate fair value at June 30, 1996 and
March 31, 1997 because of the short maturity of these financial instruments.
The estimated carrying value of the mortgages payable for financial
statement purposes at June 30, 1996 and March 31, 1997 approximate fair
value because the interest rates on these instruments approximate the
prevailing market rate at June 30, 1996 and March 31, 1997. The fair value
estimates were based on information available to management as of June 30,
1996 and March 31, 1997.
[10] Recent Pronouncements:
The Financial Accounting Standards Board has recently issued
Statements of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure," No. 130, "Reporting Comprehensive
Income," and No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The above pronouncements will not have a significant
effect on the information presented in the consolidated financial
statements.
(continued)
<PAGE> F-10
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE C) - Property and Equipment:
Property and equipment consists of the following:
<TABLE>
<CAPTION>
June 30, March 31,
1996 1997
---------- ----------
<S> <C> <C>
Transmission equipment. . . . . . $1,186,120 $1,202,903
Subscriber equipment. . . . . . . 719,695 626,455
Office furniture and equipment. . 179,571 189,126
Vehicles. . . . . . . . . . . . . 28,330 28,330
Leasehold improvements. . . . . . 66,350 66,350
Building and land . . . . . . . . 127,487 127,487
------------------------
T o t a l . . . . . . . 2,307,553 2,240,651
Accumulated depreciation. . . . . 637,896 906,455
------------------------
B a l a n c e . . . . . $1,669,657 $1,334,196
========================
</TABLE>
(NOTE D) - Wireless Channel Rights:
The Company acquired wireless channel rights through license holders
and sub-lessors of certain licenses. The Company's wireless channel rights
are principally located in the Vermont market.
The lease and sub-lease agreements frequently require initial fees
followed by certain monthly fees based on subscriber volume, subject to
certain minimum fees. Most of the agreements do not require minimum fees
until the channel starts operations. During the year ended December 31,
1994, the six-month period ended June 30, 1995, the year ended June 30, 1996
and the nine-month periods ended March 31, 1996 and March 31, 1997, the
Company incurred approximately $14,000, $18,000, $36,000, $26,000 and
$73,000 of lease fees, respectively. The Company is in arrears in paying
the monthly fees to such license holders and sublessors. The lease and
sublease agreements contain provisions for the termination of the agreements
in the event of nonpayment.
(continued)
<PAGE> F-11
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE D) - Wireless Channel Rights: (continued)
The lease and sub-lease periods generally follow the periods
corresponding to the actual Federal Communications Commission ("FCC")
license dates with provisions for extensions upon license renewal from the
FCC. The FCC licenses are typically granted for ten-year periods. The
Company, as at June 30, 1996, is obligated to pay minimum fees to license
holders or sub-lessors in future periods for channels which have begun
operations as follows:
<TABLE>
<CAPTION>
Year Ending
June 30,
-----------
<S> <C>
1997 . . . . . . . . . . . . . . $ 78,000
1998 . . . . . . . . . . . . . . 84,000
1999 . . . . . . . . . . . . . . 60,000
2000 . . . . . . . . . . . . . . 60,000
2001 . . . . . . . . . . . . . . 60,000
Thereafter . . . . . . . . . . . 220,000
--------
T o t a l. . . . . . . $562,000
========
</TABLE>
(NOTE E) - Commitments and Other Matters:
[1] Programming contracts:
In connection with its distribution of television programming,
the Company has fixed-term contracts with various program suppliers, such as
ESPN, TMC and NESN. Contract terms range in length from one year to five
years and expire at various dates through 1999. Most contracts are subject
to automatic renewal upon expiration unless notice is given, by either
party, of intent not to renew. These contracts require the Company to pay
fees to programmers based on the number of subscribers or a minimum charge.
(continued)
<PAGE> F-12
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE E) - Commitments and Other Matters: (continued)
[2] Mortgages payable:
The Company has entered into a first and second mortgage for
certain property at the base of a future transmitting site. The mortgages
bear interest at 8.0% and 6.75%, respectively. Monthly principal and
interest payments total approximately $620 for both mortgages, with the
mortgages expiring in 2009 and 2023, respectively. Future payments on these
mortgages as at June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Year Ending
June 30,
-----------
<S> <C>
1997 . . . . . . . . . . . . . . $ 2,000
1998 . . . . . . . . . . . . . . 2,000
1999 . . . . . . . . . . . . . . 3,000
2000 . . . . . . . . . . . . . . 3,000
2001 . . . . . . . . . . . . . . 3,000
Thereafter . . . . . . . . . . . 61,000
-------
T o t a l. . . . . . . $74,000
=======
</TABLE>
(NOTE F) - Operating Leases:
[1] The Company has entered into a noncancellable operating lease for
office facilities at one of its tower sites. The lease agreement is
adjusted annually for the percentage increase based on the Consumer Price
Index - All Urban Consumers. The lease agreement contains renewal options for
up to two additional five year periods on the existing terms and conditions.
The future minimum lease obligations at June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Year Ending
June 30,
-----------
<S> <C>
1997 . . . . . . . . . . . . . . $ 23,000
1998 . . . . . . . . . . . . . . 23,000
1999 . . . . . . . . . . . . . . 23,000
2000 . . . . . . . . . . . . . . 23,000
2001 . . . . . . . . . . . . . . 23,000
Thereafter . . . . . . . . . . . 13,000
--------
T o t a l. . . . . . . $128,000
========
</TABLE>
(continued)
<PAGE> F-13
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE F) - Operating Leases: (continued)
[2] The Company has entered into two operating leases with the same
party, for the right to lease space from where the Company broadcasts its
signal. The leases are adjusted annually for the percentage increase based
on the Consumer Price Index - All Urban Consumers.
The lease terms range from 8 - 10 years and the Company has the
option to renew the leases at the end of the initial terms. The future
minimum lease obligations at June 30, 1996 are as follows:
<TABLE>
<CAPTION>
Year Ending
June 30,
-----------
<S> <C>
1997 . . . . . . . . . . . . . . $ 58,000
1998 . . . . . . . . . . . . . . 58,000
1999 . . . . . . . . . . . . . . 58,000
2000 . . . . . . . . . . . . . . 35,000
2001 . . . . . . . . . . . . . . 35,000
Thereafter . . . . . . . . . . . 26,000
--------
T o t a l. . . . . . . $270,000
========
</TABLE>
The Company is in arrears in making their monthly lease payments.
The lease agreements contain provisions for the termination of the
agreements in the event of nonpayment.
The total rent expense incurred by the Company for operating
leases for the year ended December 31, 1994, the six-month period ended
June 30, 1995, the year ended June 30, 1996, and the nine-month periods
ended March 31, 1996 and March 31, 1997, was approximately $92,000, $58,000,
$131,000, $99,000 and $91,000, respectively.
(NOTE G) - Related Party Transactions:
Notes receivable includes a note for $15,000 where the Company loaned
money to an entity, one of whose officers is also the president and
stockholder of the Company. The note bears interest at 7.5% per annum and
was repaid in October 1996.
(continued)
<PAGE> F-14
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE H) - Income Taxes:
The Company accounts for income taxes under the provision of Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
which requires the Company to recognize deferred tax assets and liabilities
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.
From inception through the date of the merger, NEWI had elected to be
treated as an S Corporation for federal and state income tax purposes,
whereby, earnings and losses were included in the personal tax returns of
the stockholders and are excluded from the net operating loss carryforward
available for use by the Company to reduce future taxable income.
At June 30, 1996, the Company has net operating loss carryforwards for
income tax purposes aggregating approximately $1,484,000 which expire in the
years 2010 through 2011. The use of these carryforwards may be limited on
an annual basis pursuant to the Internal Revenue Code due to certain changes
in ownership.
The gross provision for income tax benefit and increase in valuation
allowance thereon for the year ended June 30, 1996 and for the nine-month
period ended March 31, 1997 were approximately $594,000 and $1,039,000,
respectively.
Temporary differences and carryforwards which give rise to the
deferred tax asset at June 30, 1996 are as follows:
Net operating losses. . . . . . . . . . $594,000
Less valuation allowance thereon. . . . 594,000
--------
$ -0-
========
(continued)
<PAGE> F-15
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE I) - Stock Warrants:
Outstanding stock warrants consist of the following at March 31, 1997:
<TABLE>
<CAPTION>
Number of Exercise Expiration
Shares Price Date
--------- -------- -------------
<S> <C> <C> <C>
Warrants issued with debt (i) 15,000 See note See note
Warrants issued with debt (ii) 25,000 3.00 See note
Warrants issued with debt (iii) 82,500 3.00 August 1998
Warrants issued with debt (iv) 15,000 3.00 December 1998
Warrants issued with debt (v) 7,500 3.00 January 1999
<FN>
- --------------------
<Fi> Contingent warrants issued with convertible promissory notes
aggregating $150,000 in August 1995. The notes matured in June 1996
and remain unpaid. For notes that are converted to common stock, the
warrants are exercisable at $3.50 and expire three years from the
date of issuance. For notes that are not converted to common stock
and an initial public offering is consummated, the warrants are
exercisable at the initial public offering price and are exercisable
for 3 years following the offering. In the event the convertible
promissory notes are not converted and no public offering is
consummated, no warrants will be issued. These contingent warrants
were valued at approximately $18,000 and accounted for as debt
discount and fully amortized over the term of the notes.
<Fii> Warrants issued with a promissory note of $100,000, exercisable
during a 3 year period following an initial public offering. The
note matured in October 1996 and remains unpaid. The warrants were
valued at approximately $32,000 and accounted for as debt discount
and amortized over the term of the note.
<Fiii> Warrants issued with promissory notes aggregating $330,000 in August
1996. The notes matured in March 1997 and remain unpaid. The
warrants were valued at approximately $68,000 and accounted for as
debt discount and amortized over the term of the notes.
<Fiv> Warrants issued with a promissory note of $60,000 in December 1996.
The note matured in March 1997 and remains unpaid. The warrants were
valued at approximately $12,000 and accounted for as debt discount
and amortized over the term of the note.
<Fv> Warrants issued with a promissory note of $30,000 in January 1997.
The note matured in July 1997 and remains unpaid. The warrants were
valued at approximately $6,000 and accounted for as debt discount and
are being amortized over the terms of the note.
</FN>
</TABLE>
(continued)
<PAGE> F-16
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE J) - Notes Payable:
Notes payable are summarized as follows:
<TABLE>
<CAPTION>
June 30, March 31,
1996 1997
---------- ----------
<S> <C> <C>
Notes payable to stockholder, interest
at 7.5%, unsecured . . . . . . . . . . . . $1,391,365 $1,611,065
Notes payable to stockholders, interest
at 8.5% to 10%, unsecured. . . . . . . . . 280,000
Notes payable to third parties, interest
at 7.5% to 10%, unsecured (i). . . . . . . 274,500 439,500
Convertible promissory notes, interest
at 7.5% to 8%, unsecured (ii). . . . . . . 262,500 175,000
------------------------
1,928,365 2,505,565
Less: unamortized debt discount . . . . . . (15,780) (3,046)
------------------------
Net notes payable . . . . . . . . . . $1,912,585 $2,502,519
========================
</TABLE>
Except for one note of $30,000 which matured in July 1997, the notes
matured on various dates through March 1, 1997 and are payable on demand.
The Company lacks the resources to repay those notes which are due and
payable on demand.
(i) Certain notes payable aggregating $124,500 and $149,500 at June 30,
1996 and March 31, 1997, respectively, are subject to an increased
interest rate of 12%.
(ii) Reflects conversion of $87,500 of notes into 25,000 shares in October
1996 and January 1997.
Interest payable to stockholders of approximately $191,000 and
$305,000 at June 30, 1996 and March 31, 1997, respectively, is included in
accrued expenses. Interest of $30,000 was paid to the chairman and principal
stockholder in June 1997.
(NOTE K) - Litigation:
The Company's President instituted a lawsuit against an ex-employee
claiming defamation by the ex-employee. In October 1996, the ex-employee
filed a counterclaim against the Company and its President alleging wrongful
termination, misconduct by the President and violations of SEC Regulations.
The Company believes that the ex-employee's counterclaims are without merit.
However, the Company is not able to quantify the likelihood that it will
prevail, nor the likely magnitude of a damage award in the event it should
not prevail.
(continued)
<PAGE> F-17
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE K) - Litigation: (continued)
In addition, two persons have claimed that the Company is obliged to
issue up to 60,000 shares of its common stock to them in consideration for
past services. The Company intends to contest the claims if asserted in
formal legal proceedings, however, there is no assurance that it will
prevail.
The Company is subject to two other lawsuits and claims. Management
believes that it has meritorious defenses to the above claims and is
vigorously contesting them. The proceedings are at an early stage and the
Company is not able to quantify the likelihood that it will prevail, nor
the likely magnitude of a damage award in the event it should not prevail.
(NOTE L) - Subsequent Events:
[1] In August 1997, the Company entered into an agreement with
InterDigital Communications Corporation ("InterDigital") whereby,
InterDigital will use the Company's service territory and facilities for
testing certain of its proprietary technologies. In conjunction with the
agreement, the Company is obligated to purchase certain equipment as
specified in the agreement.
In connection therewith, InterDigital made a bridge loan of
$250,000 at an interest rate of prime (as declared by Citibank) plus 1% and
is due the earlier of December 31, 1997 or the completion of the proposed
public offering. In connection with the loan, the Company issued warrants
for the purchase of 62,000 shares of common stock during either (i) the
period commencing on the 14th month and ending on the 36th month following
the completion of the contemplated offering at 50% of the offering price or
(ii) January 1, 1998 through January 1, 2002 in the event the offering has
not been declared effective by the Securities and Exchange Commission by
December 31, 1997, the warrant exercise price will be set by the Board of
Directors. The warrants have been valued at approximately $67,000 and will
be accounted for as debt discount and will be amortized over the life of the
loan. The effective interest rate on the note is 56%.
(continued)
<PAGE> F-18
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE L) - Subsequent Events: (continued)
[2] Notes payable:
Subsequent to March 31, 1997, the Company issued two promissory
notes aggregating to $65,000. The notes bear interest at 7.5% and are due
on various dates through December 31, 1997. In connection with the notes,
the Company issued warrants for the purchase of 16,250 shares during either
(i) the period commencing the 14th month and ending on the 36th month
following the completion of the contemplated offering or (ii) January 1,
1998 through January 1, 2001, at exercise prices specified in the agreement.
The warrants have been valued at approximately $17,000 and will be accounted
for as debt discount and will be amortized over the life of the notes.
[3] In January 1997, the Company settled a claim of wrongful
termination instituted by a former employee. The settlement terms included
36,050 shares transferred from two stockholders, including one who is an
officer of the Company and an agreement to use the plaintiff's corporation
for nonexclusive marketing for two years. The shares transferred on
settlement, have been valued at approximately $108,000 and have been included
in selling general and administrative expenses in the nine month period ended
March 31, 1997.
[4] The Company is currently negotiating with an underwriter with
respect to a proposed public offering of the Company's securities. There is
no assurance that such offering will be consummated. In connection with the
offering, the Company anticipates incurring substantial expenses which, if
the offering is not consummated, will be charged to expense.
The Company expects to offer 1,250,000 units between $6.00 and
$7.00 per unit. Each unit consists of one share of common stock and one
redeemable warrant. Each warrant will entitle the holder to purchase one
share of common stock at an exercise price of 120% of the offering price.
[5] In May 1997, two promissory notes aggregating $210,000 were
converted to 70,000 shares of common stock.
[6] In August 1997, the Company made an offer to all existing holders
of its promissory notes to exchange the notes for common stock at $3.00 per
share.
The Company has also agreed to issue warrants to purchase 12,909
shares of common stock to those NEWI note holders who exchanged their debt
for the Company's common stock pursuant to the merger with NEWI. Such
warrants have been valued at approximately $47,000.
(continued)
<PAGE> F-19
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(Unaudited with respect to data as of
March 31, 1997 and for the nine-month periods ended
March 31, 1996 and March 31, 1997)
(NOTE L) - Subsequent Events: (continued)
[7] In August 1997, the Company agreed to issue an option to purchase
402,766 shares of common stock to the Company's Chairman. The option is
exercisable during the period commencing on the 14th month and ending on the
36th month following completion of the contemplated public offering at an
exercise price of $3.00 per share. The option has been valued by the Company
at approximately $1,468,000.
<PAGE> F-20
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY
THE COMPANY
THE OFFERING
SUMMARY FINANCIAL INFORMATION
Statement of Operations Data
RISK FACTORS
Limited Revenues; Accumulated Deficit
Defaults Under Agreements
Unpaid Indebtedness
Competition
Risks Associated with IDC
Need for Additional Financing For Growth
Inception of Telephone Operations
Lack of Prior Experience of the Underwriter
Impediments to Proposed Expansion
Termination or Expiration of Channel Leases
Dependence on Key Individuals
Limited Number of Experienced Management; Board Composition
Additional Management
Conflicts of Interest
Physical Limitations of Wireless Cable Transmission
Government Regulation
Dependence on Programming Agreements
Unproved Basis for Company Plans
Voting Power of Present Management
Dividends Unlikely
Risk of Future Sales of Common Stock
No Prior Market
Dilution
Volatility of Stock
Risk of Authorization of Preferred Stock
Risk of Non-Registration of Securities in Certain Jurisdictions
DILUTION
USE OF PROCEEDS
DIVIDEND POLICY
CAPITALIZATION
SELECTED FINANCIAL DATA
Statement of Operations Data
Balance Sheet Data
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Results of Operations
Liquidity and Capital Resources
BUSINESS
Background
Business Strategy - Wireless Cable Television
The Cable Television Industry in General
Wireless Cable Television Systems in General
Digital Video Services
Other Technologies - InterDigital Communications Corporation
Other Technologies - Local Wireless Loop Telephone Service
Other Activities - Social Responsibility
Government Regulation
The Mount Mansfield System
Legal Proceedings
Employees
Properties
MANAGEMENT
Directors and Executive Officers
Advisory Board
Executive Compensation
CERTAIN TRANSACTIONS
PRINCIPAL STOCKHOLDERS
UNDERWRITING
DESCRIPTION OF SECURITIES
Common Stock
Common Stock Purchase Warrants
Transfer Agent or Registrar
Shares Eligible for Future Sale
LEGAL MATTERS
EXPERTS
ADDITIONAL INFORMATION
FINANCIAL STATEMENTS
</TABLE>
PART II
INFORMATION NOT REQUIRED IN Prospectus
Item 25. Other Expenses of Issuance and Distribution.
<TABLE>
<S> <C>
Registration Fee $ 5,871
NASD Filing Fee 2,000
NASDAQ SmallCap(TM)Market Fee 10,000
Boston Stock Exchange 20,000
Printing and Engraving
Legal Fees and Expenses
Accounting Fees and Expenses
Transfer Agent and Warrant Agent Fees
State Filing Fees and Blue
Sky Expenses
Underwriter's non-accountable
expense allowance 243,750
Miscellaneous
Total $_______(1)
- --------------------
<F1> All Figures Estimated
</TABLE>
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted under the Delaware General Business Law, the Company's
Certificate of Incorporation and By-Laws provide for indemnification of a
Director or Officer under certain circumstances against reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of an action brought against him by reason of his being a Director
or Officer. In addition, the Company's charter documents provide for the
elimination of Directors' liability to the Company or its stockholders for
monetary damages except in certain instances of bad faith, intentional
misconduct, a knowing violation of law, or illegal personal gain.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to Directors, Officers,
and controlling persons of the Company pursuant to any charter, provision,
by-law, contract, arrangement, statute, or otherwise, the Company has been
advised that in the opinion of the Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a Director, Officer, or
controlling person of the Company in the successful defense of any such action,
suit, or proceeding) is asserted by such Director, Officer, or controlling
person of the Company in connection with the Securities being registered
pursuant to this Registration Statement, the Company 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 Act and will
be governed by the final adjudication by such court of such issue.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The sales of securities of the Company described below were exempt from
registration under the Act, in reliance upon the exemptions afforded by Section
4(2) of the Act and Regulation D promulgated thereunder for transactions not
involving a public offering. All certificates evidencing such sales bear an
appropriate restrictive legend, and to the best knowledge of the Company, all
purchasers of the Company's securities, other than certain persons who acquired
such shares in exchange for shares of New England Wireless, Inc., were
accredited investors at the times of such purchases.
On March 11, 1995, the Company issued 801,156 shares of its common stock
for the common stock of 31 former shareholders of NEW in connection with the
merger of NEW into its wholly owed subsidiary. In addition, the Company issued
388,007 shares of its stock in cancellation of $1,164,021 of indebtedness of
NEW owed to its note holders, including Alan R. Ackerman.
During 1995, the Company issued 40,000 shares of its stock to 3
individuals at a price of $3.00 per share.
On August 21, 1995, the Company issued $150,000 of convertible promissory
notes to 5 accredited investors with annual interest rates of 8%. The notes
were due and payable on June 30, 1996. The notes afford the holders thereof
the right to convert into shares of the Company's common stock at $3.50, and
also afford the holders of the notes "piggy-back" registration rights with
respect to such shares as to any registration statements filed by the Company
after completion of its initial public offering.
On April 14, 1995 and August 22, 1995, the Company issued two promissory
notes to accredited investors in the aggregate amount of $175,000 due on
demand after 180 days. The notes carried an interest rate of 7.5%.
During December 21, 1995 through January 4, 1996, the Company issued
three convertible promissory notes in an aggregate principal amount of
$112,500 and at an annual interest rate of 7.5% (increasing to 12% if not
timely paid) to 3 investors. Two notes aggregating $87,500 were converted
into 25,000 shares of the Company's Common Stock at a price of $3.50
per share.
On April 4, 1996, the Company issued a promissory note to a single
investor in the original principal amount of $100,000 with an annual interest
rate of 8.5%(increasing to 12% if not timely paid) due 180 days after issuance.
The note provided for the issuance of 25,000 Warrants (issued during April,
1997) to purchase the Company's common stock exercisable at $3.00 per share or
at a price to be determined in the absence of a public offering for a period
from the 13th month until the 36th month after completion of a public offering
of the Company's stock.
On August 29, 1996, the Company completed a private placement of $330,000
of convertible promissory notes with attached Warrants to 5 investors. The
notes provided an annual interest rate of 10%, and for conversion into the
Company's common stock at $3.00 per share. The notes were due on March 1, 1997.
The Warrants entitle the holders thereof to purchase an aggregate of 82,500
shares of the Company's common stock at $3.00 per share.
On October 24, 1996, and January 2, 1997, the Company issued 25,603
shares of its common stock to 2 investors in conversion of its outstanding
indebtedness to them at a conversion rate of $3.00 per share.
On December 19, 1996 and January 7, 1997, the Company issued a 2
promissory notes to 2 persons in the aggregate principal amount of $90,000 with
an interest rate of 10%. The notes were due on March 1, 1997.
From March 31, 1997 until April 23, 1997, the Company issued an aggregate
of $339,000 in promissory notes to 4 investors, including InterDigital
Communications Corporation ("IDC"). The notes carry annual interest rates of
7.5% or, in the case of the IDC note, prime plus 1%, and are due either 180
days from issuance or, in the case of the note to IDC, on December 31, 1997.
One note, in the original principal amount of $5,000, is convertible at
$3.00 per share of Common Stock. The Company also issued Warrants to
purchase 78,250 shares of its common stock exercisable at a price of 50%
of the price per share at which such stock is sold in a public offering of
the Company's securities during the period from the 13th month until the
36th month after completion of the offering to the purchasers of the notes.
In May 1997, an investor converted $210,000 of indebtedness of the
Company in return for 70,000 shares of the Company's common stock.
In August 1997, the Company made an offer to all existing note holders to
issue shares of its common stock in exchange for outstanding indebtedness at a
price of $3.00 per share. To date, noteholders have elected to convert $304,500
in principal and $34,759.76 in interest into 84,064 shares of its common stock.
In August 1997, in consideration of delays which it has experienced in
securing financing necessary to pursue its operations, the Company has agreed
to issue Warrants to purchase 12,909 shares of its common stock to persons who
previously elected to exchange their indebtedness of NEW for shares of the
Company's common stock in connection with the Company's acquisition of NEW
through a merger with its subsidiary in March 1995. The Warrants were issued on
the basis of 1 Warrant for every $4 of interest due but not paid in connection
with such exchange. In August 1994, the Company also declared a bonus to Alan
R. Ackerman, its founder and principal shareholder, in consideration of the
services Mr. Ackerman has performed for the Company since its inception and
awarded Mr. Ackerman Warrants to purchase 402,766 shares of the Company's
common stock. The Warrants are to be exercisable during either (i) the period
commencing on the 13th month and ending on the 36th month following the
contemplated offering; or (ii) January 1, 1998 through January 1, 2002 in the
event the offering has not been declared effective by the Commission by
December 31, 1997. The Warrants are exercisable at $3.00 per share.
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit # Description
- --------------------------
<C> <S>
1.1 Underwriting Agreement*
3.1 Certificate of Incorporation
3.2 By-Laws
4.1 Form of Stock Certificate
4.2 Selected pages of Certificate of Incorporation defining number
of shares of common stock
4.3 Form of Warrant Agreement and Warrant Certificate
4.4 Form of Underwriter's Unit Purchase Warrant*
5.1 Form of Opinion re: legality of securities
10.1 MMDS Channel Lease Agreement
10.2 Lease Agreement between Glenn Martin and Elouise Martin
10.3 OFS Channel Lease Agreement with Ivan Nachman
10.4 OFS Channel Lease Agreement with Blake Twedt
10.5 OFS Channel Lease Agreement with John Dudeck
10.6 MMDS Channel Lease Agreement with New England Wireless
10.7 Agreement between Vermont ETV and New England Wireless
10.8 Agreement between Vermont ETV and New England Wireless
10.9 Commercial Lease between Kevin McGovern and New England Wireless
10.10 Ascutney Associates, Inc. Lease Agreement
10.11 Beta-Site Agreement with Interdigital Communications Corporation
10.12 Note and Mortgage and Assumption Agreement
10.13 Promissory Note to Alan Ackerman*
10.14 et seq. Promissory Notes Outstanding*
11.1 Statement of Earnings per share
15.1 Letter acknowledging use of interim unaudited financial statements*
21.1 Statement of Subsidiaries
23.1 Consent of Counsel
23.2 Consent of Independent Auditors
24.1 Power of Attorney
27.1 Financial Data Schedule
</TABLE>
All exhibits designated with an asterisk (*) will be filed by amendment.
ITEM 28. UNDERTAKINGS.
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 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 Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant 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 Registrant 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.
1. The undersigned Registrant hereby undertakes:
(a) To file, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement;
(b) To include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(c) To reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
2. To include any additional or changed material information with respect
to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement.
3. That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement related to the securities offered therein, and the
offering such securities at that time shall be deemed to be the initial bona
fide offering thereof.
4. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned.
WORLDWIDE WIRELESS, INC.
By: /S/ Scott A. Wendel
Scott A. Wendel
President and Chief Executive 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 stated.
Signature Title Date
-------------------------------------------------------
/s/ Scott A. Wendel President and Chief August 13, 1997
Executive Officer
/s/ Alan R. Ackerman Chairman of the Board August 13, 1997
Directors
/s/ Harold Doran Chief Financial Officer August 13, 1997
Secretary - Treasurer
Director
/s/ Jack Polak Director August 13, 1997
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit # Description
- --------------------------------------
<C> <S>
1.1 Underwriting Agreement*
3.1 Certificate of Incorporation
3.2 By-Laws
4.1 Form of Stock Certificate
4.2 Selected pages of Certificate of Incorporation defining number
of shares of common stock
4.3 Form of Warrant Agreement and Warrant Certificate
4.4 Form of Underwriter's Unit Purchase Warrant*
5.1 Form of Opinion re: legality of securities
10.1 MMDS Channel Lease Agreement
10.2 Lease Agreement between Glenn Martin and Elouise Martin
10.3 OFS Channel Lease Agreement with Ivan Nachman
10.4 OFS Channel Lease Agreement with Blake Twedt
10.5 OFS Channel Lease Agreement with John Dudeck
10.6 MMDS Channel Lease Agreement with New England Wireless
10.7 Agreement between Vermont ETV and New England Wireless
10.8 Agreement between Vermont ETV and New England Wireless
10.9 Commercial Lease between Kevin McGovern and New England Wireless
10.10 Ascutney Associates, Inc. Lease Agreement
10.11 Beta-Site Agreement with Interdigital Communications Corporation
10.12 Note and Mortgage and Assumption Agreement
10.13 Promissory Note to Alan Ackerman*
10.14 et seq. Promissory Notes Outstanding*
11.1 Statement of Earnings per share
15.1 Letter acknowledging use of interim unaudited financial statements*
21.1 Statement of Subsidiaries
23.1 Consent of Counsel
23.2 Consent of Independent Auditors
24.1 Power of Attorney
27.1 Financial Data Schedule
</TABLE>
All exhibits designated with an asterisk (*) will be filed by
amendment.
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
----------------------------
WORLDWIDE WIRELESS, INC.
------------------------
The undersigned, a natural persons for the purpose of organizing a
corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of
the laws of the State of Delaware (particularly Chapter 1, Title 8 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "General Corporation Law of the
State of Delaware"), hereby certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is WORLDWIDE WIRELESS, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 32
Loockerman Square, Suite L-100, City of Dover 19901, County of Kent; and the
name of the registered agent of the corporation in the State of Delaware at
such address is The Prentice-Hall Corporation System, Inc.
NAME MAILING ADDRESS
---- --------------
Shirley Lam 15 Columbus Circle
New York, N.Y. 10023-7773
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is twenty-two million five hundred
thousand, which are divided into twenty million Common Stock of a par value
of one cent each and two million five hundred thousand Preferred Stock of a
par value of one cent each.
The Preferred Stock may be issued, from time to time, in one or more
series, with such designations, preferences and relative, participating,
optional or other rights, qualifications, limitations or restrictions
thereof as shall be stated and expressed in the resolution or resolutions
providing for the issue of Such Series adopted by the Board of Directors
from time to time, pursuant to the authority herein given, a copy of which
resolution or resolutions shall have been set forth in a certificate made,
executed, acknowledged, filed and recorded in the manner required by the
laws of the State of Delaware in order to make the same effective. Each
series shall consist of such number of shares as shall be stated and
expressed in such resolution or resolutions providing for the issuance of
the stock of such series. All shares of any one series of Preferred Stock
shall be alike in every particular.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
---- ---------------
Shirley Lam 15 Columbus Circle
New York, N.Y. 10023-7773
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between
this corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application
in a summary way of this corporation or of any creditor or stockholder
thereof or on the application of any receiver or receivers. appointed for
this corporation under the provisions of [SECTION] 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or of any
receiver or receivers appointed for this corporation under the provisions
of [SECTION] 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may
be, agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned
by the court to which the said application has been made, be binding on all
the creditors or class of creditors, and/or on all the stockholders or class
of stockholders, of this corporation, as the case may be, and also on this
corporation.
EIGHTH: For the management of the business and for the conduct of
the affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further
provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be fixed
by. or in the manner provided in, the Bylaws. The phrase "whole Board" and
the phrase "total number of directors" shall be deemed to have the
samemeaning, to wit, the total number of directors which the corporation
would have if there were no vacancies. No election of directors need be by
written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of [SECTION] 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the Bylaws of the corporation
may be exercised by the Board of Directors of the corporation; provided,
however, that any provision for the classification of directors of the
corporation for staggered terms pursuant to the provisions of subsection (d)
of [SECTION] 141 of the General Corporation Law of the State of Delaware
shall be set forth in an initial Bylaw or in a Bylaw adopted by the
stockholders entitled to vote of the corporation unless provisions for such
classification shall be set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof to
notice of, and the right to vote at, any meeting of stockholders. Whenever
the corporation shall be authorized to issue more than one class of stock.
no outstanding share of any class of stock which is denied voting power
under the provisions of the certificate of incorporation shall entitle the
holder thereof to the right to vote at any meeting of stockholders except as
the provisions of paragraph (2) of subsection (b) of [SECTION] 242 of the
General Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise, denied voting
power shall entitle the holder thereof to vote upon the increase or decrease
in the number of authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of
paragraph (7) of subsection (b) of [SECTION] 102 of the General Corporation
Law of the State of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of [SECTION] 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred
to in or covered by said section, and the indemnification provided for herein
shall not be deemed exclusive of any other rights to which those indemnified
may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors,
and administrators of such a person.
ELEVENTH: From time to time any of the provisions of incorporation
may be amended, altered, or repeated, and other provisions authorized by the
laws of the State of Delaware at the time in force may be added or inserted
in the manner and at the time prescribed by said laws, and all rights at any
time conferred upon the stockholders of the corporation by this certificate
of incorporation are granted subject to the provisions of this Article
ELEVENTH.
Signed on April 2, 1994.
/S________________________
Incorporator
EXHIBIT 3.2
BYLAWS
OF
WORLDWIDE WIRELESS, INC.
(a Delaware corporation)
______________________
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock
in the corporation shall be signed by, or in the name of, the corporation by
the Chairman or Vice-Chairman of the Board of Directors, if any, or by the
President or a Vice President and by the Treasurer or an Assistant Treasurer
or the Secretary or an Assistant Secretary of the corporation. Any or all
the signatures on any such certificate may be a facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever
the corporation shall issue any shares of its stock as partly paid stock,
the certificates representing shares of any such class or series or of any
such partly paid stock shall set forth thereon the statements prescribed by
the General Corporation Law. Any restrictions on the transfer or
registration of transfer of any shares of stock of any class or series shall
be noted conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance
of any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, the Board of Directors of the corporation may
provide by resolution or resolutions that some or all of any or all classes
or series of the stock of the corporation shall be uncertificated shares.
Within a reasonable time after the issuance or transfer of any
uncertificated shares, the corporation shall send to the registered owner
thereof any written notice prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be
required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or bearer form
(represented by a certificate) which shall entitle the holder to receive a
full share upon the surrender of such scrip or warrants aggregating a full
share. A certificate for a fractional share or an uncertificated fractional
share shall, but scrip or warrants shall not unless otherwise provided
therein, entitle the holder to exercise voting rights, to receive dividends
thereon, and to participate in any of the assets of the corporation in the
event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not
exchanged for certificates representing the full shares or uncertificated
full shares before a specified date, or subject to the conditions that the
shares for which scrip or warrants are exchangeable may be sold by the
corporation and the proceeds thereof distributed to the holders of scrip or
warrants, or subject to any other conditions which the Board of Directors
may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers
or registration of transfers of shares of stock of the corporation shall be
made only on the stock ledger of the corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and, in the case of shares represented by
certificates, on surrender of the certificate or certificates for such
shares of stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before
the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice
of or to vote at a meeting of stockholders shall be at the close of business
on the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors
may fix a new record date for the adjourned meeting. In order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. If no record
date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
required by the General Corporation Law, shall be the first date on which a
signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office
in the State of Delaware, its principal place of business, or an officer or
agent of the corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Delivery made to the corporation's
registered office shall be by hand or by certified or registered mail,
return receipt requested. If no record date has been fixed by the Board of
Directors and prior action by the Board of Directors is required by the
General Corporation Law, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall
be at the close of business on the day on which the Board of Directors
adopts the resolution taking such prior action. In order that the
corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date
is adopted, and which record date shall be not more than sixty days prior to
such action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the right
to notice of a meeting of stockholders or a waiver thereof or to participate
or vote thereat or to consent or dissent in writing in lieu of a meeting, as
the case may be, the term "share" or "shares" or "share of stock" or "shares
of stock" or "stockholder" or "stockholders" refers to an outstanding share
or shares of stock and to a holder or holders of record of outstanding
shares of stock when the corporation is authorized to issue only one class
of shares of stock, and said reference is also intended to include any
outstanding share or shares of stock and any holder or holders of record of
outstanding shares of stock of any class upon which or upon whom the
certificate of incorporation confers such rights where there are two or more
classes or series of shares of stock or upon which or upon whom the General
Corporation Law confers such rights notwithstanding that the certificate of
incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
provided, however, that no such right shall vest in the event of an increase
or a decrease in the authorized number of shares of stock of any class or
series which is otherwise denied voting rights under the provisions of the
certificate of incorporation, except as any provision of law may otherwise
require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the directors, provided, that the first annual
meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date and at the time fixed
by the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the
State of Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the
place within the city or other municipality or community at which the list
of stockholders of the corporation may be examined. The notice of an annual
meeting shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the purpose or
purposes. The notice of a special meeting shall in all instances state the
purpose or purposes for which the meeting is called. The notice of any
meeting shall also include, or be accompanied by, any additional statements,
information, or documents prescribed by the General Corporation Law. Except
as otherwise provided by the General Corporation Law, a copy of the notice
of any meeting shall be given, personally or by mail, not less than ten days
nor more than sixty days before the date of the meeting, unless the lapse of
the prescribed period of time shall have been waived, and directed to each
stockholder at his record address or at such other address which he may have
furnished by request in writing to the Secretary of the corporation. Notice
by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States Mail. If a meeting is adjourned to another
time, not more than thirty days hence, and/or to another place, and if an
announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice signed by him before or after the time stated therein.
Attendance of a stockholder at a meeting of stockholders shall constitute a
waiver of notice of such meeting, except when the stockholder attends the
meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the stockholders need be
specified in any written waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, arranged in
alphabetical order, and showing the address of each stockholder and the
number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane
to the meeting, during ordinary business hours, for a period of at least ten
days prior to the meeting, either at a place within the city or other
municipality or community where the meeting is to be held, which place shall
be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held. The list shall also be produced and
kept at the time and place of the meeting during the whole time thereof, and
may be inspected by any stockholder who is present. The stock ledger shall
be the only evidence as to who are the stockholders entitled to examine the
stock ledger, the list required by this section or the books of the
corporation, or to vote at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if
present and acting - the Chairman of the Board, if any, the Vice-Chairman of
the Board, if any, the President, a Vice-President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the
meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or
dissent without a meeting. Every proxy must be signed by the stockholder or
by his attorney-in-fact. No proxy shall be voted or acted upon after three
years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and,
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock
itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails
to appear or act, the vacancy may be filled by appointment made by the
directors in advance of the meeting or at the meeting by the person
presiding thereat. Each inspector, if any, before entering upon the
discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspectors at such meeting with strict impartiality and
according to the best of his ability. The inspectors, if any, shall
determine the number of shares of stock outstanding and-the voting power of
each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes,
ballots, or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots, or consents, determine the result, and do such acts as are proper
to conduct the election or vote with fairness to all stockholders. On
request of the person presiding at the meeting, the inspector or inspectors,
if any, shall make a report in writing of any challenge, question, or matter
determined by him or them and execute a certificate of any fact found by him
or them. Except as otherwise required by subsection (e) of Section 231 of
the General Corporation Law, the provisions of that Section shall not apply
to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of
stock shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the
meeting despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to one
vote. Directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of
voting power, and except as may be otherwise prescribed by the provisions of
the certificate of incorporation and these Bylaws. In the election of
directors, and for any other action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special
meeting of stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action
so taken, shall be signed by the holders of outstanding stock having not
less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote
thereon were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
Action taken pursuant to this paragraph shall be subject to the provisions
of Section 228 of the General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors of the corporation. The Board of Directors shall have the
authority to fix the compensation of the members thereof. The use of the
phrase "whole board" herein refers to the total number of directors which
the corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder,
a citizen of the United States, or a resident of the State of Delaware. The
initial Board of Directors shall consist of two persons. Thereafter the
number of directors constituting the whole board shall be at least one.
Subject to the foregoing limitation and except for the first Board of
Directors, such number may be fixed from time to time by action of the
stockholders or of the directors, or, if the number is not fixed, the number
shall be two. The number of directors may be increased or decreased by
action of the stockholders or of the directors.
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation,
shall be elected by the incorporator or incorporators and shall hold office
until the first annual meeting of stockholders and until their successors
are elected and qualified or until their earlier resignation or removal.
Any director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders,
and directors who are elected in the interim to fill vacancies and newly
created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until
their earlier resignation or removal. Except as the General Corporation Law
may otherwise require, in the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election
of directors and/or for the removal of one or more directors and for the
filling of any vacancy in that connection, newly created directorships and
any vacancies in the Board of Directors, including unfilled vacancies
resulting from the removal of directors for cause or without cause, may be
filled by the vote of a majority of the remaining directors then in office,
although less than a quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, of the President, or of a majority of the directors in
office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be
given for special meetings in sufficient time for the convenient assembly of
the directors thereat. Notice need not be given to any director or to any
member of a committee of directors who submits a written waiver of notice
signed by him before or after the time stated therein. Attendance of any
such person at a meeting shall constitute a waiver of notice of such
meeting, except when he attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or special
meeting of the directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevents such majority, whereupon
a majority of the directors in office shall constitute a quorum, provided,
that such majority shall constitute at least one-third of the whole Board.
A majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law,
the vote of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board. The quorum and voting
provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law and these Bylaws which govern a
meeting of directors held to fill vacancies and newly created directorships
in the Board or action of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any
such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-
Chairman of the Board, if any and if present and acting, or the President,
if present and acting, or any other director chosen by the Board, shall
preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation.
The Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of any member of any
such committee or committees, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation with the exception of any authority the
delegation of which is prohibited by Section 141 of the General Corporation
Law, and may authorize the seal of the corporation to be affixed to all
papers which may require it.
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice-Chairman of the
Board, an Executive Vice-President, one or more other Vice-Presidents, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such
other officers with such titles as the resolution of the Board of Directors
choosing them shall designate. Except as may otherwise be provided in the
resolution of the Board of Directors choosing him, no officer other than the
Chairman or Vice-Chairman of the Board, if any, need be a director. Any
number of offices may be held by the same person, as the directors may
determine.
Unless otherwise provided in the resolution choosing him, each officer
shall be chosen for a term which shall continue until the meeting of the
Board of Directors following the next annual meeting of stockholders and
until his successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and perform
such duties in the management and operation of the corporation as shall be
prescribed in the resolutions of the Board of Directors designating and
choosing such officers and prescribing their authority and duties, and shall
have such additional authority and duties as are incident to their office
except to the extent that such resolutions may be inconsistent therewith.
The Secretary or an Assistant Secretary of the corporation shall record all
of the proceedings of all meetings and actions in writing of stockholders,
directors, and committees of directors, and shall exercise such additional
authority and perform such additional duties as the Board shall assign to
him. Any officer may be removed, with or without cause, by the Board of
Directors. Any vacancy in any office may be filled by the Board of
Directors.
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter, or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
I HEREBY CERTIFY that the foregoing is a full, true, and correct copy
of the Bylaws of WORLDWIDE WIRELESS, INC., a Delaware corporation, as in
effect on the date hereof.
Dated:
/S/________________________________
Secretary of
WORLDWIDE WIRELESS, INC.
(SEAL)
EXHIBIT 4.1
INCORPORATED UNDER THE LAWS OF
THE STATE OF DELAWARE
WORLDWIDE WIRELESS, INC.
Total Authorized Issue 22,500,000 2,500,000 Shares Par Value $.01
SHARES 20,000 Shares Par Value $.01 EACH PREFERRED STOCK
EACH COMMON STOCK
THIS IS TO CERTIFY THAT ____________________________________________ IS
THE OWNER OF _____________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF
WORLDWIDE WIRELESS, INC.
transferable on the books of the Corporation by the holder hereof
in person or by duly authorized Attorney upon surrender of this
Certificate properly endorsed.
Witness, the seal of the Corporation and the signatures of its duly
authorized officers.
Dated
___________________________________ ______________________________
SECRETARY PRESIDENT
EXHIBIT 4.2
CERTIFICATE OF INCORPORATION
----------------------------
WORLDWIDE WIRELESS, INC.
------------------------
The undersigned, a natural persons for the purpose of organizing a
corporation for conducting the business and promoting the purposes
hereinafter stated, under the provisions and subject to the requirements of
the laws of the State of Delaware (particularly Chapter 1, Title 8 of the
Delaware Code and the acts amendatory thereof and supplemental thereto, and
known, identified, and referred to as the "General Corporation Law of the
State of Delaware"). hereby certifies that:
FIRST: The name of the corporation (hereinafter called the
"corporation") is WORLDWIDE WIRELESS, INC.
SECOND: The address, including street, number, city, and county, of
the registered office of the corporation in the State of Delaware is 32
Loockerman Square, Suite L-100, City of Dover 19901, County of Kent; and the
name of the registered agent of the corporation in the State of Delaware at
such address is The Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is twenty-two million five hundred
thousand, which are divided into twenty million Common Stock of a par value
of one cent each and two million five hundred thousand Preferred Stock of a
par value of one cent each.
The Preferred Stock may be issued, from time to time, in one or more
series, with such designations, preferences and relative, participating,
optional or other rights, qualifications, limitations or restrictions
thereof as shall be stated and expressed in the resolution or resolutions
providing for the issue of Such Series adopted by the Board of Directors
from time to time, pursuant to the authority herein given, a copy of which
resolution or resolutions shall have been set forth in a certificate made,
executed, acknowledged, filed and recorded in the manner required by the
laws of the State of Delaware in order to make the same effective. Each
series shall consist of such number of shares as shall be stated and
expressed in such resolution or resolutions providing for the issuance of
the stock of such series. All shares of any one series of Preferred Stock
shall be alike in every particular.
EXHIBIT 4.3
FORM OF WARRANT CERTIFICATE
This Certificate evidences _____ Common Stock Purchase Warrants issued
under and pursuant to the terms and conditions of a certain warrant
agreement (the "Agreement") dated as of ___________, 1997 between the
Corporation and Continental Stock Transfer & Trust Company, as Warrant
Agent, to which Agreement and any instruments supplemental thereto reference
is hereby made for a description of the rights of the holders of Common
Stock Purchase Warrants issued under and pursuant thereto. The Corporation
will furnish to the holder of this Certificate, upon request and without
charge, a copy of the Agreement. The Agreement provides for adjustment in
the number of shares of Common Stock to be delivered upon the exercise of
the Common Stock Purchase Warrants in certain events therein set forth.
WORLDWIDE WIRELESS, INC. _____ WARRANTS
INCORPORATED UNDER THE LAW OF THE STATE OF DELAWARE
SEE BELOW FOR CERTAIN DEFINITIONS
THIS
CERTIFIES
THAT___________________________________________________________________________
is the
owner of ______________________________________________________________________
WARRANTS
OF
WORLDWIDE WIRELESS, INC.
(herein called the "Corporation") transferable on the books of the
Corporation by the holder hereof in person or by duly authorized attorney
upon the surrender of this certificate properly endorsed. This certificate
is not valid unless countersigned and registered by the Transfer Agent and
Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated: SEAL
_____________________________________
President
Countersigned and Registered: _____________________________________
Continental Stock Transfer & Trust Secretary
Company, Transfer Agent and Registrar
By: __________________________________
Authorized Signature
WORLDWIDE WIRELESS, INC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS, A FULL STATEMENT OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE PARTICIPATING, OPTIONAL, OR OTHER SPECIAL RIGHTS OF EACH CLASS OF
STOCK OF THE CORPORATION OR SERIES THEREOF AND THE QUALIFICATIONS,
LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS. COPIES OF
SUCH STATEMENT ARE ALSO ON FILE WITH THE TRANSFER AGENT AND ARE AVAILABLE TO
ANY STOCKHOLDER WITHOUT CHARGE UPON APPLICATION TO THE TRANSFER AGENT.
The following abbreviations when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in
full according to applicable laws or regulations.
TEN COM-as tenants in common UNIF GIFT MIN ACT -____ Custodian _____
(Cust) (Minor)
TEN ENT-as tenants by the entireties under Uniform Gifts to Minor Act
JT TEN-as joints tenants with right of
survivorship and not as tenants
in common ________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, ____________________ hereby sell, assign and
transfer unto
(PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE)
______________________________________
______________________________________
______________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING POSTAL ZIP CODE OF ASSIGNEE)
______ Units represented by the within Certificate, and do hereby
irrevocably constitute and appoint ______________________________________
Attorney to transfer the said Units on the books of the within-named
Corporation with full power of substitution in the premises.
Dated: _________________________________
NOTICE: The signature to this assignment must correspond with the
name as written upon the face of the Certificate, in every particular,
without alteration or enlargement, or any change whatever.
WARRANT AGREEMENT
This Warrant Agreement (the "Agreement") is by and among WORLDWIDE
WIRELESS, INC., a Delaware corporation (the "Company") and CONTINENTAL STOCK
TRANSFER & TRUST COMPANY, a New York corporation, as Warrant Agent (the
"Warrant Agent").
Background
----------
1. In connection with a public offering of its securities (the
"Offering") through a firm commitment underwriting with Dupont Securities,
Inc. (the "Underwriter") of pursuant to a Registration Statement filed on
Form SB-2 with the Securities and Exchange Commission under the Securities
Act of 1933 on __________, 1997 (the "Offering"), the Company proposes to
issue 1,250,000 redeemable common stock purchase warrants (the "Warrants"),
and 125,000 Warrants to the Underwriter.
2. The Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and redemption of the Warrants,
the issuance of certificates representing the Warrants, the exercise of the
Warrants, and the rights of the holders thereof.
N O W , T H E R E F O R E ,
In consideration of the premises and the mutual covenants and
agreements herein set forth, and in reliance on the representations and
warranties contained herein, the parties hereby agree as follows:
Section 1. Definitions. As used herein, the following terms shall
have the following meanings, unless the context shall otherwise require:
(a) "Average Closing Bid Price", means the average closing bid price
of the Company's Common Stock reported by NASDAQ for the 10
trading days immediately preceding the respective closing of the
Offering.
(b) "Common Stock" shall mean the authorized stock of the Company of
any class, whether now or hereafter authorized, which has the
right to participate in the distribution of earnings and assets
of the Company without limit as to amount or percentage, which
at the date hereof consists of20,000,000 shares of Common Stock,
$.01 par value per share.
(c) "Corporate Office" shall mean the office of the Warrant Agent
(or its successor) at which at any particular time its principal
business shall be administered, which office is located on the
date hereof at 2 Broadway, 19thFloor, New York, New York 10004.
(d) "Exercise Date" shall mean, as to any Warrant, the date on which
the Warrant Agent shall have received both: (i) the Warrant
Certificate representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder thereof or his
attorney duly authorized in writing; and (i) payment in cash, or
by official bank or certified check made payable to the Warrant
Agent, of an amount in lawful money of the United States of
America equal to the applicable Purchase Price.
(e) "Purchase Price" shall mean the price to be paid upon exercise
of each Warrant in accordance with the terms hereof, which price
shall be $_____ per share, subject to adjustment from time to
time pursuant to the provisions of Section 9 hereof, and subject
to the Company's right to reduce the Purchase Price; upon notice
to all Warrant Holders.
(f) "Redemption Price" shall mean the price at which the Company
may, at its option, redeem the Warrants, in accordance with the
terms hereof, which price shall be $.10 per Warrant, subject to
adjustment from time to time pursuant to the provisions of
Section 9.
(g) "Registered Holder" shall mean the person in whose name any
certificate representing Warrants shall be registered on the
books maintained by the Warrant Agent pursuant to Section 6.
(h) "Transfer Agent" shall mean Continental Stock Transfer & Trust
Company, as the Company's transfer agent, or its authorized
successor, as such.
(i) "Warrant Expiration Date" shall mean, with respect to each
Warrant, 3:00 p.m. (New York, New York time) on the fifth
anniversary of the date of issuance of the Warrants, or the
Redemption Date as defined in Section 8, whichever is earlier;
provided that if such date shall in the State of New York be a
holiday or a day on which banks are authorized to close, then
3:00 p.m. (New York, New York time) on the next following day
which in the State of New York is not a holiday nor a day on
which banks are authorized to close. Upon notice to all Warrant
Holders, the Company shall have the right to extend the Warrant
Expiration Date.
Section 2. Warrants and Issuance of Warrant Certificates.
(a) Each Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase
one (1) share of Common Stock upon the exercise thereof, in
accordance with the terms hereof, subject to modification and
adjustment as provided in Section 9.
(b) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants sold pursuant to the
Registration Statement shall be executed by the Company and
delivered to the Warrant Agent. Upon written order of the
Company signed by its President or Chairman or a Vice President
and by its Secretary or an Assistant Secretary, the Warrant
Certificates shall be countersigned, issued and delivered by the
Warrant Agent.
(c) From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall countersign and deliver stock certificates
in required whole number denominations representing the amount
of shares of Common Stocks sold in the Offering, subject to
adjustment as described herein, upon the exercise of Warrants in
accordance with this Agreement.
(d) From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates
in required whole number denominations to the persons entitled
thereto in connection with any transfer or exchange permitted
under this Agreement; provided that no Warrant Certificates
shall be issued except to: (i) those initially issued hereunder;
(ii) those issued on or after the Initial Warrant Exercise Date,
upon the exercise of fewer than all Warrants represented by any
Warrant Certificate, to evidence any unexercised Warrants held
by the exercising Registered Holder; (iii) those issued upon any
transfer or exchange pursuant to Section 6; (iv) those issued in
replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Section 7; (v) those issued pursuant to
the Placement Agents' Warrants; and (vi) at the option of the
Company, in such form as may be approved by its Board of
Directors, to reflect any adjustment or change in the Purchase
Price, the number of shares of Common Stock purchasable upon
exercise of the Warrants or the Redemption Price therefor made
pursuant to Section 9.
Section 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates for the Warrants shall be substantially
in the form annexed hereto as Exhibit A and may have such
letters, numbers or other marks of identification or designation
and such legends, summaries or endorsements printed,
lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of
this Agreement or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange on which the Warrants
may be listed, or to conform to usage. The Warrant Certificates
shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen, or destroyed Warrant Certificates) and issued in
registered form. Warrants shall be numbered serially with the
letter W on the Warrants.
(b) Warrant Certificates shall be executed on behalf of the Company
by its Chairman of the Board, President or any Vice President
and by its Secretary or an Assistant Secretary, by mutual
signatures or by facsimile signatures printed thereon, and shall
have imprinted thereon a facsimile of the Company's seal.
Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so
countersigned. Incase any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such
officer of the Company before the date of issuance of the
Warrant Certificates or before countersignature by the Warrant
Agent and issue and delivery thereof, such Warrant Certificates
may nevertheless be countersigned by the Warrant Agent, issued
and delivered with the same force and effect as though the
person who signed such Warrant Certificates had not ceased to be
such officer of the Company. After countersignature by the
Warrant Agent, Warrant Certificates shall be delivered by the
Warrant Agent to the registered Holder without further action by
the Company, except as otherwise provided by Section 4(a).
Section 4. Exercise.
(a) Each Warrant may be exercised by the Registered Holder thereof
at any time on or after the Initial Warrant Exercise Date, but
not after the Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein and in the applicable
Warrant Certificate. The Company shall not be obligated to
deliver any securities pursuant to the exercise of this Warrant
unless a registration statement under the Securities Act of
1933, with respect to such securities is effective. The Company
has covenanted and agreed that it will use all reasonable
efforts to keep the Registration Statement current while any of
the Warrants are outstanding. This Warrant shall not be
exercisable by a Registered Holder in any state where such
exercise would be unlawful. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive the securities
deliverable upon such exercise shall be treated for all purposes
as the holder upon exercise thereof as of the close of business
on the Exercise Date. As soon as practicable on or after the
Exercise Date, the Warrant Agent shall deposit the proceeds
received from the exercise of a Warrant and shall notify the
Company in writing of the exercise of the Warrants. Promptly
following, and in any event within five (5) days after the date
of such notice from the Warrant Agent, the Warrant Agent, on
behalf of the Company, shall cause to be issued and delivered to
the person or persons entitled to receive the same, a
certificate or certificates for the securities deliverable upon
such exercise (plus a Warrant Certificate for any remaining
unexercised Warrants of the Registered Holder) unless prior to
the date of issuance of such certificates the Company shall
instruct the Warrant Agent to refrain from causing such issuance
of certificates pending clearance of checks received in payment
of the Purchase Price pursuant to such Warrants.
Section 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the
purpose of issuance upon exercise of Warrants, such number of
shares of Common Stock as shall then be issuable upon the
exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon
exercise of the Warrants shall, at the time of delivery, be duly
and validly issued, fully paid, nonassessable and free from all
taxes, liens and charges with respect to the issuance thereof
(other than those which the Company shall promptly pay or
discharge) and that upon issuance such shares shall be listed on
each national securities exchange, if any, on which the other
shares of outstanding Common Stock of the Company are then
listed.
(b) The Company covenants that if any securities to be reserved for
the purpose of exercise of Warrants hereunder require
registration with, or approval of, any governmental authority
under any federal securities law before such securities may be
validly issued or delivered upon such exercise, then the Company
will in good faith and as expeditiously as reasonably possible,
endeavor to secure such registration or approval. The Company
will use all reasonable efforts to obtain appropriate approvals
or registrations under state "blue sky"securities laws with
respect to any such securities. However, Warrants may not be
exercised by, or shares of Common Stock issued to, any
Registered Holder in any state in which such exercise would be
unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect
to the issuance of Warrants, or the issuance or delivery of any
shares upon exercise of the Warrants; provided, however, that if
the shares of Common Stock are to be delivered in a name other
than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no
such delivery shall be made unless the person requiring the same
has paid to the Warrant Agent the amount of transfer taxes or
charges incident thereto, if any.
Section 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants
of the same class or may be transferred in whole or in part.
Warrant Certificates to be exchanged shall be surrendered to the
Warrant Agent at its Corporate Office, and upon satisfaction of
all the terms and provisions hereof, the Company shall execute
and the Warrant Agent shall countersign, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which
the Registered Holder making the exchange shall be entitled to
receive.
(b) The Warrant Agent shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it
shall register Warrant Certificates and the transfer thereof in
accordance with its regular practice. Upon due presentment for
registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall
issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate
number of Warrants of the same class.
(c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the
subscription form on the reverse thereof shall be duly endorsed,
or be accompanied by a written instrument or instruments of
transfer and subscription, in form satisfactory to the Company
and the Warrant Agent, duly executed by the Registered Holder or
his attorney-in-fact duly authorized in writing.
(d) A service charge may be imposed by the Warrant Agent for any
exchange or registration of transfer of Warrant Certificates.
In addition, the Company may require payment by such holder of a
sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be
promptly canceled by the Warrant Agent and thereafter retained
by the Warrant Agent until termination of this Agreement or
resignation as Warrant Agent.
(f) Prior to due presentment for registration of transfer thereof,
the Company and the Warrant Agent may deem and treat the
Registered Holder of any Warrant Certificate as the absolute
owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon
made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary.
Section 7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any Warrant Certificate and (in case of
loss, theft or destruction) of indemnity satisfactory to them, and (in the
case of mutilation) upon surrender and cancellation thereof, the Company
shall execute and the Warrant Agent shall (in the absence of notice to the
Company and/or Warrant Agent that the Warrant Certificate has been acquired
by a bonafide purchaser) countersign and deliver to the Registered Holder in
lieu thereof a new Warrant Certificate of like tenor representing an equal
aggregate number of Warrants. Applicants for a substitute Warrant Certificate
shall comply with such other reasonable regulations and pay such other
reasonable charges as the Warrant Agent may prescribe.
Section 8. Redemption.
(a) On not less than thirty (30) days' prior written notice, the
Warrants may be redeemed, at a price of $.10 per Warrant,
provided the average closing bid price of the Company's Common
Stock on the Nasdaq Stock Market (or the last sale price, if
quoted on a national securities exchange) for twenty (20)
consecutive trading days ending on the fifteenth day prior to
the date of the notice of redemption equals or exceeds $9.00 per
share (subject to adjustment by the Company in accordance with
Section 9 hereof). The notice of redemption will be sent to the
registered address of the registered holder of the Warrant. All
Warrants must be redeemed if any are redeemed.
(b) In case the Company shall desire to exercise its right to so
redeem the Warrants, it shall request the Warrant Agent to mail
a notice of redemption to each of the Registered Holders of the
Warrants to be redeemed, first class, postage prepaid, not later
than the thirtieth (30th) day before the date fixed for
redemption, at their last address as shall appear on the records
of the Warrant Agent. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given
whether or not the Registered Holder receives such notice.
(c) The notice of redemption shall specify: (i) the Redemption
Price; (ii) the date fixed for redemption; (iii) the place where
the Warrant Certificates shall be delivered and the redemption
price paid; and (iv) that the right to exercise the Warrant
shall terminate at 3:00 p.m. (New York, New York time) on the
business day immediately preceding the date fixed for
redemption. No failure to mail such notice nor any defect
therein or in the mailing thereof shall affect the validity of
the proceedings for such redemption except as to a holder (i) to
whom notice was not mailed; or (ii) whose notice was defective.
An affidavit of the Warrant Agent or of the Secretary or the
Company that notice of redemption has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated
therein.
(d) Any right to exercise a Warrant that has been called for
redemption shall terminate at 3:00 p.m. (New York, New York
time) on the business day immediately preceding the Redemption
Date. On and after the Redemption Date, Holders of the redeemed
Warrants shall have no further rights except to receive, upon
surrender of the redeemed Warrant, the Redemption Price.
(e) From and after the date specified for redemption, the Company
shall, at the place specified in the notice of redemption, upon
presentation and surrender to the Company by or on behalf of the
Registered Holder thereof of one or more Warrants to be
redeemed, deliver or cause to be delivered to or upon the
written order of such Holder a sum in cash equal to the
Redemption Price of each such Warrant. From and after the date
fixed for redemption and upon the depositor setting aside by the
Company of a sum sufficient to redeem all the Warrants called
for redemption, such Warrants shall expire and become void and
all rights hereunder and under the Warrant Certificates, except
the right to receive payment of the Redemption Price, shall
cease.
(f) In case the Company shall desire to exercise its right to so
redeem the Warrants before the Warrants are exercisable, the
Warrants shall become immediately exercisable upon receipt of
written notice of the Company's intent to redeem.
Section 9. Adjustment of Purchase Price and Number of Shares of
Common Stock or Warrants.
(a) Subject to the exceptions referred to in Section 9 (g), in the
event the Company shall, at any time or from time to time after
the date hereof, subdivide or combine the outstanding shares of
Common Stock into a greater or lesser number of shares (any such
subdivision or combination being herein called a "Change of
Shares") , then, and thereafter upon each further Change of
Shares, the applicable Purchase Price in effect immediately
prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent) determined by
multiplying the Purchase Price in effect immediately prior
thereto by a fraction, the numerator of which shall be the total
number of shares of Common Stock outstanding immediately prior
to such Change of Shares and the denominator of which shall be
the total number of shares of Common Stock outstanding
immediately after such Change of Shares. Upon each adjustment
of the applicable Purchase Price pursuant to this Section 9, the
total number of shares of Common Stock purchasable upon the
exercise of each Warrant shall (subject to the provisions
contained in Section9(b)) be such number of shares (calculated
to the nearest tenth) purchasable at the applicable Purchase
Price immediately prior to such adjustment multiplied by a
fraction, the numerator of which shall be the applicable
Purchase Price in effect immediately prior to such adjustment
and the denominator of which shall be the applicable Purchase
Price in effect immediately after such adjustment.
(b) In case of any reclassification, capital reorganization or other
change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another
corporation (other than a consolidation or merger in which the
Company is the continuing corporation and which does not result
in any reclassification, capital reorganization or other change
of outstanding shares of Common Stock), or incase of any sale or
conveyance to another corporation of the property of the Company
as, or substantially as, an entirety (other than a
sale/leaseback, mortgage or other financing transaction), the
Company shall cause effective provision to be made so that each
holder of a Warrant then outstanding shall have the right
thereafter, by exercising such Warrant, to purchase the kind and
number of shares of stock or other securities or property
(including cash) receivable upon such reclassification, capital
reorganization or other change, consolidation, merger, sale or
conveyance by a holder of the number of shares ofCommon Stock
that might have been purchased upon exercise of such Warrant,
immediately prior to such reclassification, capital
reorganization or other change, consolidation, merger, sale or
conveyance. Any such provision shall include provision for
adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 9.
The foregoing provisions, shall similarly apply to successive
reclassifications, capital reorganizations and other changes of
outstanding shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(c) Irrespective of any adjustments or changes in the Purchase Price
or the number of shares of Common Stock purchasable upon
exercise of the Warrants, the Warrant Certificates theretofore
and thereafter issued shall, unless the Company shall exercise
its option to issue new Warrant Certificates pursuant to Section
2 (e), continue to express the applicable Purchase Price per
share, the number of shares purchasable thereunder as the
Purchase Price per share, and the number of shares purchasable
thereunder as were expressed in the Warrant Certificates when
the same were originally issued.
(d) After each adjustment of the Purchase Price pursuant to this
Section 9, the Company will promptly prepare a certificate
signed by the Chairman or President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary,
of the Company setting forth: (i) the applicable Purchase Price
as so adjusted; (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant after such adjustment,
and the number of Warrants to which the registered holder of
each Warrant shall then be entitled; and (iii) a brief statement
of the facts accounting for such adjustment. The Company will
promptly file such certificate with the Warrant Agent and cause
a brief summary thereof to be sent by ordinary first class mail
to the Placement Agents and to each registered holder of
Warrants at his last address as it shall appear on the registry
books of the Warrant Agent. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the
validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose
notice was defective. The affidavit of an officer of the
Warrant Agent or the Secretary or an Assistant Secretary of the
Company that such notice has been mailed shall, in the absence
of fraud, be prima facie evidence of the facts stated therein.
(e) For purposes of Section 9(a) and 9(b) hereof, the following
provisions (i) and (ii) shall also be applicable:
(i) The number of shares of Common Stock outstanding at any
given time shall include shares of Common Stock owned or
held by or for the account of the Company and the sale or
issuance of such treasury shares or the distribution of
any such treasury shares shall not be considered a Change
of Shares for purposes of said Sections.
(ii) No Adjustment of the Purchase Price shall be made unless
such adjustment would require an increase or decrease of
at least five cents ($.05) in such price; provided that
any adjustments which by reason of this clause (ii) are
not required to be made shall be carried forward and shall
be made at the time of and together with the next
subsequent adjustment which, together with any adjustments
so carried forward, shall require an increase or decrease
of at least $0.05 in the Purchase Price then in effect
hereunder.
(f) No Adjustment of Purchase Price in Certain Cases. Notwithstanding
any provision to the contrary contained herein, no adjustment of
the Purchase Price shall be made:
(i) Upon the issuance or sale of: (i) the Underwriters'
Warrants or the securities underlying the Underwriters'
Warrants; (ii) the shares issuable pursuant to the
options, warrants, rights, stock purchase agreements or
convertible or exchangeable securities outstanding or in
effect on the date hereof as described in the Prospectus;
(iii) any shares of Common Stock to be issued upon
exercise of options granted by the Company under stock
option plans subsequently adopted by the Company; (iv)
securities issued in connection with the acquisition of,
or merger with, any entity by the Company; and (v) any
Shares issued in connection with the Offering.
(ii) If the amount of said adjustments shall aggregate less
than five cents ($.05) for one (1) share of Common Stock;
provided, however, that in such case any adjustment that
would otherwise be required then to be made shall be
carried forward and shall be made at the time of and
together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall
aggregate at least five cents ($.05) for one (1) share of
Common Stock.
(g) As used in this Section 9, the term "Common Stock" shall mean
and include the Company's Common Stock authorized on the date of
the Offering of the Units and shall also include any capital
stock of any class of the Company thereafter authorized which
shall not be limited to a fixed sum or percentage in respect of
the rights of the holders thereof to participate in dividends
and in the distribution of assets upon the voluntary
liquidation, dissolution or winding up of the Company; provided,
however, that the shares issuable upon exercise of the Warrants
shall include only shares of such class designated in the
Company's Certificate of Incorporation as Common Stock on the
date of the Offering or: (i) in the case of any
reclassification, change, consolidation, merger, sale or
conveyance of the character referred to in Section 9(c) hereof,
the stock, securities or property provided for in such Section;
or (ii) in the case of any reclassification or change in the
outstanding shares of Common Stock issuable upon exercise of the
Warrants as a result of a subdivision or combination or
consisting of a change in par value, or from par value to no par
value, or from no par value to par value, such shares of Common
Stock as so reclassified or changed.
(h) Any determination as to whether an adjustment in the Purchase
Price in effect hereunder is required pursuant to Section 9, or
as to the amount of any such adjustment, if required, shall be
binding upon the holders of the Warrants and the Company if made
in good faith by the Board of Directors of the Company.
Section 10. Fractional Warrants and Fractional Shares.
(a) If the number of shares of Common Stock purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 9
hereof, the Company shall nevertheless not be required to issue
fractions of shares, upon exercise of the Warrants or otherwise,
or to distribute certificates that evidence fractional shares.
With respect to any fraction of a share called for upon any
exercise hereof, the Company shall pay to the Holder an amount
in cash equal to such fraction multiplied by the current market
value of such fractional share, determined as follows:
(i) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on
such exchange or listed for trading on the Nasdaq National
Market, the current value shall be the last reported sale
price of the Common Stock on such exchange on the last
business day prior to the date of exercise of the Warrant,
or if no such sale is made on such day, the average of the
closing bid and asked prices for such day on such
exchange; or
(ii) If the Common Stock is not listed or admitted to unlisted
trading privileges, the current value shall be the mean of
the last reported bid and asked prices reported by the
National Quotation Bureau, Inc. on the last business day
prior to the date of the exercise of the Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are
not so reported, the current value shall be an amount
determined in such reasonable manner as may be prescribed
by the Board of Directors of the Company.
Section 11. Warrant Holders Not Deemed Stockholders. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Common Stock that may at any time be issuable upon
exercise of such Warrants for any purpose whatsoever, nor shall anything
contained herein be construed to confer upon the holder of Warrants, as
such, any of the rights of a stockholder of the Company or any right to vote
for the election of directors or upon any matter submitted to stockholders
at any meeting thereof, or to give or withhold consent to any corporate
action (whether upon any recapitalization, issuance or reclassification of
stock, change of par value or change of stock to no par value,
consolidation, merger o conveyance or otherwise), or to receive notice
of meetings, or to receive dividends or subscription rights, until
such Holder shall have exercised such Warrants and been issued shares of
Common Stock in accordance with the provisions hereof.
Section 12. Rights of Action. All rights of action with respect to
this Agreement are vested in the respective Registered Holders of the
Warrants, and any Registered Holder of a Warrant, without consent of the
Warrant Agent or of the holder of any other Warrant, may, in his own behalf
and for his own benefit, enforce against the Company his right to exercise
his Warrants for the purchase of shares of Common Stock in the manner
provided in the Warrant Certificates and this Agreement.
Section 13. Agreement of Warrant Holders. Every holder of a Warrant,
by his acceptance thereof, consents and agrees with the Company, the
Warrant Agent and every other holder of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Warrant Agent by the Registered Holder thereof in person or by
his attorney duly authorized in writing and only if the Warrant
Certificates representing such Warrants are surrendered at
the office of the Warrant Agent, duly endorsed or accompanied
by a proper instrument of transfer satisfactory to the Warrant
Agent and the Company in their sole discretion, together
with payment of any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the person
in whose name the Warrant Certificate is registered as the
holder and as the absolute, true and lawful owner of the
Warrants represented thereby for all purposes, and neither the
Company nor the Warrant Agent shall be affected by any notice or
knowledge to the contrary, except as otherwise expressly
provided in Section 7 hereof.
Section 14. Cancellation of Warrant Certificates. If the Company
shall purchase or acquire any Warrant or Warrants, the Warrant Certificate
or Warrant Certificates evidencing the same shall thereupon be delivered to
the Warrant Agent and canceled by it and retired. The Warrant Agent shall
also cancel Common Stock following exercise of any or all of the Warrants
represented thereby or delivered to it for transfer, split-up, combination
or exchange.
Section 15. Concerning the Warrant Agent. The Warrant Agent acts
hereunder as agent and in a ministerial capacity for the Company, and its
duties shall be determined solely by the provisions hereof. The Warrant
Agent shall not, by issuing and delivering Warrant Certificates or by any
other act hereunder be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificates or the Warrants
represented thereby or of any securities or other property delivered upon
exercise of any Warrant or whether any stock issued upon exercise of any
Warrant is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be
made any adjustment of the Purchase Price or the Redemption Price provided
in this Agreement, or to determine whether any fact exists which may require
any such adjustments, or with respect to the nature or extent of any such
adjustment, when made, or with respect to the method employed in making the
same. It shall not: (i) be liable for any recital or statement of facts
contained herein or for any action taken, suffered or omitted by it in
reliance on any Warrant Certificate or other document or instrument believed
by it in good faith to be genuine and to have been signed or presented by
the proper party or parties; (ii) be responsible for any failure on the part
of the Company to comply with any of its covenants and obligations contained
in this Agreement or in any Warrant Certificate; or (iii) be liable for any
act or omission in connection with this Agreement except for its own
negligence or willful misconduct. The Warrant Agent may at any time consult
with counsel satisfactory to it (who may be counsel for the Company) and
shall incur no liability or responsibility for any action taken, suffered or
omitted by it in good faith in accordance with the opinion or advice of such
counsel. Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument
signed by the Chairman of the Board, President, any Vice President, its
Secretary, or Assistant Secretary, (unless other evidence in respect thereof
is herein specifically prescribed). The Warrant Agent shall not be liable
for any action taken, suffered or omitted by it in accordance with such
notice, statement, instruction, request, direction, order or demand believed
by it to be genuine.
The Company agrees to pay the Warrant Agent reasonable compensation
for its services hereunder and to reimburse it for its reasonable expenses
hereunder; it further agrees to indemnify the Warrant Agent and save it
harmless against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except
losses, expenses and liabilities arising as a result of the Warrant Agent's
negligence or willful misconduct.
In the event of a dispute under this Agreement between the Company and
the Underwriter regarding proceeds received by the Warrant Agent from the
exercise of the Warrants, the Warrant Agent shall have the right, but not
the obligation, to bring an interpleader action to resolve such dispute.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or willful misconduct), after
giving 30 days' prior written notice to the Company. At least 15 days prior
to the date such resignation is to become effective, the Warrant Agent shall
cause a copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon such
resignation, or any inability of the Warrant Agent to act as such hereunder,
the Company shall appoint a new warrant agent in writing. If the Company
shall fail to make such appointment within a period of 15 days after it has
been notified in writing of such resignation by the resigning Warrant Agent,
then the Registered Holder of any Warrant Certificate may apply to any court
of competent jurisdiction for the appointment of a new warrant agent. Any
new warrant agent, whether appointed by the Company or by such a court shall
be a bank or trust company having a capital and surplus as shown by its last
published report to its stockholders, of not less than Ten Million Dollars
($10,000,000.00), or a stock transfer company. After acceptance in writing
of such appointment by the new warrant agent is received by the Company,
such new warrant agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named herein as the
Warrant Agent, without any further assurance, conveyance, act or deed; but
if for any reason it shall be necessary or expedient to execute and deliver
any further assurance conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and
delivered by the resigning Warrant Agent. Not later than the effective date
of any such appointment the Company shall file notice thereof with the
resigning Warrant Agent and shall forthwith cause a copy of such notice to
be mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to the trust business of the Warrant
Agent shall be a successor warrant agent under this Agreement without any
further act, provided that such corporation is eligible for appointment as
successor to the Warrant Agent under the provisions of the preceding
paragraph. Any such successor warrant agent shall promptly cause notice of
its succession as warrant agent to be mailed to the Company and to the
Registered Holder of each Warrant Certificate. The Warrant Agent, its
subsidiaries and affiliates, and any of its or their officers or directors,
may buy and hold or sell Warrants or other securities of the Company and
otherwise deal with the Company in the same manner and to the same extent
and with like effects as though it were not Warrant Agent. Nothing herein
shall preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
Section 16. Modification of Agreement. The Warrant Agent and the
Company may by supplemental agreement make any changes or corrections in
this Agreement: (i) that they shall deem appropriate to cure any ambiguity
or to correct any defective or inconsistent provision or manifest mistake or
error herein contained; or (ii) that they may deem necessary or desirable
and which shall not adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders of Warrant Certificates representing not
less than 50% of the Warrants then outstanding; and provided, further, that
no change in the number or nature of the securities purchasable upon the
exercise of any Warrant, or the Purchase Price therefor, or the acceleration
of the Warrant Expiration Date, shall be made without the consent in writing
of the Registered Holder of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed.
Section 17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have
been made when delivered or mailed first class registered or certified mail,
postage prepaid as follows: if to the Registered Holder of a Warrant
Certificate, at the address of such holder as shown on the registry books
maintained by the Warrant Agent; if to the Company, at P.O. Box 470,
Ascutney, VT 05030, Attention: President, with a copy to Gravel and Shea,
76 St. Paul Street, Burlington, Vermont 05401, attention Peter S. Erly,
Esq., or at such other address as may have been furnished to the Warrant
Agent in writing by the Company; if to the Warrant Agent, at Continental
Stock Transfer & Trust Company, 2 Broadway, 19th Floor, New York, New York
10004.
Section 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
Section 19. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the Warrant Agent and their
respective successors and assigns, and the holders from time to time of the
Warrant Certificates. Nothing in this Agreement is intended or shall be
construed to confer upon any other person any right, remedy or claim, in
equity or at law, or to impose upon any other person any duty, liability or
obligation.
Section 20. Termination. This Agreement shall terminate at the close
of business on the Expiration Date of all the Warrants of such earlier date
upon which all warrants have been exercised, except that the Warrant Agent
shall account to the Company for cash held by it and the provisions of
Section 15hereof shall survive such termination.
Section 21. Counterparts. This Agreement may be executed in several
counterparts which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the _____ day of ______________, 1997.
WORLDWIDE WIRELESS, INC.
By: __________________________________
Duly Authorized Agent
CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
By:___________________________________
Duly Authorized Agent
Exhibit "A"
FORM OF FACE OF WARRANT CERTIFICATE
No. _____ _______ (______) Warrants
VOID AFTER ________________
CLASS A REDEEMABLE COMMON STOCK WARRANT CERTIFICATE
FOR PURCHASE OF COMMON STOCK OF
WORLDWIDE WIRELESS, INC.
This certifies that FOR VALUE RECEIVED or registered assigns
(the"Registered Holder") is the owner of the number of Redeemable Common
Stock purchase Warrants (the "Warrants") specified above. Each Warrant
entitles the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and nonassessable share of Common
Stock, $.01 par value, of Worldwide Wireless, Inc., a Delaware corporation
(the "Company"), at any time between one year from __________ and the
Expiration Date (as hereinafter defined), upon the presentation and
surrender of this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of Continental Stock
Transfer & Trust Company as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $_____ per share (the "Purchase Price")
in lawful money of the United States of America in cash or by official bank
or certified check made payable to the Warrant Agent.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Warrant Agreement (the "Warrant Agreement"),
dated as of __________, 1997, by and among the Company and the Warrant
Agent.
In the event of certain events provided for in the Warrant Agreement,
the Purchase Price and the number of shares of Common Stock subject to
purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued.
In the case of the exercise of less than all the Warrants represented
hereby, the Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor, which the Warrant Agent shall countersign, for
the balance of such Warrants.
The term "Expiration Date" shall mean 3:00 p.m. (New York, New York
time) on __________, 2002, or such earlier date as the Warrants shall be
redeemed. If such date shall in the State of New York be a holiday or a day
on which the banks are authorized to close, then the Expiration Date shall
be 3:00 p.m. (New York, New York time) the next day which in the State of
New York is not a holiday nor a day in which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, with respect to such securities is effective. The
Company has covenanted and agreed that it will file a registration statement
and will use all reasonable efforts to cause the same to become effective
and to keep such registration statement current while any of the Warrants
are outstanding. This Warrant shall not be exercisable by a Registered
Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a
new warrant Certificate or Warrant Certificates of like tenor representing
an equal aggregate number of Warrants, each of such new Warrant Certificates
to represent such number of Warrants as shall be designated by such
Registered Holder at the time of such surrender. Upon due presentment
together with any tax or other governmental charge imposed in connection
therewith, for registration or transfer of this Warrant Certificate at such
office, a new Warrant Certificate or Warrant Certificates representing an
equal aggregate number of Warrants will be issued to the transferee in
exchange therefor, subject to the limitations provided in the Warrant
Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
This Warrant may be redeemed at the option of the Company, at a
Redemption Price of $.10 per Warrant, provided that (a) the closing price of
the Company's Common Stock on the Nasdaq Small Cap Market as reported by the
National Quotation Bureau, Incorporated (or the last sale price, if quoted
on a national securities exchange) equals or exceeds $9.00 for at least 20
consecutive trading days ending on the fifteenth (15th) business day prior
to the date of the notice of redemption. Notice of redemption shall be
given not later than the thirtieth (30th) day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the date
fixed for redemption, the Registered Holder shall have no rights with
respect to this Warrant except to receive the $.10 per Warrant upon
surrender of this Certificate.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as
the absolute owner hereof and of each Warrant represented hereby
(notwithstanding any notations of ownership or writing hereon made by anyone
other than a duly authorized officer of the Company or the Warrant Agent)
for all purposes and shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two (2) of its officers
thereunto duly authorized and a facsimile of its corporate seal to be
imprinted hereon.
Dated: _______________________ WORLDWIDE WIRELESS, INC.
SEAL By:___________________________________
President
By:___________________________________
Secretary
Countersigned:
Dated:________________________ CONTINENTAL STOCK TRANSFER
& TRUST COMPANY
SEAL By:___________________________________
Duly Authorized Agent
FORM OF REVERSE OF WARRANT CERTIFICATE
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise (_____) Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name
of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_______________________
_______________________
_______________________
_______________________
please print or type name and address
and be delivered to
_______________________
_______________________
_______________________
_______________________
please print or type name and address
and if such number of Warrants shall not be all the Warrants evidenced by
This Warrant Certificate, that a new Warrant Certificate for the balance of
such Warrants be registered in the name of, and delivered to, the Registered
Holder at the address stated below.
Dated:________________________ ______________________________________
Signature
______________________
Street Address
______________________
City, State and Zip Code
______________________
Taxpayer ID Number
______________________
Signature Guaranteed
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
_______________________
_______________________
_______________________
_______________________
please print or type name and address
_____ (_____) of the Warrants represented by this __________Warrant
Certificate, and hereby irrevocably constitutes and appoints ____________
Attorney to transfer This Warrant Certificate on the books of the Company,
with full power of substitution in the premises.
Dated:________________________ ______________________________________
Signature Guaranteed
THE SIGNATURE MUST BE GUARANTEED BY A MEDALLION BANK
EXHIBIT 5.1
Form of Opinion
---------------
_____________, 1997
Worldwide Wireless, Inc.
P.O. Box 470
Ascutney, VT 05030
Re: Opinion Regarding Legality of Securities to be Issued
-----------------------------------------------------
Ladies and Gentlemen:
We are counsel to Worldwide Wireless, Inc., a Delaware corporation
(the "Company") and are providing this opinion in connection with the
registration by the Company of 1,250,000 units, each consisting of one share
of common stock, par value $.01 per share (the "Shares"), and one Redeemable
Common Stock Purchase Warrant, on a Registration Statement on Form SB-2,
Registration Number ____.
We have examined the Company's Registration Statement on Form SB-2
(Registration No. __________). We also have examined the Articles of
Incorporation of the Company, the Bylaws of the Company, and such other
documents as we deemed pertinent as a basis for the opinion hereinafter
expressed.
Based on the foregoing, we are of the opinion that the Shares have
been duly authorized and are, or in the case of the Option and Warrant
Shares, upon exercise of the respective Options and Warrants and upon
payment therefore, will be, legally and validly issued, fully paid and non-
assessable.
We hereby consent to the filing of this opinion with the Commission as
Exhibit 5.1 to the Registration Statement. We also consent to the reference
to this firm under the heading "Legal Matters" in the Registration
Statement, and in the Prospectus constituting a part thereof, as the counsel
who will pass on the validity of the Shares. In giving this consent, we do
not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act or the rules of the
Securities and Exchange Commission thereunder.
In rendering this opinion, we advise you that members of this firm are
members of the Bar of the State of Vermont, and we express no opinion herein
concerning the applicability or effect of any laws of any other
jurisdiction, except the securities laws of the United States of America
referred to herein, and the general corporation laws of the State of
Delaware.
GRAVEL AND SHEA
EXHIBIT 10.1
MMDS CHANNEL LEASE AGREEMENT
This MMDS Channel Lease Agreement (this "Agreement") entered into this
10th day of October, 1991, between Lawrence N. Brandt, having his principal
place of business at 3201 New Mexico Avenue, N.W., Washington, D.C. 20016
(hereinafter referred to as "Lessor" or "Brandt"), and New England Wireless,
Inc., (and any other entities owned or controlled by NEW), a Vermont
corporation, having its principal place of business at 56 Green Street,
Bellows Falls, Vermont 05101 (hereinafter referred to as "New England
Wireless" or "Lessee").
W I T N E S S E T H
WHEREAS, Lessor is the Federal Communications Commission (hereinafter
referred to as the "FCC"), applicant and tentative selectee for a four
channel Multichannel Multipoint Distribution Service Station (hereinafter
referred to as the "MMDS Station"), to operate on Channels E-1, E-2, E-3,
and E-4 (hereinafter referred to as the "Channels"), as designated by
Subpart K of Part 21 of the FCC's Rules, serving Burlington, Vermont area
(hereinafter referred to as the "Market Area" or the "Burlington Market
Area"), by line-of-sight transmissions from the MMDS Station.
WHEREAS, Lessee is undertaking to build and operate a wireless cable
system to serve the Burlington Market Area; and
WHEREAS, Lessor is desirous of leasing service on all of the Channels
to Lessee and Lessee is desirous of leasing such service from Lessor.
NOW, THEREFORE, in consideration of the premises and of mutual
promises, undertakings, covenants and conditions set forth herein, the
parties hereto do hereby agree as follows:
1. Use of the Channels.
(a) Leased Time. Lessor hereby leases to Lessee the complete
transmission capacity on all of the Channels 24 hours a day, seven days a
week, every week, as necessary for Lessee's use of the Channels for
transmission of Lessee provided video and audio programming, data and other
information in connection with Lessee's wireless cable business at reception
points selected by Lessee in the Market Area (the "Wireless Cable System")
commencing on the day the MMDS Station is constructed and extending for the
term of this Agreement and any renewal(s) thereof.
(b) Scope of Use. The transmission capacity may be used by Lessee
for any legal purpose as part of its Wireless Cable System, without any
restriction on the substance, format or type of information or signal to be
transmitted thereover except that Lessee shall not transmit video and audio
programming, data and other information that does not comply with FCC rules
and policies or any other applicable federal, state or local requirements,
including, but not limited to, FCC policies concerning indecent or obscene
programming.
(c) Obligation to Transmit. Nothing in this Agreement shall be
construed to obligate or create a duty on the part of Lessee to actually
provide to Lessor for transmission any minimum amount of video and audio
programming, data or other information during that air time covered hereby,
but the absence of programming shall not relieve Lessee of its obligation to
pay Lessor the fees due hereunder.
(d) Preemption. The use of the Channels leased hereunder are
subject to preemption by Lessor in accordance with any requirement or order
of the FCC or any other local, state or federal regulatory authority with
jurisdiction over the operation of the Channels. However, in the event such
preemption exceeds 168 consecutive hours on any one of the Channels or a
total of 336 hours in any thirty (30) day period on any or all of the
Channels, Lessee may terminate this Agreement without further liability to
Lessor.
2. Term.
(a) Initial Term. Subject to the provisions for earlier
termination contained in Section 11 hereof, the term of this Agreement shall
commence upon the date first written above and shall continue in full force
and effect for a period of five (5) years from the Start Date as defined in
Section 6 hereof. Said period is hereinafter referred to as the "Initial
Term."
(b) Renewal Term. Subject to the provisions for earlier
termination contained in Section 11 hereof, the term of this Agreement shall
automatically be extended for up to five (5) successive additional terms of
five years each (such additional term(s) are hereinafter referred to as the
"Renewal Term(s)") unless Lessee shall have served written notice on Lessor
at least six (6) months prior to the expiration date of the then-current
Initial Term or Renewal Term that it elects not to renew this Agreement for
the subsequent Renewal Term. Commencing no later than six (6) months prior
to the expiration of the fifth Renewal Term, if this Agreement has been so
extended by Lessee, Lessor and Lessee shall attempt in good faith to
negotiate the terms of a further extension of this Agreement. At no time
prior to the conclusion of those negotiations may Lessor enter into any
agreement contemplating any use whatsoever of any or all of the Channels
with any individual or entity other than Lessee.
3. Facilities.
(a) Transmission Point. Lessor's FCC application specifies a
transmitter site located at the WJOY/WQCR Radio Tower on Joy Drive in
Burlington, Vermont (the "Present Transmission Point") . Lessee has advised
Lessor that it has obtained reasonable assurance of the availability of a
new Transmission Point (the "New Transmission Point") located on Mount
Mansfield, the coordinates of which are 44 [DEGREES] 31' 32", 72 [DEGREES]
48' 54". Lessee will co-locate all of the microwave transmission facilities
to be utilized in Lessee's Wireless Cable Business serving the Burlington
Market Area at the New Transmission Point. Lessee shall, within thirty (30)
days of the date of the Agreement, provide Lessor with an amendment to his
pending application to specify the New Transmission Point for the MMDS
Station and to conform the design and equipment of the MMDS Station to that
of other facilities Lessee intends to utilize in connection with its
wireless cable business in the Burlington Market Area. Lessor shall submit
such amendment to the FCC within five (5) working days of receipt thereof.
In the event that the Commission, prior to or after submission of the
modification amendment to specify the New Transmission Point, should issue a
Conditional License specifying that construction shall be completed at the
Present Transmission Point, Lessor and Lessee shall cooperate in the
preparation and filing of an application for modification of conditional
license in the same manner as provided for in this Section for filing of an
amendment to the presently pending application. It is the intent of the
parties that Lessee's design of the MMDS Station and Lessee's specification
of equipment shall be approved by Lessor unless Lessor reasonably believes
that the design of the MMDS Station or specification of equipment proposed
by Lessee will result in non-compliance with the rules or policies of the
FCC or Lessor's inability to provide service as contemplated by this
Agreement. In the event of such reasonable disapproval by Lessor, the
parties shall utilize their best efforts to redesign the MMDS Station to
meet both the needs of Lessee's Wireless Cable Business and Lessor's
concerns.
(b) Satisfaction Notice. Upon a grant of (a) Conditional License
which specifies that construction shall be completed at the New Transmission
Point (the "Modified Conditional License") or (b) a Conditional License
which specifies that construction shall be completed at the Present
Transmission Point (the "Conditional License"), Lessor shall utilize his
best efforts to satisfy any and all conditions that the FCC may impose in
the Conditional License or the Modified Conditional License or the FCC's
Rules as conditions precedent to the construction and operation of the MMDS
Station in a manner consistent with this Agreement and further Lessor shall
take all steps necessary to obtain a Modified Conditional License as
provided for in Section 3(a) hereof. Lessor shall provide Lessee notice
within three (3) workdays of satisfying all conditions that the FCC may
impose in the Modified Conditional License or the FCC's Rules as conditions
precedent to the construction and operation of the MMDS Station (the
"Satisfaction Notice") . Notwithstanding anything in this Agreement to the
contrary, Lessee shall not be required to commence construction of the MMDS
Station until after Lessor's receipt of the Modified Conditional License and
Lessee's receipt of the Satisfaction Notice with respect thereto.
(c) Construction Schedule. Within sixty (60) days after the date
of the grant of the Modified Conditional License, Lessee shall order the
Transmission Equipment (as defined in Section 3 (c) hereof), utilizing its
best efforts to specify a delivery schedule as necessary to ensure delivery
of equipment and construction of the MMDS Station by the earlier of nine (9)
months after such grant date or such date that may be specified by the FCC
in the Modified Conditional License for completion of construction of the
MMDS Station, provided, however, that it has received the Satisfaction
Notice provided for in Section 3(b) hereof. In the event that Lessee is
unable to complete construction of the Station within the time provided by
the FCC for construction of the MMDS Station in the Modified Conditional
License for causes reasonably beyond its control, Lessee's time to complete
construction shall, subject to FCC approval thereof, be extended for such
period as is reasonable under the circumstances. Lessor agrees that upon
request of Lessee, it will file reasonable requests for an extension of its
time to complete construction of the MMDS Station. Without limiting the
generality of the foregoing, Lessor shall, upon Lessee's request, request
an extension of the time to construct the MMDS Station in the event the
Transmission Equipment is not delivered before ninety (90) days of the date
on which Lessor's authority to construct the MMDS Station is to expire under
the Modified Conditional License (as such may be extended from time to
time). Lessee shall have no obligation to order Transmission Equipment or
to construct the Station unless a Modified Conditional License specifying
the New Transmission Point shall have been granted by the FCC provided,
however, that Lessor and Lessee will use their respective best efforts to
obtain grant of a Modified Conditional License.
(d) Certification of Completion of Construction. Within three (3)
workdays after completing construction of the Station, Lessee shall notify
Lessor in writing of such completion. Within five (5) workdays of receiving
such notice, Lessor shall file a Certification of Completion of Construction
of the MMDS Station on FCC Form 494 or any successor form designated by the
FCC (the "Construction Certificate") , along with any other documentation as
may be necessary at the time to permit the commercial operation of the MMDS
Station.
(e) Transmission Equipment. Lessee shall purchase and install such
transmitters and other equipment, including, without limitation,
transmitters, combiners and waveguide (hereinafter referred to as the
"Transmission Equipment"), which equipment may be shared with other
stations, as is required to operate the Channels in accordance with the
provisions of FCC rules and regulations and the Station's FCC license.
Lessor's consent, which shall not be unreasonably withheld, shall be
required as to all Transmission Equipment. Within sixty (60) days after the
date of this Agreement, Lessee shall provide Lessor with a list of all
proposed Transmission Equipment, except for such Transmission Equipment
previously specified in the amendment) to the present application or
modification application) to specify the New Transmission Point or within
ten (10) days thereafter. Lessor shall be considered to have consented
thereto unless he states his reasons for declining consent in writing within
ten (10) days after receipt of any list of Transmission Equipment has been
provided to the Lessor by the Lessee. It is the intent of the parties that
Lessee's specification of Transmission Equipment shall be approved unless
Lessor reasonably believes that use of the Transmission Equipment specified
by Lessor will result in non-compliance with Lessor's FCC license, the rules
or policies of the FCC or Lessor's ability to provide service as required by
this Agreement.
(f) Lease of Transmission Equipment. Lessor shall have no
ownership or security interest in the Transmission Equipment. All
Transmission Equipment shall be owned by Lessee and shall be leased to
Lessor for the sum of one dollar ($1.00) per year for the entire Initial
Term and any renewal(s) thereof. In the event of termination (except as a
result of Lessor's breach) or non-renewal of this Agreement Lessor shall
have the right to purchase the Transmission Equipment at fair market value
except for such of the Transmission Equipment as is shared with other FCC-
licensed stations. In the event that Lessee shall desire to replace any of
the Transmission Equipment, Lessor shall reasonably agree to such
replacement and Lessor and Lessee will cooperate to satisfy any FCC
requirements with respect thereto.
(g) Lease of Transmission Point. Lessee agrees to utilize its best
efforts to enter a binding lease or option for sufficient space at the New
Transmission Point for installation and operation of the transmission
facilities (the "New Transmission Point Space") within ninety (90) days
after execution of this Agreement and shall, in any event, secure such a
lease or option no later than the date on which the FCC grants the Modified
Conditional License. Such option and/or lease shall provide for (1) lease
of such space for the entire Initial Term and any renewals thereof, and (2)
the right of Lessee to sublet such space to Lessor for the entire term
thereof. Copies of such option and lease shall be provided to Lessor within
ten (10) days of the execution thereof. Such lease shall provide for full
and equal rights to access by Lessor and by Lessee or by the authorized
representatives of either.
(h) Sublease of Transmission Point Space. Lessee agrees to
sublease the New Transmission Point Space to Lessor during the term of this
Agreement for $1.00 per month, provided that Lessor shall have no liability
under Lessee's lease with the owner of the New Transmission Point Space, and
no liability to Lessee under the sublease except for the payment as
specified in this paragraph. In the event of termination (except as a
result of Lessor's breach) or non-renewal of this Agreement, Lessee shall if
feasible and, if so requested by Lessor and at Lessor's cost and expense,
cooperate in seeking assignment of the lease for that part of the
Transmission Point used for operation of the Transmission Equipment or in
any efforts by Lessor to secure from the owner of the New Transmission Point
a lease for the space utilized for the Transmission Equipment at the New
Transmission Point.
(i) Modification of License. Lessor and Lessee acknowledge the
possibility that the location and technical configuration of the MMDS
Station may from time to time prevent Lessee from optimizing its wireless
cable business throughout the term of this Agreement. Lessor therefore
agrees that if at any time and from time to time Lessee so requests in
writing, Lessor shall use its best efforts to modify its FCC application(s)
or license(s) to meet the reasonable requirements of Lessee. Lessee shall
pay all costs associated with such modifications (including engineering and
legal fees, equipment costs and construction expenses), as provided in
Paragraph 5(f) hereof.
4. Operation of the Channels.
(a) Operation of the Transmission Equipment. Lessee shall supply,
at its sole cost and expense, personnel to operate and maintain the
Transmission Equipment on a day-to-day basis. Said personnel shall insure
that the Transmission Equipment shall at all times meet the technical
operating requirements set forth in the FCC License and the rules and
regulations of the FCC. All operations, maintenance and repair activities
shall be undertaken at such times as are consistent with the operating
requirements of Lessee's business. Lessor and Lessee shall cooperate to
insure that each of them at all times is fully aware of any and all
operational, maintenance and repair activities on the Channels. All
maintenance personnel shall be under the technical direction, supervision
and control of Lessor but shall be contracted for and shall be supervised on
a day-to-day basis by Lessee at Lessee's sole expense. All repairs shall be
completed as soon as reasonably possible following notification by Lessor to
Lessee of the need thereof. Lessee shall have access to the station
facilities at all times for any of the foregoing activities. Lessor shall
not be liable for any costs, and/or liability whatsoever arising as a result
of Lessee's work on the Transmission Equipment pursuant to this Agreement,
except liability caused by Lessor's own negligence.
(b) Operation of Additional Equipment. Lessee, at its own expense,
and with the prior written approval of Lessor, which shall not be
unreasonably withheld, may make alterations and/or additions to the
Transmission Equipment (including, without limitation, encoding and/or
addressing equipment selected by it) as may be required by the exigencies of
its business from time to time, provided that such alterations and additions
do not violate any FCC rules or regulations. Any alterations/additions
shall be provided by Lessee and title thereto shall remain in Lessee.
Lessee shall be responsible for the operation, maintenance and repair of all
equipment provided by it and shall indemnify Lessor against and shall pay
all costs, including legal, engineering, equipment, construction,
installation and other expenses associated with any alterations or
attachments to the Transmission Equipment, provided, however, that Lessee
has approved such costs in advance.
(c) Interference With Existing Operations. Lessor and Lessee will
cooperate in the operation and maintenance of the Transmission Equipment as
well as any alterations or attachments added thereto, in such a fashion as
to insure that the Channels do not create impermissible interference to any
FCC applicants, permittees or licensees which are entitled to protection
from such interference under the rules and regulations of the FCC, provided
that Lessee shall be responsible at its sole expense for eliminating such
interference.
(d) Reception Equipment. The parties contemplate that the MMDS
Station will be licensed and operated on a non-common carrier basis.
Therefore, the parties agree that Lessor has no responsibility hereunder to
acquire or provide any reception antennas, down converters', decoders,
descramblers., related power supplies or any associated equipment
("Reception Equipment") required to display signals transmitted over the
Channels on a television set. Lessee may, in its sole discretion and on
terms and conditions of its choosing, may, from time to time, install or
cause to be installed such Reception Equipment as may be required in order
for the general public, or any member thereof, to view the programs to be
transmitted over the Channels. Title to all Reception Equipment provided by
Lessee hereunder shall vest in Lessee or its designee. Lessee shall be
required to install Reception Equipment only at particular locations
selected by it. Reception equipment shall be installed, maintained,
operated and controlled by Lessee consistent with FCC rules and regulations.
(e) Program Origination and Delivery. Lessee shall be solely
responsible for the origination of all programming to be transmitted over
the Channels and the delivery of such programming to the New Transmission
Point, including but not limited to the costs of point-to-point microwave
channels and earth stations, if any, which it may require for such purpose.
Lessee shall bear all costs and expenses of purchasing, installing,
operating and maintaining those facilities. Any personnel required to
install, operate and maintain any program origination and delivery
facilities shall be provided by Lessee, at its sole cost and expense, and
such personnel shall be under Lessee's exclusive control.
(f) Operating Expenses. Lessee shall be solely responsible for and
shall indemnify and hold Lessor harmless from all operating expenses
resulting from provision of service over the Channels. Said operating
expenses shall include all expenses incurred by Lessor in providing service
on Lessee's behalf, provided such expenses are approved in advance by
Lessee. Any operating costs incurred by Lessor shall be passed through each
month on a dollar-for-dollar basis to Lessee and shall be due and payable as
provided in Section 5(d) hereof.
(g) Cooperation of Lessor and Lessee. Lessor shall use, operate
and maintain the Transmission Equipment in such a way as not to interfere
with Lessee or cause damage to Lessee's facilities equipment or Wireless
Cable business. Lessee shall use, operate and maintain the equipment
(including any attachments installed to the Transmission Equipment) in such
a way as not to interfere with Lessor or cause damage to the Transmission
Equipment.
(h) Maintenance of Authorization. Throughout the Initial Term and
any Renewal Term, Lessor shall maintain in force all licenses and other
authorizations required in connection with Lessee's use of the Channels
hereunder, and shall file and prosecute all necessary applications for
license renewal and all periodic reports required by the FCC. Lessor shall
not assign, transfer, sell, trade, dispose or otherwise encumber such
licenses and other authorizations or modify them in such a way as to impair
Lessee's rights hereunder without the prior written consent of Lessee, which
shall not be unreasonably withheld.
(i) Additional Authorizations. Where requested to do so by Lessee
in writing, Lessor shall utilize its best efforts to obtain and maintain in
force such additional or other authorization) as would help Lessee in its
business (including authorizations for relays, repeaters and boosters),
obtain all governmental authorizations and fulfill all other usual and
customary requirements associated with obtaining and maintaining such
authorizations. Lessee shall pay all reasonable costs, including legal,
engineering, equipment, construction, installation and other expenses
associated with obtaining and maintaining such authorization and
constructing, operating, and maintaining the authorized facilities as
provided in Paragraph 5(f) hereof.
(j) Further Efforts. Lessor shall, at Lessee's expense, file and
diligently prosecute such reasonable petitions to deny or other protests
against applications of third parties for licenses as may be requested by
Lessee.
(k) Prosecution of Applications and Amendments. In the event any
person petitions the FCC to deny or otherwise challenges any application
filed pursuant to this Agreement, or in the event the FCC grants any
application filed pursuant to this Agreement and any person petitions for
review or reconsideration of such grant before the FCC or seeks judicial
review of such grant, then Lessor and Lessee shall at Lessee's expense
oppose such petition or challenge before the FCC or defend such grant by the
FCC diligently and in absolute good faith. Should the FCC deny any
application filed by Lessor hereunder, Lessee and Lessor shall utilize their
best efforts at Lessee's expense, to secure reconsideration or review of
such denial and, should such denial become a Final Order, shall utilize
their best efforts to redesign the MMDS Station in order to meet Lessee's
legitimate business needs and to satisfy the objections of the FCC.
(l) Covenant Not to Amend or Modify. Because the location and
configuration of the MMDS Station and other facilities constructed by Lessee
hereunder are critical to Lessee's business, Lessee shall not attempt to
further amend the pending Application other than as provided for in Section
3(h) hereof or to modify the Modified Conditional License, or any other
application filed hereunder or modify any license or other authorization
secured hereunder without the prior written consent of Lessee, which consent
shall not be unreasonably withheld.
5. Charges.
(a) Security Deposit. To assure fulfillment of Lessee's
obligations hereunder, Lessee shall, on the earlier of (i) six (6) months
after the date of execution of this Agreement or (ii) no later than ten (10)
days after grant by the FCC of the Modified Conditional License for the
Station to specify the New Transmission Point, pay to Lessor a security
deposit (the "Security Deposit") in the amount of Eighteen Thousand Dollars
($18,000.00) provided, however, that such Modified Conditional License
provides that the Licensee shall have at least a six (6) month period in
which the MMDS Station may be constructed. In the event that the FCC shall
not have granted a Modified Conditional License within six (6) months of the
date of execution of this Agreement, or the FCC shall have granted a
Modified Conditional License providing less than six (6) months for
construction of the MMDS Station, the Security Deposit shall be placed in an
interest bearing escrow account by the law firm of McFadden, Evans & Sill
(the "Escrow Agent"). The Escrow Agent shall pay the principal of the
Security Deposit to Lessor upon grant of a Modified Conditional License
providing a continuous period of six (6) months or more for construction of
the MMDS Station. In the event that the FCC should grant the Modified
Conditional License containing a condition requiring construction in less
than six (6) months from the date of such grant and Lessee determines that
the time provided for construction of the MMDS Station is not reasonably
sufficient for actual construction of the MMDS Station, the Security Deposit
shall be held in escrow by the Escrow Agent and shall be paid over to Lessor
within ten (10) days of grant of such extensions of time by the FCC as may
be reasonably necessary for construction of the MMDS station as contemplated
by Section 3(c) hereof. Lessee may, at its option, terminate this Agreement
and the Security Deposit shall be returned to Lessee if Lessor is unable to
obtain FCC approval of a Modified Conditional License specifying the new
Transmission Point for a period within which Lessee determines it can
reasonably comply with the construction schedule contained in Section 3(c)
hereof. In any case, a grant of a Modified Conditional License or of any
extension thereof authorizing a continuous construction period of six (6)
months or more shall be considered reasonably sufficient for construction.
In the event of termination pursuant to this provision Lessee's only
remaining obligation shall be to pay Lessor's expenses under Section 5(f) of
this Agreement through the date of termination. In the event the Security
Deposit is then held in escrow, the Escrow Agent is directed to deduct such
expenses from the escrowed funds and to pay over the balance of the
principal and interest accrued thereon to Lessee. Subsequent to the payment
of the Security Deposit to the Lessor, in the event of any default in
Lessee's obligations, Lessor shall have the right, at its option and
consistent with Section 5(e) hereof, to apply the Security Deposit to the
curing of such default. Any such application shall not be a defense to any
action by Lessor arising out of said default, and, upon demand, Lessee shall
restore the Security Deposit to the then full amount. Failure by Lessee to
pay the Security Deposit provided for in this section shall terminate this
Agreement, subject, however, to Lessee's obligation to pay Lessor's expenses
under Section 5(f) of this Agreement through the date of termination.
(b) Transmission Fee. Commencing on the Start Date and continuing
each month thereafter for the Initial Term of this Agreement, Lessee shall
pay to Lessor in consideration of lease of the Channels provided to Lessee
hereunder and the performance by Lessor of its additional obligations
hereunder, a minimum monthly fee (the "Transmission Fee"), of One Thousand
Dollars ($1,000.00) in each of the first twelve months following the Start
Date, One Thousand Two Hundred and Fifty Dollars ($1,250.00) in the
thirteenth through twenty-fourth months following the Start Date and One
Thousand Five Hundred Dollars ($1,500.00) for each of remaining months in
the Initial and Renewal Term(s). The Transmission Fee shall only be paid in
those months in which the amount payable to Lessor as a Transmission Fee
pursuant to this provision is greater than the net amount due and payable to
Lessor as a Connection Fee pursuant to 5(c) hereof.
(c) Connection Fee. Commencing on the Start Date and continuing
each month thereafter, Lessee shall pay to Lessor a monthly connection fee
(the "Connection Fee") which shall be the product of the average number of
wireless cable subscribers receiving Lessee's wireless cable operation over
the MMDS Station in the Burlington Market Area during the previous calendar
month and a per subscriber fee of Thirty-Five Cents ($.35) per month. For
the purposes of computing the Connection Fee due for any month, the term
"Subscribers" shall be deemed to mean the number of paid subscribers who
have received Lessee's wireless cable programming over Lessor's Station
during the prior month. For purposes of the definition of Subscriber, (1)
each single family residential dwelling and each single business office or
place shall be considered one subscriber and (2) in those situations where
programming is sold in bulk for viewing at isolated locations in the same
facility (e.g., where a number of viewing units are grouped for billing
purposes, such as may be the case with condominiums and hotels) and the
Lessee's rates therefore are less than its prevailing monthly rate for the
sale of the Lessee's programming over Lessee's wireless cable system to
individual subscribers in the Market Area, the number of subscribers from
such bulk billing points shall be determined by dividing the total monthly
revenues derived from the sale of programming over Lessee's wireless cable
system to the bulk billing point by the Lessee's then prevailing basic
monthly rate for the sale of programming to individual subscribers receiving
wireless cable programming over Lessor's Channels in the Market Area. The
determination of the number of Subscribers in any given month may be subject
to redetermination by the Lessee, with notice to the Lessor, to take into
account those Subscribers who have not paid for at least one full month's
subscription fee and those who the Lessee may have disconnected or
terminated for lack of payment. In such event, the Connection Fees for the
applicable month shall be recalculated at any time within three (3) months
of the end of the month in question and deficiencies in the Connection Fee
for such month shall be paid promptly by the Lessee to the Lessor and any
excess in the Connection Fee for such month shall be applied to offset
against any then current payments due from the Lessee to the Lessor.
(d) Required Certificate, Invoice and Payment Procedure. Lessee
shall, within fifteen (15) days after the end of each month after the Start
Date, provide Lessor with a Certificate signed by a partner of Lessee
showing the number of Subscribers for the preceding month, computed in
accordance with Section 5(c). The Connection Fee or Transmission Fee
payable by Lessee to Lessor, as determined in accordance with Sections 5(b)
and 5(c) hereof, shall be computed on the Certificate, and Lessee shall
forward said Connection Fee or Transmission Fee to Lessor at the time of
tendering the Certificate. Lessee shall include on the Certificate any
other information reasonably requested by Lessor so that Lessor may
accurately determine that the Connection Fee tendered by Lessee has been
calculated correctly pursuant to Section 5(c) hereof. Any other charges to
be paid by Lessee hereunder shall be invoiced to Lessee on a monthly basis
by Lessor. Said invoices shall contain an itemization of the charges
contained therein, and shall be paid by Lessee within twenty (20) days after
the date of receipt thereof.
(e) Set-Off. The Security Deposit provided for in Section 5(a)
hereof shall be set-off on a pro rata basis against the Connection or
Transmission Fee due during each month of the fifth year of the Initial
Term. The amount of the set-off shall be Fifteen Hundred Dollars
($1,500.00) per month, i.e., Eighteen Thousand Dollars ($18,000.00) divided
by Twelve (12) months equals Fifteen Hundred Dollars ($1,500.00) per month.
(f) Lessor's Expenses. Lessee shall pay all reasonable costs
incurred by Lessor subsequent to the execution of this Agreement ("Lessor's
Expenses"), including filing fees, legal, engineering and consulting fees,
equipment, construction, installation and other expenses associated with
obtaining, protecting and maintaining Lessor's FCC authorization (including
the satisfaction of any conditions thereon), with performing under this
Agreement, and with constructing, operating and maintaining the authorized
facilities, so long as such expenses relate to activities required of Lessor
under this Agreement or are otherwise approved by Lessee.
(g) Right to Audit. Lessor and Lessee shall, while this agreement
is in force, keep, maintain and preserve complete and accurate records and
accounts, including invoices, correspondence, ledgers, financial and other
records reasonably required to determine Lessor's and Lessee's charges
hereunder, and such records and accounts shall be available for inspection
and audit at the respective offices of Lessor and Lessee at any time or
times during the time service is being provided to Lessee hereunder or
within ninety (90) days thereafter, during reasonable business hours, by
Lessor or Lessee or their nominee(s). Lessor and Lessee shall provide each
other with five (5) business days' advance written notice of their intent to
inspect said records and accounts prior to being allowed to do so. In the
event of any dispute to the amount of Connection Fees due to Lessor, such
dispute and no other dispute arising under this Agreement, shall be resolved
by arbitration before the American Arbitration Association (the "AAA") on a
fast track single arbitrator basis. Such dispute shall not in any way
result in a default hereunder unless the award of the AAA is not complied
with. All non-public information obtained by Lessee or Lessor during any
audit shall be maintained on a confidential basis.
(h) Proration of Fees. In the event that (i) the Start Date shall
be a date other than the first day of a calendar month, (ii) this Agreement
shall be terminated on a date other than the last day of a calendar month
and it is determined that such termination shall have occurred in a manner
not affecting Lessor's right to payments hereunder, the Transmission Fee or
Connection Fee due Lessor in such month shall be pro rated.
(i) Subscriber Contracts. Lessor shall not interfere with the
right of Lessee or its designee to lawfully modify, waive, rescind,
terminate, in whole or in part, or cancel any and all services or contracts
with Subscribers. In case any such services or contracts are rescinded,
terminated or canceled, Lessor shall not be entitled to any participation in
revenues or claims whatsoever with respect to the unperformed portion of any
such contract.
6. Start Date. The Start Date shall be the earlier of the date upon
which Lessee first provides service to a Subscriber or the first day of the
sixth calendar month following the date upon which Lessor certifies
completion of construction pursuant to Section 3(d) hereof. For purposes of
this Paragraph, a "Subscriber" is any residential unit or commercial
establishment which receives wireless cable service under paid contract with
the Lessee or under rights granted by the Lessee.
7. Unauthorized Reception Over Channels. Lessor if requested by
Lessee and to the extent requested, shall use its best efforts to prevent
any unauthorized individual or entity from receiving the signals transmitted
over the Channels. Lessee shall be responsible for and shall reimburse
Lessor for all costs, including legal, engineering, equipment, construction,
installation and other expenses associated with any prevention efforts
regarding unauthorized reception over the Channels initiated by Lessor on
Lessee's behalf provided that Lessee has approved such costs in advance.
8. Indemnification. Each party shall forever protect, save, defend
and keep the other party harmless and indemnify said other party against and
from any and all claims, demands, losses, costs (including reasonable
attorneys' fees), damages, suits, judgments, penalties, expenses and
liabilities of any kind or nature whatsoever arising directly or indirectly
out of the acts, omissions, negligence or willful misconduct of the said
party, its employees or agents in connection with the performance of this
Agreement. Moreover, Lessee shall forever protect, save, defend and keep
Lessor and its owners, employees and agents harmless and indemnify them
against (i) any and all claims, demands, losses, costs (including reasonable
attorneys' fees), damages, suits, judgments, penalties, expenses and
liabilities resulting from Lessee's wireless cable operation and from claims
of indecency, obscenity, libel, slander or the infringement of copyright or
the unauthorized use of any trademark, trade name, service mark or any other
claimed harm or unlawfulness arising from the transmission of any
programming; and (ii) against claims for infringement of patents arising
from Lessor's or Lessee's use of the Transmission Equipment in connection
with apparatus or systems of Lessee. Where such indemnification is sought
by a party (the "Claiming Party"), (a) it shall notify the other party (the
"Indemnifying Party") promptly of any claim or litigation or threatened
claim to which the indemnification relates, (b) upon the Indemnifying
Party's written acknowledgement of its obligation to indemnify in such
instance, in form and substance satisfactory to the Claiming party, the
Claiming Party shall afford the Indemnifying Party the opportunity to
participate in and, at the option of the Indemnifying Party, control,
compromise, settle, defend or otherwise resolve the claim or litigation (and
the Claiming Party shall not effect any such compromise or settlement
without prior written consent of the Indemnifying Party) and (c) the
Claiming Party shall cooperate with the reasonable requests of the
Indemnifying Party in its above-described participation in any compromise,
settlement, defense or resolution of such claim or litigation.
9. Insurance. The Lessee shall during the entire term of this
Agreement (and all renewal(s) thereof) carry insurance covering (i) general
liability, (ii) loss or damage to the transmission equipment, (iii) loss and
liability for accidents and other losses in such amounts as is reasonably
prudent in view of the potential losses covered. The Lessor shall be named
as coinsured on each of such policies and the Lessee shall provide the
Lessor with certificates of insurance demonstrating such coverage and co-
insured status prior to commencement of construction as provided for in
Section 3(b) hereof.
10. Representations and Warranties. Each of the parties hereto
represents and warrants to the other the following, with respect to facts
and issues relating to it;
(a) Organization. Lessor will, on the Start Date, control the FCC
license for the Channels and have full power and authority to carry out all
of the transactions contemplated hereby. Lessee has full power and
authority to own property and to carry out all of the transactions
contemplated hereby.
(b) Compliance with Law. Lessor and Lessee shall comply with all
material laws, rules and regulations governing the business, ownership and
operation of the Channels.
(c) Requisite Authority. All requisite resolutions and other
authorizations necessary for the execution, delivery, performance and
satisfaction of this Agreement by Lessor and Lessee have been duly adopted
and complied with.
(d) Litigation and Claims. No litigation, proceeding, complaint,
investigation or controversy is pending by or before any court or regulatory
agency or to the knowledge of Lessor or Lessee is threatened that is
material to this transaction, and there is no basis known to it for any such
litigation, proceeding, controversy or claim.
11. Termination.
(a) Termination of FCC Authorization. Either party may terminate
this Agreement upon prior written notice to the other that Lessor's
authority to provide the Channels in accordance with the terms of this
Agreement shall have terminated by the FCC. If such FCC termination shall
have occurred without breach by either party of its obligations hereunder,
such termination shall extinguish and cancel this Agreement and its effect
absolutely without further liability on the part of either party to the
other except that Lessor shall be entitled to retain the Security Deposit
and Lessee shall remain obligated to pay all Transmission Fees, Connection
Fees, Monthly Operating Charges and Lessor's expenses through the date of
such termination. If, however, such FCC termination is caused in whole or
in part by a material breach of this Agreement, then such termination shall
not affect or diminish the rights, claims or remedies available in equity or
at law to the non-breaching party. If such termination is occasioned by a
breach of this Agreement by Lessor, Lessor shall, within ten (10) days after
such termination, return the Security Deposit to Lessee, provided, however,
that such return shall be without prejudice to any other rights or remedies
that Lessee may enjoy under this Agreement.
(b) Termination by Reason of Default and Nonperformance. At the
option of a non-defaulting party, this Agreement may be terminated upon the
material breach or default by the other party of its duties and obligations
hereunder if such breach or default shall continue for a period of thirty
(30) consecutive days after such party's receipt of written notice thereof
from the nondefaulting party. If such termination is occasioned by a breach
of this Agreement by Lessor, Lessor shall, within ten (10) days after such
termination, return the Security Deposit to Lessee, provided, however, that
such return shall be without prejudice to any other rights or remedies that
Lessee may enjoy under this Agreement. Failure to make any payment of
Transmission Fees, Connection Fees or operating charges shall, if such
failure continues for a period of thirty (30) days after written notice
thereof to Lessee, constitute a material breach of this Agreement by Lessee.
In such event, Lessor may elect to cancel and terminate this Agreement, and
retain the Security Deposit, and Lessee shall remain obligated to pay all
Transmission Fees, Connection Fees, Operating Charges and Lessor's expenses
through the date of such termination.
(c) Termination for Interference. If, following the Start Date,
harmful electrical interference as defined by FCC Rules which precludes
service to 25% or more of the homes within the Station's predicted service
area should arise which is beyond the control of Lessee and Lessor, Lessee
may terminate this Agreement without further liability to Lessor, provided,
however, that Lessee shall first give written notice to Lessor of its intent
to so terminate, provide therein complete information concerning the origin,
nature and duration of such interference and utilize its best efforts for a
reasonable period in cooperation with Lessor to eliminate such electrical
interference. In the event of termination under this Paragraph, Lessor
shall be entitled to retain the Security Deposit and Lessee shall remain
obligated to pay all Transmission Fees, Connection Fees, Operating Charges
and Lessor's Expenses through the date of such termination.
12. Miscellaneous.
(a) Force Majeure. Notwithstanding anything contained herein to
the contrary, no party shall be liable to any other for failure to perform
any obligation hereunder (nor shall any charges or payments be obligated to
be made in respect thereof) if prevented from doing so by reason of fires,
strikes, labor unrest, embargoes, civil commotion, rationing or other orders
or requirements, acts of civil or miliary authorities, acts of God or other
contingencies beyond the reasonable control of the parties, and all
requirements as to notice and other performance required hereunder within a
specified period of pendency of any such contingency which shall interfere
with such performance.
(b) Assignment of Interests. Except as provided in Section 12(d)
hereof, neither Lessor nor Lessee may assign their rights or interests under
this Agreement except with the prior written consent of the other party,
which consent shall not be unreasonably withheld.
(c) Sublease. Lessee may not sublease any rights or interests
under this Agreement without the prior consent of Lessor nor may Lessor
enter any agreement to provide wireless cable programming or any other
transmission service to any other entity in the Market Area without the
prior consent of Lessee, it being understood that any sublease or agreement
to provide such programming to any other entity shall require that all
revenues received by such sublease or third party shall be subject to the
Connection Fee provided for in Section 3(c) hereof.
(d) Right of First Refusal. If at any time Lessor receives and
intends to accept a bona fide offer to purchase the MMDS Station, it shall
deliver to Lessee notice of the offer. The notice shall specify the
proposed purchase price for the station and the terms for payment thereof.
For a period of sixty (60) days from receipt of such notice, Lessee shall
have a right to notify Lessor that it intends to purchase the MMDS Station
at the price and on the terms specified in the notice. If Lessee declines
to exercise this right, Lessor will be permitted to consummate the proposed
sale or transfer, subject to Lessee's prior and superseding interest as
created and existing under the terms and provisions of this Agreement,
including the following Section. In the event that any material term of the
original offer is changed in any respect or a material new offer is
presented, before accepting such offer Lessor must first follow the
procedures specified in the foregoing, providing Lessee notice with regard
to the revised offer and giving it the opportunity to exercise its right of
first refusal thereto. At the commencement of any negotiations with any
party for the acquisition by that party of the authorizations, Lessor will
provide such party, in writing, with full disclosure of Lessee's rights
provided for in this Paragraph and of Lessor's intention to honor those
rights. No such sale or transfer of the MMDS Station by Lessor will have
the effect of limiting, abbreviating or terminating the rights and interests
created in favor of Lessee under this Agreement, including under the
following Section.
13. There is no paragraph 13 to this Agreement.
14. Option to Purchase. Lessee shall have an option to purchase
Lessor's MMDS Station, subject to FCC approval, upon the following terms:
(a) Date of Exercise. Lessee may exercise this option by written
notice for a period of six (6) months following the first anniversary of the
Start Date.
(b) Option Price. The Option Price is Fifty Thousand Dollars
($50,000.00).
(c) Exercise of Option. Upon exercise of this Option, the parties
will promptly seek FCC approval of assignment of the license from Lessor to
Lessee. The Option Price will be payable in cash at closing which shall be
held within thirty (30) days after FCC grant of assignment or transfer to
Lessee shall become final and not subject to FCC or judicial review. In the
event the FCC shall not consent to such assignment or transfer, this
Agreement shall remain in full force and effect.
(d) Closing. At closing following exercise of the Option and FCC
approval thereof, Lessor shall deliver to Lessee the Station license and all
other instruments necessary to perfect Lessee's rights with respect thereto.
At such closing this Agreement shall terminate and neither Lessor nor Lessee
shall have any further rights or obligations with respect thereto.
15. Notice. Any notice required to be given by any party to any
other party shall be deemed to have been sufficiently given it in writing,
deposited in the United States mail in a sealed envelope with postage
thereon prepaid and certified or registered, return receipt requested,
addressed to Lessor or to Lessee as the case may be, at their respective
addresses set forth in the preamble hereto, or, if different, at the last
known principal business address of each such party. A copy of any notice
to Lessee shall be made in the same manner to:
William M. Barnard, Esquire
1220 19th Street, N.W., #501
Washington, D.C. 20036
A copy of any notice to Lessor shall be made in the same manner to:
Todd Gray, Esquire
Dow, Lohnes & Albertson
1255 23rd Street, N.W., #500
Washington, D.C. 20037
(f) Severability of Provisions. If any provision hereof is held
invalid, the remainder of this Agreement shall not be affected thereby.
(g) Entire Agreement. This Agreement states the entire agreement
as of this date between the parties with respect to the subject matter
hereof and supersedes all pre-existing oral, letter or other agreements or
commitments with respect thereto. This Agreement may be modified only by an
agreement in writing executed by all of the parties hereto.
(h) Survival of Representations. All representations, warranties,
covenants and agreements made by the parties hereto shall survive the
execution and delivery hereof.
(i) Payment of Expenses. Except as otherwise provided herein, the
parties shall pay their own expenses incident to the preparation and
carrying out of this Agreement, including all fees and expenses of their
respective counsel.
(j) Further Action. From time to time after the date of execution
hereof, the parties shall take such further action and execute such further
documents, assurances and certificates as either party may reasonably
request of the other in order to effectuate the purposes hereof. In
addition, each party agrees that it will not take any action which would
adversely affect the rights granted by it to the other party hereunder.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have had delivered to it
this Agreement duly executed by the other party hereto.
(l) Headings. The headings herein are inserted for convenience
only and shall not constitute a part hereof.
(m) Dealings with Third Parties. No party is, nor shall any party
hold itself out to be, vested with any power or right to contractually bind,
or act on behalf of any other as its contracting broker, agent or otherwise
for committing, selling, conveying or transferring any of the other party's
assets or property, contracting for or in the same of the other party, or
making any contractually binding representations as to the other party which
shall be deemed representations contractually binding such party. In
particular, Lessee shall not be identified as the FCC licensee or permittee
of the Channels and Lessor shall not be held out as the programmer of the
Channels.
(n) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Vermont.
(o) FCC Rules. Anything contained herein to the contrary
notwithstanding, nothing herein shall in any way limit the rights and
remedies of Lessor or Lessee under FCC rules and regulations.
(p) FCC Licenses. Nothing contained herein shall be construed as
granting to Lessee any rights in or to any FCC authorizations or license(s)
which may be held by Lessor.
(q) Time of Essence. Whenever this Agreement shall set forth any
time for the performance of an act, such time shall be deemed of the
essence.
(r) Benefit. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective heirs, legal
representatives, successors and, to the extent permissible hereunder,
assigns. Nothing in this Agreement expressed or implied, is intended to or
shall (a) confer on any person other than the parties hereto or their
respective heirs, legal representatives, successors or assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
or (b) constitute the parties hereto partners or participants in a joint
venture.
(s) Confidentiality. All non-public information exchanged by the
parties or acquired by them in connection with their performance under this
Agreement shall be kept confidential.
(t) Reformation. If the FCC or any other governmental authority
should (i) change its Rules or policies in a manner that would affect the
enforceability of this Agreement, (ii) directly or indirectly reject or take
action to challenge the enforceability of this Agreement, or (iii) take any
steps whatsoever, on its own initiative or by petition from another person,
to challenge or deny the authority heretofore granted by the FCC with regard
to the Channels, then the parties hereto shall promptly negotiate in good
faith to reform and amend this Agreement so as to eliminate or amend to make
unobjectionable any portion that is the subject of any FCC action. No party
shall take any action that contributes to such FCC action.
(u) Specific Performance. The parties acknowledge and agree that
the rights reserved to each of them hereunder are of a special, unique,
unusual and extraordinary character, which gives them a particular value,
the loss of which cannot be adequately or reasonably compensated for in
damages in an action at law, and the breach by either of the parties of any
of the provisions hereof will cause the other parties irreparable injury and
damage. In such event, the non-defaulting party shall be entitled, as a
matter of right, to require of the defaulting party specific performance of
all of the acts, services and undertakings required hereunder including the
reasonable obtaining of all requisite authorizations to execute or perform
this Agreement and to obtain injunctive and other equitable relief in any
competent court to prevent the violation of any of the provisions hereof.
Neither this provision nor any exercise by any party or rights to equitable
relief or specific performance herein granted shall constitute a waiver of
any other rights which it may have to damages or otherwise.
(v) Waiver. The express or implied waiver by either party of any
breach of any representation or warranty or any failure to fulfill any
condition, covenant or other obligation or liability under this Agreement
shall not constitute a waiver of any other representation or warranty or of
any other failure in the future or in the past by the other party to fulfill
such representation, warranty, condition, covenant, obligation or liability
hereunder.
(w) Word Meanings. As used in this Agreement, the term "including"
shall be deemed to mean "including, without limitation". All pronouns and
any variations therefore shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the context may require. A "Final
Order" means a written action or order issued by the FCC: (a) which has not
been reversed, stayed, enjoined, set aside, annulled or suspended; and (b)
with respect to which (i) no requests have been filed for administrative or
judicial review, reconsideration, appeal or stay and the time for filing any
such requests, and the time for the FCC to set aside the action on its own
motion, has expired, or (ii) in the event of review, reconsideration or
appeal, the action or order has been affirmed and the time for further
review, reconsideration or appeal has expired.
LAWRENCE N. BRANDT
By: /S/_____________________________
Date: October 10, 1991
NEW ENGLAND WIRELESS CABLE, INC.
By: /S/_____________________________
President
Date: October 18, 1991
EXHIBIT 10.2
LEASE AGREEMENT
THIS AGREEMENT, made as of this 7th day of January, 1992, by and
between GLENN H. MARTIN and ELOUISE A. MARTIN, of Jericho, in the County of
Chittenden and State of Vermont (hereinafter called "Landlord") and NEW
ENGLAND WIRELESS INC., a Vermont Corporation with a principal place of
business at 56 Green Street, Bellows Falls, Vermont, 05101 (hereinafter
called "Tenant").
1. Description of Premises. The Landlord hereby leases to the Tenant
two buildings in the Jericho East Complex, one of a approximately Four
Hundred Forty square feet and the other of approximately Fourteen Hundred
square feet and a parcel of land approximately 100 feet by 100 feet all as
more particularly shown on Schedule A attached hereto and incorporated
herein.
2. Commencement and Term. The term of this Lease shall commence on
the 1st day of February, 1992 and shall expire on the 31st day of January,
1997. The tenant shall have the right to renew this lease for three
additional Five year terms upon the same terms and conditions except that
the rental amount shall continue to be adjusted annually from the previous
rental amount pursuant to Paragraph 3B. Lessee shall notify Lessor in
writing of such renewal prior to the expiration of the Lease term.
3. Rental Payments. (A) Tenant agrees to pay rent at the annual rate
of Nineteen Thousand Two Hundred Dollars per annum. Said amount shall be
adjusted annually as set forth below. Tenants shall pay said minimum rent
in equal monthly installments of Sixteen Hundred Dollars per month in lawful
money of the United State in advance, on the first of each calendar month
during the term of the Lease.
(B) At the beginning of the second Lease Year and at the beginning of
each Lease Year thereafter, Tenant's minimum rent shall be adjusted based
upon changes in the cost of living, as those changes are reflected in the
Consumer Price Index for all Urban Consumers for the United States Average
(1982-1984=100) ("C.P.I.") published by the Bureau of Labor Statistics
("BLS") of the United States Department of Labor. At the commencement of
each Lease Year beginning with the second Lease Year, the rent shall be
increased as follows:
Multiply the annual minimum rent for the immediately preceding
Lease Year by a fraction, the numerator of which is the C.P.I.
for the month published last prior to the commencement of the
new Lease Year, and the denominator of which is the C.P.I. for
the month one year prior to the month used to determine the
numerator. The product shall be the annual rent for the new
Lease Year.
Under no circumstances shall the foregoing adjustments result in a decrease
in the minimum rent. If the C.P.I. decreases from one Lease Year to the
next at any time during the term of this Lease, the minimum rent shall
remain the same as the minimum rent for the prior year. If the BLS changes
the base reference period for the C.P.I. from 1982-1984=100, the cost of
living adjustment shall be determined with the use of such conversion
formula or table as may be published by the BLS. If the BLS otherwise
substantially revises, or ceases publication of, the C.P.I. then a
substitute index for determining cost of living adjustments, issued by the
BLS or by a reliable governmental or other nonpartisan publication, shall be
reasonably designed by Landlord.
The annual rental for the first year of any Lease renewal shall be the
rental amount for the previous year as adjusted by the C.P.I. as provided in
this Paragraph and the rental amount for the subsequent years of any Lease
renewal shall be computed in the same manner as provided in this Paragraph.
4. Security Deposit. Tenant shall deposit with the Landlord at the
time of execution of this Lease the sum of One Thousand Six Hundred Dollars
as a security deposit to insure compliance with all of the terms and
conditions as herein provided. This deposit shall not bear interest.
5. Net Lease. This is a net lease and the Landlord shall not be
required to provide any services or do any action in connection with the
demised premises except as specifically provided herein, and the rent
reserved hereunder shall be paid the Landlord without any claims on the part
of the tenant for diminution or abatement.
6. Use of the Premises. Tenant shall use the demised premises for
the conduct of its principal business. Any change of use must be approved
by the Landlord in writing.
7. Parking Area and Easements. The Tenant shall have reasonable use
the parking area as shown on Schedule A attached hereto. The overnight
parking of up to twelve service type vehicles or automobiles will be
allowed.
8. Maintenance and Repair. The Tenant shall, during the term of this
Lease, at its sole expense, keep the interior of Leased premises in as good
order and repair as they are at the commencement of this Lease, reasonable
wear and tear excepted. Lessor shall be responsible for all structural
repairs provided said repairs are not caused by the negligence or fault of
the Lessee. Landlord shall be responsible for snow removal, trash removal
and the up keep of the lawns surrounding the leased premises.
9. Utilities and Services. The Tenants specifically agrees to pay
for all charges for gas, electricity, water, light, heat, power and/or other
services used or charges imposed and the Landlord shall not be required to
furnish any services or facilities to the premises except for rubbish
removal.
10. Taxes. The Landlord shall pay all Real Estate Taxes on the
Leased premises. The Tenant shall pay all taxes and assessments upon the
personal property and satellite dish to be erected.
11. Compliance with Laws. The Tenant, at its sole expense, shall
comply with all laws, orders and regulations of federal, state and municipal
authorities, and with any direction of any public officer, pursuant to law,
which shall impose any duty upon the Landlord or the Tenant with respect to
the leased premises. The Tenant, at its sole expense, shall obtain all
licenses or permits which may be required for the conduct of its business
within the terms of this Lease, or for the making of repairs, alterations,
improvements or additions, and the Landlord, where necessary, will join the
Tenant in applying for all such permits or licenses.
12. Condition of Premises. At the expiration of the Lease term, the
Tenant shall surrender the leased property in as good condition as it was in
at the beginning of the term, reasonable use and wear and damages by the
elements excepted.
13. Alterations and Improvements. No alteration, addition or
improvement to the leased premises shall be made by the Tenant without the
written consent of the Landlord. Any alteration, addition or improvements
made by the Tenant after such consent shall have been given, and any
fixtures installed as part thereof, shall, at the Landlord's option, become
the property of the Landlord upon the expiration or other sooner termination
of this Lease; excepting TV satellite dishes, transmission antenna; and
associated TV electronic components which shall at all times remain the
Tenants property; provided, however, that the Landlord shall have the right
to require the Tenant to remove such fixtures at the Tenant's cost upon such
termination of this Lease.
14. Tenant's Default. If the leased premises shall be deserted or
vacated, or if proceedings are commenced against the Tenant in any court
under any bankruptcy act or for the appointment of a trustee or receiver of
the Tenant's property, either before or after the commencement of the Lease
term, or if there shall be a default in the payment of rent or any part
thereof for more than ten (10) days, or if there shall be default in any
other covenant, agreement or condition for more than twenty (20) days after
written notice of such default by the Landlord, this Lease (if the Landlord
so elects) shall thereupon become null and void, and the Landlord shall have
the right to re-enter or repossess the leased premises, either by force,
summary proceedings, surrender or otherwise, and dispossess and remove
therefrom, the Tenant, or other occupants thereof, and their effects,
without being liable to any prosecution therefor. In such case, the
Landlord may, at its option, relet the leased premises or any part thereof,
and the Tenant shall pay the Landlord the difference between the rent hereby
reserved and agreed to be paid by the Tenant for the portion of the term
remaining at the time of re-entry or repossession and the amount, if any,
received or to be received under such relating for such portion of the term.
15. Landlord's Right to Perform Tenant's Obligations. If the Tenant
is in default, other than the provisions requiring the payment of rent, and
the Landlord shall give to the Tenant written notice of such default, and if
the Tenant shall fail to cure or commence with due diligence to cure such
default within fifteen (15) days after the receipt of such notice, then the
Landlord may cure such default for the account of the Tenant, and any such
sums reasonably expended by the Landlord in connection therewith shall be
deemed to be additional rent and payable with rent which shall next become
due.
16. Right to Access. The Landlord and their representatives may
enter the leased premises, at any reasonable time, for the purpose of
inspecting the lease premises, performing any work which the Landlord elects
to undertake, exhibiting the leased property for sale, lease or mortgage
financing, or posting any required notices.
17. Insurance. During the term of this Lease, the Tenant, at its
sole cost and expense, and for the benefit of the Landlord, shall carry and
maintain comprehensive public liability insurance, including property
damage, insuring the Landlord against liability for injury to persons or
property occurring in or about the leased premises or arising from the
ownership, maintenance, use or occupancy thereof.
18. Quiet Enjoyment. Landlord covenants and agrees with Tenant that
upon Tenant paying said rent, and performing all the covenants and
conditions aforesaid, on Tenant's part to be observed and performed, Tenant
shall and may peaceably and quietly have, hold and enjoy the premises hereby
demised, for the term aforesaid, subject, however, to any underlying
mortgages.
19. Assignment and Subletting. This Lease may not be assigned or
sublet by the Tenant without the express written consent of the Landlord.
20. Indemnification of Landlord. Except for claims arising out of
acts caused by the affirmative negligence of the Landlord or its
representatives, the Tenant shall indemnify and defend the Landlord and the
leased premises, at the Tenant's expense, against all claims, expenses and
liabilities arising from (a) the management or occurrence on or about the
leased premises; (b) any default by the Tenant hereunder; or (c) any act or
omission or negligence of the Tenant or its agents, directors, employees or
licensees.
21. Waiver. The failure of the Landlord to insist upon strict
performance of any of its terms, conditions and covenants herein shall not
be deemed a waiver of any rights or remedies that the Landlord may have and
shall not be deemed a waiver of any subsequent breach or default in the
terms, conditions and covenants herein contained.
22. Invalidity or Inapplicability of Clause. If any term or
provision of this Lease or the application thereof to any person or
circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest permitted by law.
23. Captions. The headings and captions contained in the Lease are
inserted for convenience of reference only, and are not to be deemed part of
or to be used in construing this Lease.
24. Successors or Assigns. The covenants and agreements herein
contained shall, subject to the provisions of this Lease, bind and inure to
the benefit of the Landlord, its successors and assigns, and Tenants, its
successors and assigns, and Tenants, its successors and assigns, except as
otherwise provided herein.
25. Subordination or Lease: This Lease is subordinate to all existing
mortgages that presently exist on this property. Should the Lessors desire
to sell or mortgage said premises after execution of this Lease Agreement
this Lease shall be subordinate and secondary to said mortgage or sale of
said property provided that nothing shall in anyway inhibit Lessees use of
said property in accordance with this Lease Agreement for the remainder of
Lessee's term. Lessee shall upon mortgage or sale of said premises execute
such documents as are necessary to effectuate such mortgage or sale provided
that such documents do not change any of the terms and conditions of Lessees
written Lease Agreement.
26. Entire Agreement; Amendments. It is expressly understood and
agreed by and between the parties hereto that this Lease sets forth all the
promises, agreement, conditions, inducements and understanding between the
Landlord and the Tenant relative to the demised premises and that there are
no promises, agreements, conditions, understanding, inducements, warranties
or representations, oral or written, express or implied, between them other
than as herein set forth and shall not be modified in any manner except by
an instrument in writing executed by the parties.
IN WITNESS WHEREOF, the parties have executed this on the 7th day of
January, 1992.
IN THE PRESENCE OF: LANDLORD:
/S/______________________________ /S/_______________________________
GLENN H. MARTIN
_________________________________ /S/_______________________________
ELOUISE A. MARTIN
TENANT:
NEW ENGLAND WIRELESS INC.
By: /S/__________________________
SCOTT A. WENDEL
PRESIDENT
STATE OF VERMONT
CHITTENDEN COUNTY, SS.
At Essex Junction, in said County and State, this 7th day of January,
1992, personally appeared GLENN H. MARTIN and ELOUISE A. MARTIN, and SCOTT
A. WENDEL, as duly authorized agent of New England Wireless Inc., and they
acknowledged this instrument by them sealed and subscribed, to be their free
act and deed and the free act and deed of New England Wireless Inc.
Before me, /S/______________________
Notary Public
GUARANTEE
In consideration of the making of the foregoing Lease between GLENN H.
MARTIN and ELOUISE A. MARTIN and NEW ENGLAND WIRELESS INC., the undersigned
do hereby covenant and agree with the said Glenn H. Martin and Elouise A.
Martin, their heirs and assigns that if default be made at any time by the
Lessee, its successors and assigns, in the payment of rent and/or
performance of the covenants in the said Lease Agreement on its part to be
paid and/or perform, the undersign will pay said rent and any arrears
thereof that may remain due and perform the covenants and also pay any and
all damages that may arise in consequence of the nonpayment of said rent
and/or the nonperformance of said covenants or any of them.
Dated this 7th day of January, 1992.
/S/_________________________________
Scott A. Wendel
EXHIBIT 10.3
OFS CHANNEL LEASE AGREEMENT
This AGREEMENT is entered into as of the 30 day of Sept., 1991, by New
England Wireless Inc., a Vermont Corporation referred to as ("Lessee")
having its principal place of business at 56 Green Street, Bellows Falls,
Vermont 05101 and Ivan Nachman, hereinafter referred to as ("Lessor"),
having his principal place of business at 10300 97th St. N., Seminole, FL
34643.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licensees for Private Operational-Fixed Microwave Radio Service ("OFS")
channels to lease time on such channels on a private carrier basis; and
WHEREAS, Lessor has been awarded a license by the FCC to construct and
operate OFS station WNTI-675 using channel H1 in the Burlington, Vermont
area; and
WHEREAS, Lessor has determined that he desires to lease the full capacity of
his channel on a twenty-four (24) hours a day, seven (7) days a week private
carrier basis; and
WHEREAS, Lessee is developing a wireless cable system to serve the
Burlington market and is desirous of leasing transmission capacity from
Lessor in order to expand its channel capacity, provided that Lessor's
facilities can be relocated to Lessee's transmission, headend and configured
in a manner that is technically compatible with the other stations Lessor
proposes to employ in connection with its wireless cable system in
Burlington .
NOW, THEREFORE, in consideration of their mutual promises, lessor and lessee
do hereby agree to the following terms and conditions:
1. TERM. The initial term of this Agreement shall be five (5) years from
the date hereof, with three (3) consecutive and automatic five (5) year
renewal terms, unless voluntarily terminated by written consent of both
parties or as provided in Section VIII below. Notwithstanding language in
the preceding sentence to the contrary, should lessee choose not to renew
this Agreement at the end of the initial term or any five (5) year renewal
term, lessee shall provide lessor with written notice of lessee election not
to renew at least six (6) months prior to the expiration date. If lessee
fails to provide lessor with six (6) months advance written notice of its
election not to renew, then this Agreement shall be deemed automatically
renewed for another five (5) year term.
II. THE FCC AUTHORIZATION.
A. Modification Application. Within five (5) working days of the
execution of this Agreement by both parties, lessor shall file with the FCC
an application for modification of the license in substantially the form of
Exhibit A hereto ("Modification Application") to secure a license for an H
Group station identical in all material respects to the other stations
lessee intends to employ in Burlington ("Modified Station"). The parties
recognize that the FCC may deny the Modification application. In such
event, lessee shall utilize its best efforts to redesign its system to
accommodate its requirements and those of the FCC, shall supply the
documentation necessary for lessor to further modify his authorization and
lessor shall properly submit a second Modification Application. In the
event such second Modification Application is granted, the station proposed
therein shall become the Modified Station for purposes of this Agreement.
If lessee is unable to redesign its wireless cable system to meet its
requirements and those of the FCC, it shall so notify lessor, at which this
time this Agreement shall terminate pursuant to Section VIII.A. In the
event that the time allowed by the FCC for construction of the modified
station is not reasonably sufficient to complete construction as provided
for in Section IV-A hereof, Lessor and Lessee shall cooperate in seeking
extension of such time and/or special temporary authority (STA) as may be
appropriate in the circumstances.
B. Covenant Not to Amend or Modify. Because the location and
configuration of lessor station is critical to lessee business, lessor shall
not attempt to amend its pending application or the Modification Application
or modify any license issued by the FCC for the Modified Station or the
Original Station without the prior written consent of lessee, which consent
shall not be unreasonably withheld.
III. USE OF THE CHANNELS.
A. Air Time. Commencing on the Start Date, lessor shall provide to
Lessee during the term of this Agreement all of the transmission capacity on
the Modified Station 24 hours a day, seven days a week, every week.
B. Scope of Use. The transmission capacity provided hereunder to
Lessee is for the transmission of Lessee provided video programming, data
and other information to reception points selected by Lessee. The
transmission capacity may be used by Lessee for any legal purpose, without
any restriction on the substance, format or type of information or signal to
be transmitted thereover.
IV. FACILITIES.
A. Provision of Transmission Facilities. No later than the earlier
of six months after receiving notice from lessor that lessor received a
grant of the Modification Application or such lesser time allowed by the FCC
for such construction, provided such lesser time is reasonably adequate f or
such construction in accordance with the FCC's Rules, Lessee shall, at its
sole expense, install the facilities authorized by the FCC for the Modified
Station in accordance with the terms of lessor FCC authorization, the FCC's
rules and of this Agreement, subject to such supervision and control by
lessor as shall be required under the FCC's rules. Subsequently, throughout
the term of this Agreement, Lessee shall at its sole cost and expense
provide to lessor appropriate space (complete with utilities and necessary
environmental controls), transmitters, waveguide, antennas and other
associated equipment for the Modified Station (which equipment may be shared
with other stations). Subject to the provisions of Section VII.E, Lessee
shall retain title to the Modified Station. In addition, Lessee will
cooperate with lessor in obtaining at the earliest possible date (and in any
event prior to any renewal term) an agreement between lessor and the owner
of the transmission site at which the Modified Station will be located so as
to assure that lessor continues uninterrupted operations if Lessee's site
agreement expires or Lessee defaults under its site agreement. Lessor will
not take any action that would remove his eligibility to hold a license
issued under FCC rules then applicable to the facility during the initial
term and the renewal term(s) and he will duly file each license renewal
applications) and any other FCC applications) or report(s) at Lessee's
expense that are required to continue and extend the term of license issued
by the FCC.
B. Start Date. For purposes of this Agreement, the Start Date shall
be the date Lessee completes construction of the Modified Station.
C. Operation and Maintenance. Lessee shall, at its own cost and
expense, retain technically qualified personnel to operate, repair, and
maintain the transmission facilities under the technical direction,
supervision and control of lessor to assure continued operation of the
Modified Station in accordance with lessor FCC license and the FCC's rules
and regulations. Lessee shall make available to lessor upon reasonable
request records of all repairs and maintenance activities and shall notify
lessor in the event transmission service is interrupted for any reason for a
period of five (5) minutes or more.
D. Interference. Lessee shall operate the Modified Station in such a
fashion as to ensure that such operation does not create or increase
interference to any other FCC applicant, permittee, or licensee entitled to
protection under the FCC's rules and policies. In the event of any creation
or increase in interference associated with the Modified Station, Lessee
shall pay all reasonable costs, including any costs of lessor attorney and
engineers, to resolve all interference to FCC applicants, permittees, or
licensees entitled to protection under the FCC's rules and policies,
provided however, that the Lessee shall have approved such costs in advance
in writing.
E. Modification of Transmission Facilities. Lessor and Lessee
acknowledge the possibility that as a result of currently unforeseen events
or changes in the FCC's rules and policies, the technical configuration of
the Modified Station may prevent Lessee from optimizing its business
throughout the term of this Agreement. Lessor therefore agrees that if any
time and from time to time Lessee so requests, lessor shall use his best
efforts to apply to the FCC for authority to modify the transmission
facilities (including, without limiting the generality of the foregoing, to
increase transmitted power, to increase antenna height, to modify the
transmission and antenna systems or to relocate the Modified Station) to
meet the reasonable requirements of Lessee. Lessee shall bear all
reasonable costs associated with such modifications, including engineering
and construction, and all reasonable costs associated with obtaining FCC
approval thereof, provided that such costs are approved by Lessee in advance
in writing. Upon the completion of such modification, the modified facility
shall become the Modified Station.
F. Additional Equipment. Lessee, at its own expense, may install
attachments to the Modified Station (including, without limitation, encoding
and/or addressing equipment selected by it) as may be required by the
exigencies of its business from time to time, provided that such alterations
and attachment do not violate any FCC rules and regulations. Any equipment
used in making attachments shall be provided by Lessee and Lessee shall be
responsible for the operation, maintenance and repair of all such equipment.
G. Reception Equipment. lessor has no responsibility hereunder to
provide any reception antennas, down converters, decoders, descramblers,
power supplies or any other equipment required to display signals
transmitted over the Modified Station ("Reception Equipment") . Lessee may,
in its sole discretion and on terms and conditions of its choosing, install
or cause to be installed such Reception Equipment as may be required, from
time to time, in order to receive the signals to be transmitted over the
Modified Station.
H. Program Origination and Delivery. Lessee shall be solely
responsible for the origination of any and all signals to be transmitted
over the Modified Station and the delivery of such to the Modified Station,
and shall bear all costs and expenses in connection therewith.
V. CHARGES
A. Commitment Fee. In consideration for Lessor's loss of opportunity
and forbearance from dealing with others for service on the Station, Lessee
shall pay to Lessor a Commitment Fee of One Thousand Dollars ($1,000) in the
form of a cashier's check within seven (7) days of receiving notice from
Lessor that the FCC has granted the Modified Application.
B. Transmission Fee. Commencing on the Start Date and continuing
thereafter for the term of this Agreement, Lessee shall pay to lessor in
consideration of the faithful performance by lessor of his obligations
hereunder a monthly fee (the "Transmission Fee") equal to the number of
Subscribers (as calculated in accordance with the formula below) during the
month in question multiplied by Ten Cents ($0.10). For purposes of computing
the Transmission Fee due hereunder for any month, the term "Subscribers"
shall be deemed to mean the number of subscribers contracting with Lessee to
receive Lessee's programming over the Modified Station as of the last day of
the prior month plus the number of such subscribers to Lessee's programming
over the Modified Station as of the last day of the current month divided by
two. Only Subscribers which are current with respect to their payments
shall be considered for this purpose; provided, however, that Subscribers
paying after the fact for a prior month or months shall be counted as
Subscribers for such month or months retroactively. In those situations
where programming is sold in bulk for viewing at isolated locations in the
same facility (that is, where a number of viewing units are grouped for
billing purposes such as may be the case with hotels and condominiums) and
Lessee's rates therefore are less than its prevailing monthly rate for the
sale of Lessee's programming. over the Modified Station to individual
Subscribers of its wireless cable service, the number of Subscribers from
such bulk billing points shall be determined by dividing the total monthly
revenues derived from the sale of Lessee's programming over Lessee's
wireless cable business to the bulk billing points by the Lessee's then
prevailing basic monthly rate for sale of programming to individual
subscribers.
C. Minimum Monthly Payments. Customer agrees to make minimum
payments to carrier, commencing on the Start Date as follows:
1) For the initial twelve month period commencing on the Start Date,
Lessee shall pay to lessor a minimum of $250.00 per month.
2) For the second year, Lessee shall pay lessor a minimum of $500 per
month.
3) For the third year thereafter throughout the term of this
Agreement, lessee shall pay lessor a minimum of $750 per month.
D. Cost of Living Adjustment. The Minimum Monthly Payment shall be
adjusted upward or downward based upon the consumer's price index as
reported by the U.S. Department of Labor (1967=100) for each five (5) year
renewal Term using 1991 as the base year.
E. Required Certificate and Payment Dates. Lessee shall, within
thirty (30) days of the end of each calendar month after the Start Date,
mail to lessor by first class United States mail, postage prepaid, a
certificate signed by an officer of Lessee showing the number of Subscribers
served during said month, together with the Transmission Fee to be paid by
Lessee hereunder for such month.
F. Right to Audit. For the purpose of permitted verification by
lessor of any payments due, Lessee shall keep and preserve for at least
three (3) years a true and accurate record of all sales and business
transacted during the term of this Agreement, including, without limitation,
all invoices, correspondence, ledgers, financial and other records relating
to its subscribers and billings. Lessor, his agents, employees, or
representatives, shall have the right, upon seventy two (72) hours advance
notice to Lessee, to examine all such books and records of Lessee at any
reasonable time during business hours. If, as a result of Lessor's
examination of such books and records, Lessor's certified public accountants
determine that any payment by Lessee was insufficient, Lessee agrees to pay
to the deficiency within five (5) days of receiving notice from Lessor. If
it is determined that Lessee has underpaid by seven (7%) or more, then in
addition to the payment of the deficiency, Lessee shall pay Lessor's cost of
examining Lessee's books and records and an additional fee equal to ten
percent (10%) of the amount of the deficiency. Lessor shall hold all
information obtained from Lessee's records in confidence, except as may be
necessary for the enforcement of his rights under this Agreement or except
pursuant to any legal requirements. In the event of dispute concerning the
sufficiency of any payment due Lessor under this agreement, the dispute
shall be resolved by arbitration conducted by a single arbitrator chosen by
the American Arbitration Association. The decision of such arbitrator shall
be final and binding on the parties hereto. The cost of such arbitration
shall be borne jointly by the parties provided, however, that if the
arbitrator shall determine that Lessee has underpaid the transmission fee
due to Lessor by 7% or more the cost of such arbitration shall be borne by
the Lessee.
G. Subscriber contracts. Lessor shall not interfere with the right of
Lessee or its designee to lawfully modify, waive, rescind, terminate or
cancel any and all services or contracts with Subscribers. In case any such
services or contracts are modified, waived, rescinded, terminated or
cancelled, Lessor shall not be entitled to any participation in revenues or
claims whatsoever with respect to the unperformed portion of any such
contract.
H. Proration of Fees. In the event that (i) the Start Date shall be
date other than the first day of a calendar month, or (ii) this Agreement
shall be terminated on a date other than the last day of a calendar month,
then the Transmission Fee for such month shall be proportionately reduced.
I. Taxes. If federal, state, or local taxes (other than taxes on the
income of Lessee) are applicable, or become applicable to the services
provided under this Agreement, it will be the responsibility of Lessor to
pay such taxes and/or reimburse Lessee for its payment of such taxes.
J. Broker's Fees. Simultaneously with the Execution of this
Agreement, Lessee shall pay to Suncoast Wireless Cable, 7800 113th Street
North, Suite 201, Seminole, Florida 34642, ("Broker") a broker's fee in the
form of a cashier's check for the amount of One Thousand Six Hundred
Seventy-Five Dollars ($1,675) in partial payment of Broker's services in
introducing Lessee and Lessor and brokering this Agreement. Within 7 days
of the granted modification, Lessee shall pay Suncoast Wireless Cable an
additional Three Thousand Three Hundred Twenty-Five Dollars ($3,325) in the
form of a cashier's check.
VI. PROSECUTION OF APPLICATIONS AND PETITIONS
A. FCC Filings. Both parties shall diligently prepare, file and
prosecute before the FCC all necessary or desirable petitions, waivers,
applications and other related documents required to secure FCC approval of
the matters addressed herein. Notwithstanding anything herein to the
contrary, it is understood that no filing shall be made with the FCC with
respect to the subject matter hereof unless both parties hereto shall have
reviewed said document and shall have consented in advance to its
submission.
B. Further Efforts. While this Agreement is in effect, Lessor shall
use his best efforts to obtain and maintain in force all licenses, permits
and authorizations required in connection with Lessee's use of the Modified
Station hereunder, and shall file and prosecute all necessary applications
for license renewal. Lessor shall also file such reasonable protests or
other petitions to deny against applications of third parties for licenses
as may be requested by Lessee. Lessor, if requested by Lessee, and to the
extent requested, shall use his best efforts to prevent any unauthorized
individual or entity from receiving the signals transmitted over the
Modified Station, provided that all costs and expenses in connection
therewith are paid by Lessee. Lessor shall promptly notify Lessee of any
event which may affect the licenses, permits, or authorizations for the
Modified Station. Lessor shall fully cooperate with all reasonable requests
of Lessee for assistance in the construction, operation and maintenance of
any additional facilities which Lessee may desire in order to optimize its
business within the city metropolitan area, provided that Lessee shall
reimburse Lessor for all reasonable expenses incurred by Lessor in providing
such assistance.
VII. REPRESENTATIONS AND WARRANTIES.
A. Lessee Representations and Warranties. In addition to
representations and warranties set forth above, Lessee represents and
warrants to Lessor that:
1. Organization. It is duly organized and existing under the laws of
the state of its incorporation, is qualified to do business in the state in
which the Modified Station will be located and has full power and authority
to carry out all of the transactions contemplated hereby.
2. Authorization. All necessary actions on its parts to authorize
the execution and delivery of this Agreement and the performance of its
obligations hereunder have been taken.
3. Compliance with Law. It is in compliance and shall comply with
all laws, rules and regulations governing the business, ownership, and
operation of the Modified Station. The carrying out of the provisions of
this Agreement will not result in any violation or be in conflict with any
judgement, decree, order, statute, rule or regulation of any governmental
authority with jurisdiction over it.
4. No Violation. Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated hereby
constitutes or will constitute or will constitute a violation of, be in
conflict with, constitute a default under, or be ultra vires as to, any term
of provision of its articles of incorporation or other governing instruments
or any agreement or commitment to which it is bound. or any judgement,
decree, order, regulation or rule of any court or governmental authority, or
any statute or law. Except for approval of the FCC, no 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 and thereby.
5. Litigation. There is no action, suit, proceeding or investigation
pending or, to its best knowledge, threatened against it before any court,
administrative agency or other governmental body relating in any way to the
transactions contemplated by this Agreement, and it does not know of any
valid basis for the commencement of any such action, proceeding or
investigation. It has not been charged with, and, to its best knowledge,
has not been under investigation with respect to any charge concerning, any
material violation of any provision of any federal, state, or local law or
of any administrative regulation. No unsatisfied judgement, order, writ,
injunction, decree or assessment of any court or of any federal, state,
local or other governmental department, commission, board, bureau, agency or
instrumentality relating in any way to this Agreement has been entered
against and served upon it. There is no action, proceeding or investigation
pending or, to its best knowledge, threatened against it, nor are there
questions or challenges that otherwise seek to prevent the consummation or
performance of this Agreement.
B. Lessor Representations and Warranties. In addition to
representations and warranties set forth above, Lessor represents and
warrants to Lessee that:
1. Authorization. He has full power and authority to carry out all
of the transactions contemplated hereby. All necessary actions on his part
to authorize the execution and delivery of this Agreement and the
performance of his obligations hereunder have been taken.
2. Compliance with Law. He is in compliance and shall comply with
all laws, rules and regulations governing the business, ownership, and
operation of the Modified Station. The carrying out of the provisions of
this Agreement will no result in any violation or be in conflict with any
judgement, decree, order, statute, rule or regulation of any governmental
authority with jurisdiction over him.
3. No Violation. Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated hereby,
constitutes -or will constitute a violation of, be in conflict with,
constitute a default under, or be ultra vires as to, any term or provision
of any agreement or commitment to which he is bound, or any judgement,
decree, order, regulation or rule of any court or governmental authority, or
any statute or law. Except for approval of the FCC, no 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 and thereby.
4. Litigation. There is no action, suit, proceeding or investigation
pending or, to his best knowledge, threatened against him before any court,
administrative agency or other governmental body relating in any way to the
transactions contemplated by this Agreement, and he does not know of any
valid basis for the commencement of any such action, proceeding or
investigation. He has not been charged with and, to his best knowledge, has
not been under investigation with respect to any charge concerning, any
material violation of any provision of any federal, state, or local law or
of any administrative regulation. No unsatisfied judgement, order, writ,
injunction, decree or assessment of any court or of any federal, state,
local, or other governmental department, commission, board, bureau, agency,
or instrumentality relating in any way to this Agreement has been entered
against and served upon him. There is no action, proceeding or
investigation pending or, to his best knowledge, threatened against him, nor
are there questions or challenges that otherwise seek to prevent the
consummation or performance of this Agreement.
5. Lessor will not take any action that would remove his eligibility
to hold a license issued under FCC rules then applicable to the facility
during the initial term and the renewal term(s) and he will duly file each
license renewal applications and any other FCC applications or report(s) at
Lessee's expense that are required to continue and extend the term of
license issued by the FCC.
C. Survival of Representations and Warranties. The representations
and warranties contained in this Agreement shall not in any respect be
limited or diminished by any past or future inspection, examination, or
possession on the part of the parties or their representatives of any
records, documents, information or properties. Such warranties and
representations shall be deemed to be continuing during the term 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.
D. Waiver. The express or implied waiver by either party of any
breach of any representation or warranty or any failure to fulfill any
condition, covenant or other obligation or liability under this Agreement
shall not constitute a waiver of any other representation or warranty or of
any other failure in the future or in the past by the other party to fulfill
such representation, warranty, condition, covenant, obligation or liability
hereunder.
E. Indemnification. Each of Lessor and Lessee (as the case may be
the ("Indemnitor") hereby covenants and agrees to, and shall, indemnify,
defend and save harmless the other, its directors, officers, and employees,
partners and affiliates and its respective successors or assigns (the
"Indemnitees") from and against, and shall reimburse the Indemnitees on
demand for any and all liabilities, losses, damages, claims, demands,
actions, costs and expenses (including without limitations, reasonable court
costs and attorney's fees) of whatsoever kind or nature, which any of the
Indemnitees may suffer, sustain, incur, or put to, pay, expend or lay out by
reason, by virtue or as a result of (i) each and every breach or default by
the Indemnitor of any of its covenants, agreements, duties or obligations
hereunder, or (ii) each and every breach or default of, or inaccuracy or
omission in, any representation or warranty of it contained herein. In any
case where indemnification is sought by the Indemnitees, the Indemnitees
shall (1) notify Indemnitor as soon as reasonably practicable of any claim,
litigation, or threatened claim or litigation, to which this indemnification
relates, and (2) shall afford the Indemnitor the opportunity to participate
in, and, at the option of the Indemnitor (subject to the approval of the
Indemnitees) comprise, settle, defend or otherwise resolve the claim or
litigation (and the Indemnitees shall not effect any such compromise or
settlement without prior written consent of the Indemnitor).
VIII. TERMINATION
A. Termination by Reason of FCC Action. This Agreement shall be
terminated in the event the FCC fails to grant the Modification Application
within four months prior to the expiration of Lessor's time to construct the
original Station. This Agreement shall be terminated immediately in the
event that the FCC determines after grant of the Modification Application
that Lessor is not authorized to operate the Modified Station as
contemplated by this Agreement. Should such determination occur without
either party having breached this Agreement, there shall be a final
accounting of monies due under this Agreement and, when completed, there
shall be no further liability of one party to the other.
B. Termination by Reason of Lessee Default or Non-Performance. This
Agreement may be terminated at the option of Lessor without further notice
if (i) Lessee fails to make a payment required by Section V and such breach
continued uncured for a period of ten (10) consecutive days after written
notice of such breach; (ii) Lessee does not commence transmission over the
Modified Station within one (1) year after the FCC grants the Modification
Application unless such failure is beyond Lessee's reasonable control. (iii)
Lessee is in default under the site agreement and such default is not cured
within the time allowed for cure in the site agreement, the site agreement
is terminated before the expiration of the term of this Agreement, or
Lessee's rights under the site agreement are restricted in any manner that
materially affects its ability to perform this Agreement; (iv) Lessee
commences any proceeding relating to its reorganization, dissolution or
liquidation or shall discontinue business, become insolvent or at any time
shall fail generally to pay its obligations as they fall due; (v) Lessee
makes an assignment for the benefit of creditors or applies for or consents
to the appointment of a receiver, trustee, or liquidator for all or
substantially all of its assets; or (vi) any governmental agency or
bankruptcy court or other court shall assume custody of the whole or any
part of Lessee's assets.
C. Termination in Other Cases of Breach, Default, or Non-Performance.
In all other cases not specifically provided for, this Agreement may be
terminated by either party upon the breach of any material warranty or
representation or the default or non-performance by the other party of its
obligations under this Agreement if such breach, default, or non-performance
continues uncured for a period of thirty (30) consecutive days after such
other party's receipt of written notice thereof from the party giving such
notice, provided, however, that in the event of a dispute concerning such
breach or default, the dispute shall be resolved by an arbitration conducted
by a single arbitrator chosen by the American Arbitration Association. The
decision of such arbitrator shall be final and binding on the parties
hereto. The cost of such arbitration shall be borne jointly by the parties
within 30 days after notice of one party to the other that termination is
sought pursuant to this provision.
D. Effects of Termination. Termination of this Agreement shall not
affect Lessee's obligation to pay any amounts due to Lessor accrued prior to
the effective date of termination, nor shall any termination pursuant to
Section VIII.B or VIII.C affect or diminish the rights or claims or remedies
available to the non-defaulting party arising by reason of such breach,
default or non-performance.
E. Continued Operations. Upon expiration or termination of this
Agreement (except for termination resulting from Lessor's breach of this
Agreement) , Lessee shall promptly surrender control of and title to -the
Modified Station to Lessee free and clear of any and all liens, charges,
security interests and encumbrances whatsoever and shall take such further
steps as may be reasonably necessary to assure that there is no interruption
in service by Lessor.
IX. INSURANCE
A. Policies Required. Lessee shall, at its own cost, maintain with
sound and financially reputable insurers, insurance with respect to the
Modified Station and Lessee's utilization of the Modified Station against
casualty and other losses of the kinds customarily insured against by firms
of established reputations engaged in the same or a similar line of
business, of such types and in such amounts as are customarily carried under
similar circumstances by such firms, including, without limitation:
1. "All-risk" property insurance covering the Modified Station to the
extent of one hundred percent (100%) of its full replacement value without
deduction for depreciation;
2. "All-risk" business interruption insurance and/or extra expense
insurance covering Lessee's potential business losses in the event of
casualty to the Modified Station.;
3. Comprehensive general public liability insurance covering
liability resulting from Lessee's operation of the Modified Station on an
occurrence basis having minimum limited of liability in an amount of not
less than One Million Dollars ($1,000,000) 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) in the aggregate for all such losses
during each policy year, and not less than One Million Dollars ($1,000,000)
with respect to damage to property;
4. All worker's compensation, automobile and similar insurance
required by law;
5. Such additional or difference insurance as Lessor, in his
reasonable business judgement, shall request as a result of changing
conditions.
B. Insurance Policy Forms. All policies of insurance required by
this Section shall, as appropriate, designate Lessor as either the insured
party or as a named additional insured, 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 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.
X. MISCELLANEOUS.
A. Assignments
1. Assignment of Authorization. Lessor may not assign or transfer
his FCC authorization for the Modified Station during the term hereof unless
the assignee agrees in writing to assume Lessor's obligations hereunder and
unless Lessee gives its prior written consent, which shall not be
unreasonably withheld. Notwithstanding the foregoing, Lessor may assign his
authorization for the Modified Station to any partnership or corporation in
which he holds an equity interest without the prior consent of Lessee if
that partnership or corporation agrees in writing to assume Lessor's
obligations hereunder.
2. Assignment of Agreement. Except as set forth above, no party may
assign or transfer its. rights, benefits, duties or obligations hereunder
without the prior written consent of the other, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, Lessee may assign its
rights, benefits, duties and obligations hereunder to a lender in connection
with the financing of its wireless cable system without securing the prior
written consent of Lessor.
B. Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
C. Dealings with Third Parties. No party is, nor shall any party
hold itself out to be, vested with any power or right to contractually bind,
or act on behalf of any other as its contracting broker, agent or otherwise
for committing, selling, conveying or transferring any of the other party's
assets or property, contracting for or in the lessor of the other party, or
making any contractually binding representations as to the other party which
shall be deemed representations contractually binding such party.
D. Due Authorization. Each of the Signatories personally represents
and warrants that he is duly authorized to execute this Agreement on behalf
of the party on whose behalf he purports to execute this Agreement.
E. Entire Agreement. This Agreement states the entire agreement as
of this date between the parties with respect to the subject matter hereof
and supersedes all pre-existing oral, letter, or other agreements or
commitments with respect thereto. This Agreement may be modified only by an
agreement in writing executed by all of the parties hereto. This Agreement
shall be binding on and shall inure to the benefit of the parties hereto and
their respective successors and assigns, subject, however, to the provisions
hereof restricting assignment.
F. Force Majeure. If by reasons of force majeure either party is
unable, in whole or in part, to carry out its obligations hereunder, said
party shall not be deemed in violation or default during the continuance of
such inability. The term "force majeure" as used herein shall mean the
following: acts of God, acts of public enemies, orders of any kind of the
government of the United States of America or any of its departments,
agencies, political subdivisions, or officials, or any civil or military
authority; earthquakes; fires, hurricanes, volcanic activity, storms of
extraordinary force, floods, washouts, droughts, civil disturbances,
explosions, disruptions to the equipment manufacturing process, including
labor strikes and lockouts, beyond the control of Lessee, the inability of
the equipment manufacturer to deliver equipment ordered by Lessee in a
timely manner due to reasons beyond the control of Lessee.
G. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the state of Vermont.
H. Jurisdiction and Venue. In the event of any dispute between the
parties regarding the rights and obligations of any party hereunder, except
for the arbitration provisions contained herein, any party shall have the
right to sue the other party in state courts located in Vermont. For any
and all such purposes, the parties hereto hereby irrevocably submit to the
jurisdiction of such courts waive all objections thereto (on the grounds of
improper venue, forum non conveniens or otherwise), and agree that service
of process upon each as provided in the section concerning Notices herein
shall be effective to establish personal jurisdiction over it in such
courts.
I. Headings. The headings herein are inserted for convenience only
and shall not constitute a part of this Agreement.
J. Notices. Except as set forth above concerning the payment of
Transmission Fees, all notices and documentation given under this Agreement
shall be in writing and shall be deemed given the first weekday (excluding
Federal holidays) after being sent by United States Express Mail, return
receipt requested, or by Federal Express, signature required, to the other
party at the following address:
If to Lessee:
New England Wireless
56 Green Street
Bellows Falls, Vermont 05101
William M. Barnard
McFadden, Evans & Sill
1220 19th Street, N.W., #501
Washington, D.C. 20036
If to Lessor:
Ivan Nachman
10300 97th St. N.
Seminole, Florida 34643
K. Parties Defined. The parties to this Agreement shall include the
parties identified at the head of this Agreement, or any corporation or
other entity into or with which any of them be incorporated, merged or
consolidated, or any corporation or entity which shall succeed to or acquire
all or substantially all of the business and/or assets of any of them, as
the case may be.
L. Specific Performance. The parties acknowledge and agree that the
rights reserved to each of them hereunder are of a special, unique unusual
and extraordinary character, which gives them a particular value, the loss
of which cannot be adequately or reasonably compensated for in damages in an
action at law, and the breach by either of the parties of any of the
provisions hereof will cause the other parties irreparable injury and
damage. In such event, the nondefaulting party shall be entitled, as a
matter of right, without further notice, to require of the defaulting party
specific performance of all of the acts, services and undertakings required
hereunder including the obtaining of all requisite authorizations to execute
or perform this Agreement and to obtain injunctive and other equitable
relief in any competent court to prevent the violation of any of the
provisions hereof. Neither this provision nor any exercise by any party of
rights to equitable relief or specific performance herein granted shall
constitute a waiver of any other rights which it may have to damages or
otherwise.
M. Reallocation of OFS H Group Channels. The parties acknowledge
that the FCC has proposed to reallocate the OFS H Group channels to the
Multipoint Distribution Service ("MDS"). In the event of such reallocation,
the parties shall use their best efforts to carry out the intention of this
Agreement by having Lessor provide a non-common carrier MDS transmission
service to Lessee.
N. Time of Essence, Whenever this Agreement shall set forth any time
for the performance of any act, such time shall be deemed of the essence.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
LESSOR /S/ _____________________________
New England Wireless /S/ _______________________________
EXHIBIT 10.4
OFS CHANNEL LEASE AGREEMENT
This AGREEMENT is entered into as of the 30 day of Sept., 1991, by New
England Wireless Inc., a Vermont Corporation referred to as ("Lessee")
having its principal place of business at 56 Green Street, Bellows Falls,
Vermont 05101 and Blake Twedt, hereinafter referred to as ("Lessor"), having
his principal place of business at 810 18th St. Largo, FL 34640.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licensees for Private Operational-Fixed Microwave Radio Service ("OFS")
channels to lease time on such channels on a private carrier basis; and
WHEREAS, Lessor has been awarded a license by the FCC to construct and
operate OFS station WNTI-675 using channel H2 in the Burlington, Vermont
area; and
WHEREAS, Lessor has determined that he desires to lease the full capacity of
his channel on a twenty-four (24) hours a day, seven (7) days a week private
carrier basis; and
WHEREAS, Lessee is developing a wireless cable system to serve the
Burlington market and is desirous of leasing transmission capacity from
Lessor in order to expand its channel capacity, provided that Lessor's
facilities can be relocated to Lessee's transmission, headend and configured
in a manner that is technically compatible with the other stations Lessor
proposes to employ in connection with its wireless cable system in
Burlington .
NOW, THEREFORE, in consideration of their mutual promises, lessor and lessee
do hereby agree to the following terms and conditions:
I. TERM. The initial term of this Agreement shall be five (5) years from
the date hereof, with three (3) consecutive and automatic five (5) year
renewal terms, unless voluntarily terminated by written consent of both
parties or as provided in Section VIII below. Notstanding language in the
preceding sentence to the contrary, should lessee choose not to renew this
Agreement at the end of the initial term or any five (5) year renewal term,
lessee shall provide lessor with written notice of lessee election not to
renew at least six (6) months prior to the expiration date. If lessee fails
to provide lessor with six (6) months advance written notice of its election
not to renew, then this Agreement shall be deemed automatically renewed for
another five (5) year term.
II. THE FCC AUTHORIZATION.
A. Modification Application. Within five (5) working days of the
execution of this Agreement by both parties, lessor shall file with the FCC
an application for modification of the license in substantially the form of
Exhibit A hereto ("Modification Application") to secure a license for an H
Group station identical in all material respects to the other stations
lessee intends to employ in Burlington ("Modified Station"). The parties
recognize that the FCC may deny the Modification application. In such
event, lessee shall utilize its best efforts to redesign its system to
accommodate its requirements and those of the FCC, shall supply the
documentation necessary for lessor to further modify his authorization and
lessor shall properly submit a second Modification Application. In the
event such second Modification Application is granted, the station proposed
therein shall become the Modified Station for purposes of this Agreement.
If lessee is unable to redesign its wireless cable system to meet its
requirements and those of the FCC, it shall so notify lessor, at which this
time this Agreement shall terminate pursuant to Section VIII.A. In the
event that the time allowed by the FCC for construction of the modified
station is not reasonably sufficient to complete construction as provided
for in Section IV-A hereof, Lessor and Lessee shall cooperate in seeking
extension of such time and/or special temporary authority (STA) as may be
appropriate in the circumstances.
B. Covenant Not to Amend or Modify. Because the location and
configuration of lessor station is critical to lessee business, lessor shall
not attempt to amend its pending application or the Modification Application
or modify any license issued by the FCC for the Modified Station or the
Original Station without the prior written consent of lessee, which consent
shall not be unreasonably withheld.
III. USE OF THE CHANNELS.
A. Air Time. Commencing on the Start Date, lessor shall provide to
Lessee during the term of this Agreement all of the transmission capacity on
the Modified Station 24 hours a day, seven days a week, every week.
B. Scope of Use. The transmission capacity provided hereunder to
Lessee is for the transmission of Lessee provided video programming, data
and other information to reception points selected by Lessee. The
transmission capacity may be used by Lessee for any legal purpose, without
any restriction on the substance, format or type of information or signal to
be transmitted thereover.
IV. FACILITIES.
A. Provision of Transmission Facilities. No later than the earlier
of six months after receiving notice from lessor that lessor received a
grant of the Modification Application or such lesser time allowed by the FCC
for such construction, provided such lesser time is reasonably adequate for
such construction in accordance with the FCC's Rules, Lessee shall, at its
sole expense, install the facilities authorized by the FCC for the Modified
Station in accordance with the terms of lessor FCC authorization, the FCC's
rules and of this Agreement, subject to such supervision and control by
lessor as shall be required under the FCC's rules. Subsequently, throughout
the term of this Agreement, Lessee shall at its sole cost and expense
provide to lessor appropriate space (complete with utilities and necessary
environmental controls), transmitters, waveguide, antennas and other
associated equipment for the Modified Station (which equipment may be shared
with other stations). Subject to the provisions of Section VII.E, Lessee
shall retain title to the Modified Station. In addition, Lessee will
cooperate with lessor in obtaining at the earliest possible date (and in any
event prior to any renewal term) an agreement between lessor and the owner
of the transmission site at which the Modified Station will be located so as
to assure that lessor continues uninterrupted operations if Lessee's site
agreement expires or Lessee defaults under its site agreement. Lessor will
not take any action that would remove his eligibility to hold a license
issued under FCC rules then applicable to the facility during the initial
term and the renewal term(s) and he will duly file each license renewal
application) and any other FCC applications) or report(s) at Lessee's
expense that are required to continue and extend the term of license issued
by the FCC.
B. Start Date. For purposes of this Agreement, the Start Date shall
be the date Lessee completes construction of the Modified Station.
C. Operation and Maintenance. Lessee shall, at its own cost and
expense, retain technically qualified personnel to operate, repair, and
maintain the transmission facilities under the technical direction,
supervision and control of lessor to assure continued operation of the
Modified Station in accordance with lessor FCC license and the FCC's rules
and regulations. Lessee shall make available to lessor upon reasonable
request records of all repairs and maintenance activities and shall notify
lessor in the event transmission service is interrupted for any reason for a
period of five (5) minutes or more.
D. Interference. Lessee shall operate the Modified Station in such a
fashion as to ensure that such operation does not create or increase
interference to any other FCC applicant, permittee, or licensee entitled to
protection under the FCC's rules and policies. In the event of any creation
or increase in interference associated with the Modified Station, Lessee
shall pay all reasonable costs, including any costs of lessor attorney and
engineers, to resolve all interference to FCC applicants, permittees, or
licensees entitled to protection under the FCC's rules and policies,
provided however, that the Lessee shall have approved such costs in advance
in writing.
E. Modification of Transmission Facilities. lessor and Lessee
acknowledge the possibility that as a result of currently unforeseen events
or changes in the FCC's rules and policies, the technical configuration of
the Modified Station may prevent Lessee from optimizing its business
throughout the term of this Agreement. lessor therefore agrees that if any
time and from time to time Lessee so requests, lessor shall use his best
efforts to apply to the FCC for authority to modify the transmission
facilities (including, without limiting the generality of the foregoing, to
increase transmitted power, to increase antenna height, to modify the
transmission and antenna systems or to relocate the Modified Station) to
meet the reasonable requirements of Lessee. Lessee shall bear all
reasonable costs associated with such modifications, including engineering
and construction, and all reasonable costs associated with obtaining FCC
approval thereof, provided that such costs are approved by Lessee in advance
in writing. Upon the completion of such modification, the modified facility
shall become the Modified Station.
F. Additional Equipment. Lessee, at its own expense, may install
attachments to the Modified Station (including, without limitation, encoding
and/or addressing equipment selected by it) as may be required by the
exigencies of its business from time to time, provided that such alterations
and attachment do not violate any FCC rules and regulations. Any equipment
used in making attachments shall be provided by Lessee and Lessee shall be
responsible for the operation, maintenance and repair of all such equipment.
G. Reception Equipment. lessor has no responsibility hereunder to
provide any reception antennas, down converters, decoders, descramblers,
power supplies or any other equipment required to display signals
transmitted over the Modified Station ("Reception Equipment") . Lessee may,
in its sole discretion and on terms and conditions of its choosing, install
or cause to be installed such Reception Equipment as may be required, from
time to time, in order to receive the signals to be transmitted over the
Modified Station.
H. Program Origination and Delivery. Lessee shall be solely
responsible for the origination of any and all signals to be transmitted
over the Modified Station and the delivery of such to the Modified Station,
and shall bear all costs and expenses in connection therewith.
V. CHARGES
A. Commitment Fee. In consideration for Lessor's loss of opportunity
and forbearance from dealing with others for service on the Station, Lessee
shall pay to Lessor a Commitment Fee of One Thousand Dollars ($1,000) in the
form of a cashier's check within seven (7) days of receiving notice from
Lessor that the FCC has granted the Modified Application.
B. Transmission Fee. Commencing on the Start Date and continuing
thereafter for the term of this Agreement, Lessee shall pay to lessor in
consideration of the faithful performance by lessor of his obligations
hereunder a monthly fee (the "Transmission Fee") equal to the number of
Subscribers (as calculated in accordance with the formula below) during the
month in question multiplied by Ten Cents ($0.10). For purposes of computing
the Transmission Fee due hereunder for any month, the term "Subscribers"
shall be deemed to mean the number of subscribers contracting with Lessee to
receive Lessee's programming over the Modified Station as of the last day of
the prior month plus the number of such subscribers to Lessee's programming
over the Modified Station as of the last day of the current month divided by
two. Only Subscribers which are current with respect to their payments
shall be considered for this purpose; provided, however, that Subscribers
paying after the fact for a prior month or months shall be counted as
Subscribers for such month or months retroactively. In those situations
where programming is sold in bulk for viewing at isolated locations in the
same facility (that is, where a number of viewing units are grouped for
billing purposes such as may be the case with hotels and condominiums) and
Lessee's rates therefore are less than its prevailing monthly rate for the
sale of Lessee's programming. over the Modified Station to individual
Subscribers of its wireless cable service, the number of Subscribers from
such bulk billing points shall be determined by dividing the total monthly
revenues derived from the sale of Lessee's programming over Lessee's
wireless cable business to the bulk billing points by the Lessee's then
prevailing basic monthly rate for sale of programming to individual
subscribers.
C. Minimum Monthly Payments. Customer agrees to make minimum
payments to carrier, commencing on the Start Date as follows:
1) For the initial twelve month period commencing on the Start
Date, Lessee shall pay to lessor a minimum of $250.00 per month.
2) For the second year, Lessee shall pay lessor a minimum of
$500 per month.
3) For the third year thereafter throughout the term of this
Agreement, lessee shall pay lessor a minimum of $750 per month.
D. Cost of Living Adjustment. The Minimum Monthly Payment shall be
adjusted upward or downward based upon the consumer's price index as
reported by the U.S. Department of Labor (1967=100) for each five (5) year
renewal Term using 1991 as the base year.
E. Required Certificate and Payment Dates. Lessee shall, within
thirty (30) days of the end of each calendar month after the Start Date,
mail to lessor by first class United States mail, postage prepaid, a
certificate signed by an officer of Lessee showing the number of Subscribers
served during said month, together with the Transmission Fee to be paid by
Lessee hereunder for such month.
F. Right to Audit. For the purpose of permitted verification by
lessor of any payments due, Lessee shall keep and preserve for at least
three (3) years a true and accurate record of all sales and business
transacted during the term of this Agreement, including, without limitation,
all invoices, correspondence, ledgers, financial and other records relating
to its subscribers and billings. Lessor, his agents, employees, or
representatives, shall have the right, upon seventy two (72) hours advance
notice to Lessee, to examine all such books and records of Lessee at any
reasonable time during business hours. If, as a result of Lessor's
examination of such books and records, Lessor's certified public accountants
determine that any payment by Lessee was insufficient, Lessee agrees to pay
to the deficiency within five (5) days of receiving notice from Lessor. If
it is determined that Lessee has underpaid by seven (7%) or more, then in
addition to the payment of the deficiency, Lessee shall pay Lessor's cost of
examining Lessee's books and records and an additional fee equal to ten
percent (10%) of the amount of the deficiency. Lessor shall hold all
information obtained from Lessee's records in confidence, except as may be
necessary for the enforcement of his rights under this Agreement or except
pursuant to any legal requirements. In the event of dispute concerning the
sufficiency of any payment due Lessor under this agreement, the dispute
shall be resolved by arbitration conducted by a single arbitrator chosen by
the American Arbitration Association. The decision of such arbitrator shall
be final and binding on the parties hereto. The cost of such arbitration
shall be borne jointly by the parties provided, however, that if the
arbitrator shall determine that Lessee has underpaid the transmission fee
due to Lessor by 7% or more the cost of such arbitration shall be borne by
the Lessee.
G. Subscriber contracts. Lessor shall not interfere with the right
of Lessee or its designee to lawfully modify, waive, rescind, terminate or
cancel any and all services or contracts with Subscribers. In case any such
services or contracts are modified, waived, rescinded, terminated or
cancelled, Lessor shall not be entitled to any participation in revenues or
claims whatsoever with respect to the unperformed portion of any such
contract.
H. Proration of Fees. In the event that (i) the Start Date shall be
date other than the first day of a calendar month, or (ii) this Agreement
shall be terminated on a date other than the last day of a calendar month,
then the Transmission Fee for such month shall be proportionately reduced.
I. Taxes. If federal, state, or local taxes (other than taxes on the
income of Lessee) are applicable, or become applicable to the services
provided under this Agreement, it will be the responsibility of Lessor to
pay such taxes and/or reimburse Lessee for its payment of such taxes.
J. Broker's Fees. Simultaneously with the Execution of this
Agreement, Lessee shall pay to Suncoast Wireless Cable, 7800 113th Street
North, Suite 201, Seminole, Florida 34642, ("Broker") a broker's fee in the
form of a cashier's check for the amount of One Thousand Six Hundred
Seventy-Five Dollars ($1,675) in partial payment of Broker's services in
introducing Lessee and Lessor and brokering this Agreement. Within 7 days
of the granted modification, Lessee shall pay Suncoast Wireless Cable an
additional Three Thousand Three Hundred Twenty-Five Dollars ($3,325) in the
form of a cashier's check.
VI. PROSECUTION OF APPLICATIONS AND PETITIONS
A. FCC Filings. Both parties shall diligently prepare, file and
prosecute before the FCC all necessary or desirable petitions, waivers,
applications and other related documents required to secure FCC approval of
the matters addressed herein. Notwithstanding anything herein to the
contrary, it is understood that no filing shall be made with the FCC with
respect to the subject matter hereof unless both parties hereto shall have
reviewed said document and shall have consented in advance to its
submission.
B. Further Efforts. While this Agreement is in effect, Lessor shall
use his best efforts to obtain and maintain in force all licenses, permits
and authorizations required in connection with Lessee's use of the Modified
Station hereunder, and shall file and prosecute all necessary applications
for license renewal. Lessor shall also file such reasonable protests or
other petitions to deny against applications of third parties for licenses
as may be requested by Lessee. Lessor, if requested by Lessee, and to the
extent requested, shall use his best efforts to prevent any unauthorized
individual or entity from receiving the signals transmitted over the
Modified Station, provided that all costs and expenses in connection
therewith are paid by Lessee. Lessor shall promptly notify Lessee of any
event which may affect the licenses, permits, or authorizations for the
Modified Station. Lessor shall fully cooperate with all reasonable requests
of Lessee for assistance in the construction, operation and maintenance of
any additional facilities which Lessee may desire in order to optimize its
business within the city metropolitan area, provided that Lessee shall
reimburse Lessor for all reasonable expenses incurred by Lessor in providing
such assistance.
VII. REPRESENTATIONS AND WARRANTIES.
A. Lessee Representations and Warranties. In addition to
representations and warranties set forth above, Lessee represents and
warrants to Lessor that:
1. Organization. It is duly organized and existing under the
laws of the state of its incorporation, is qualified to do business in
the state in which the Modified Station will be located and has full
power and authority to carry out all of the transactions contemplated
hereby.
2. Authorization. All necessary actions on its parts to
authorize the execution and delivery of this Agreement and the
performance of its obligations hereunder have been taken.
3. Compliance with Law. It is in compliance and shall comply
with all laws, rules and regulations governing the business,
ownership, and operation of the Modified Station. The carrying out of
the provisions of this Agreement will not result in any violation or
be in conflict with any judgement, decree, order, statute, rule or
regulation of any governmental authority with jurisdiction over it.
4. No Violation. Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated hereby
constitutes or will constitute or will constitute a violation of, be
in conflict with, constitute a default under, or be ultra vires as to,
any term of provision of its articles of incorporation or other
governing instruments or any agreement or commitment to which it is
bound. or any judgement, decree, order, regulation or rule of any
court or governmental authority, or any statute or law. Except for
approval of the FCC, no 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 and thereby.
5. Litigation. There is no action, suit, proceeding or
investigation pending or, to its best knowledge, threatened against it
before any court, administrative agency or other governmental body
relating in any way to the transactions contemplated by this
Agreement, and it does not know of any valid basis for the
commencement of any such action, proceeding or investigation. It has
not been charged with, and, to its best knowledge, has not been under
investigation with respect to any charge concerning, any material
violation of any provision of any federal, state, or local law or of
any administrative regulation. No unsatisfied judgement, order, writ,
injunction, decree or assessment of any court or of any federal,
state, local or other governmental department, commission, board,
bureau, agency or instrumentality relating in any way to this
Agreement has been entered against and served upon it. There is no
action, proceeding or investigation pending or, to its best knowledge,
threatened against it, nor are there questions or challenges that
otherwise seek to prevent the consummation or performance of this
Agreement.
B. Lessor Representations and Warranties. In addition to
representations and warranties set forth above, Lessor represents and
warrants to Lessee that:
1. Authorization. He has full power and authority to carry out
all of the transactions contemplated hereby. All necessary actions on
his part to authorize the execution and delivery of this Agreement and
the performance of his obligations hereunder have been taken.
2. Compliance with Law. He is in compliance and shall comply
with all laws, rules and regulations governing the business,
ownership, and operation of the Modified Station. The carrying out of
the provisions of this Agreement will no result in any violation or be
in conflict with any judgement, decree, order, statute, rule or
regulation of any governmental authority with jurisdiction over him.
3. No Violation. Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated hereby,
constitutes or will constitute a violation of, be in conflict with,
constitute a default under, or be ultra vires as to, any term or
provision of any agreement or commitment to which he is bound, or any
judgement, decree, order, regulation or rule of any court or
governmental authority, or any statute or law. Except for approval of
the FCC, no 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 and thereby.
4. Litigation. There is no action, suit, proceeding or
investigation pending or, to his best knowledge, threatened against
him before any court, administrative agency or other governmental body
relating in any way to the transactions contemplated by this
Agreement, and he does not know of any valid basis for the
commencement of any such action, proceeding or investigation. He has
not been charged with and, to his best knowledge, has not been under
investigation with respect to any charge concerning, any material
violation of any provision of any federal, state, or local law or of
any administrative regulation. No unsatisfied judgement, order, writ,
injunction, decree or assessment of any court or of any federal,
state, local, or other governmental department, commission, board,
bureau, agency, or instrumentality relating in any way to this
Agreement has been entered against and served upon him. There is no
action, proceeding or investigation pending or, to his best knowledge,
threatened against him, nor are there questions or challenges that
otherwise seek to prevent the consummation or performance of this
Agreement.
5. Lessor will not take any action that would remove his
eligibility to hold a license issued under FCC rules then applicable
to the facility during the initial term and the renewal term(s) and he
will duly file each license renewal application and any other FCC
application or report(s) at Lessee's expense that are required to
continue and extend the term of license issued by the FCC.
C. Survival of Representations and Warranties. The representations
and warranties contained in this Agreement shall not in any respect be
limited or diminished by any past or future inspection, examination, or
possession on the part of the parties or their representatives of any
records, documents, information or properties. Such warranties and
representations shall be deemed to be continuing during the term 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.
D. Waiver. The express or implied waiver by either party of any
breach of any representation or warranty or any failure to fulfill any
condition, covenant or other obligation or liability under this Agreement
shall not constitute a waiver of any other representation or warranty or of
any other failure in the future or in the past by the other party to fulfill
such representation, warranty, condition, covenant, obligation or liability
hereunder.
E. Indemnification. Each of Lessor and Lessee (as the case may be
the ("Indemnitor") hereby covenants and agrees to, and shall, indemnify,
defend and save harmless the other, its directors, officers, and employees,
partners and affiliates and its respective successors or assigns (the
"Indemnitees") from and against, and shall reimburse the Indemnitees on
demand for any and all liabilities, losses, damages, claims, demands,
actions, costs and expenses (including without limitations, reasonable court
costs and attorney's fees) of whatsoever kind or nature, which any of the
Indemnitees may suffer, sustain, incur, or put to, pay, expend or lay out by
reason, by virtue or as a result of (i) each and every breach or default by
the Indemnitor of any of its covenants, agreements, duties or obligations
hereunder, or (ii) each and every breach or default of, or inaccuracy or
omission in, any representation or warranty of it contained herein. In any
case where indemnification is sought by the Indemnitees, the Indemnitees
shall (1) notify Indemnitor as soon as reasonably practicable of any claim,
litigation, or threatened claim or litigation, to which this indemnification
relates, and (2) shall afford the Indemnitor the opportunity to participate
in, and, at the option of the Indemnitor (subject to the approval of the
Indemnitees) comprise, settle, defend or otherwise resolve the claim or
litigation (and the Indemnitees shall not effect any such compromise or
settlement without prior written consent of the Indemnitor).
VIII. TERMINATION
A. Termination by Reason of FCC Action. This Agreement shall be
terminated in the event the FCC fails to grant the Modification Application
within four months prior to the expiration of Lessor's time to construct the
original Station. This Agreement shall be terminated immediately in the
event that the FCC determines after grant of the Modification Application
that Lessor is not authorized to operate the Modified Station as
contemplated by this Agreement. Should such determination occur without
either party having breached this Agreement, there shall be a final
accounting of monies due under this Agreement and, when completed, there
shall be no further liability of one party to the other.
B. Termination by Reason of Lessee Default or Non-Performance. This
Agreement may be terminated at the option of Lessor without further notice
if (I) Lessee fails to make a payment required by Section V and such breach
continued uncured for a period of ten (10) consecutive days after written
notice of such breach; (ii) Lessee does not commence transmission over the
Modified Station within one (1) year after the FCC grants the Modification
Application unless such failure is beyond Lessee's reasonable control. (iii)
Lessee is in default under the site agreement and such default is not cured
within the time allowed for cure in the site agreement, the site agreement
is terminated before the expiration of the term of this Agreement, or
Lessee's rights under the site agreement are restricted in any manner that
materially affects its ability to perform this Agreement; (iv) Lessee
commences any proceeding relating to its reorganization, dissolution or
liquidation or shall discontinue business, become insolvent or at any time
shall fail generally to pay its obligations as they fall due; (v) Lessee
makes an assignment for the benefit of creditors or applies for or consents
to the appointment of a receiver, trustee, or liquidator for all or
substantially all of its assets; or (vi) any governmental agency or
bankruptcy court or other court shall assume custody of the whole or any
part of Lessee's assets.
C. Termination in Other Cases of Breach, Default, or Non-Performance.
In all other cases not specifically provided for, this Agreement may be
terminated by either party upon the breach of any material warranty or
representation or the default or non-performance by the other party of its
obligations under this Agreement if such breach, default, or non-performance
continues uncured for a period of thirty (30) consecutive days after such
other party's receipt of written notice thereof from the party giving such
notice, provided, however, that in the event of a dispute concerning such
breach or default, the dispute shall be resolved by an arbitration conducted
by a single arbitrator chosen by the American Arbitration Association. The
decision of such arbitrator shall be final and binding on the parties
hereto. The cost of such arbitration shall be borne jointly by the parties
within 30 days after notice of one party to the other that termination is
sought pursuant to this provision.
D. Effects of Termination. Termination of this Agreement shall not
affect Lessee's obligation to pay any amounts due to Lessor accrued prior to
the effective date of termination, nor shall any termination pursuant to
Section VIII.B or VIII.C affect or diminish the rights or claims or remedies
available to the non-defaulting party arising by reason of such breach,
default or non-performance.
E. Continued Operations. Upon expiration or termination of this
Agreement (except for termination resulting from Lessor's breach of this
Agreement) , Lessee shall promptly surrender control of and title to the
Modified Station to Lessee free and clear of any and all liens, charges,
security interests and encumbrances whatsoever and shall take such further
steps as may be reasonably necessary to assure that there is no interruption
in service by Lessor.
IX. INSURANCE
A. Policies Required. Lessee shall, at its own cost, maintain with
sound and financially reputable insurers, insurance with respect to the
Modified Station and Lessee's utilization of the Modified Station against
casualty and other losses of the kinds customarily insured against by firms
of established reputations engaged in the same or a similar line of
business, of such types and in such amounts as are customarily carried under
similar circumstances by such firms, including, without limitation:
1. "All-risk" property insurance covering the Modified Station
to the extent of one hundred percent (100%) of its full replacement
value without deduction for depreciation;
2. "All-risk" business interruption insurance and/or extra
expense insurance covering Lessee's potential business losses in the
event of casualty to the Modified Station.;
3. Comprehensive general public liability insurance covering
liability resulting from Lessee's operation of the Modified Station on
an occurrence basis having minimum limited of liability in an amount
of not less than One Million Dollars ($1,000,000) 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) in the
aggregate for all such losses during each policy year, and not less
than One Million Dollars ($1,000,000) with respect to damage to
property;
4. All worker's compensation, automobile and similar insurance
required by law;
5. Such additional or difference insurance as Lessor, in his
reasonable business judgement, shall request as a result of changing
conditions.
B. Insurance Policy Forms. All policies of insurance required by
this Section shall, as appropriate, designate Lessor as either the insured
party or as a named additional insured, 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 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.
X. MISCELLANEOUS.
A. Assignments
1. Assignment of Authorization. Lessor may not assign or
transfer his FCC authorization for the Modified Station during the
term hereof unless the assignee agrees in writing to assume Lessor's
obligations hereunder and unless Lessee gives its prior written
consent, which shall not be unreasonably withheld. Notwithstanding
the foregoing, Lessor may assign his authorization for the Modified
Station to any partnership or corporation in which he holds an equity
interest without the prior consent of Lessee if that partnership or
corporation agrees in writing to assume Lessor's obligations
hereunder.
2. Assignment of Agreement. Except as set forth above, no
party may assign or transfer its rights, benefits, duties or
obligations hereunder without the prior written consent of the other,
which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, Lessee may assign its rights, benefits, duties and
obligations hereunder to a lender in connection with the financing of
its wireless cable system without securing the prior written consent
of Lessor.
B. Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
C. Dealings with Third Parties. No party is, nor shall any party
hold itself out to be, vested with any power or right to contractually bind,
or act on behalf of any other as its contracting broker, agent or otherwise
for committing, selling, conveying or transferring any of the other party's
assets or property, contracting for or in the lessor of the other party, or
making any contractually binding representations as to the other party which
shall be deemed representations contractually binding such party.
D. Due Authorization. Each of the Signatories personally represents
and warrants that he is duly authorized to execute this Agreement on behalf
of the party on whose behalf he purports to execute this Agreement.
E. Entire Agreement. This Agreement states the entire agreement as
of this date between the parties with respect to the subject matter hereof
and supersedes all pre-existing oral, letter, or other agreements or
commitments with respect thereto. This Agreement may be modified only by an
agreement in writing executed by all of the parties hereto. This Agreement
shall be binding on and shall inure to the benefit of the parties hereto and
their respective successors and assigns, subject, however, to the provisions
hereof restricting assignment.
F. Force Majeure. If by reasons of force majeure either party is
unable, in whole or in part, to carry out its obligations hereunder, said
party shall not be deemed in violation or default during the continuance of
such inability. The term "force majeure" as used herein shall mean the
following: acts of God, acts of public enemies, orders of any kind of the
government of the United States of America or any of its departments,
agencies, political subdivisions, or officials, or any civil or military
authority; earthquakes; fires, hurricanes, volcanic activity, storms of
extraordinary force, floods, washouts, droughts, civil disturbances,
explosions, disruptions to the equipment manufacturing process, including
labor strikes and lockouts, beyond the control of Lessee, the inability of
the equipment manufacturer to deliver equipment ordered by Lessee in a
timely manner due to reasons beyond the control of Lessee.
G. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the state of Vermont.
H. Jurisdiction and Venue. In the event of any dispute between the
parties regarding the rights and obligations of any party hereunder, except
for the arbitration provisions contained herein, any party shall have the
right to sue the other party in state courts located in Vermont. For any
and all such purposes, the parties hereto hereby irrevocably submit to the
jurisdiction of such courts waive all objections thereto (on the grounds of
improper venue, forum non conveniens or otherwise), and agree that service
of process upon each as provided in the section concerning Notices herein
shall be effective to establish personal jurisdiction over it in such
courts.
I. Headings. The headings herein are inserted for convenience only
and shall not constitute a part of this Agreement.
J. Notices. Except as set forth above concerning the payment of
Transmission Fees, all notices and documentation given under this Agreement
shall be in writing and shall be deemed given the first weekday (excluding
Federal holidays) after being sent by United States Express Mail, return
receipt requested, or by Federal Express, signature required, to the other
party at the following address:
If to Lessee:
New England Wireless
56 Green Street
Bellows Falls, Vermont 05101
William M. Barnard
McFadden, Evans & Sill
1220 19th Street, N.W., #501
Washington, D.C. 20036
If to Lessor:
Blake Twedt
810 18th St.
Largo, FL 34640
L. Parties Defined. The parties to this Agreement shall include the
parties identified at the head of this Agreement, or any corporation or
other entity into or with which any of them be incorporated, merged or
consolidated, or any corporation or entity which shall succeed to or acquire
all or substantially all of the business and/or assets of any of them, as
the case may be.
M. Specific Performance. The parties acknowledge and agree that the
rights reserved to each of them hereunder are of a special, unique unusual
and extraordinary character, which gives them a particular value, the loss
of which cannot be adequately or reasonably compensated for in damages in an
action at law, and the breach by either of the parties of any of the
provisions hereof will cause the other parties irreparable injury and
damage. In such event, the nondefaulting party shall be entitled, as a
matter of right, without further notice, to require of the defaulting party
specific performance of all of the acts, services and undertakings required
hereunder including the obtaining of all requisite authorizations to execute
or perform this Agreement and to obtain injunctive and other equitable
relief in any competent court to prevent the violation of any of the
provisions hereof. Neither this provision nor any exercise by any party of
rights to equitable relief or specific performance herein granted shall
constitute a waiver of any other rights which it may have to damages or
otherwise.
N. Reallocation of OFS H Group Channels. The parties acknowledge
that the FCC has proposed to reallocate the OFS H Group channels to the
Multipoint Distribution Service ("MDS"). In the event of such reallocation,
the parties shall use their best efforts to carry out the intention of this
Agreement by having Lessor provide a non-common carrier MDS transmission
service to Lessee.
O. Time of Essence, Whenever this Agreement shall set forth any time
for the performance of any act, such time shall be deemed of the essence.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
LESSOR /S/____________________________
New England Wireless /S/____________________________
EXHIBIT 10.5
OFS CHANNEL LEASE AGREEMENT
This AGREEMENT is entered into as of the 30 day of Sept., 1991, by New
England Wireless Inc., a Vermont Corporation referred to as ("Lessee")
having its principal place of business at 56 Green Street, Bellows Falls,
Vermont 05101 and John Dudeck, hereinafter referred to as ("Lessor"), having
his principal place of business at 12432 81st Ct. N., Seminole, Florida
34642.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licensees for Private Operational-Fixed Microwave Radio Service ("OFS")
channels to lease time on such channels on a private carrier basis; and
WHEREAS, Lessor has been awarded a license by the FCC to construct and
operate OFS station WNTI-842 using channel H3 in the Burlington, Vermont
area; and
WHEREAS, Lessor has determined that he desires to lease the full capacity of
his channel on a twenty-four (24) hours a day, seven (7) days a week private
carrier basis; and
WHEREAS, Lessee is developing a wireless cable system to serve the
Burlington market and is desirous of leasing transmission capacity from
Lessor in order to expand its channel capacity, provided that Lessor's
facilities can be relocated to Lessee's transmission, headend and configured
in a manner that is technically compatible with the other stations Lessor
proposes to employ in connection with its wireless cable system in
Burlington .
NOW, THEREFORE, in consideration of their mutual promises, lessor and lessee
do hereby agree to the following terms and conditions:
1. TERM. The initial term of this Agreement shall be five (5) years from
the date hereof, with three (3) consecutive and automatic five (5) year
renewal terms, unless voluntarily terminated by written consent of both
parties or as provided in Section VIII below. Notwithstanding language in
the preceding sentence to the contrary, should lessee choose not to renew
this Agreement at the end of the initial term or any five (5) year renewal
term, lessee shall provide lessor with written notice of lessee election not
to renew at least six (6) months prior to the expiration date. If lessee
fails to provide lessor with six (6) months advance written notice of its
election not to renew, then this Agreement shall be deemed automatically
renewed for another five (5) year term.
II. THE FCC AUTHORIZATION.
A. Modification Application. Within five (5) working days of the
execution of this Agreement by both parties, lessor shall file with the FCC
an application for modification of the license in substantially the form of
Exhibit A hereto ("Modification Application") to secure a license for an H
Group station identical in all material respects to the other stations
lessee intends to employ in Burlington ("Modified Station"). The parties
recognize that the FCC may deny the Modification application. In such
event, lessee shall utilize its best efforts to redesign its system to
accommodate its requirements and those of the FCC, shall supply the
documentation necessary for lessor to further modify his authorization and
lessor shall properly submit a second Modification Application. In the
event such second Modification Application is granted, the station proposed
therein shall become the Modified Station for purposes of this Agreement.
If lessee is unable to redesign its wireless cable system to meet its
requirements and those of the FCC, it shall so notify lessor, at which this
time this Agreement shall terminate pursuant to Section VIII.A. In the
event that the time allowed by the FCC for construction of the modified
station is not reasonably sufficient to complete construction as provided
for in Section IV-A hereof, Lessor and Lessee shall cooperate in seeking
extension of such time and/or special temporary authority (STA) as may be
appropriate in the circumstances.
B. Covenant Not to Amend or Modify. Because the location and
configuration of lessor station is critical to lessee business, lessor shall
not attempt to amend its pending application or the Modification Application
or modify any license issued by the FCC for the Modified Station or the
Original Station without the prior written consent of lessee, which consent
shall not be unreasonably withheld.
III. USE OF THE CHANNELS.
A. Air Time. Commencing on the Start Date, lessor shall provide to
Lessee during the term of this Agreement all of the transmission capacity on
the Modified Station 24 hours a day, seven days a week, every week.
B. Scope of Use. The transmission capacity provided hereunder to
Lessee is for the transmission of Lessee provided video programming, data
and other information to reception points selected by Lessee. The
transmission capacity may be used by Lessee for any legal purpose, without
any restriction on the substance, format or type of information or signal to
be transmitted thereover.
IV. FACILITIES.
A. Provision of Transmission Facilities. No later than the earlier
of six months after receiving notice from lessor that lessor received a
grant of the Modification Application or such lesser time allowed by the FCC
for such construction, provided such lesser time is reasonably adequate for
such construction in accordance with the FCC's Rules, Lessee shall, at its
sole expense, install the facilities authorized by the FCC for the Modified
Station in accordance with the terms of lessor FCC authorization, the FCC's
rules and of this Agreement, subject to such supervision and control by
lessor as shall be required under the FCC's rules. Subsequently, throughout
the term of this Agreement, Lessee shall at its sole cost and expense
provide to lessor appropriate space (complete with utilities and necessary
environmental controls), transmitters, waveguide, antennas and other
associated equipment for the Modified Station (which equipment may be shared
with other stations). Subject to the provisions of Section VII.E, Lessee
shall retain title to the Modified Station. In addition, Lessee will
cooperate with lessor in obtaining at the earliest possible date (and in any
event prior to any renewal term) an agreement between lessor and the owner
of the transmission site at which the Modified Station will be located so as
to assure that lessor continues uninterrupted operations if Lessee's site
agreement expires or Lessee defaults under its site agreement. Lessor will
not take any action that would remove his eligibility to hold a license
issued under FCC rules then applicable to the facility during the initial
term and the renewal term(s) and he will duly file each license renewal
application) and any other FCC application) or report(s) at Lessee's expense
that are required to continue and extend the term of license issued by the
FCC.
B. Start Date. For purposes of this Agreement, the Start Date shall
be the date Lessee completes construction of the Modified Station.
C. Operation and Maintenance. Lessee shall, at its own cost and
expense, retain technically qualified personnel to operate, repair, and
maintain the transmission facilities under the technical direction,
supervision and control of lessor to assure continued operation of the
Modified Station in accordance with lessor FCC license and the FCC's rules
and regulations. Lessee shall make available to lessor upon reasonable
request records of all repairs and maintenance activities and shall notify
lessor in the event transmission service is interrupted for any reason for a
period of five (5) minutes or more.
D. Interference. Lessee shall operate the Modified Station in such a
fashion as to ensure that such operation does not create or increase
interference to any other FCC applicant, permittee, or licensee entitled to
protection under the FCC's rules and policies. In the event of any creation
or increase in interference associated with the Modified Station, Lessee
shall pay all reasonable costs, including any costs of lessor attorney and
engineers, to resolve all interference to FCC applicants, permittees, or
licensees entitled to protection under the FCC's rules and policies,
provided however, that the Lessee shall have approved such costs in advance
in writing.
E. Modification of Transmission Facilities. lessor and Lessee
acknowledge the possibility that as a result of currently unforeseen events
or changes in the FCC's rules and policies, the technical configuration of
the Modified Station may prevent Lessee from optimizing its business
throughout the term of this Agreement. lessor therefore agrees that if any
time and from time to time Lessee so requests, lessor shall use his best
efforts to apply to the FCC for authority to modify the transmission
facilities (including, without limiting the generality of the foregoing, to
increase transmitted power, to increase antenna height, to modify the
transmission and antenna systems or to relocate the Modified Station) to
meet the reasonable requirements of Lessee. Lessee shall bear all
reasonable costs associated with such modifications, including engineering
and construction, and all reasonable costs associated with obtaining FCC
approval thereof, provided that such costs are approved by Lessee in advance
in writing. Upon the completion of such modification, the modified facility
shall become the Modified Station.
F. Additional Equipment. Lessee, at its own expense, may install
attachments to the Modified Station (including, without limitation, encoding
and/or addressing equipment selected by it) as may be required by the
exigencies of its business from time to time, provided that such alterations
and attachment do not violate any FCC rules and regulations. Any equipment
used in making attachments shall be provided by Lessee and Lessee shall be
responsible for the operation, maintenance and repair of all such equipment.
G. Reception Equipment. lessor has no responsibility hereunder to
provide any reception antennas, down converters, decoders, descramblers,
power supplies or any other equipment required to display signals
transmitted over the Modified Station ("Reception Equipment") . Lessee may,
in its sole discretion and on terms and conditions of its choosing, install
or cause to be installed such Reception Equipment as may be required, from
time to time, in order to receive the signals to be transmitted over the
Modified Station.
H. Program Origination and Delivery. Lessee shall be solely
responsible for the origination of any and all signals to be transmitted
over the Modified Station and the delivery of such to the Modified Station,
and shall bear all costs and expenses in connection therewith.
V. CHARGES
A. Commitment Fee. In consideration for Lessor's loss of opportunity
and forbearance from dealing with others for service on the Station, Lessee
shall pay to Lessor a Commitment Fee of One Thousand Dollars ($1,000) in the
form of a cashier's check within seven (7) days of receiving notice from
Lessor that the FCC has granted the Modified Application.
B. Transmission Fee. Commencing on the Start Date and continuing
thereafter for the term of this Agreement, Lessee shall pay to lessor in
consideration of the faithful performance by lessor of his obligations
hereunder a monthly fee (the "Transmission Fee") equal to the number of
Subscribers (as calculated in accordance with the formula below) during the
month in question multiplied by Ten Cents ($0.10). For purposes of computing
the Transmission Fee due hereunder for any month, the term "Subscribers"
shall be deemed to mean the number of subscribers contracting with Lessee to
receive Lessee's programming over the Modified Station as of the last day of
the prior month plus the number of such subscribers to Lessee's programming
over the Modified Station as of the last day of the current month divided by
two. Only Subscribers which are current with respect to their payments
shall be considered for this purpose; provided, however, that Subscribers
paying after the fact for a prior month or months shall be counted as
Subscribers for such month or months retroactively. In those situations
where programming is sold in bulk for viewing at isolated locations in the
same facility (that is, where a number of viewing units are grouped for
billing purposes such as may be the case with hotels and condominiums) and
Lessee's rates therefore are less than its prevailing monthly rate for the
sale of Lessee's programming over the Modified Station to individual
Subscribers of its wireless cable service, the number of Subscribers from
such bulk billing points shall be determined by dividing the total monthly
revenues derived from the sale of Lessee's programming over Lessee's
wireless cable business to the bulk billing points by the Lessee's then
prevailing basic monthly rate for sale of programming to individual
subscribers.
C. Minimum Monthly Payments. Customer agrees to make minimum
payments to carrier, commencing on the Start Date as follows:
1) For the initial twelve month period commencing on the Start Date,
Lessee shall pay to lessor a minimum of $250.00 per month.
2) For the second year, Lessee shall pay lessor a minimum of $500 per
month.
3) For the third year thereafter throughout the term of this
Agreement, lessee shall pay lessor a minimum of $750 per month.
D. Cost of Living Adjustment. The Minimum Monthly Payment shall be
adjusted upward or downward based upon the consumer's price index as
reported by the U.S. Department of Labor (1967=100) for each five (5) year
renewal Term using 1991 as the base year.
E. Required Certificate and Payment Dates. Lessee shall, within
thirty (30) days of the end of each calendar month after the Start Date,
mail to lessor by first class United States mail, postage prepaid, a
certificate signed by an officer of Lessee showing the number of Subscribers
served during said month, together with the Transmission Fee to be paid by
Lessee hereunder for such month.
F. Right to Audit. For the purpose of permitted verification by
lessor of any payments due, Lessee shall keep and preserve for at least
three (3) years a true and accurate record of all sales and business
transacted during the term of this Agreement, including, without limitation,
all invoices, correspondence, ledgers, financial and other records relating
to its subscribers and billings. Lessor, his agents, employees, or
representatives, shall have the right, upon seventy two (72) hours advance
notice to Lessee, to examine all such books and records of Lessee at any
reasonable time during business hours. If, as a result of Lessor's
examination of such books and records, Lessor's certified public accountants
determine that any payment by Lessee was insufficient, Lessee agrees to pay
to the deficiency within five (5) days of receiving notice from Lessor. If
it is determined that Lessee has underpaid by seven (7%) or more, then in
addition to the payment of the deficiency, Lessee shall pay Lessor's cost of
examining Lessee's books and records and an additional fee equal to ten
percent (10%) of the amount of the deficiency. Lessor shall hold all
information obtained from Lessee's records in confidence, except as may be
necessary for the enforcement of his rights under this Agreement or except
pursuant to any legal requirements. In the event of dispute concerning the
sufficiency of any payment due Lessor under this agreement, the dispute
shall be resolved by arbitration conducted by a single arbitrator chosen by
the American Arbitration Association. The decision of such arbitrator shall
be final and binding on the parties hereto. The cost of such arbitration
shall be borne jointly by the parties provided, however, that if the
arbitrator shall determine that Lessee has underpaid the transmission fee
due to Lessor by 7% or more the cost of such arbitration shall be borne by
the Lessee.
G. Subscriber contracts. Lessor shall not interfere with the right
of Lessee or its designee to lawfully modify, waive, rescind, terminate or
cancel any and all services or contracts with Subscribers. In case any such
services or contracts are modified, waived, rescinded, terminated or
cancelled, Lessor shall not be entitled to any participation in revenues or
claims whatsoever with respect to the unperformed portion of any such
contract.
H. Proration of Fees. In the event that (i) the Start Date shall be
date other than the first day of a calendar month, or (ii) this Agreement
shall be terminated on a date other than the last day of a calendar month,
then the Transmission Fee for such month shall be proportionately reduced.
I. Taxes. If federal, state, or local taxes (other than taxes on the
income of Lessee) are applicable, or become applicable to the services
provided under this Agreement, it will be the responsibility of Lessor to
pay such taxes and/or reimburse Lessee for its payment of such taxes.
J. Broker's Fees. Simultaneously with the Execution of this
Agreement, Lessee shall pay to Suncoast Wireless Cable, 7800 113th Street
North, Suite 201, Seminole, Florida 34642, ("Broker") a broker's fee in the
form of a cashier's check for the amount of One Thousand Six Hundred
Seventy-Five Dollars ($1,675) in partial payment of Broker's services in
introducing Lessee and Lessor and brokering this Agreement. Within 7 days
of the granted modification, Lessee shall pay Suncoast Wireless Cable an
additional Three Thousand Three Hundred Twenty-Five Dollars ($3,325) in the
form of a cashier's check.
VI. PROSECUTION OF APPLICATIONS AND PETITIONS
A. FCC Filings. Both parties shall diligently prepare, file and
prosecute before the FCC all necessary or desirable petitions, waivers,
applications and other related documents required to secure FCC approval of
the matters addressed herein. Notwithstanding anything herein to the
contrary, it is understood that no filing shall be made with the FCC with
respect to the subject matter hereof unless both parties hereto shall have
reviewed said document and shall have consented in advance to its
submission.
B. Further Efforts. While this Agreement is in effect, Lessor shall
use his best efforts to obtain and maintain in force all licenses, permits
and authorizations required in connection with Lessee's use of the Modified
Station hereunder, and shall file and prosecute all necessary applications
for license renewal. Lessor shall also file such reasonable protests or
other petitions to deny against applications of third parties for licenses
as may be requested by Lessee. Lessor, if requested by Lessee, and to the
extent requested, shall use his best efforts to prevent any unauthorized
individual or entity from receiving the signals transmitted over the
Modified Station, provided that all costs and expenses in connection
therewith are paid by Lessee. Lessor shall promptly notify Lessee of any
event which may affect the licenses, permits, or authorizations for the
Modified Station. Lessor shall fully cooperate with all reasonable requests
of Lessee for assistance in the construction, operation and maintenance of
any additional facilities which Lessee may desire in order to optimize its
business within the city metropolitan area, provided that Lessee shall
reimburse Lessor for all reasonable expenses incurred by Lessor in providing
such assistance.
VII. REPRESENTATIONS AND WARRANTIES.
A. Lessee Representations and Warranties. In addition to
representations and warranties set forth above, Lessee represents and
warrants to Lessor that:
1. Organization. It is duly organized and existing under the laws of
the state of its incorporation, is qualified to do business in the state in
which the Modified Station will be located and has full power and authority
to carry out all of the transactions contemplated hereby.
2. Authorization. All necessary actions on its parts to authorize
the execution and delivery of this Agreement and the performance of its
obligations hereunder have been taken.
3. Compliance with Law. It is in compliance and shall comply with
all laws, rules and regulations governing the business, ownership, and
operation of the Modified Station. The carrying out of the provisions of
this Agreement will not result in any violation or be in conflict with any
judgement, decree, order, statute, rule or regulation of any governmental
authority with jurisdiction over it.
4. No Violation. Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated hereby
constitutes or will constitute or will constitute a violation of, be in
conflict with, constitute a default under, or be ultra vires as to, any term
of provision of its articles of incorporation or other governing instruments
or any agreement or commitment to which it is bound. or any judgement,
decree, order, regulation or rule of any court or governmental authority, or
any statute or law. Except for approval of the FCC, no 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 and thereby.
5. Litigation. There is no action, suit, proceeding or investigation
pending or, to its best knowledge, threatened against it before any court,
administrative agency or other governmental body relating in any way to the
transactions contemplated by this Agreement, and it does not know of any
valid basis for the commencement of any such action, proceeding or
investigation. It has not been charged with, and, to its best knowledge,
has not been under investigation with respect to any charge concerning, any
material violation of any provision of any federal, state, or local law or
of any administrative regulation. No unsatisfied judgement, order, writ,
injunction, decree or assessment of any court or of any federal, state,
local or other governmental department, commission, board, bureau, agency or
instrumentality relating in any way to this Agreement has been entered
against and served upon it. There is no action, proceeding or investigation
pending or, to its best knowledge, threatened against it, nor are there
questions or challenges that otherwise seek to prevent the consummation or
performance of this Agreement.
B. Lessor Representations and Warranties. In addition to
representations and warranties set forth above, Lessor represents and
warrants to Lessee that:
1. Authorization. He has full power and authority to carry out all
of the transactions contemplated hereby. All necessary actions on his part
to authorize the execution and delivery of this Agreement and the
performance of his obligations hereunder have been taken.
2. Compliance with Law. He is in compliance and shall comply with
all laws, rules and regulations governing the business, ownership, and
operation of the Modified Station. The carrying out of the provisions of
this Agreement will no result in any violation or be in conflict with any
judgement, decree, order, statute, rule or regulation of any governmental
authority with jurisdiction over him.
3. No Violation. Neither the execution and delivery of this
Agreement nor the performance of the transactions contemplated hereby,
constitutes or will constitute a violation of, be in conflict with,
constitute a default under, or be ultra vires as to, any term or provision
of any agreement or commitment to which he is bound, or any judgement,
decree, order, regulation or rule of any court or governmental authority, or
any statute or law. Except for approval of the FCC, no 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 and thereby.
4. Litigation. There is no action, suit, proceeding or investigation
pending or, to his best knowledge, threatened against him before any court,
administrative agency or other governmental body relating in any way to the
transactions contemplated by this Agreement, and he does not know of any
valid basis for the commencement of any such action, proceeding or
investigation. He has not been charged with and, to his best knowledge, has
not been under investigation with respect to any charge concerning, any
material violation of any provision of any federal, state, or local law or
of any administrative regulation. No unsatisfied judgement, order, writ,
injunction, decree or assessment of any court or of any federal, state,
local, or other governmental department, commission, board, bureau, agency,
or instrumentality relating in any way to this Agreement has been entered
against and served upon him. There is no action, proceeding or
investigation pending or, to his best knowledge, threatened against him, nor
are there questions or challenges that otherwise seek to prevent the
consummation or performance of this Agreement.
5. Lessor will not take any action that would remove his eligibility
to hold a license issued under FCC rules then applicable to the facility
during the initial term and the renewal term(s) and he will duly file each
license renewal applications and any other FCC application or report(s) at
Lessee's expense that are required to continue and extend the term of
license issued by the FCC.
C. Survival of Representations and Warranties. The representations
and warranties contained in this Agreement shall not in any respect be
limited or diminished by any past or future inspection, examination, or
possession on the part of the parties or their representatives of any
records, documents, information or properties. Such warranties and
representations shall be deemed to be continuing during the term 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.
D. Waiver. The express or implied waiver by either party of any
breach of any representation or warranty or any failure to fulfill any
condition, covenant or other obligation or liability under this Agreement
shall not constitute a waiver of any other representation or warranty or of
any other failure in the future or in the past by the other party to fulfill
such representation, warranty, condition, covenant, obligation or liability
hereunder.
E. Indemnification. Each of Lessor and Lessee (as the case may be
the ("Indemnitor") hereby covenants and agrees to, and shall, indemnify,
defend and save harmless the other, its directors, officers, and employees,
partners and affiliates and its respective successors or assigns (the
"Indemnitees") from and against, and shall reimburse the Indemnitees on
demand for any and all liabilities, losses, damages, claims, demands,
actions, costs and expenses (including without limitations, reasonable court
costs and attorney's fees) of whatsoever kind or nature, which any of the
Indemnitees may suffer, sustain, incur, or put to, pay, expend or lay out by
reason, by virtue or as a result of (i) each and every breach or default by
the Indemnitor of any of its covenants, agreements, duties or obligations
hereunder, or (ii) each and every breach or default of, or inaccuracy or
omission in, any representation or warranty of it contained herein. In any
case where indemnification is sought by the Indemnitees, the Indemnitees
shall (1) notify Indemnitor as soon as reasonably practicable of any claim,
litigation, or threatened claim or litigation, to which this indemnification
relates, and (2) shall afford the Indemnitor the opportunity to participate
in, and, at the option of the Indemnitor (subject to the approval of the
Indemnitees) comprise, settle, defend or otherwise resolve the claim or
litigation (and the Indemnitees shall not effect any such compromise or
settlement without prior written consent of the Indemnitor).
VIII. TERMINATION
A. Termination by Reason of FCC Action. This Agreement shall be
terminated in the event the FCC fails to grant the Modification Application
within four months prior to the expiration of Lessor's time to construct the
original Station. This Agreement shall be terminated immediately in the
event that the FCC determines after grant of the Modification Application
that Lessor is not authorized to operate the Modified Station as
contemplated by this Agreement. Should such determination occur without
either party having breached this Agreement, there shall be a final
accounting of monies due under this Agreement and, when completed, there
shall be no further liability of one party to the other.
B. Termination by Reason of Lessee Default or Non-Performance. This
Agreement may be terminated at the option of Lessor without further notice
if (i) Lessee fails to make a payment required by Section V and such breach
continued uncured for a period of ten (10) consecutive days after written
notice of such breach; (ii) Lessee does not commence transmission over the
Modified Station within one (1) year after the FCC grants the Modification
Application unless such failure is beyond Lessee's reasonable control. (iii)
Lessee is in default under the site agreement and such default is not cured
within the time allowed for cure in the site agreement, the site agreement
is terminated before the expiration of the term of this Agreement, or
Lessee's rights under the site agreement are restricted in any manner that
materially affects its ability to perform this Agreement; (iv) Lessee
commences any proceeding relating to its reorganization, dissolution or
liquidation or shall discontinue business, become insolvent or at any time
shall fail generally to pay its obligations as they fall due; (v) Lessee
makes an assignment for the benefit of creditors or applies for or consents
to the appointment of a receiver, trustee, or liquidator for all or
substantially all of its assets; or (vi) any governmental agency or
bankruptcy court or other court shall assume custody of the whole or any
part of Lessee's assets.
C. Termination in Other Cases of Breach, Default, or Non-Performance.
In all other cases not specifically provided for, this Agreement may be
terminated by either party upon the breach of any material warranty or
representation or the default or non-performance by the other party of its
obligations under this Agreement if such breach, default, or non-performance
continues uncured for a period of thirty (30) consecutive days after such
other party's receipt of written notice thereof from the party giving such
notice, provided, however, that in the event of a dispute concerning such
breach or default, the dispute shall be resolved by an arbitration conducted
by a single arbitrator chosen by the American Arbitration Association. The
decision of such arbitrator shall be final and binding on the parties
hereto. The cost of such arbitration shall be borne jointly by the parties
within 30 days after notice of one party to the other that termination is
sought pursuant to this provision.
D. Effects of Termination. Termination of this Agreement shall not
affect Lessee's obligation to pay any amounts due to Lessor accrued prior to
the effective date of termination, nor shall any termination pursuant to
Section VIII.B or VIII.C affect or diminish the rights or claims or remedies
available to the non-defaulting party arising by reason of such breach,
default or non-performance.
E. Continued Operations. Upon expiration or termination of this
Agreement (except for termination resulting from Lessor's breach of this
Agreement) , Lessee shall promptly surrender control of and title to the
Modified Station to Lessee free and clear of any and all liens, charges,
security interests and encumbrances whatsoever and shall take such further
steps as may be reasonably necessary to assure that there is no interruption
in service by Lessor.
IX. INSURANCE
A. Policies Required. Lessee shall, at its own cost, maintain with
sound and financially reputable insurers, insurance with respect to the
Modified Station and Lessee's utilization of the Modified Station against
casualty and other losses of the kinds customarily insured against by firms
of established reputations engaged in the same or a similar line of
business, of such types and in such amounts as are customarily carried under
similar circumstances by such firms, including, without limitation:
1. "All-risk" property insurance covering the Modified Station to the
extent of one hundred percent (100%) of its full replacement value without
deduction for depreciation;
2. "All-risk" business interruption insurance and/or extra expense
insurance covering Lessee's potential business losses in the event of
casualty to the Modified Station.;
3. Comprehensive general public liability insurance covering
liability resulting from Lessee's operation of the Modified Station on an
occurrence basis having minimum limited of liability in an amount of not
less than One Million Dollars ($1,000,000) 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) in the aggregate for all such losses
during each policy year, and not less than One Million Dollars ($1,000,000)
with respect to damage to property;
4. All worker's compensation, automobile and similar insurance
required by law;
5. Such additional or difference insurance as Lessor, in his
reasonable business judgement, shall request as a result of changing
conditions.
B. Insurance Policy Forms. All policies of insurance required by
this Section shall, as appropriate, designate Lessor as either the insured
party or as a named additional insured, 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 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.
X. MISCELLANEOUS.
A. Assignments
1. Assignment of Authorization. Lessor may not assign or transfer
his FCC authorization for the Modified Station during the term hereof unless
the assignee agrees in writing to assume Lessor's obligations hereunder and
unless Lessee gives its prior written consent, which shall not be
unreasonably withheld. Notwithstanding the foregoing, Lessor may assign his
authorization for the Modified Station to any partnership or corporation in
which he holds an equity interest without the prior consent of Lessee if
that partnership or corporation agrees in writing to assume Lessor's
obligations hereunder.
2. Assignment of Agreement. Except as set forth above, no party may
assign or transfer its rights, benefits, duties or obligations hereunder
without the prior written consent of the other, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, Lessee may assign its
rights, benefits, duties and obligations hereunder to a lender in connection
with the financing of its wireless cable system without securing the prior
written consent of Lessor.
B. Counterparts. This Agreement may be executed simultaneously in
several counterparts, each of which shall be an original and all of which
together shall constitute one and the same instrument.
C. Dealings with Third Parties. No party is, nor shall any party
hold itself out to be, vested with any power or right to contractually bind,
or act on behalf of any other as its contracting broker, agent or otherwise
for committing, selling, conveying or transferring any of the other party's
assets or property, contracting for or in the lessor of the other party, or
making any contractually binding representations as to the other party which
shall be deemed representations contractually binding such party.
D. Due Authorization. Each of the Signatories personally represents
and warrants that he is duly authorized to execute this Agreement on behalf
of the party on whose behalf he purports to execute this Agreement.
E. Entire Agreement. This Agreement states the entire agreement as
of this date between the parties with respect to the subject matter hereof
and supersedes all pre-existing oral, letter, or other agreements or
commitments with respect thereto. This Agreement may be modified only by an
agreement in writing executed by all of the parties hereto. This Agreement
shall be binding on and shall inure to the benefit of the parties hereto and
their respective successors and assigns, subject, however, to the provisions
hereof restricting assignment.
F. Force Majeure. If by reasons of force majeure either party is
unable, in whole or in part, to carry out its obligations hereunder, said
party shall not be deemed in violation or default during the continuance of
such inability. The term "force majeure" as used herein shall mean the
following: acts of God, acts of public enemies, orders of any kind of the
government of the United States of America or any of its departments,
agencies, political subdivisions, or officials, or any civil or military
authority; earthquakes; fires, hurricanes, volcanic activity, storms of
extraordinary force, floods, washouts, droughts, civil disturbances,
explosions, disruptions to the equipment manufacturing process, including
labor strikes and lockouts, beyond the control of Lessee, the inability of
the equipment manufacturer to deliver equipment ordered by Lessee in a
timely manner due to reasons beyond the control of Lessee.
G. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the state of Vermont.
H. Jurisdiction and Venue. In the event of any dispute between the
parties regarding the rights and obligations of any party hereunder, except
for the arbitration provisions contained herein, any party shall have the
right to sue the other party in state courts located in Vermont. For any
and all such purposes, the parties hereto hereby irrevocably submit to the
jurisdiction of such courts waive all objections thereto (on the grounds of
improper venue, forum non conveniens or otherwise), and agree that service
of process upon each as provided in the section concerning Notices herein
shall be effective to establish personal jurisdiction over it in such
courts.
I. Headings. The headings herein are inserted for convenience only
and shall not constitute a part of this Agreement.
J. Notices. Except as set forth above concerning the payment of
Transmission Fees, all notices and documentation given under this Agreement
shall be in writing and shall be deemed given the first weekday (excluding
Federal holidays) after being sent by United States Express Mail, return
receipt requested, or by Federal Express, signature required, to the other
party at the following address:
If to Lessee:
New England Wireless
56 Green Street
Bellows Falls, Vermont 05101
William M. Barnard
McFadden, Evans & Sill
1220 19th Street, N.W., #501
Washington, D.C. 20036
If to Lessor:
John Dudeck
12432 81st Court N.
Seminole, FL 34642
L. Parties Defined. The parties to this Agreement shall include the
parties identified at the head of this Agreement, or any corporation or
other entity into or with which any of them be incorporated, merged or
consolidated, or any corporation or entity which shall succeed to or acquire
all or substantially all of the business and/or assets of any of them, as
the case may be.
M. Specific Performance. The parties acknowledge and agree that the
rights reserved to each of them hereunder are of a special, unique unusual
and extraordinary character, which gives them a particular value, the loss
of which cannot be adequately or reasonably compensated for in damages in an
action at law, and the breach by either of the parties of any of the
provisions hereof will cause the other parties irreparable injury and
damage. In such event, the nondefaulting party shall be entitled, as a
matter of right, without further notice, to require of the defaulting party
specific performance of all of the acts, services and undertakings required
hereunder including the obtaining of all requisite authorizations to execute
or perform this Agreement and to obtain injunctive and other equitable
relief in any competent court to prevent the violation of any of the
provisions hereof. Neither this provision nor any exercise by any party of
rights to equitable relief or specific performance herein granted shall
constitute a waiver of any other rights which it may have to damages or
otherwise.
N. Reallocation of OFS H Group Channels. The parties acknowledge
that the FCC has proposed to reallocate the OFS H Group channels to the
Multipoint Distribution Service ("MDS"). In the event of such reallocation,
the parties shall use their best efforts to carry out the intention of this
Agreement by having Lessor provide a non-common carrier MDS transmission
service to Lessee.
O. Time of Essence, Whenever this Agreement shall set forth any time
for the performance of any act, such time shall be deemed of the essence.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
LESSOR /S/ _______________________________
New England Wireless /S/ _______________________________
EXHIBIT 10.6
MMDS CHANNEL LEASE AGREEMENT
This MMDS Channel Lease Agreement (this "Agreement") entered into this
28th day of January, 1991, between Satellite Signals of New England, having
their principal place of business at P.O. Box 608, Barre, Vermont 05641
(hereinafter referred to as "Lessor", and New England Wireless, Inc., (and
any other entities owned or controlled by NEW) a Vermont corporation, having
its principal place of business at 56 Green Street, Bellows Falls, Vermont
05101 (hereinafter referred to as "New England Wireless" or "Lessee").
W I T N E S S E T H
WHEREAS, Lessor is the Federal Communications Commission (hereinafter
referred to as the "FCC"), applicant and tentative selectee for a four
channel Multichannel Multipoint Distribution Service Station (hereinafter
referred to as the "MMDS Station"), to operate on Channels E. Group
(hereinafter referred to as the "Channels"), as designated by Subpart K of
Part 21 of the FCC's Rules, serving Brownsville, Vermont area (hereinafter
referred to as the "Market Area" or the Springfield - Windsor Market Area"),
by line-of-sight transmissions from the MMDS Station.
WHEREAS, Lessee is undertaking to build and operate a wireless cable
system to serve the Springfield - Windsor Market Area; and
WHEREAS, Lessor is desirous of leasing service on all of the Channels
to Lessee and Lessee is desirous of leasing such service from Lessor.
NOW, THEREFORE, in consideration of the premises and of the mutual
promises, undertakings, covenants and conditions set forth herein, the
parties hereto do hereby agree as follows:
1. Use of the Channels.
(a) Leased Time. Lessor hereby leases to Lessee the complete
transmission capacity on all of the Channels 24 hours a day, seven days a
week, every week, as necessary for Lessee's use of the Channels for
transmission of Lessee provided video and audio programming, data and other
information in connection with Lessee's wireless cable business at reception
points selected by Lessee in the Market Area (the "Wireless Cable System")
commencing on the day the MMDS Station is constructed and extending for the
term of this Agreement and any renewal(s) thereof.
(b) Scope of Use. The transmission capacity may be used by Lessee
for any legal purpose as part of its Wireless Cable System, without any
restriction on the substance, format or type of information or signal to be
transmitted thereover except that Lessee shall not transmit video and audio
programming, data and other information that it knows or reasonably should
know does not comply with FCC rules and policies including, but not limited
to, FCC policies concerning indecent or obscene programming.
Obligation to Transmit. Nothing in this Agreement shall be construed
to obligate or create a duty on the part of Lessee to actually provide to
Lessor for transmission any minimum amount of video and audio programming,
data or other information during that air time covered hereby, but the
absence of programming shall not relieve Lessee of its obligation to pay
Lessor the fees due hereunder.
(d) Preemption. The use of the Channels leased hereunder are subject
to preemption by Lessor in accordance with any requirement or order of the
FCC or any other local, state or federal regulatory authority with
jurisdiction over the operation of the Channels. However, in the event such
preemption exceeds 168 consecutive hours on any one of the Channels or a
total of 336 hours-in any thirty (30) day period on any or all of the
Channels, Lessee may terminate this Agreement without further liability to
Lessor.
2 . Term.
(a) Initial Term. Subject to the provisions for earlier termination
contained in Section 11 hereof, the term of this Agreement shall commence
upon the date first written above and shall continue in full force and
effect for a period of Ten (10) years from the Start Date as defined in
Section 6 hereof. Said period is hereinafter referred to as the "Initial
Term."
(b) Renewal Term. Subject to the provisions for earlier termination
contained in Section 11 hereof, the term of this Agreement shall
automatically be extended for up to three (3) successive additional ten year
terms (such additional term(s) are hereinafter referred to as the "Renewal
Term(s)" unless Lessee shall have served written notice on Lessor at least
six (6) months prior to the expiration date of the then-current initial Term
or Renewal Term that it elects not to renew this Agreement for the
subsequent Renewal Term.
Commencing no later than six (6) months prior to the expiration of the
third Renewal Term, if this Agreement has been so extended by Lessee, Lessor
and Lessee shall attempt in good faith to negotiate the terms of a further
extension of this Agreement. At no time prior to the conclusion of those
negotiations may Lessor negotiate or enter into any agreement contemplating
any use whatsoever of any or all of the Channels with any individual or
entity other than Lessee.
In the event, after the expiration of the Initial Term, Lessor decides
to utilize channel capacity for itself for non-ITFS purposes, or in the
event that Lessor decides to lease channel capacity to an entity other than
Lessee, or in the event that Lessor decides no to lease channel capacity to
any individual or entity, including Lessee, Lessor shall compensate Lessee
for the fair market value of the Leased Equipment, as hereinafter defined,
after which title of such equipment shall pass to Lessor, as well as for the
fair market value of Lessee's business as a going concern, including good
will, as a provider of channel capacity for delivery of entertainment
programming, either by its own organization or through an operator, on
ITFS, MDS, OFS and/or MMDS channels in the Ascutney Mountain area.
3. Facilities.
(a) Transmission Point. Lessor's FCC application specifies a
transmitter site located (Ascutney Mountain ) of Brownsville, Vermont (the
"Present Transmission Point"). Lessee has advised Lessor that it has
obtained reasonable assurance of the availability of a new Transmission
Point (the "New Transmission Point") located on Mount Ascutney, the
coordinates of which are North Lat. 43 Deg. 26' 15" West Lon 72 Deg. 27' 09"
Lessee will co-locate all of the microwave transmission facilities to be
utilized in Lessee's Wireless Cable Business serving the Springfield -
Windsor Market Area at the New Transmission Point. Lessee shall, within
thirty (30) days of the date of the Agreement, provide Lessor with an
amendment to his pending application to specify the New Transmission Point
for the MMDS Station and to conform the design and equipment of the MMDS
Station to that of other facilities Lessee intends to utilize in connection
with its wireless cable business in the Springfield - Windsor Market Area.
Lessor shall submit such amendment to the FCC within five (5) working days
of receipt thereof. In the event that the Commission, prior to or after
submission of the modification amendment to specify the New Transmission
Point, should issue a Conditional License specifying that construction shall
be completed at the Present Transmission Point, Lessor and Lessee shall
cooperate in the preparation and filing of an application for modification
of conditional license in the same manner as provided for in this Section
for filing of an amendment to the presently pending application. It is the
intent of the parties that Lessee's design of the MMDS Station and Lessee's
specification of equipment shall be approved by Lessor unless Lessor
reasonably believes that the design of the MMDS Station or specification of
equipment proposed by Lessee will result in non-compliance with the rules or
policies of the FCC or Lessor's inability to provide service as contemplated
by this Agreement. In the event of such reasonable disapproval by Lessor,
the parties shall utilize their best efforts to redesign the MMDS Station to
meet both the needs of Lessee's Wireless Cable Business and Lessor's
concerns.
(b) Satisfaction Notice. Upon a grant of (a) Conditional License
which specifies that construction shall be completed at the New Transmission
Point (the "Modified Conditional License") or (b) a Conditional License
which specifies that construction shall be completed at the Present
Transmission Point (the "Conditional License"), Lessor shall utilize his
best efforts to -satisfy any and all conditions that the FCC may impose in
the Conditional License or the Modified Conditional License or the FCC's
Rules as conditions precedent to the construction and operation of the MMDS
Station in a manner consistent with this Agreement and further Lessor shall
take all steps necessary to obtain a Modified Conditional License as
provided for in Section 3(a) hereof. Lessor shall provide Lessee notice
within three (3) workdays of satisfying all conditions that the FCC may
impose in the Modified Conditional License or the FCC's Rules as conditions
precedent to the construction and operation of the MMDS Station (the
"Satisfaction Notice")> Notwithstanding anything in this Agreement to the
contrary, Lessee shall not be required to commence construction of the MMDS
Station until after Lessor's receipt of the Modified Conditional License and
Lessee's receipt of the Satisfaction Notice with respect thereto.
Construction Schedule. Within sixty(60) days after the date of the
grant of the Modified Conditional License, Lessee shall order the
Transmission Equipment (as defined in Section 3 (hereof), utilizing its
reasonable best efforts to specify a delivery schedule as Necessary to
ensure delivery of equipment and construction of the MMDS Station by the
earlier of nine (9) months after such grant date or such .date that may be
specified by the FCC in the Modified Conditional License for completion of
construction of the MMDS Station, provided, however, that it has received
the Satisfaction Notice provided for in Section 3(b) hereof. In the event
that Lessee is unable to reasonably complete construction of the Station
within the time provided by the FCC for construction of the MMDS Station in
the Modified Conditional License or for other causes reasonably beyond its
control, Lessee's time to complete construction shall, subject to FCC
approval thereof, be extended for such period as is reasonable under the
circumstances. Lessor agrees that upon request of Lessee, it will file
reasonable requests for an extension of its time to complete construction of
the MMDS Station. Without limiting the generality of the foregoing, Lessor
shall, upon Lessee's request, request an extension of the time to construct
the MMDS Station in the event the Transmission Equipment is not delivered
before ninety (90) days of the date on which Lessor's authority to construct
the MMDS Station is to expire under the Modified Conditional License (as
obligation to order Transmission Equipment or to construct the Station
unless a Modified Conditional License specifying the New Transmission Point
shall not have been granted by the FCC provided, however, that Lessor and
Lessee will use their respective best efforts to obtain grant, of a Modified
Conditional License.
(d) Certification of Completion of Construction. Within three (3)
workdays after completing construction of the Station, Lessee shall notify
Lessor in writing of such completion. Within five (5) workdays of receiving
such notice, Lessor shall file a Certification of Completion of Construction
of the MMDS Station on FCC Form 494 or any successor form designated by the
FCC (the "Construction Certificate") along with any other documentation as
may be necessary at the time to permit the commercial operation of the MMDS
Station.
(e) Transmission Equipment. Lessee shall purchase and install such
transmitters and other equipment, including, without limitation,
transmitters, combiners and waveguide (hereinafter referred to as the
"Transmission Equipment"), which equipment may be shared with other
stations, as is required to operate the Channels in accordance with the
provisions of FCC rules and regulations and the Station's FCC license.
Lessor's consent, which shall not be unreasonably withheld, shall be
required as to all Transmission Equipment. Within sixty (60) days after the
date of this Agreement, Lessee shall provide Lessor with a list of all
proposed Transmission Equipment, except for such Transmission Equipment
previously specified in the amendments to the present application or
modification applications) to specify the New Transmission Point or within
ten (10) days thereafter. Lessor shall be considered to have consented
thereto unless he states his reasons for declining consent in writing with
ten (10) days after receipt of any list of Transmission Equipment has been
provided to the Lessor by the Lessee. It is the intent of the parties that
Lessee's specification of Transmission Equipment shall be approved unless
Lessor reasonably believes that use of the Transmission Equipment specified
by Lessor will result in non-compliance with Lessor's FCC license, the rules
or policies of the FCC or Lessor's ability to provide service as required by
this Agreement.
(f) Lease of Transmission Equipment. Lessor shall have no ownership
or security interest in the Transmission Equipment. All Transmission
Equipment shall be owned by Lessee and shall be leased to Lessor for the sum
of one dollar ($1.00) per year for the entire initial term and any
renewal(s) thereof. In the event of termination (except as a result of
Lessor's breach) or non-renewal of this Agreement Lessor shall have the
right to purchase the Transmission Equipment at fair market value except for
such of the Transmission Equipment as is shared with other FCC-licensed
stations. In the event that Lessee shall desire to replace any of the
Transmission Equipment, Lessor shall reasonably agree to such replacement
and Lessor and Lessee will cooperate to satisfy and FCC requirements with
respect thereto.
(g) Lease of Transmission Point. Lessee agrees to utilize its
reasonable best efforts to enter a binding lease or option for sufficient
space at the New Transmission Point for installation and operation of the
transmission facilities (the "New Transmission Point Space") within ninety
(90) days after execution of this Agreement and shall, in any event, secure
such a lease or option no later than the date on which the FCC grants the
Modified Conditional License. Such option and/or lease shall provide for
(1) lease of such space for the entire Initial Term and any renewals
thereof, and (2) the right of Lessee to sublet such space to Lessor for the
entire term thereof. Copies of such option and lease shall be provided to
Lessor within ten (10) days of the execution thereof. Such lease shall
provide for full and equal rights to access by Lessor and by Lessee or by
the authorized representatives of either.
(h) Sublease of Transmission Point Space. Lessee agrees to sublease
the New Transmission Point Space to Lessor during the term of this Agreement
for $1.00 per month. In the event of termination (except as a result of
Lessor's breach) or non-renewal of this Agreement, Lessee shall if feasible
and, if so requested by Lessor and at Lessor's cost and expense, cooperated
in seeking assignment of the lease for that part of the Transmission Point
used for operation of the Transmission Equipment or in any efforts by Lessor
to secure from the owner of the New Transmission Point a lease for the space
utilized for the Transmission Equipment at the New Transmission Point.
(i) Modification of License. Lessor and Lessee acknowledge the
possibility that the location and technical configuration of the MMDS
Station may from time to time prevent Lessee from optimizing its wireless
cable business throughout the term of this Agreement. Lessor therefore
agrees that if at any time and from time to time Lessee so requests in
writing, Lessor shall use its best efforts to modify its FCC applications)
or license(s) to meet the reasonable requirements of Lessee. Lessee shall
pay all costs associated with such modifications (including engineering and
legal fees, equipment costs and construction expenses), provided that such
costs are approved in advance.
4. Operation of the Channels.
(a) Operation of the Transmission Equipment. Lessee shall supply, at
its sole cost and expense, personnel to operate and maintain the
Transmission Equipment on a day-to-day basis. Said personnel shall insure
that the Transmission Equipment shall at all times meet the technical
operating requirements set forth in the FCC License and the rules and
regulations of the FCC. All operations, maintenance and repair activities
shall be undertaken at such times as are consistent with the operating
requirements of Lessee's business. Lessor and Lessee shall cooperate to
insure that each of them at all times is fully aware of any and all
operational, maintenance and repair activities on the Channels. All
maintenance personnel shall be under the technical direction, supervision
and control of Lessor but shall be contracted for and shall be supervised on
a day-to-day basis by Lessee at Lessee's sole expense. All repairs shall be
completed as soon as reasonably possible following notification by Lessor to
Lessee of the need thereof. Lessee shall have access to the station
facilities at all times for any of the foregoing activities. Lessor shall
not be liable for any costs, and/or liability whatsoever arising as a result
of Lessee's work on the Transmission Equipment pursuant to this Agreement,
except liability caused by Lessor's own negligence.
(b) Operation of Additional Equipment. Lessee, at its own expense,
and with the prior written approval of Lessor, which shall not be
unreasonably withheld, may make alterations and/or additions to the
Transmission Equipment (including, without limitation, encoding and/or
addressing equipment selected by it) as may be required by the exigencies of
its business from time to time, provided that such alterations and additions
do not violate and FCC rules or regulations. Any alterations/additions
shall be provided by Lessee and title thereto shall remain in Lessee.
Lessee shall be responsible for the operation, maintenance and repair of all
equipment provided by it and shall indemnify Lessor against and shall pay
all costs, including legal, engineering, equipment, construction,
installation and other expenses associated with any alterations or
attachments to the Transmission Equipment, provided, however, that Lessee
has approved such costs in advance.
(c) Interference With Existing Operations. Lessor and Lessee will
cooperate in the operation and maintenance of the Transmission Equipment as
well as any alterations or attachments added thereto, in such a fashion as
to insure that the Channels do not create impermissible interference to any
FCC applicants, permittees or licensees which are entitled to protection
from such interference under the rules and regulations of the FCC, provided
that Lessee shall be responsible at its sole expense for eliminating such
interference.
(d) Reception Equipment. Lessor has no responsibility hereunder to
acquire or provide any reception antennas, down converters, decoders,
descramblers, related power supplies or any associated equipment ("Reception
Equipment") required to display signals transmitted over the Channels on a
television set. Lessee may, in its sole discretion and on terms and
conditions of its choosing, may, from time to time, install or cause to be
installed such reception Equipment as may be required in order for the
general public, or any member thereof, to view the programs to be
transmitted over the Channels. Title to all Reception Equipment provided by
Lessee hereunder shall vest in Lessee or its designee. Lessee shall be
required to install Reception Equipment only at particular locations
selected by it. Reception equipment shall be installed, maintained,
operated and controlled by Lessee consistent with FCC rules and regulations.
(e) Program Origination and Delivery. Lessee shall be solely
responsible for the origination of all programming to be transmitted over
the Channels and the delivery of such programming to the New Transmission
Point, -including but not limited to the costs of point-to-point microwave
channels and earth stations, if nay, which it may require for such purpose.
Lessee shall bear all costs and expenses of purchasing, installing,
operating and maintaining those facilities. Any personnel required to
install, operate and maintain any program origination and delivery
facilities shall be provided by Lessee, at its sole cost and expense, and
such personnel shall be under Lessee's exclusive control.
(f) Operating Expenses. Lessee shall be solely responsible for and
shall indemnify and hold Lessor harmless from all operating expenses
resulting from provision of service over the Channels. Said operating
expenses shall include all expenses incurred by Lessor in providing service
on Lessee's behalf, provided such expenses are approved in advance by
Lessee. Any operating costs incurred by Lessor shall be passed through each
month on a dollar-for-dollar basis to Lessee and shall be due and payable as
provided in Section 5(d) hereof.
(g) Cooperation of Lessor and Lessee. Lessor shall use, operate and
maintain the Transmission Equipment in such a way as not to interfere with
Lessee or cause damage to Lessee's facilities, equipment or Wireless Cable
business. Lessee shall use, operate and maintain the equipment (including
any attachments installed to the Transmission Equipment) in such a way as
not to interfere with Lessor or cause damage to the Transmission Equipment.
(h) Maintenance of Authorization. Throughout the Initial Term and
any Renewal Term, Lessor shall maintain in force all licenses and other
authorizations required in connection with Lessee's use of the Channels
hereunder, and shall file and prosecute all necessary applications for
license renewal and all periodic reports required by the FCC. Lessor shall
not assign, transfer, sell, trade, dispose or otherwise encumber such
licenses and other authorizations or modify them in such a way as to impair
Lessee's rights hereunder without the prior written consent of Lessee, which
shall not be unreasonably withheld.
(i) Additional Authorizations. Where requested to do so by Lessee in
writing, Lessor shall utilize its best efforts to obtain and maintain in
force such additional or other authorizations for relays, repeaters and
boosters), obtain all governmental authorizations and fulfill all other
usual and customary requirements associated with obtaining and maintaining
such authorizations. Lessee shall pay all reasonable costs, including
legal, engineering, equipment, construction, installation and other expenses
associated with obtaining and maintaining such authorization and
constructing, operating, and maintaining the authorized facilities which it
shall have approved in advance.
(j) Further Efforts. Lessor shall, at Lessee's expense, file and
diligently prosecute such reasonable petitions to deny or other protests
against applications of third parties for licenses as may be requested by
Lessee.
(k) Prosecution of Applications and Amendments. In the event any
person petitions the FCC to deny or otherwise challenges any application
filed pursuant to this Agreement, or in the event the FCC grants any
application filed pursuant to this Agreement and any person petitions for
review or reconsideration of such grant before the FCC or seeks judicial
review of such grant, the Lessor and Lessee shall at Lessee's expense oppose
such petition or challenge before the FCC or defend such grant by the FCC
diligently and in absolute good faith. Should the FCC deny any application
filed by Lessor hereunder, Lessee and Lessor shall utilize their best
efforts, at Lessee's expense, to secure reconsideration or review of such
denial and, should such denial become a Final Order, shall utilize their
best efforts to redesign the MMDS Station in order to meet Lessee's
legitimate business needs and to satisfy the objection of the FCC.
(l) Covenant Not to Amend or Modify. Because the location and
configuration of the MMDS Station and other facilities constructed by Lessee
hereunder are critical to Lessee's business, Lessee shall not attempt to
further amend the pending Application other than as provided for in Section
3 (h) hereof or to modify the Modified Conditional License or any other
application filed hereunder or modify Any license or other authorization
secured hereunder without the prior written consent of Lessee, which consent
shall not be unreasonably withheld.
5. Charges.
(a) Commitment Fee. In consideration for Lessor's loss of
opportunity and forbearance from dealing with others for service on the
Station, Lessee shall pay to Lessor a Commitment Fee of One Thousand Dollars
($1,000) per frequency or channel within seven (7) days of receiving notice
from Lessor that the FCC has granted the Amended Application.
(b) Transmission Fee. Commencing on the Start Date and continuing
thereafter for the term of this Agreement, Lessee shall pay to Lessor in
consideration of the faithful performance by Lessor of his obligations
hereunder a monthly fee (the "Transmission Fee") equal to the number of
Subscribers (as calculated in accordance with the formula below) during-the
month in question multiplied by Ten Cents ($0.10) per channel. For purposes
of computing the Transmission Fee due hereunder for any month, the term
"Subscribers" shall be deemed to mean the number of subscribers contracting
with Lessee to receive Lessee's programming over the Modified Station as of
the last day of the prior month plus the number of such subscribers to
Lessee's programming over the Modified Station as of the last day of the
current month divided by two. Only Subscribers which are current with
respect to their payments shall be considered for this purpose; provided,
however, that Subscribers paying after the fact for a prior month or months
shall be counted as Subscribers for such month or months retroactively. In
those situations where programming is sold in bulk for viewing at isolated
locations in the same facility (that is, where a number of viewing units are
grouped for billing purposes such as may be the case with hotels and
condominiums) and Lessee's rates therefore are less than its prevailing
monthly rate for the sale of Lessee's programming over the Modified Station
to individual Subscribers of its wireless cable service, the number of
Subscribers from such bulk billing points shall be determined by dividing
the total monthly revenues derived from the sale of Lessee's programming
over the Modified Station to individual Subscribers to Lessee's city
Wireless Cable system.
(c) Minimum Monthly Payments. Customer agrees to make minimum
payments to carrier, commencing on the Start Date follows:
1) For the initial twelve month period commencing on the Start
Date, Lessee shall pay to Lessor a minimum of $250.00 per month per 2
channels.
2) For the second year, Lessee shall pay Lessor a minimum of
$500.00 per 2 channels per month.
3) For the third year thereafter throughout the term of this
Agreement, Lessee shall pay Lessor a minimum of $750.00 per month per
2 channels.
(d) Cost of Living Adjustment. The Minimum Monthly Payment shall be
adjusted upward of downward based upon the consumers price index as reported
by the U.S. Department of Labor (1967=100) for each five (5) year renewal
Term using 1991 as the base year.
(e) Required Certificate, Invoice and Payment Procedure. Lessee
shall, within fifteen (15) days after the end of each month after the Start
Date, provide Lessor with a Certificate signed by a partner of Lessee
showing the number of Subscribers for the preceding month, computed in
accordance with Section 5(c). The Connection Fee or Transmission Fee
payable by Lessee to Lessor, as determined in accordance with Sections 5(b)
and 5(c) hereof, shall be computed on the Certificate, and Lessee shall
forward said Connection Fee or Transmission Fee to Lessor at the time of
tendering the Certificate. Lessee shall include on the Certificate any
other information reasonably requested by Lessor so that Lessor may
accurately determine that the Connection Fee tendered by Lessee has been
calculated correctly pursuant to Section 5(c) hereof. Any other charges to
be paid by Lessee hereunder shall be invoiced to Lessee on a monthly basis
by Lessor. Said invoices shall contain an itemization of the charges
contained therein, and shall be paid by Lessee within twenty (20) days after
the date of receipt thereof.
(f) Right to Audit. Lessor and Lessee shall, while this agreement is
in force, keep, maintain and preserve complete and accurate records and
accounts, including invoices, correspondence, ledgers, financial and other
records reasonably required to determine Lessor's and Lessee's charges
hereunder, and such records and accounts shall be available for inspection
and audit at the respective offices of Lessor and Lessee at any time or
times during the time service is being provided to Lessee hereunder or
within ninety (90) days thereafter, during reasonable business hours, by
Lessor or Lessee or their nominee(s). Lessor and Lessee shall provide each
other with five (5) business days' advance written notice of their intent to
inspect said records and accounts prior to being allowed to do so. In the
event of any dispute to the amount of Connection Fees due to Lessor, such
dispute and no other dispute arising under this Agreement, shall be resolved
by arbitration before the American Arbitration Association (the "AAA" ) on a
fast track single arbitrator basis. Such dispute shall not in any way
result in a default hereunder unless the award of the AAA is not complied
with. All non-public information obtained by Lessee or Lessor during any
audit shall be maintained on a confidential basis.
(g) Proration of Fees. In the event that (i) the Start Date shall be
a date other than the first day of a calendar month, (ii) this Agreement
shall be terminated on a date other than the last day of a calendar month
and it is determined that such termination shall have occurred in a manner
not affecting Lessor's right to payments hereunder, the Transmission Fee or
Connection Fee due Lessor in such month shall be pro rated.
(h) Subscriber Contracts. Lessor shall not interfere with the right
of Lessee or its designee to lawfully modify, waive, rescind, terminate, in
whole or in part, or cancel any and all services or contracts with
Subscribers. In case any such services or contracts are rescinded,
terminated or cancelled, Lessor shall not be entitled to any participation
in revenues or claims whatsoever with respect to the unperformed portion of
any such contract.
6. Start Date. The Start Date shall be the earlier of the date upon
which Lessee first provides service to a Subscriber or the first day of the
sixth calendar month following the date upon which Lessee is required to
complete construction pursuant to Section 3(c) hereof. For purposes of this
Paragraph, a "Subscriber" is any residential unit or commercial
establishment which receives wireless cable service under paid contract with
the Lessee or under rights granted by the Lessee.
7. Unauthorized Reception Over Channels. Lessor if requested by
Lessee and to the extent requested, shall use its best efforts to prevent
any unauthorized individual or entity from receiving the signals transmitted
over the Channels. Lessee shall be responsible for and shall reimburse
Lessor for all costs, including legal, engineering, equipment, construction,
installation and other expenses associated with any prevention efforts
regarding unauthorized reception over the Channels initiated by Lessor on
Lessee's behalf provided that Lessee has approved such costs in advance.
8. Indemnification. Each party shall forever protect, save, defend
and keep the other party harmless and indemnify said other party against and
from any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities of any kind or nature whatsoever arising
directly or indirectly out of the acts, omissions, negligence or willful
misconduct of the said party, its employees or agents in connection with
performance of the Agreement. Moreover, Lessee shall forever protect, save,
defend and keep Lessor and its owners, employees and agents harmless and
indemnify them against (i) any and all claims, demands, losses, costs,
interfere with the right of Lessee or its designee to damages, suits,
judgments, penalties, expenses and liabilities resulting from Lessee's
wireless cable operation and from claims of libel, slander or the
infringement of copyright or the unauthorized use of any trademark, trade
name, service mark or any other claimed harm or unlawfulness arising from
the .transmission of any programming; and (ii) against claims for
infringement of patents "Indemnifying Party"), promptly of any claim or
litigation or threatened claim to which the indemnification relates, (b)
upon the Indemnifying Party's written acknowledgement of its obligation to
indemnify in such instance, in form and substance satisfactory to the
Claiming party, the Claiming Party shall afford the Indemnifying Party the
opportunity to participate in and, at the option of the Indemnifying Party,
control, compromise, settle, defend or otherwise resolve the claim or
litigation (and the Claiming Party shall not effect any such compromise or
settlement without prior written consent of the Indemnifying Party) and (c)
the Claiming Party shall cooperate with the reasonable requests of the
Indemnifying Party in its above-described participation in any compromise,
settlement, defense or resolution of such claim or litigation.
9. Insurance. The Lessee shall during the entire term of this
Agreement (and all renewal(s) thereof) carry insurance covering (i) general
liability, (ii) loss or damage to the transmission equipment, (iii) loss and
liability for accidents and other losses in such amounts as Lessee believes
is reasonably prudent in view of the potential losses covered. The Lessor
shall be named as co-insured on each of such policies and the Lessee shall
provide the Lessor with certificates of insurance demonstrating such
coverage and co-insured status prior to commencement of construction as
provided for in Section 3(b) hereof.
10. Representations and Warranties. Each of the parties hereto
represents and warrants to the other the following, with respect to facts
and issues relating to it;
(a) Organization. Lessor will, on the Start Date, control the FCC
license for the Channels and have full power and authority to carry out all
of the transactions contemplated hereby. Lessee has full power and
authority to own property and to carry out all of the transactions
contemplated hereby.
(b) Compliance with Law. Lessor and Lessee shall comply with all
material laws, rules and regulation governing the business, ownership and
operation of the Channels.
(c) Requisite Authority. All requisite resolutions and other
authorizations necessary for the execution, delivery, performance and
satisfaction of this Agreement by Lessor have been duly adopted and complied
with.
(d) Litigation and Claims. No litigation, proceeding, complaint,
investigation or controversy is pending by or before any court or regulatory
agency or to the knowledge of Lessor or Lessee is threatened that is
material to this transaction, and there is no basis known to it for any such
litigation, proceeding, controversy or claim.
11. Termination.
(a) Termination of FCC Authorization. Either party may terminate
this Agreement upon prior written notice to the other that Lessor's
authority to provide the Channels in accordance with the terms of this
Agreement shall have terminated by the FCC. If such FCC termination shall
have occurred without breach by either party of its obligations hereunder,
such termination shall extinguish and cancel this Agreement and its effect
absolutely without further liability on the part of either party to the
other except that Lessee shall remain obligated to pay all Transmission
Fees, Connection Fees and Monthly Operating Charges through the date of such
termination. If, however, such FCC termination is caused in whole or in
part by a material breach of this Agreement, than such termination shall not
affect or diminish the rights, claims or remedies available in equity or at
law to the non-breaching party.
(b) Termination by Reason of Default and Nonperformance. At the
option of a non-defaulting party, this Agreement may be terminated upon the
material breach or default by the other party of its duties and obligations
hereunder if such breach or default shall continue for a period of ninety
(90) consecutive days after such party's receipt of written notice thereof
from the non-defaulting party. Failure to make, any payment of Transmission
Fees, Connection Fees or operating charges shall, if such failure continues
for a period of ninety (90) days after written notice thereof to Lessee,
constitute a material breach of this Agreement by Lessee. In such event,
Lessor may elect to cancel and terminate this Agreement, and Lessee shall
remain obligated to pay all Transmission Fees, Connection Fees, and
Operating Charges through the date of such termination.
(c) Termination for Interference. If, following the Start Date,
harmful electrical interference as defined by FCC Rules which precludes
service to 25% or more of the homes within the Station's predicted service
area should arise which is beyond the control of Lessee and Lessor, Lessee
may terminate this Agreement without further liability to Lessor, provided,
however, that Lessee shall first give written notice to Lessor of its intent
to so terminate, provide therein complete information 'concerning the
origin, nature and duration of such interference and utilize its best
efforts for a reasonable period in cooperation with Lessor to eliminate such
electrical interference.
12. Miscellaneous.
(a) Force Majeure. Notwithstanding anything contained herein to the
contrary, no party shall be liable to any other for failure to perform any
obligation hereunder (nor shall any charges or payments be obligated to be
made in respect thereof) if prevented from doing so by reason of fires,
strikes, labor unrest, embargoes, civil commotion, rationing or other orders
or requirements, acts of civil or military authorities, acts of God or other
contingencies beyond the reasonable control of the parties, and all
requirements as to notice and other performance required hereunder within a
specified period of pendency of any such contingency which shall interfere
with such performance.
(b) Assignment of Interests. Except as provided in Section 12(d)
hereof, neither Lessor nor Lessee may assign their rights or interests under
this Agreement except with the prior written consent of the other party,
which consent shall not be unreasonably withheld.
(c) Sublease. Lessee may not sublease any rights or interests under
this Agreement without the prior consent of Lessor nor may Lessor enter any
agreement to provide wireless cable programming or any other transmission
service to any other entity in the Market Area without the prior consent of
Lessee, it being understood that any sublease or agreement to provide such
programming to any other entity shall require that all revenues received by
such sublease or third party shall be subject to the Connection Fee provided
for in Section 3(c) hereof.
(d) Right of First Refusal. If at any time Lessor receives a bona
fide offer to purchase the MMDS Station, it shall deliver to Lessee notice
of the offer. The notice shall specify the proposed purchase price for the
station and the terms for payment thereof. For a period of sixty (60) days
from receipt of such notice, Lessee shall have a right to notify Lessor that
it intends to purchase the MMDS Station at the price and on substantially
the terms specified in the notice. If Lessee declines to exercise this
right, Lessor will be permitted to consummate the proposed sale or transfer,
subject to Lessee's prior and superseding interest as created and existing
under the terms and provisions of this Agreement, including the following
Section. In the event that any material term of the original offer is
changed in any respect or a material new offer is presented, before
accepting such offer Lessor must first follow the procedures specified in
the foregoing, providing Lessee notice with regard to the revised offer and
giving it the opportunity to exercise its right of first refusal thereto.
At the commencement of any negotiations with any party for the acquisition
by that party of the authorizations, Lessor will provide such party, in
writing, with full disclosure of Lessee's rights provided for in this
Paragraph and of Lessor's intention to honor those rights. No such sale of
transfer of the MMDS Station by Lessor will have the effect of limiting,
abbreviating or terminating the rights and interests created in favor of
Lessee under this Agreement, including under the following Section.
14. Notice. Any notice required to be given by any party to any
other party shall be deemed to have been sufficiently given it in writing,
deposited in the United States mail in a sealed envelope with postage
thereon prepaid and certified or registered, return receipt requested,
addressed to Lessor or to Lessee ad the case may be, at their respective
addresses set forth in the preamble hereto, or, if different, at the last
known principal business address of each such party. A copy of any notice
to Lessee shall be made in the same manner to:
William M. Barnard, Esquire
1220 19th Street, N.W., #501
Washington, D.C. 20036
A copy of any notice to Lessor shall be made in the same manner to:
Robert Corazzini
Pepper & Corazzini
Attorneys At Law
200 Montgomery Building
1776 K Street, Northwest
Washington, D.C. 20006
(f) Severability of Provisions. If any provision hereof is held
invalid, the remainder of this Agreement shall not be affected thereby.
(g) Entire Agreement. This Agreement states the entire agreement as
of this date between the parties with respect to the subject matter hereof
and supersedes all pre-existing oral, letter or other agreements or
commitments with respect thereto. This Agreement may be modified only by an
agreement in writing executed by all of the parties hereto.
(h) Survival of Representations. All representations, warranties,
covenants and agreements made by the parties hereto shall survive the
execution and delivery hereof.
(i) Payment of Expenses. Except as otherwise provided herein, the
parties shall pay their own expenses incident to the preparation and
carrying out of this Agreement, including all fees and expenses of their
respective counsel.
(j) Further Action. From time to time after the date of execution
hereof, the parties shall take such further action and execute such further
documents, assurances and certificates as either party may reasonably
request of the other in order to effectuate the purposes hereof. In
addition, each party agrees that it will not take any action which would
adversely affect the rights granted by it to the other party hereunder.
(k) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument, and shall become
effective when each of the parties hereto shall have had delivered to it
this Agreement duly executed by the other party hereto.
(l) Headings. The headings herein are inserted for convenience only
and shall not constitute a part hereof.
(m) Dealings with Third Parties. No party is, nor shall any party
hold itself out to be, vested with any power or right to contractually bind,
or act on behalf of any other as its contracting broker, agent or otherwise
for committing, selling conveying or transferring any of the other party's
assets or property, contracting for or making any contractually binding
representations as to the party which shall be deemed representations
contractually binding such party. In particular, Lessee shall not be
identified as the FCC licensee or permittee of the Channels and Lessor shall
not be held out as the programmer of the Channels.
(n) Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Vermont.
(o) FCC Rules. Anything contained herein to the contrary
notwithstanding, nothing herein shall in any way limit the rights and
remedies of Lessor or Lessee under FCC rules and regulations.
(p) FCC Licenses. Nothing contained herein shall be construed. as
granting to Lessee any rights in or to any FCC authorizations or license(s)
which may be held by Lessor.
(q) Time of Essence. Whenever this Agreement shall set forth any time
for the performance of an act, such time shall be deemed of the essence.
(r) Benefit. This Agreement shall inure to the benefit of and shall
be binding upon the parties hereto and their respective heirs, legal
representatives, successors and, to the extent permissible hereunder,
assigns. Nothing in this Agreement expressed or implied, is intended to or
shall (a) confer on any person other than the parties hereto or their
respective heirs, legal representatives, successors or assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
or (b) constitute the parties hereto partners or participants in a joint
venture.
(s) Confidentiality. All non-public information exchanged by the
parties or acquired by them in connection with their performance under this
Agreement shall be kept confidential.
(t) Reformation. If the FCC or any other governmental authority
should (i) change its Rules or policies in a manner that would affect the
enforceability of this Agreement, (ii) directly or indirectly reject or take
action to challenge the enforceability of this Agreement, or (iii) take any
steps whatsoever, on its own initiative or by petition from another person,
to challenge or deny the authority hereto fore granted by the FCC with
regard to the Channels, then the parties hereto shall promptly negotiate in
good faith to reform and amend this Agreement so as to eliminate or amend to
make unobjectionable any portion that is the subject of any FCC action. No
party shall take any action that contributes to such FCC action.
(u) Specific Performance. The parties acknowledge and agree that the
rights reserved to each of them hereunder are of a special, unique, unusual
and extraordinary character, which gives them a particular value, the loss
of which cannot be adequately or reasonably compensated for in damages in an
action at law, and the breach by either of the parties of any of the
provisions hereof will cause the other parties irreparable injury and
damage. In such event, the non-defaulting party shall be entitled, as a
matter of right, to require of the defaulting party specific performance of
all of the acts, services and undertakings required hereunder including the
reasonable obtaining of all requisite authorizations to execute or perform
this Agreement and to obtain injunctive and other equitable relief in any
competent court to prevent the violation of any of the provisions hereof.
Neither this provision nor any exercise by any party or rights to equitable
relief or specific performance herein granted shall constitute a waiver of
any other rights which it may have to damages or otherwise.
(v) Waiver. The express or implied waiver by either party of any
breach of any representation or warranty or any failure to fulfill any
condition, covenant or other obligation or liability under this Agreement
shall not constitute a waiver of any other representation or warranty or of
any other failure in the future or in the past by the other party to fulfill
such representation, warranty, condition, covenant, obligation or liability
hereunder.
(w) Word Meanings. As used in this Agreement, the term "including"
shall be deemed to mean "including, without limitation". All pronouns and
any variations therefore shall be deemed to refer to the masculine,
feminine, neuter, singular or plural as the context may require. A "Final
Order" means a written action or order issued by the FCC: (a) which has not
been reversed, stayed, enjoined, set aside, annulled or suspended; and (b)
with respect to which (i) no requests have been filed for administrative or
judicial review, reconsideration, appeal or stay and the time for filing any
such requests, and the time for the FCC to set aside the action on its own
motion, has expired, or (ii) in the event of review, reconsideration or
appeal, the action or order had been affirmed and the time for further
review, reconsideration or appeal has expired.
Satellite Signals of New England
By: /S/_____________________________
Margaret Maxfield, President
Date: 1-29-92
NEW ENGLAND WIRELESS, INC.
By: /S/_____________________________
Scott A. Wendel, President
Date: 1-21st-92
EXHIBIT 10.7
AGREEMENT
This AGREEMENT made and entered into this August 1, 1991, between Vermont
ETV, a public television network incorporated and existing under the laws of
the State of Vermont and having its principal offices in Colchester, Vermont
(ETV hereinafter) , and New England Wireless, a wireless cable television
company, having its principal place of business at Bellows Falls, Vermont
(NEWCTV hereinafter):
WHEREAS ETV is the Lessee of certain land under a Lease from the State of
Vermont acting by and through its Department of Forests, Parks, and Recreation,
said Lease dated September 27, 1989, (attached hereto as Exhibit B and
incorporated by reference herein), by which there is demised to ETV
approximately 3.3 acres of Land located within the Ascutney State Park,
designated as "South Peak," Town of Windsor, Vermont, which Lease will continue
unless terminated as provided therein for a term of ten (10) years beginning
January 1, 1990;
WHEREAS NEWCTV has requested the use of certain ETV premises and
facilities for the purpose of installing, operating, and maintaining at the
site of the leased premises an antenna and ancillary equipment housed in
cabinets, all of which is more particularly described in Exhibit A attached
hereto, which is hereby incorporated by reference, in connection with the
operation of a wireless cable television service by NEWCTV; and
WHEREAS NEWCTV has satisfied criteria established by ETV for use of ETV's
premises and facilities for electromagnetic broadcast purposes;
NOW, THEREFORE, it is agreed as follows:
1. INSTALLATION, OPERATIONS, AND MAINTENANCE. NEWCTV shall be permitted to
install, operate, and maintain an antenna(s) on the existing ETV
transmitter tower and to install, operate, and maintain certain ancillary
equipment within the ETV-owned building, as specified in Exhibit A to
this Agreement, for the purposed stated above. Any installation and/or
alterations by NEWCTV deviating in any way from the original installation
authorized in Exhibit A must be specifically authorized in writing by
ETV.
2. ACCESS TO PREMISES. NEWCTV shall have such access to and use of ETV's
premises and facilities, including common areas, as may be reasonable and
necessary for its installation, operations, and maintenance under this
AGREEMENT. NEWCTV shall be solely responsible for securing from third
persons not party to this AGREEMENT, appropriate authorization for access
to premises and facilities not within the possession and control of ETV.
3. TERM. The term of this AGREEMENT shall commence on July 1, 1991 and shall
expire at midnight on June 30, 1999 unless sooner terminated as
hereinafter provided. There shall be no automatic renewal of this
AGREEMENT by holdover, however, NEWCTV shall have the option to renew
this agreement at the end of the initial term.
4. TERMINATION. This AGREEMENT may be terminated by either party upon one
(1) year's written notice by certified mail. In addition, if NEWCTV fails
to comply with any provision or condition of this Agreement, and such
noncompliance shall continue for a period of forty-five (45) days after
timely written notice thereof is given by ETV to NEWCTV, ETV may
terminate this AGREEMENT and pursue all remedies otherwise available
under law.
5. FEE. NEWCTV shall pay to ETV the annual base rent of Thirty-one Thousand,
two-hundred-thirty dollars and no cents ($31,230.00) for the license term
established in equal monthly installments in advance beginning on the
commencement date of this license AGREEMENT. On 1 July of each succeeding
year of the term of this license AGREEMENT, the revised annual base rent
for each additional yearly period shall be increased by multiplying that
year's base rent by one hundred percent (100%) plus the percentage
increase in the Consumer Price Index, All Urban Consumers for the United
States Average, published by the Bureau of Labor Statistics of the United
States Department of Labor (CPI hereinafter), and computed as follows:
5.1 The CPI level reported as of December of the year prior to the current 1
July will be the numerator of a fraction and the CPI as reported for
December 1990 will be the denominator.
5.2 CPI Base. The initial CPI to be used in calculating the escalator index
to the base rent shall be the rate published for the month ending
December 1990.
5.3 In no instance shall the annual base rent be less than the previous base
rent as escalated.
5.4 NEWCTV shall forward monthly payment checks made payable to Vermont ETV,
Inc., and mailed to the address stated in Paragraph 16 of this license
AGREEMENT.
5.5 ETV reserves the right to make appropriate adjustments to the base rent
which reflect use of the site, in particular, its power requirements.
Such adjustments shall be made only on July 1 of each succeeding year,
with no less than sixty (60) days notice to NEWCTV. ETV also reserves the
right to require NEWCTV to procure metered power service, should NEWCTV's
power requirements be significant.
6. INTEREST. Interest shall be charged on all overdue accounts in accordance
with ETV's policies in effect at the time such interest is charged. ETV's
assessment of interest shall not constitute a waiver of its rights to
terminate this AGREEMENT for non-payment and/or to pursue remedies
otherwise available under law.
7. TAXES AND OTHER GOVERNMENTAL LEVIES, FEES, OR CHARGES. NEWCTV shall pay,
or cause to be paid, any and all taxes or payments in lieu thereof,
levies, fees, or charges assessed against ETV or NEWCTV which result from
or arise out of NEWCTV's operations under this AGREEMENT. NEWCTV shall
have any such right as may be provided by law to dispute the
reasonableness of any such taxes, levies, fees, or charges; provided
NEWCTV agrees to pay all costs and/or expenses incurred in any such
dispute and to indemnify ETV for all costs, expenses, fees, or judgments
arising from NEWCTV's non-payment.
8. PERMITS, RULES, AND REGULATIONS. NEWCTV shall be solely responsible for
obtaining and maintaining all local, state, and federal permits and
licenses required for its operations under this AGREEMENT. In addition,
NEWCTV shall be solely responsible for complying with all local, state,
and federal ordinances, rules, regulations, and laws applicable to
installations and/or operations that are the subject of this AGREEMENT.
ETV agrees to provide reasonable assistance to NEWCTV securing said
permits and licenses, provided LICENSEE agrees to indemnify and hold ETV
harmless from any and all expenses, penalties, damages, or costs,
including but not limited to reasonable attorney's fees incurred in
discharging this obligation.
9. INITIAL APPLICATION. NEWCTV warrants and agrees that all information it
provided in its application to ETV for the installation, operations, and
maintenance that are the subject of this AGREEMENT is true and accurate.
NEWCTV further warrants and agrees that it will advise ETV in writing of
any contemplated changes in such installation, operations, or maintenance
activity so that ETV can determine whether such use is consistent with
its criteria for use of ETV's premises and facilities.
10. REMOVAL OF EQUIPMENT. NEWCTV shall be solely responsible for the removal
of its materials, equipment, and the like from ETV's premises and
facilities upon termination of this AGREEMENT, said removal to occur
within a reasonable time not to exceed thirty (30) days. Title to any
property not removed within thirty (30) days shall vest in ETV unless
NEWCTV has obtained prior to the expiration of such period written
consent from ETV for an extension of time within which to remove such
equipment.
Subject to the terms of Paragraph 12, NEWCTV shall assume responsibility
for the cost and expense of restoring the premises and facilities to
their condition at the time it commenced installation under this
AGREEMENT, reasonable wear and tear excepted.
11. DAMAGE. NEWCTV shall be responsible for all damage to persons or property
done to or resulting from its installation, operations, maintenance, or
any other activity arising out of or incidental to this AGREEMENT or
conducted by NEWCTV in violation thereof. NEWCTV shall indemnify and hold
harmless ETV from any such loss, cost, fees, claims, damage, expense, or
liability for such damage, including but not limited to all costs of
defense. NEWCTV agrees to maintain commercial general liability insurance
with a combined single limit of at least $1,000,000, including
contractual liability coverage which will respond to obligations assumed
under this license agreement.
11a. INSURANCE. NEWCTV shall at all times maintain adequate property and
liability insurance for its activity at the site. Within thirty (30) days
following the execution of this agreement, NEWCTV shall provide ETV with
a current Certificate for insurance coverage in effect for its activities
at the site.
12. PRINCIPAL LEASE. NEWCTV agrees to abide by all the terms and conditions
expressed in the above-referenced Lease between the State of Vermont and
ETV (attached as Exhibit B and incorporated by referenced herein). NEWCTV
agrees to assume sole liability for its own breaches, violations or
defaults of said Lease, and to indemnify and hold harmless ETV from
claims or actions by the State of Vermont against ETV resulting from such
breaches, violations or defaults by NEWCTV.
13. INTERFERENCE. In the event that the operations of NEWCTV under this
AGREEMENT interfere with the transmitting or receiving of radio,
television, or electronic signals on the data hereof by ETV or other
earlier authorized operators on the site, NEWCTV shall at its own expense
and as soon as reasonably possible after notice thereof correct such
interference and shall cease its operations until such correction occurs;
provided, cessation of operations shall not be required if written
consent is obtained from the operator suffering the interference; further
provided, this provision shall not apply to test periods where the source
of the interference is being determined for purposes of suppression. In
the event that transmitting or receiving devices installed on the site in
the future by any authorized user shall interfere with NEWCTV's
transmission or reception, NEWCTV shall cooperate with such user in
eliminating such interference.
14. AIRTIME LOSS. ETV shall not be held liable or responsible for air time
losses sustained for any reason by NEWCTV under this AGREEMENT or its
rights hereunder. If any claim is made against ETV by NEWCTV's client,
customer, or other third party for air time losses and any damage arising
out of or resulting from such losses, NEWCTV shall indemnify and hold
harmless ETV for all losses and expenses incurred by ETV including but
not limited to all costs of defense.
15. ASSIGNMENT. NEWCTV shall not assign or sublicense this AGREEMENT or its
rights hereunder without the expressed written approval of ETV and
subject to the underlying ground lease attached in EXHIBIT B.
16. NOTICES. All notices required by this AGREEMENT shall be presented as
provided below:
TO ETV: Business Office
Vermont ETV, Inc.
88 Ethan Allen Avenue
Colchester, Vermont 05446
TO NEWCTV: New England Wireless
56 Green Street
Bellows Falls, VT 05101
17. PAYMENTS. All payments required by the AGREEMENT shall be made payable to
Vermont ETV, Inc., and mailed to:
Business Office
Vermont ETV, Inc.
88 Ethan Allen Avenue
Colchester, Vermont 05446
18. PERFORMANCE. The failure of ETV to demand strict performance of any of
the terms, conditions, and covenants herein shall not be deemed a waiver
of any rights and/or remedies ETV has and shall not be deemed a waiver of
any subsequent breach or default in the terms, covenants, and conditions
herein contained.
19. AMENDMENT. This AGREEMENT may not be modified or amended except by
written Agreement signed by both parties.
20. DISPLAY OF LICENSE. NEWCTV shall attach and prominently display a copy of
NEWCTV's current FCC license on equipment installed by NEWCTV on the
premises.
21. LAWS. This AGREEMENT shall be governed by the laws of the State of
Vermont.
22. STATE CONSENT. This AGREEMENT shall be subject to the consent of the
State of Vermont through its Department of Forests, Parks, and
Recreation, said consent provided as attached Exhibit C, which is hereby
incorporated by reference.
23. This AGREEMENT has been signed in duplicate, each of which shall stand as
an original.
ETV: Vermont ETV, Inc.
By: /S/_________________________________
John E. King
Vice President
Finance and Administration
Date: 8/2/91
On the 2nd day of August, in the year 1991, before me Louise Rashleigh, Notary
Public in and for said state, personally appeared John E. King and signed said
Agreement of his own free will.
Signature /S/___________________________
Notary Public
NEWCTV: New England Wireless
By: /S/_________________________________
Scott A. Wendel
President
Date: August 2, 1991
On the 2nd day of August in the year 1991, before me Louise Rashleigh, Notary
Public in and for said state, personally appeared Scott Wendel, and signed said
Agreement of his/her own free will.
Signature ______________________________
Notary Public
EXHIBIT A
EQUIPMENT INVENTORY
EXHIBIT B
Underlying sublease agreement between the State of Vermont and Vermont ETV, Inc.
EXHIBIT C
STATE CONSENT
I, ________________________ duly authorized Agent of the State of Vermont,
acting through its Agency of Natural Resources, Department of Forests, Parks
and Recreation, do hereby consent to the foregoing Agreement dated
________________, 1991, between Vermont ETV, Inc. and ________________________.
STATE OF VERMONT
By: /S/____________________________ __________________________________
Witness
Title: ____________________________ __________________________________
Witness
Date: _____________________________
EXHIBIT D
CALCULATION OF ANNUAL LEASE PAYMENT
Annual Site Fee $ 2,000
Tower Space:
1 - 27 foot receive antenna (2 sides) = 54 feet
2 - 12 foot transmit antenna = 24 feet
1 - 6 foot microwave dish antenna = 6 feet
84 feet @ $80/lineal foot 6,720
Building Space:
4 - equipment cabinets = 58.74 square feet
@ $200/square ft. 11,748
Estimated Power Consumption:
12.29 KWH per day 10,762
--------
Total $ 31,230
or $2,602.50/month
EXHIBIT 10.8
AGREEMENT
This AGREEMENT made and entered into this 13th day March, 1992 between
Vermont ETV, a public television network incorporated and existing under the
laws of the State of Vermont and having its principal offices in Colchester,
Vermont (ETV hereinafter), and New England Wireless, a wireless cable
television provider with principal offices in Bellows Falls, Vermont (NEWCTV
hereinafter):
WHEREAS ETV is the lessee of a parcel of land under a ground lease from
the University of Vermont said lease dated December 31, 1989 (attached hereto
as Exhibit B and incorporated by reference herein) located along the crest of
Mt. Mansfield in the Town of Stowe in Lamoille County and Underhill in
Chittenden County Vermont; and
WHEREAS ETV, along with other owners of major transmitter facilities
established in May of 1980 a colocation area in the vicinity of the "Nose" area
of Mt. Mansfield for the installation and management of transmitter facilities,
on which is located ETV facilities; and
WHEREAS NEWCTV has requested the use of certain ETV premises and
facilities for the purpose of installing, operating, and maintaining at the
site of the leased premises an antenna and ancillary equipment housed in a
cabinet, all of which is more particularly described in Exhibit A attached
hereto, which is hereby incorporated by reference, in connection with the
operation of a wireless cable television system by NEWCTV; and
WHEREAS NEWCTV has satisfied criteria established by ETV for use of ETV's
premises and facilities for electromagnetic broadcast purposes by agreeing to
restrict this provision of services to public and quasi-public subscribers;
NOW, THEREFORE, it is agreed as follows:
1. INSTALLATION, OPERATIONS, AND MAINTENANCE. NEWCTV shall be permitted to
install, operate, and maintain an antenna on the existing ETV transmitter
tower and to install, operate, and maintain certain ancillary equipment
within the ETV-owned building, as specified in Exhibit A to this
Agreement, for the purposes stated above. Any installation and/or
alterations by NEWCTV deviating in any way from the original installation
authorized in Exhibit A must be specifically authorized in writing by
ETV.
2. ACCESS TO PREMISES. NEWCTV shall have such access to and use of ETV's
premises and facilities, including common areas, as may be reasonable and
necessary for its installation, operations, and maintenance under this
AGREEMENT. NEWCTV shall be solely responsible for securing from third
persons not party to this AGREEMENT, appropriate authorization for access
to premises and facilities not within the possession and control of ETV.
3. TERM. The term of this AGREEMENT shall commence on April 1, 1992 and
shall expire at midnight on March 31, 2002 unless sooner terminated as
hereinafter provided. There shall be no automatic renewal of this
AGREEMENT by holdover, however, NEWCTV shall have the option to renew
this agreement at the end of the initial term.
4. TERMINATION. This AGREEMENT may be terminated by either party upon one
(1) years written notice by certified mail. In addition, if either party
fails to comply with any provision or condition of this Agreement, and
such noncompliance shall continue for a period of forty-five (45) days
after timely written notice thereof is given by the other, the notifying
party may terminate this AGREEMENT and pursue all remedies otherwise
available under law.
4.1 This Agreement shall be subject to termination by ETV in the event ETV
becomes engaged in co-location efforts which would require the removal of
any or all NEWCTV's equipment from ETV premises prior to the end of
Lease term as stated in Item 3. Co-location shall refer to efforts of ETV
and others to consolidate communications facilities and/or equipment from
various sites on Mt. Mansfield to a single or more concentrated site on
Mt. Mansfield ETV shall provide at least one (1) years written notice of
termination under this clause to NEWCTV. In the event of co-location,
NEWCTV shall have a right to enter into an amended Lease Agreement with
ETV for the remainder of the term stated herein, but only insofar as any
amendment provided reasonably for sharing with ETV and other users and/or
owners of communications facilities, equipment, and land on Mt.
Mansfield. To the extent possible, ETV shall use its best efforts to
include NEWCTV in discussions of co-location efforts.
5. FEE. NEWCTV shall pay to ETV the annual base rent of $29,925 (twenty-nine
thousand, nine hundred and twenty five dollars) payable in monthly
installments in advance for the license term established from April 1,
1992 to March 31, 2002. Beginning on July 1, 1993 and on July 1 of each
succeeding year of the term of this license AGREEMENT, the annual base
rent for each additional yearly period shall be increased by multiplying
that year's base rent by one hundred percent (100%) plus the percentage
increase in the Consumer Price Index, All Urban Consumers for the United
States Average, published by the Bureau of Labor Statistics of the United
States Department of Labor (CPI hereinafter), and computed as follows:
5.1 The CPI level reported as of December of the year prior to the current 1
July will be the numerator of a fraction and the CPI as reported for
December 1991 will be the denominator.
5.2 CPI Base. The initial CPI to be used in calculating the escalator index
to the base rent shall be the rate published for the month ending
December 1992.
5.3 In no instance shall the annual base rent be less than the previous base
rent as escalated.
5.4 NEWCTV shall forward monthly payment checks made payable to Vermont ETV,
Inc., and mailed to the address stated in Paragraph 16 of this license
AGREEMENT.
5.5 ETV reserves the right to make appropriate adjustments to the annual base
rent which reflect use of the site, in particular, its power
requirements. Such adjustment shall be made only on the anniversary date
of this AGREEMENT, with no less than thirty (30) days notice to NEWCTV.
ETV also reserves the right to require NEWCTV to procure metered power
service, should NEWCTV's power requirements be significant.
5.6 As additional consideration for this lease agreement, NEWCTV agrees to
pay to ETV an additional monthly fee as more fully described in Exhibit D
- attached hereto and incorporated by reference herein.
6. INTEREST. Interest shall be charged on all overdue accounts in accordance
with ETV's policies in effect at the time such interest is charged. ETV's
assessment of interest shall not constitute a waiver of its rights to
terminate this AGREEMENT for nonpayment and/or to pursue remedies
otherwise available under law.
7. TAXES AND OTHER GOVERNMENTAL LEVIES, FEES, OR CHARGES. NEWCTV shall pay,
or cause to be paid, any and all taxes or payments in lieu thereof,
levies, fees, or charges assessed against ETV or NEWCTV which result from
or arise out of NEWCTV's operations under this AGREEMENT. NEWCTV shall
have any such right as may be provided by law to dispute the
reasonableness of any such taxes, levies, fees, or charges; provided
NEWCTV agrees to pay all costs and/or expenses incurred in any such
dispute and to indemnify ETV for all costs, expenses, fees, or judgments
arising from NEWCTV's non-payment.
8. PERMITS, RULES, AND REGULATIONS. NEWCTV shall be solely responsible for
obtaining and maintaining all local, state, and federal permits and
licenses required for its operations under this AGREEMENT. In addition,
NEWCTV shall be solely responsible for complying with all local, state,
and federal ordinances, rules, regulations, and laws applicable to
installations and/or operations that are the subject of this AGREEMENT.
ETV agrees to provide reasonable assistance to NEWCTV securing said
permits and licenses, provided NEWCTV agrees to indemnify and hold ETV
harmless from any and all expenses, penalties, damages, or costs,
including but not limited to reasonable attorney's fees incurred in
discharging this obligation.
9. INITIAL APPLICATION. NEWCTV warrants and agrees that all information it
provided in its application to ETV for the installation, operations, and
maintenance that are the subject of this AGREEMENT is true and accurate.
NEWCTV further warrants and agrees that it will advise ETV in writing of
any contemplated changes in such installation, operations, or maintenance
activity so that ETV can determine whether such use is consistent with
its criteria for use of ETV's premises and facilities.
10. REMOVAL OF EQUIPMENT. NEWCTV shall be solely responsible for the removal
of its materials, equipment, and the like from ETV's premises and
facilities upon termination of this AGREEMENT, said removal to occur
within a reasonable time not to exceed thirty (30) days. Title to any
property not removed within thirty (30) days shall vest in ETV unless
NEWCTV has obtained prior to the expiration of such period written
consent from ETV for an extension of time within which to remove such
equipment.
Subject to the terms of Paragraph 11, NEWCTV shall assume responsibility
for the cost and expense of restoring the premises and facilities to
their condition at the time it commenced installation under this
AGREEMENT, reasonable wear and tear excepted.
11. DAMAGE. NEWCTV shall be responsible for all damage to persons or property
resulting solely from its negligence in installation, operations,
maintenance, or any other activity arising out of or incidental to this
AGREEMENT or conducted by NEWCTV in violation thereof. NEWCTV shall
indemnify and hold harmless ETV from any such loss, cost, fees, claims,
damage, expense, or liability for such damage, including but not limited
to all costs of defense. Both parties agree to maintain commercial
general liability insurance with a combined single limit of at least
$1,000,000, including contractual liability coverage which will respond
to obligations assumed under this licence agreement.
11.1 INSURANCE. NEWCTV shall at all times maintain adequate property and
liability insurance for its activity at the site. Within thirty (30) days
following the execution of this AGREEMENT, NEWCTV shall provide ETV with
a current certificate for insurance coverage in effect for its activities
at the site.
12. INTERFERENCE. In the event that the operations of NEWCTV under this
AGREEMENT interfere with the transmitting or receiving of radio,
television, or electronic signals on the date hereof by ETV or other
earlier authorized operators on the site, NEWCTV shall at its own expense
and as soon as reasonably possible after notice thereof correct such
interference and shall cease its operations until such correction occurs;
provided, cessation of operations shall not be required if written
consent is obtained from the operator suffering the interference; further
provided, this provision shall not apply to test periods where the source
of the interference is being determined for purposes of suppression. In
the event that transmitting or receiving devices installed on the site in
the future by any subsequently authorized user shall interfere with
NEWCTV's transmission or reception, NEWCTV shall cooperate with such user
in eliminating such interference by assisting the subsequent user in
identifying the source, extent and nature of the interference and
modifying equipment where feasible at no cost to itself. The subsequent
authorized user shall have the principal responsibility of eliminating
the interference, and shall be required to cease its operations if the
interference cannot be eliminated as a result of its efforts.
Modifications of existing installed devices by site users constitute new
installations for purposes of determining seniority under this Paragraph.
Nothing in this Paragraph shall be construed to prohibit ETV, or exempt
NEWCTV from complying with duly authorized governmental requests for
priority use of the site in cases of federal, state, or local emergency.
13. AIRTIME LOSS. ETV shall not be held liable or responsible for air time
losses sustained for any reason by NEWCTV under this AGREEMENT or its
rights hereunder. If any claim is made against ETV by NEWCTV's client,
customer, or other third party for air time losses and any damage arising
out of or resulting from such losses, NEWCTV shall indemnify and hold
harmless ETV for all losses and expenses incurred by ETV including but
not limited to all costs of defense.
14. ASSIGNMENT. NEWCTV shall not assign or sublicense this AGREEMENT or its
rights hereunder without the expressed written approval of ETV. Such
approval shall not be unreasonably withheld.
15. NOTICES. All notices required by this AGREEMENT shall be presented as
provided below:
TO ETV: Business Office
Vermont ETV, Inc.
88 Ethan Allen Avenue
Colchester, Vermont 05446
TO NEWCTV: New England Wireless
56 Green Street
Bellows Falls, Vermont 05101
16. PAYMENTS. All payments required by the AGREEMENT shall be made payable to
Vermont ETV, Inc., and mailed to:
Business Office
Vermont ETV, Inc.
88 Ethan Allen Avenue
Colchester, Vermont 05446
17. PERFORMANCE. The failure of either party to demand strict performance of
any of the terms, conditions, and covenants herein shall not be deemed a
waiver of any rights and/or remedies of the other has and shall not be
deemed a waiver of any subsequent breach or default in the terms,
covenants, and conditions herein contained.
18. AMENDMENT. This AGREEMENT may not be modified or amended except by
written Agreement signed by both parties.
19. DISPLAY OF LICENSE. NEWCTV shall attach and prominently display a copy of
NEWCTV's current FCC license on each piece of equipment installed by
NEWCTV on the premises.
20. LAWS. This AGREEMENT shall be governed by the laws of the State of
Vermont.
21. UNIVERSITY CONSENT. This AGREEMENT shall be subject to the consent of the
University of Vermont as provided in Exhibit B which is incorporated by
reference.
22. This AGREEMENT has been signed in duplicate, each of which shall stand as
an original.
ETV: Vermont ETV, Inc.
By: __________________________________
John E. King
Vice President
Finance and Administration
Date: March 19 1992
On the 19th day of March, in the year 1992, before me Louise Rashleigh, Notary
Public in and for said state, John E. King personally appeared and signed said
Agreement of his own free will.
Signature ____________________________
Notary Public
NEWCTV: By: __________________________________
Name: Richard E. Dufresne
Title: Secretary
Date: March 20, 1992
On the 20th day of March in the year 1992, before me Louise Rashleigh, Notary
Public in and for said state, Richard E. Dufresne personally appeared, and
signed said Agreement of his/her own free will.
Signature ____________________________
Notary Public
EXHIBIT A
INVENTORY OF EQUIPMENT INSTALLED BY NEWCTV
TRANSMITTER SYSTEM PACKAGE
- --------------------------
- - (33) 20 Watt Transmitters with Diplexers -MDS 1 , 2A; ITFS A-G; H Group;
E&F Groups
- - 31 Channel Switchable Waveguide Combining Network
- - Equipment racks with slides, cable refractors, and AC power wiring
- - 340 Feet EW20 Transmission Line with mounting hardware. Installation by
customer.
- - (4) Transmit Antennas with pressurization equipment. Installation by
customer.
- - On site transmitter system checkout by ITS Field Engineer. Estimated time
required is 7 days. Includes travel and lodging expenses.
(FREQUENCY AGILE)
(AUTOMATIC) BACK-UP
TRANSMITTER SYSTEM OPTION
- -------------------------
- - Frequency Agile Back-up Transmitter with keypad channel entry or system
controller channel selection.
- - System controller with audio/visual switcher.
- - Group controller assembly with motorized channel combiner control.
EXHIBIT B
Underlying ground lease with the University of Vermont
GROUND LEASE AGREEMENT
----------------------
BY THIS GROUND LEASE AGREEMENT (the "Lease") made as of this 31st day of
December, 1989, between the University of Vermont State and Agricultural
College (the "University") as Lessor and Vermont ETV, Inc., (the "VT-ETV") as
Lessee, it is agreed as follows:
1. DEMISED PREMISES. The University does hereby lease, demise, and let
unto VT-ETV, and VT-ETV does hereby lease and take from the University, upon
the terms and conditions herein set forth and for the rent herein provided to
be paid, a certain parcel of land located in the Town of Stowe, Lamoille
County, Vermont underlying and appurtenant to the buildings and improvements
conveyed by the University to VT-ETV by Warranty Deed of even date, comprising
the existing buildings and fixtures of VT-ETV's Mount Mansfield transmission
facility, said parcel of land being a portion of the land conveyed to the
University by deed recorded in Volume 34, Page 405 of the Town of Stowe Land
Records on November 22, 1923, and in Volume 17, Page 165 of the Town of
Underhill Land Records on November 24, 1866, all as more particularly described
in Exhibit A attached hereto (the "Premises"). Included in this Lease of land
is a right of way and easement in common with others across other adjacent
lands of the University for purposes of access to the buildings and fixtures
thereon.
2. TERM; POSSESSION.
2.1 Term. This Lease is for a term of thirty-five (35) years (the
"Fixed Term"), to commence on January 1, 1990 (the "Commencement Date"), and
expire at midnight on December 31, 2025, unless it shall sooner terminate as
provided herein. VT-ETV shall have the option to renew this Lease for one
additional term of thirty-five (35) years (the "Renewal Term") by giving
written notice to the University at least one year prior to the expiration of
the Fixed Term.
2.2 Possession. Physical possession of the Premises shall be delivered
to VT-ETV by the University, free and clear of all tenants and occupants other
than VT-ETV, on the Commencement Date.
3 . USE. VT-ETV may use the Premises for non-commercial television
transmitting facilities, and related uses, and, upon a permitted assignment
under paragraphs 10 or 14(g)(v) of this Lease, for such further uses as are not
repugnant or offensive to the purposes and policies of the University, and for
no other purpose without the prior written consent of the University, which
consent shall not be unreasonably withheld. VT-ETV shall occupy the Premises
and shall conduct continuously in the Premises the business stated above.
VT-ETV shall, at its expense, procure, maintain, and comply with all permits,
licenses, and other authorizations required by any governmental authority for
VT-ETV's use of the Premises.
4. RENT.
4.1 Basic Rent. VT-ETV covenants to pay and shall pay to the University
an annual basic rental (the "Basic Rent") of $1,000, payable in advance on
January 1 (or on the first business day thereafter) during each year of the
Fixed Term. During each year of the Renewal Term, VT-ETV covenants to pay and
shall pay as the Basic Rent an amount equal to the fair market rental of the
Premises (exclusive of improvements) as determined by agreement of the
University and VT-ETV, or if the University and VT-ETV are unable to agree
prior to commencement of the Renewal Term, by a qualified real estate appraiser
appointed jointly by the University and VT-ETV.
4.2 Manner of Payment. The Basic Rent and all other sums payable to the
University shall be paid to the University at the University's address set
forth in paragraph 18, or to such agent or person or persons or at such other
address as the University may designate from time to time.
4.3 Additional Rent. VT-ETV covenants to pay to the University, as
Additional Rent: (i) all real estate taxes, sewer and water assessments, and
other governmental charges and assessments against the Premises, (ii) all
insurance premiums and charges incurred by the University in relation to the
Premises, (iii) all other costs and expenses of the University pertaining to
the Premises for which the University is responsible under the terms of this
Lease; and (iv) 25 percent of any rents or fees derived by VT-ETV from leases
or licenses with respect to the transmission facility on the Premises.
4.4 Adjustments to Basic Rent. On January 1, 1991, and on January 1 of
each year thereafter during the Fixed Term ("Adjustment Dates") the Basic Rent
shall be increased or decreased by a percentage equal to the percentage
increase or decrease in the consumer price index as herein defined. For these
purposes, the consumer price index is defined to be the "Consumer Price Index -
All Urban Consumers - Northeast Region Population Size Class C (5,000 -
500,000), All Items (1982-1984 = 100)," published by the Bureau of Labor
Statistics, United States Department of Labor. For purposes of making the
initial basic rent adjustment, the index number indicated in the column for the
northeast region entitled "All Items" for the bimonthly period ending June 30,
1989, shall be the "Base Index Number" and the corresponding index number for
the bimonthly period ending June 30, 1990, shall be the "Current Index Number."
For subsequent annual adjustments, the respect "Base Index Numbers" will be the
corresponding index number for the bimonthly period ending June 30th of each
preceding year, and the respective "Current Index Numbers" will be the
corresponding index number for the bimonthly period ending June 30th of the
current year. On each Adjustment Date, VT-ETV's Basic Rent shall be increased
or decreased by the same percentage rate that the "Current Index Number" has
increased or decreased from the "Base Index Number."
4.5 Net Lease; No Counterclaim, Setoff, Etc. This Lease is a net lease
and VT-ETV acknowledges and agrees that, except as otherwise expressly provided
herein, VT-ETV's obligation to pay the Basic Rent, the Additional Rent, and
other amounts hereunder is absolute and unconditional and shall not be affected
by any circumstance, including without limitation (i) any abatement, reduction,
setoff, or recoupment whatsoever or any right to any thereof (including without
limitation abatements, reductions, setoffs, and recoupments for or on account
of any past, present, or future claims which VT-ETV may have against the
University); it being the intention of the parties hereto that the Basic Rent,
the Additional Rent, and other amounts payable by VT-ETV under this Lease shall
continue to be payable in all events in the manner and at the times herein
provided unless the obligation to pay the same shall be terminated pursuant to
the express provisions of this Lease or pursuant to a judgment of a court
having jurisdiction over the Premises and the parties.
5. SECURITY DEPOSIT. No amount shall be required as a security
deposit or similar payment under this Lease.
6. UTILITIES. VT-ETV shall be responsible for furnishing and paying
for all utilities and services associated with the ordinary use of the
Premises, including, without limitation: electricity, heat, air conditioning
and ventilating, water and sewer, telephone, rubbish removal, and snow
plowing and ice removal.
7. PERSONAL PROPERTY TAXES. VT-ETV shall pay for all personal
property taxes or special assessments assessed against any personal property
of VT-ETV located at the Premises.
8. INSURANCE.
8.1 Risks To Be Insured By VT-ETV. VT-ETV, at its expense, will
maintain personal injury and property damage liability insurance against claims
for bodily injury, death, or property damage occurring on, in, or about the
Premises during the term of this Lease, of not less than One Million and 00/100
Dollars ($1,000,000.00) in respect of personal injury or death and of not less
than One Hundred Thousand Dollars and 00/100 ($100,000.00) in respect of any
instance of property damage.
8.2 Policy Provisions. All insurance maintained by VT-ETV shall:
(a) name as insureds, as their respective interests may appear, the
University and VT-ETV; and
(b) provide that no cancellation, reduction in amount, or material
change in coverage thereof shall be effective until at least thirty (30) days
after receipt of written notice thereof by the University.
(c) The insurance policy shall be examined by VT-ETV and the University
every three (3) years on the anniversary date of the commencement of the Lease
Term and the limits shall be adjusted so as to be equal to the limits of such
insurance carried by the University in the Chittenden County area at that time.
8.3 Delivery of Policies; Insurance Certificates. VT-ETV will deliver
to the University promptly upon request certified copies of all insurance
policies (or, in the case of blanket policies, certificates thereof) with
respect to the Premises which VT-ETV is required to maintain pursuant to this
Section 8, together with evidence as to the payment of all premiums then due
thereon.
8.4 Waiver of Subrogation. The University and VT-ETV hereby release the
other from any and all liability or responsibility to the other (or anyone
claiming through or under them by way of subrogation or otherwise) for any loss
or damage to property caused by fire or any of the extended coverage or
supplementary contract casualties, even if such fire or other casualty shall
have been caused by the fault or negligence of the other party (or anyone for
whom such party may be responsible); provided, however, that this release shall
be applicable and in force and effect only with respect to loss or damage
occurring during such time as the policies of the releasing party contain a
clause or endorsement to the effect that any such release shall not adversely
affect or impair the policies or prejudice the rights of the releasing party to
recover thereunder. Each party shall request its insurer to include such a
clause or endorsement.
9. ALTERATIONS AND ADDITIONS. VT-ETV shall have the right, at its
expense, to construct additional facilities and improvements on the Premises
and to make alterations, additions, and renovations and repairs to the existing
improvements on the Premises, for the uses permitted by this Lease, without the
prior consent of the University. Any such construction, alteration, addition,
or improvement made by VT-ETV and any fixtures installed as part thereof shall
at the University's option become property of the University upon the
expiration or other termination of this Lease. Any improvements made to the
Premises pursuant to this paragraph shall be made with due diligence and in a
good and workmanlike manner, shall be promptly paid for by VTETV, and shall not
adversely affect the value or usefulness of the Premises. VT-ETV shall have the
obligation to obtain all necessary licenses and permits for such alterations
and additions.
10. ASSIGNMENT AND SUBLEASING. Except as specifically set forth herein,
VT-ETV shall not assign, mortgage, or encumber this Lease, nor sublet or permit
the Premises or any part thereof, including the improvements located thereon,
to be used by others, without the prior written consent of . the University in
each instance, which consent shall not be unreasonably withheld.
11. REPAIR AND MAINTENANCE. VT-ETV shall, at its own expense, keep the
Premises clean and in as good order and repair as it is at the Commencement
Date, and shall not cause or suffer any waste.
12. QUIET ENJOYMENT AND LOCAL LAWS. VT-ETV shall comply with all laws and
ordinances applicable to the use of the Premises. The University covenants that
VT-ETV, on paying all amounts due hereunder and complying with the provisions
of this Lease, shall peaceably and quietly have, hold, and enjoy the Premises
for the term of this Lease. The University hereby warrants and covenants that
it is the owner of marketable title in fee simple to the Premises, and the
University shall defend title to the Premises for an on behalf of VT-ETV. The
University further covenants that it shall not, at any time during the Fixed
Term, grant or place any mortgages, liens or encumbrances on the Leased
Premises, which are superior to this Lease.
13. INTERFERENCE. VT-ETV is presently operating the buildings and
improvements on the Premises as a facility for the generation and transmission
of television broadcasts. The University hereby expressly acknowledges VT-ETV's
right to install additional communications and broadcasting equipment at the
Premises subject to all approvals, permits and licenses necessary to install
and operate such equipment. The University specifically agrees that VT-ETV has
the unrestricted right to install and operate any such equipment at the
Premises. In the event that the University owns or leases to others any land
owned by the University adjacent to the Premises, the University shall, at is
sole expense, take all steps necessary to prevent interference of any nature
whatsoever that such a lease may cause to VT-ETV's facilities at the Premises.
Nothing in this Lease shall prevent the University from leasing adjacent
premises to other entities for the purpose of installing communications or
broadcasting equipment; provided that said equipment does not interfere with
Vt-ETVs permitted use of the Premises.
If the University exercises the right to lease all or any portion of the
adjacent premises not herein leased to other Vt-ETVs, the University agrees to
include in all such lease agreements with other Vt-ETVs provisions prohibiting
any other VT-ETV from installing or operating any equipment which broadcast or
transmits over the airwaves that will cause interference to the operation of
VT-ETV already using the airwaves from the premises. If such interference does
occur, the party responsible for the most recent improvement causing the
interference to VT-ETV shall be required to take action toward elimination of
such interference within 12 hours after the responsible party receives written
notice from VT-ETV concerning the interference. If interference is caused by
VT-ETV in the operation of newly installed equipment, VT-ETV shall be
responsible for taking acting toward the elimination of such interference
within 12 hours after receiving notice of such interference.
14. LIENS ON VT-ETV'S LEASEHOLD ESTATE; RIGHTS OF LEASEHOLD MORTGAGEES.
(a) Leasehold Mortgage Authorized. On one or more occasions without the
University's prior consent, VT-ETV may (i) mortgage or otherwise encumber
VT-ETV's leasehold estate to one or more Institutional Investors (as
hereinafter defined), (the holder of any such mortgage being hereinafter
referred to as "Leasehold Mortgagee") under one or more leasehold mortgages (a
"Leasehold Mortgage"), or (ii) assign this Lease as security for such Leasehold
Mortgage or Leasehold Mortgages.
(b) Notice to University. (i) (1) If VT-ETV shall mortgage the Leased
Premises to a Leasehold Mortgagee, and if the holder of such Leasehold Mortgage
shall provide the University with notice of such Leasehold Mortgage together
with a true copy of such Leasehold Mortgage and the name and address of the
Leasehold Mortgagee, the University and VTETV agree that, following receipt of
such notice by VT-ETV, the provisions of this Section 14 shall apply in respect
to each such Leasehold Mortgage.
(2) In the event of any assignment of a Leasehold Mortgage or in
the event of a change of address of a Leasehold Mortgagee or of an
assignee of such Leasehold Mortgage, notice of the new name and address
shall be provided to the University.
(ii) The University shall promptly upon receipt of a communication
purporting to constitute the notice provided for by subsection (b)(i)
above acknowledge by an instrument in recordable form receipt of such
communication as constituting the notice provided for by subsection
(b)(i) above or, in the alternative, notify VT-ETV and the Leasehold
Mortgagee of the rejection of such communication as not conforming with
the provisions of subsection (b)(i) and specify the specific basis of
such rejection. Failure by the University to notify the Leasehold
Mortgagee and VT-ETV within fifteen (15) days shall be deemed to
constitute acknowledgment of conformity of the notice with the
requirements of subsection (b)(i).
(iii) After the University has received the notice provided for by
subsection (b) (i) above, VT-ETV, upon being requested to do so by the
University, shall with reasonable promptness provide the University with
copies of the note or other obligation secured by such Leasehold Mortgage
and of any other documents pertinent to the Leasehold Mortgage as
specified by the University. If requested to do so by the University,
VT-ETV shall thereafter also provide the University from time to time
with a copy of each amendment to or other modification or supplement to
such documents. From time to time upon being requested to do so by the
University, VT-ETV shall also notify the University of the date and place
of recording and other pertinent recording data with respect to such
documents as have been recorded.
(c) Definitions. (i) The term "Institutional Investor" as used in this
Section 14 shall refer to a savings bank, savings and loan association,
commercial bank, trust company/credit union, insurance company, college,
university, real estate investment trust or pension fund. The term
"Institutional Investor" shall also include other lenders of substance which
perform functions similar to any of the foregoing.
(ii) The term "Leasehold Mortgage" as used in this Section 14 shall
include a mortgage, a deed of trust, a deed to secure debt, or other
security instrument by which VT-ETV's Leasehold Estate is mortgaged,
conveyed, assigned, or otherwise transferred, to secure a debt or other
obligation, including, without limitation, obligations to reimburse the
issuer of a letter of credit.
(iii) The term "Leasehold Mortgagee" as used in this Section 14
shall refer to a holder of a Leasehold Mortgage in respect to which the
notice provided for by subsection (b) of this Section 14 has been given
and received and as to which the provisions of this Section 14 are
applicable.
(d) Consent of Leasehold Mortgagee Required. No cancellation, surrender
or modification of this Lease shall be effective as to any Leasehold Mortgagee
unless consented to in writing by such Leasehold Mortgagee.
(e) Default Notices. The University, upon providing VT-ETV any notice
of: (i) default under this Lease of (ii) a termination of this Lease, shall at
the same time provide a copy of such notice to every Leasehold Mortgagee. No
such notice by the University to VT-ETV shall be deemed to have been duly given
unless and until a copy thereof has been so provided to every Leasehold
Mortgagee. From and after such notice has been given to a Leasehold Mortgagee,
such Leasehold Mortgagee shall have the same period, after the giving of such
notice upon it, for remedying any default or causing the same to be remedied,
as is given VT-ETV after the giving of such notice to subsections (f) and (g)
of this Section 13 to remedy, commence remedying or cause to be remedied the
defaults specified in any such notice. The University shall accept such
performance by or at the instigation of such Leasehold Mortgagee as if the same
had been done by VT-ETV. The University authorizes each Leasehold Mortgagee to
take any such action at such Leasehold Mortgagee's option and does hereby
authorize entry upon the Premises by the Leasehold Mortgagee for such purpose.
(f) Notice to Leasehold Mortgagee. (i) Anything contained in this Lease
to the contrary notwithstanding, if any default shall occur which entitles the
University to terminate this Lease, the University shall have no right to
terminate this Lease unless, following the expiration of the period of time
given VT-ETV to cure such default, the University shall notify every Leasehold
Mortgagee of the University's intent to so terminate at least 30 days in
advance of the proposed effective date of such termination if such default is
capable of being cured by the payment of money, and at least 60 days in advance
of the proposed effective date of such termination if such default is not
capable of being cured by the payment of money. The provisions of subsection
(g) below of this Section 14 shall apply if, during such 30 or 60-day
termination notice period, any Leasehold Mortgagee shall:
(1) notify the University of such Leasehold Mortgagee's desire to
nullify such notice, and
(2) pay or cause to be paid all Basic Rent, Additional Rent, and
other payments then due and in arrears as specified in the termination
notice to such Leasehold Mortgagee and which may become due during such
30 or 60-day period, and
(3) comply or in good faith, with reasonable diligence and
continuity, commence to comply with all non-monetary requirements of this
Lease then in default and reasonably susceptible of being complied with
by such Leasehold Mortgagee.
(ii) Any notice to be given by the University to a Leasehold
Mortgagee pursuant to any provision of this Section 13 shall be deemed
properly addressed if sent to the Leasehold Mortgagee who served the
notice referred to in subsection (b)(i)(1) unless notice of a change of
Leasehold Mortgage ownership has been given to the University pursuant to
subsection (b)(i)(2).
(g) Procedure on Default. (i) If the University shall elect to
terminate this Lease by reason of any default of VT-ETV, and a Leasehold
Mortgagee shall have proceeded in the manner provided for by subsection (f) of
this Section 14, the specified date for the termination of this Lease as fixed
by the University in its termination notice shall be extended for a period of
six months, provided that such Leasehold Mortgagee shall, during such six-month
period:
(1) Pay or cause to be paid the Rent, Additional Rent and other
monetary obligations of VT-ETV under this Lease as the same become due,
and continue its good faith efforts to perform or cause performance of
all of VT-ETV's other obligations under this Lease, excepting past
non-monetary obligations then in default and not reasonably susceptible
of being cured by such Leasehold Mortgagee; and
(2) if not enjoined or stayed, take steps to acquire or sell
VT-ETV's interest in this Lease by foreclosure of the Leasehold Mortgage
or other appropriate means and prosecute the same to completion with due
diligence.
(ii) If at the end of such six (6) month period such Leasehold
Mortgagee is complying with subsection (g)(i), this Lease shall not then
terminate, and the time for completion by such Leasehold Mortgagee of its
proceeding shall continue so long as such Leasehold Mortgagee is enjoined
or stayed and thereafter for so long as such Leasehold Mortgagee proceeds
to complete steps to acquire or sell VT-ETV's interest in this Lease by
foreclosure of the Leasehold Mortgage or by other appropriate means with
reasonable diligence and continuity. Nothing in this subsection (g) of
this Section 14, however, shall be construed to extend this Lease beyond
the original term hereof as extended by any options to extend the term of
this Lease properly exercised by VT-ETV or a Leasehold Mortgagee in
accordance with the terms of such Leasehold Mortgagee's Leasehold
Mortgage, nor to require a Leasehold Mortgagee to continue such
foreclosure proceedings after the default has been cured. If the default
shall be cured and the Leasehold Mortgagee shall discontinue such
foreclosure proceedings, this Lease shall continue in full force and
effect as if VT-ETV had not defaulted under this Lease.
(iii) If a Leasehold Mortgagee is complying with subsection (g)(i)
of this section 14, upon the acquisition of VT-ETV's estate herein by
such Leasehold Mortgagee or its designee or any other purchaser at a
foreclosure sale or otherwise this Lease shall continue in full force and
effect as if VT-ETV had not defaulted under this Lease.
(iv) For the purposes of this Section 14 the making of a Leasehold
Mortgage shall not be deemed to constitute an assignment or transfer of
this Lease or of the leasehold estate hereby created, nor shall any
Leasehold Mortgagee, as such, be deemed to be an assignee or transferee
of this Lease or of the leasehold estate hereby created so as to require
such Leasehold Mortgagee, as such, to assume the performance of any
terms, covenants or conditions on the part of VT-ETV to be performed
hereunder, but the purchaser at any sale of this Lease and of the
leasehold estate hereby created in any proceedings for the foreclosure of
any Leasehold Mortgage shall be deemed to be an assignee or transferee
within the meaning of this Section 14, and shall be deemed to have agreed
to perform all of the terms, covenants and conditions on the part of
VT-ETV to be performed hereunder from and after the date of such purchase
and assignment, but only for so long as such purchaser or assignee is the
owner of the leasehold estate.
(v) Any Leasehold Mortgagee or other party who acquires the
leasehold estate of VT-ETV pursuant to foreclosure, assignment in lieu of
foreclosure or other proceedings may, upon acquiring Vt-ETV's leasehold
estate, without further consent of the University, sell and assign the
leasehold estate on such terms and to such persons and organizations as
are acceptable to such Leasehold Mortgagee and thereafter be relieved of
all obligations under this Lease; provided that such assignee has
delivered to the University its written agreement to be bound by all of
the provisions of this Lease.
(vi) Notwithstanding any other provisions of this Lease, any sale
of this Lease and of the leasehold estate hereby created in any
proceedings for the foreclosure of any Leasehold Mortgage, or the
assignment or transfer of this Lease and of the leasehold estate hereby
created in lieu of the foreclosure of any Leasehold Mortgage shall be
deemed to be a permitted sale, transfer or assignment of this Lease and
of the leasehold estate hereby created.
(vii) VT-ETV has the right to assign to any Leasehold Mortgagee
VT-ETV's right to elect to accede to a rejection of this Lease by the
University's trustee in bankruptcy.
(h) Leasehold Mortgage Need Not Cure Specified Defaults. Nothing herein
contained shall require any Leasehold Mortgagee or its designee as a condition
to its exercise of rights hereunder to cure any default of VT-ETV not
reasonably susceptible of being cured by such Leasehold Mortgagee or its
designee, in order to comply with the provisions of subsections (f) or (g) of
this Section 14. Notwithstanding the foregoing, the Leasehold Mortgagee or its
designee will be required to pay all amounts required to be paid hereunder and
fulfill all of VTETV's other obligations under this Lease.
(i) No Merger. So long as any Leasehold Mortgagee is in existence,
unless all Leasehold Mortgagees shall otherwise expressly consent in writing,
the fee title to the Leased Premises and the leasehold estate of VT-ETV therein
created by this Lease shall not merge but shall remain separate and distinct,
notwithstanding the acquisition of said fee title and said leasehold estate by
the University or by VT-ETV or by a third party, by purchase or otherwise.
(j) Future Amendments. In the event on any occasions hereafter VT-ETV
seeks to mortgage or collaterally assign the leasehold estate created hereby,
the University agrees to amend this Lease from time to time to the extent
reasonably requested by an Institutional Investor proposing to make a loan to
VT-ETV or issue a letter of credit secured by a lien upon VT-ETV's leasehold
estate, provided that such proposed amendments do not materially and adversely
affect the rights of the University or his interest in the Leased Premises. All
reasonable expenses incurred by the University in connection with any such
amendment shall be paid by VT-ETV.
(k) Notices. Notices from the University to the Leasehold Mortgagee
shall be mailed to the address furnished the University pursuant to subsection
(b) of this Section 14, and those from the Leasehold Mortgagee to the
University shall be mailed to the address designated pursuant to the provisions
of Section 14 hereof. Such notices, demands and requests shall be given in the
manner described in Section 14 and shall in all respects be governed by the
provisions of that section.
(l) Erroneous Payments. No payment made to the University by a Leasehold
Mortgagee shall constitute agreement that such payment was, in fact, due under
the terms of this Lease; and a Leasehold Mortgagee having made any payment to
the University pursuant to the University's wrongful, improper or mistaken
notice or demand shall be entitled to the return of such payment or portion
thereof provided he shall have made demand therefor not later than one year
after the date of its payment.
15. INDEMNIFICATION BY VT-ETV. VT-ETV will defend, indemnify, and save
harmless the University from and against all liabilities, obligations, claims,
damages, penalties, causes of action, costs, and expenses (including, but
without limitation, reasonable attorney's fees and expenses) imposed upon,
incurred by, or asserted against the University or against the Premises by
reason of the occurrence or existence of any of the following during the term
hereof or thereafter while VT-ETV is in possession of the Premises and
resulting from or arising out of VT-ETV's occupancy:
(a) any accident, injury to or death of persons, or loss of or damage
to property occurring on or about the Premises or any part thereof as a result
of or in connection with any condition at the Premises;
(b) any failure on the part of VT-ETV to perform or comply with any
of the terms of this Lease;
(c) performance by VT-ETV or its agents, employees, or contractors
of any labor or services or the furnishing or sale of any materials or other
property; or
(d) any negligence or tortious act on the part of VT-ETV or any of
its agents, contractors, sub-lessees, licensees, or invitees.
In case any action, suit, or proceeding is brought against the University
by reason of any such occurrence, VT-ETV, upon the University's request, will
at VT-ETV's expense resist and defend such action, suit, or proceeding or cause
the same to be resisted or defended by counsel designated by VT-ETV. The
obligations of VT-ETV under this section shall survive any termination of this
Lease for any cause of action arising during the term of this Lease.
16. EMINENT DOMAIN. In the event the Premises shall at any time during
the term of this Lease be taken by any public authority or agency for any
public use, the entire damages which may be awarded for the taking of the
Premises shall be equitably apportioned between the University and VT-ETV,
taking into the account the value of their respective interests in the
Premises. In the event only a part of the Premises shall be taken for the
public use and such taking does not render the Premises unsuitable for VT-ETV's
conduct of television broadcast and telecommunications operations, but such
taking does diminish the ability of VT-ETV to utilize the Premises as
previously utilized, the rent for the remainder of the term of this Lease shall
then be reduced or refunded to VT-ETV in proportion to the part of the Premises
so taken. If the taking is of the entirety, of the Premises, this Lease shall
terminate. If the taking is of less than the entirety of the Premises, but
nonetheless a substantial portion, VT-ETV may terminate this Lease by notifying
the University within a reasonably prompt time after delivery of the notice
required herein.
17. TERMINATION. The University may, if the University so elects, and
with or without demand or notice whatsoever, except as hereinafter expressly
provided terminate this Lease or VT-ETV's right to possession (one or both)
upon the happening of any one or more of the following events:
(a) the default of VT-ETV in the payment of Rent or Additional Rent,
provided such default is not remedied within thirty (30) days after written
notice by the University to VT-ETV;
(b) the default of VT-ETV in the prompt and full performance of or
compliance with any other covenant, restriction, limitation, or provision of
this Lease to be performed or complied with by VT-ETV, provided such default is
not remedied within thirty (30) days after notice by the University to VT-ETV;
(c) the levy under execution upon the leasehold estate of VT-ETV or the
attachment thereof by process of law, provided such levy or attachment is not
discharged or stayed by appeal or otherwise within a period of sixty (60) days,
or an assignment of VT-ETV's assets for the benefit of any creditor;
(d) the filing of a complaint or petition with any court having
jurisdiction over the Premises seeking any order or decree judging VT-ETV
insolvent or a bankrupt, or for the reorganization of VT-ETV under the
Bankruptcy Code, as amended, or under any act in force from time to time of
similar purport, or for the winding up or liquidation of VT-ETV's affairs, or
for the appointment of any receiver or trustee in bankruptcy of VT-ETV or of
VT-ETV's property, provided such proceeding is not dismissed within sixty (60)
days of the filing thereof; or
(e) the institution by VT-ETV of proceedings to be adjudicated a
voluntary bankrupt, or the consent by VT-ETV to the filing of any bankruptcy
proceedings against VT-ETV, or the filing of a petition or answer or consent
seeking a reorganization under the Bankruptcy Code, as amended, or under any
other act of similar purport, or consent to the appointment of a receiver or
trustee in bankruptcy of VT-ETV or any portion of VT-ETV's property, or the
admission by VT-ETV, in writing, of VT-ETV's inability to pay debts generally
as they become due, or the taking of corporate action authorizing any of the
foregoing steps to be taken.
Upon termination of this Lease, whether by lapse of time or otherwise,
the University shall have full and free license to enter into and upon the
Premises by any lawful manner or method to repossess the same as the
University's estate, and to expel or remove VT-ETV and others who may be
occupying or within the Premises and to remove any and all property therefrom,
and without relinquishing any rights which the University may have by law or
under the provisions of this Lease.
VT-ETV promises to pay, upon demand, all the University's reasonable
costs, charges, and expenses, including the reasonable fees of attorneys
retained by the University, reasonably and necessarily incurred in enforcing
the University's obligations under this Lease, or incurred in any litigation in
which the University, without the University's fault, may become involved or
concerned by reason of any action or inaction of VT-ETV.
Upon termination of this Lease, by lapse of time or otherwise, or of
VT-ETV's right to possession, VT-ETV shall yield up immediate possession of the
Premises to the University in substantially as good condition as existed at the
Commencement Date, ordinary wear and tear excepted.
18. NOTICE. Any notice that either party hereto desires to give the other
shall be deemed given upon placing such notice in U.S. First Class mail,
certified mail, return receipt requested, with postage fully prepaid, addressed
as follows:
As to Lessor:
University of Vermont and State Agricultural College
Land Records Office
Waterman Building
Burlington, VT 05405
As to Lessee:
Vermont ETV, Inc.
88 Ethan Allen Avenue
Colchester, VT 05446
Attn: President
19. NO WAIVER, ETC., BY UNIVERSITY. No failure by the University to
insist upon the strict performance of any term hereof or to exercise any right,
power, or remedy consequent upon a breach thereof, and no acceptance of full or
partial rent during the continuance of any such breach shall constitute the
University's acceptance or approval of any such breach. No waiver of any breach
shall affect or alter this Lease, which shall continue in full force and
effect, or the rights of the University with respect to any other existing or
subsequent breach.
20. REMEDIES, ETC., CUMULATIVE. Each right, power, and remedy of the
University provided for in this Lease or now or hereafter existing at law or in
equity or by statute or otherwise shall be cumulative and concurrent and shall
be in addition to every other right, power, or remedy provided for in this
Lease or now or hereafter existing at law or in equity or by statute or
otherwise and shall not preclude the simultaneous or later exercise by the
University of any or all such other rights, powers, or remedies.
21. MODIFICATION, ACCEPTANCE OF SURRENDER. No modification, termination,
or surrender to the University of this Lease and no surrender of the Premises
or any part thereof, or of any interest therein shall be valid or effective
unless agreed to and accepted in writing by the University, and no act by the
University, other than such a written agreement and acceptance by the
University, shall constitute an agreement thereto or acceptance thereof.
22. HOLDING OVER. In the event that VT-ETV shall remain in the Premises
after the expiration of this Lease or any renewal hereof without having
executed a new written lease and has not otherwise committed an act of default
which is then continuing, such holding over shall not constitute a renewal of
this Lease, but in such event, a tenancy from month to month shall arise and
VT-ETV shall continue to pay the Basic Rent and Additional Rent at the rate
required during the last month of the term immediately preceding and shall
otherwise comply with all its obligations pursuant to this Lease, as the same
shall have been modified from time to time as provided herein. Such tenancy
shall be terminated by either party at the end of a calendar month upon thirty
(30) days written notice.
23. RIGHT OF FIRST REFUSAL TO VT-ETV. In the event the University elects
to sell or otherwise dispose of the Premises, the University shall first give
written notice to VT-ETV offering to sell the Premises to VT-ETV at a purchase
price no greater than the fair market value of the Premises. The fair market
value of the Premises shall be determined by an appraiser selected by the
University and VT-ETV. VT-ETV shall have 30 days from the date the appraiser
establishes the fair market value for the Premises to exercise its option. The
option shall be exercised by written notice from VT-ETV to the University. In
the event VT-ETV does not exercise its option within said 30-day period, the
University may sell the Premises to any party it so elects. Upon exercise of
the option, the closing of the purchased and sale of the Premises shall occur
within 60 days of VT-ETV's exercise of the option.
24. MISCELLANEOUS. If any term of this Lease or any application thereof
shall be held to be invalid or unenforceable, the remainder of this Lease and
any other application of such term shall not be affected thereby. This Lease
may be changed, waived, discharged, or terminated only by an instrument in
writing signed by the party against whom enforcement of such change, waiver,
discharge, or termination is sought. This Lease shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns
of the parties hereto. This Lease shall be construed and enforced in accordance
with and governed by the laws of the State of Vermont. The headings-in this
Lease are for purposes of reference only and shall not limit or otherwise
affect the meaning hereof. Where applicable, use of words in the singular shall
be read in the plural, and vice versa and use of the masculine gender shall be
read in the neuter or feminine gender, and vice versa. Upon request of either
party, the parties shall execute a Memorandum of Lease, suitable for recording
in the Land Records of the Town of Colchester. The recording of this Lease in
the Land Records of the Town of Colchester is expressly prohibited and any such
recording shall constitute an incurable default.
IN WITNESS WHEREOF, the parties have hereunto signed in duplicate, each
of which shall rank as an original, this Lease Agreement on the day and year
first above written.
IN THE PRESENCE OF: University of Vermont and State
Agricultural College, Lessor
_________________________________
_________________________________ By: _________________________________
Duly Authorized Agent
Vermont ETV, Inc., Lessee
_________________________________
_________________________________ By: _________________________________
Duly Authorized Agent
STATE OF VERMONT
COUNTY OF CHITTENDEN, SS.
At Burlington, in said County, on this 28th day of December, 1989,
personally appeared Ben R. Forsyth, Duly Authorized Agent of the University of
Vermont and State Agricultural College, and he/she acknowledged the foregoing
Lease Agreement to be his/her free act and deed and the free act and deed of
the University of Vermont and State Agricultural College.
Before me, __________________________
Notary Public
STATE OF VERMONT
COUNTY OF CHITTENDEN, SS.
At Burlington, in said County, on this 28th day of December, 1989,
personally appeared Hope S. Green, Duly Authorized Agent of Vermont ETV, Inc.,
and he/she acknowledged the foregoing Lease Agreement to be his/her free act
and deed and the free act and deed of Vermont ETV, Inc.
Before me, __________________________
Notary Public
EXHIBIT A
1.10(a)-2
DESCRIPTION OF 1990 LEASE LIMITS
UNIVERSITY OF VERMONT AND STATE AGRICULTURAL COLLEGE
TO
VERMONT EDUCATIONAL TELEVISION INC. (VT-ETV)
"NOSE" AREA OF MT. MANSFIELD
TOWN OF STOWE, LAMOILLE COUNTY, VERMONT
Being a parcel of land containing 0.7968 acres, more or less, located on
the southerly side of the "Nose" area of Mt. Mansfield in the Town of Stowe,
Lamoille County, as shown on a drawing of survey entitled "1990 Lease Limits
for Vermont Educational Television, Inc., "Nose" Area of Mt. Mansfield, Town of
Stowe, Lamoille County, Vermont", dated 17 November 1989, drawing 36-89c
prepared by the University of Vermont Land Records Office, which is attached
hereto and thereby made a part of this description. This parcel is located
within Parcel 3 of the Colocation Area shown on the plat of easement entitled
"Colocation Area-Mt. Mansfield", dated 4 March 1980, revised 29 September 1989,
drawing 36-89 prepared by the University of Vermont Land Records Office, and is
more particularly described as follows:
Commencing at NGS Station "Mt. Mansfield (Nose)", which is a bolt set in
ledge recovered broken flush with the ledge, and further described in a
Horizontal Control Data Sheet, Quad 440724, Station 1002, as published and
printed by the U.S. Department of Commerce, National Geodetic Survey,
Rockville, MD. Thence proceeding S10 [DEGREES] 39'26"W for a distance of
173.55' to a UVM&SAC brass survey tablet stamped "Separation - 1989" set in
open ledge which is located northerly of the wave grid support structure that
runs northwesterly from the VT-ETV transmitter building to the VT-ETV tower and
is the point of beginning for this description.
Thence proceeding S68 [DEGREES] 48'06"E for a distance of 124.11' to a
UVM&SAC brass survey tablet stamped "From - 1989" set in ledge at the edge of
scrub spruce and located at the top of a rock cut, said point is located N41
[DEGREES] 57'59"W 18.13' northerly of the northeasterly corner of the VT-ETV
building and N41 [DEGREES] 30'34"E 33.55' from the northwesterly corner of the
original VT-ETV building;
Thence proceeding N71 [DEGREES] 07'21"E for a distance of 56.42' to a
UVM&SAC brass survey tablet stamped "UVM&SAC 1989" which is located in open
ledge and bears N36 [DEGREES] 29'E 29.5' from the northeasterly corner of the
VT-ETV microwave tower and is the northeasterly corner of the lease limits
being described;
Thence proceeding S13 [DEGREES] 18'39"E for a distance of 118.94' to a
UVM&SAC brass survey tablet stamped "MacNeil-1989" which is located in open
ledge + 251 easterly of the septic tank and marks an angle point in the
easterly limits being described;
Thence proceeding S4 [DEGREES] 37'01"W for a distance of 30.98' to a
UVM&SAC brass survey tablet stamped "D.J. Carney-1989" which is located in open
ledge, + 351 southeasterly from the septic tank and is the southeasterly corner
of the lease limits being described;
Thence proceeding S74 [DEGREES] 01'31"W for a distance of 194.63' to a
UVM&SAC brass survey tablet stamped "Ann-Ahmed-1984" which is located easterly
of the access road leading northerly and northeasterly to VT-ETV and at the
northeasterly corner of the 1984 lease limits of the parcel leased from the
University of Vermont and State Agricultural College to Mount Mansfield
Television, Inc., (WCAX-TV);
Thence proceeding S80 [DEGREES] 54'30"W for a distance of 24.88' across
the access road leading to VT-ETV to a UVM&SAC brass survey tablet stamped "Oil
Tanks-1983" which is located in a rock outcrop on the westerly side of the
access road leading to VT-ETV and in the in the northerly limits of land leased
to Mount Mansfield Television in 1984;
Thence proceeding N35 [DEGREES] 20'26"W for a distance of 61.70' to a
UVM&SAC brass survey tablet stamped "Lease-1989" set in a rock outcrop.
Thence proceeding N54 [DEGREES] 26'28"E for a distance of 119.84' along a
line that is northerly of the access road leading to VT-ETV to a UVM&SAC brass
survey tablet stamped "limits-1989" which is located on a rock outcrop
northerly of the access road to VT-ETV and N85 [DEGREES] 48'00"W 39.82' from
the southwesterly corner of the 1988 addition to the VT-ETV transmitter
building;
Thence proceeding N7 [DEGREES] 35'46"W for a distance of 59.97' to a
UVM&SAC brass survey tablet stamped "For-1989" set in ledge south of the wave
guide support structure previously described;
Thence proceeding N61 [DEGREES] 10'11"W for a distance of 64.39' to a
UVM&SAC brass survey tablet stamped "VTETV-1989" set in ledge southerly of the
wave guide support structure previously described;
Then continuing in the same direction of N61 [DEGREES] 10'11"W for a
distance of 15.33' to a point located S46 [DEGREES] 59'26"E 31.00' from a
UVM&SAC brass survey tablet stamped "VTETV Tower-1989" which is located beneath
the center line of the VT-ETV antenna and in the control line of the tower
structure and marks the center of a circle having a radius of 25.00';
Thence proceeding in a clockwise direction through an arc which has a
length of 131.66', a deflection angle of 301 [DEGREES] 41'47", a degree curve
of 229 [DEGREES] 10'59", and a radius of 25.00' which is marked by the UVM&SAC
brass survey tablet stamped "VT-ETV Tower 1989" as previously described until a
point is reached that bears N74 [DEGREES] 45'27"E and a distance of 25.00' from
the UVM&SAC brass survey tablet stamped "VT-ETV Tower-1989" as previously
described;
Thence proceeding S68 [DEGREES] 48'06"E for a distance of 29.84' to a
UVM&SAC brass survey tablet stamped "Separation-1989" which is the point of
beginning for this description.
Bearings used in this description are related to the Vermont State Plane
Coordinate System, 1927 NAD. Distances are at elevation, not grid.
The University of Vermont and State Agricultural College Reserves unto
itself and its assigns the right to traverse with, but not limited to, foot and
vehicle through the above described parcel of land.
The University of Vermont and State Agricultural College grants to
VT-ETV, Inc. The right to traverse with, but not limited to, foot and vehicle
along existing roadways on lands of the University of Vermont and State
Agricultural College abutting the above described parcel of land.
By: Harris G. Abbott, L.S. 59
Manager, Land Records Office
27 November 1989
EXHIBIT A
1.10(a)-2
DESCRIPTION OF 1990 LEASE LIMITS
UNIVERSITY OF VERMONT AND STATE AGRICULTURAL COLLEGE
TO
VERMONT EDUCATIONAL TELEVISION INC. (VT-ETV)
"NOSE" AREA OF MT. MANSFIELD
TOWN OF STOWE, LAMOILLE COUNTY, VERMONT
Being a parcel of land containing 0.7968 acres, more or less, located on
the southerly side of the "Nose" area of Mt. Mansfield in the Town of Stowe,
Lamoille County, as shown on a drawing of survey entitled "1990 Lease Limits
for Vermont Educational Television, Inc., "Nose" Area of Mt. Mansfield, Town of
Stowe, Lamoille County, Vermont", dated 17 November 1989, drawing 36-89c
prepared by the University of Vermont Land Records office, which is attached
hereto and thereby made a part of this description. This parcel is located
within Parcel 3 of the Colocation Area shown on the plat of easement entitled
"Colocation Area-Mt. Mansfield", dated 4 March 1980, revised 29 September 1989,
drawing 36-89 prepared by the University of Vermont Land Records Office, and is
more particularly described as follows:
Commencing at NGS Station "Mt. Mansfield (Nose)", which is a bolt set in
ledge recovered broken flush with the ledge, and further described in a
Horizontal Control Data Sheet, Quad 440724, Station 1002, as published and
printed by the U.S. Department of Commerce, National Geodetic Survey,
Rockville, MD. Thence proceeding S10 [DEGREES] 39'26"W for a distance of
173.55' to a UVM&SAC brass survey tablet stamped "Separation - 1989" set in
open ledge which is located northerly of the wave grid support structure that
runs northwesterly from the VT-ETV transmitter building to the VT-ETV tower and
is the point of beginning for this description.
Thence proceeding S68 [DEGREES] 48'06"E for a distance of 124.11' to a
UVM&SAC brass survey tablet stamped "From - 1989" set in ledge at the edge of
scrub spruce and located at the top of a rock cut, said point is located N41
[DEGREES] 57'59"W 18.13' northerly of the northeasterly corner of the VT-ETV
building and N41 [DEGREES] 30'34"E 33.55' from the northwesterly corner of the
original VT-ETV building;
Thence proceeding N71 [DEGREES] 07'21"E for a distance of 56.42' to a
UVM&SAC brass survey tablet stamped "UVM&SAC 1989" which is located in open
ledge and bears N36 [DEGREES] 29'E 29.5' from the northeasterly corner of the
VT-ETV microwave tower and is the northeasterly corner of the lease limits
being described;
Thence proceeding S13 [DEGREES] 18'39"E for a distance of 118.94' to a
UVM&SAC brass survey tablet stamped "MacNeil-1989" which is located in open
ledge +/- 25' easterly of the septic tank and marks an angle point in the
easterly limits being described;
Thence proceeding S4 [DEGREES] 37'01"W for a distance of 30.98' to a
UVM&SAC brass survey tablet stamped "D.J. Carney-1989" which is located in open
ledge, +/- 35' southeasterly from the septic tank and is the southeasterly
corner of the lease limits being described;
Thence proceeding S74 [DEGREES] 01'31"W for a distance of 194.63' to a
UVM&SAC brass survey tablet stamped "Ann-Ahmed-1984" which is located easterly
of the access road leading northerly and northeasterly to VT-ETV and at the
northeasterly corner of the 1984 lease limits of the parcel leased from the
University of Vermont and State Agricultural College to Mount Mansfield
Television, Inc. (WCAX-TV);
Thence proceeding S80 [DEGREES] 54'30"W for a distance of 24.88' across
the access road leading to VT-ETV to a UVM&SAC brass survey tablet stamped "Oil
Tanks-1983" which is located in a rock outcrop on the westerly side of the
access road leading to VT-ETV and in the in the northerly limits of land leased
to Mount Mansfield Television in 1984;
Thence proceeding N35 [DEGREES] 20'26"W for a distance of 61.70' to a
UVM&SAC brass survey tablet stamped "Lease-1989" set in a rock outcrop.
Thence proceeding N54 [DEGREES] 26'28"E for a distance of 119.84' along a
line that is northerly of the access road leading to VT-ETV to a UVM&SAC brass
survey tablet stamped "limits-1989" which is located on a rock outcrop
northerly of the access road to VT-ETV and N85 [DEGREES] 48'00"W 39.82' from
the southwesterly corner of the 1988 addition to the VT-ETV transmitter
building;
Thence proceeding N7 [DEGREES] 35'46"W for a distance of 59.97' to a
UVM&SAC brass survey tablet stamped "For-1989" set in ledge south of the wave
guide support structure previously described;
Thence proceeding N61 [DEGREES] 10'11"W for a distance of 64.39' to a
UVM&SAC brass survey tablet stamped "VTETV-1989" set in ledge southerly of the
wave guide support structure previously described;
Then continuing in the same direction of N61 [DEGREES] 10'11"W for a
distance of 15.33' to a point located S46 [DEGREES] 59'26"E 31.00' from a
UVM&SAC brass survey tablet stamped "VTETV Tower-1989" which is located beneath
the center line of the VT-ETV antenna and in the control line of the tower
structure and marks the center of a circle having a radius of 25.00';
Thence proceeding in a clockwise direction through an arc which has a
length of 131.66', a deflection angle of 301 [DEGREES] 41'47", a degree curve
of 229 [DEGREES] 10'59", and a radius of 25.00' which is marked by the UVM&SAC
brass survey tablet stamped "VT-ETV Tower-1989" as previously described until a
point is reached that bears N74 [DEGREES] 45'27"E and a distance of 25.00' from
the UVM&SAC brass survey tablet stamped "VT-ETV Tower-1989" as previously
described;
Thence proceeding S68 [DEGREES] 48'06"E for a distance of 29.84' to a
UVM&SAC brass survey tablet stamped "Separation-1989" which is the point of
beginning for this description.
Bearings used in this description are related to the Vermont State Plane
Coordinate System, 1927 NAD. Distances are at elevation, not grid.
The University of Vermont and State Agricultural College reserves unto
itself and its assigns the right to traverse with, but not limited to, foot and
vehicle through the above described parcel of land.
The University of Vermont and State Agricultural College grants to
VT-ETV, Inc. The right to traverse with, but not limited to, foot and vehicle
along existing roadways on lands of the University of Vermont and State
Agricultural College abutting the above-described parcel of land.
By: Harris G. Abbott, L.S. 59
Manager, Land Records Office
27 November 1989
EXHIBIT C
COMPUTATION OF ANNUAL RENTAL
Annual Site Fee: $ 2,000
Building Space:
68 Square Feet @ $200/square feet 13,600
Tower Space:
3 - antennas @ 6 ft - (2 sides) = 36 ft.
1 - Microwave Dish @ 4 ft = 4 ft.
40 lineal feet @ $80/1f. 3,200
Estimated Power Cost:
12.7 KWH/day 11,125*
--------
Total Annual lease payment $ 29,925
or monthly payments of $2,493.75
* Prior to full start-up operations by New England Wireless, the monthly
rental will be reduced by the estimated power requirement for monthly
payments of $1,566.67
EXHIBIT D
ADDITIONAL LEASE FEE AGREEMENT
In addition to the basic lease fee described in section 5 of the AGREEMENT, New
England Wireless agrees to the following additional lease fee:
Commencing 180 days following the initiation of service to subscribers, New
England Wireless shall pay to Vermont ETV, on a monthly basis, an additional
lease fee equal to $0.05 per subscriber, per channel, per month (of the four
channels licensed by ETV) based on subscriptions to its cable television
service, or a minimum monthly fee of $25.00, whichever is greater.
Such fee is in addition to the basic lease fee described in section 5 of the
AGREEMENT and to any other air time lease agreements which may be currently in
effect.
New England Wireless shall maintain documentation for all subscriber accounts
associated with this AGREEMENT and, upon reasonable demand, shall make such
records available to Vermont ETV at Vermont ETV's premises, for Vermont ETV's
inspection and audit. Vermont ETV reserves the right to require New England
Wireless to undertake up to two financial audits per year, to be conducted by a
Certified Public Accountant and to make the results of such audits available to
Vermont ETV. The expense of such audits, if required, shall be borne by New
England Wireless.
The parties hereto have executed this Agreement at Colchester this 19th day of
March, 1992.
By: /S/ ______________________________
New England Wireless
By: /S/ ______________________________
Vermont ETV
EXHIBIT 10.9
COMMERCIAL LEASE
This lease is made between Kevin McGovern, herein called Lessor, and
New England Wireless, Inc., herein called Lessee.
Lessee hereby offers to lease from Lessor the premises situated in the
City of Jericho, County of Chittenden, State of Vermont, described as 630
square feet, 14x 45, gated area, right end side of Jeri-Hill warehouse, rt.
15, upon the following TERMS and CONDITIONS:
1. Term and Rent. Lessor demises the above premises for a term of 1
years, commencing January 1, 1997 and terminating on December 31, 1997 or
sooner as provided herein at the annual rental of ($) 2,220.00 payable in
equal installments in advance on the first day of each month for that
month's rental, during the term of this lease. All rental payments shall be
made to Lessor, at the address specified below.
2. Use. Lessee shall use and occupy the promises for storage of
business related equipment. The premises shall be used for no other
purpose. Lessor represents that the premises may lawfully be used for such
purpose.
3. Care and Maintenance of Premises. Lessee acknowledges that the
premises are in good order and repair, unless otherwise indicated herein.
Lessee shall, at his own expense and at all times, maintain the Premises in
good and safe condition, including plate glass, electrical wiring, plumbing
and heating installations and any other system or equipment upon the
premises, and shall surrender the same at termination hereof, in as good
condition as received, normal wear and tear excepted. Lessee shall be
responsible for all repairs required, excepting the roof, exterior walls,
structural foundations, and: keep rentant area clean, safe and keep access
way open. No utilities are included with the lease. Tenant will provide
copy of insurance.
4. Alterations. Lessee shall not, without first obtaining the
written consent of Lessor, make any alterations, additions, or improvements,
in, to or about the premises.
5. Ordinances and Statutes. Lessee shall comply with all statutes,
ordinances and requirements of all municipal, state and federal authorities
now in force, or which may hereafter lie in force, pertaining to the
premises, occasioned by or affecting the use thereof by Lessee.
6. Assignment and Subletting. Lessee shall not assign this lease or
sublet any portion of the premises without prior written concert of the
Lessor, which shall not be unreasonably withhold. Any such assignment or
subletting without consent shall be void and, at the option of the Lessor,
may terminate this lease.
7. Utilities. All applications and connections for necessary utility
services on the demised premises shall be made in the name of Lessee only,
and Lessee shall be solely liable for utility charges as they become due,
including those for sewer, water, gas, electricity, and telephone services.
8. Entry and Inspection. Lessee shall permit Lessor or Lessor's
agents to enter upon the premises at reasonable times and upon reasonable
notice, for the purpose of inspecting the same, and will permit Lessor at
any time within sixty (60) days prior to the expiration of this lease, to
place upon the premises any usual "To Let" or "For Lease" signs, and permit
persons desiring to lease the same to inspect the premises thereafter.
9. Possession. If Lessor is unable to deliver possession of the
premises at the commencement hereof, Lessor shall not be liable for any
damage caused thereby, nor shall this lease be void or voidable, but Lessee
shall not be liable for any rent until possession is delivered. Lessee may
terminate this lease if possession is not delivered within 5 days of the
commencement of the term hereof.
10. Indemnification of Lessor. Lessor shall not be liable for any
damage or injury to Lessee, or any other person, or to any property,
occurring on the demised premises or any part thereof, and Lessee agrees to
hold Lessor harmless from any claim for damages, no matter how caused.
11. Insurance. Lessee, at his expense, shall maintain plate glass
and public liability insurance including bodily injury and property damage
insuring Lessee and Lessor with minimum coverage as follows:
Lessee shall provide Lessor with a Certificate of Insurance showing
Lessor as additional insured. The Certificate shall provide for a ten-day
written notice to Lessor in the event of cancellation or material change of
coverage. To the maximum extent permitted by insurance policies which may
be owned by Lessor or Lessee, Lessee and Lessor, for the benefit of each
other, waive any and all rights of subrogation which might otherwise exist.
12. Eminent Domain. If the promises or any part thereof or any estate
therein, or any other part of the building materially affecting Lessee's use
of the premise, shall be taken by eminent domain, this lease shall terminate
on the date when title vests pursuant to such taking. The rent, and any
additional rent, shall be apportioned as of the termination date, and any
rent paid for any period beyond that date shall be repaid to Lessee, Lessee
shall not be entitled to any part of the award for such taking or any
payment in lieu thereof, but Lessee may file a claim for any taking of
fixtures and improvements owned by Lessee, and for moving expenses.
13. Destruction of Premises. In the event of a partial destruction of
the premises during the term hereof, from any cause, Lessor shall forthwith
repair the same, provided that such repairs can be made within sixty (60)
days under existing governmental laws and regulations, but such Partial
destruction shall not terminate this lease, except that Lessee shall, be
entitled to a proportionate reduction of rent while such repairs are being
made, based upon the extent to which the making of such repairs shall
interfere with the business of Lessee on the premises. If such repairs
cannot be made within said sixty (60) days, Lessor, at his option, may make
the same within a reasonable time, this lease continuing in effect with the
rent proportionately abated as aforesaid, and in the event that Lessor shall
not elect to make such repairs which cannot be made within sixty (60) days,
this lease may be terminated at the option of either party. In the event
that the building in which the demised premises may be situated is destroyed
to an extent of not less than one-third of the replacement costs thereof,
Lessor may elect to terminate this lease whether the demised premises be
injured or not. A total destruction of the building in which the premises
may be situated shall terminate this lease.
14. Lessor's Remedies on Default. If Lessee defaults in the payment
of rent, or any additional rent, or defaults in the performance of any of
the other covenants or conditions hereof, Lessor may give Lessee notice of
such default and if Lessee does not cure any such default within 10 days,
after the giving of such notice (or if such other default is of such nature
that it cannot be completely cured within such period, if Lessee does not
commence such curing within such 20 days and thereafter proceed with
reasonable diligence and in good faith to cure such default), then Lessor
may terminate this lease on not less than 25 days' notice to Lessee. On the
date specified in such notice the term of this lease shall terminate, and
Lessee shall then quit and surrender the premises to Lessor, but Lessee
shall remain liable as hereinafter provided. If this lease shall have been
so terminated by Lessor, Lessor may at any time thereafter resume possession
of the premises by any lawful means and remove Lessee or other occupants and
their effects. No failure to enforce any term shall be deemed a waiver.
15. Security Deposit. Lessee shall deposit with Lessor on the
signing of this lease the sum of three hundred fifty one, seventy six cents
(prepaid) Dollars ($) 351.76 as security deposit for the performance of
Lessee's obligations under this lease, including without limitation, the
surrender of possession of the premises to Lessor as herein provided. If
Lessor applies any part of the deposit to cure any default of Lessee, Lessee
shall on demand deposit with Lessor the amount so applied so that Lessor
shall have the full deposit on hand at all times during the term of this
lease.
16. Tax Increase. In the event there is any increase during any year
of the term of this lease in the City, County or State real estate taxes
over and above the amount of such taxes assessed for the tax year during
which the term of this lease commences, whether because of increased rate or
valuation, Lessee shall pay to Lessor upon presentation of paid tax bills an
amount equal to 50 % of the increase in taxes upon the land and building in
which the leased premises are situated. In the event that such taxes are
assessed for a tax year extending beyond the term of the lease, the
obligation of Lessee shall be proportionate to the portion of the lease term
included in such year.
17. Common Area Expenses. In the event the demised premises are
situated in a shopping center or in a commercial building in which there are
common areas, Lessee agrees to pay his pro-rata share of maintenance, taxes,
and insurance for the common area.
18. Attorney's Fees. In case suit should be brought for recovery of
the premises, or for any sum due hereunder, or because of any act which may
arise out of the possession of the premises, by either party, the prevailing
party shall be entitled to all costs incurred in connection with such
action, including a reasonable attorney's fee.
19. Notices. Any notice which either party may, or is required to
give, shall be given by mailing the same, postage prepaid, to Lessee at the
premises, or Lessor at the address shown below, or at such other places as
may be designated by the parties from time to time.
20. Heirs, Assigns, Successors. This lease is binding upon and
inured to the benefit of the heirs, assigns and successors in interest to
the parties.
21. Option to Renew. Provided that Lessee is not in default in the
performance of this lease, Lessee shall have the option to renew the lease
for an additional term of 12 months commencing at the expiration of the
initial lease term. All of the terms and conditions of the lease shall
apply during the renewal term except that the monthly rent shall be the sum
of $185.00. The option shall be exercised by written notice given to Lessor
not less than 30 days prior to the expiration of the initial lease term. If
notice is not given in the manner provided herein within the time specified,
this option shall expire.
22. Subordination. This lease is and shall be subordinated to all
existing and future liens and encumbrances against the property.
23. Entire Agreement. The foregoing constitutes the entire Agreement
between the parties and may be modified only by a writing signed by both
parties. The following Exhibits, if any, have been made a part of this
lease before the parties' execution hereof: Exhibit 1 shows location of
rental area, lessor will keep the driveway free of snow so as to provide
adequate entrance for lessee.
Signed this 1st day of January, 1997.
By: /S/__________________________ By: /S/_________________________
Lessee: New England Wireless, Inc. Lessor: Kevin McGovern
P.O. Box 470
Ascutney, Vt. 05030
674-2206
fax: 674-2674
Please mail rent to:
Kevin McGovern Rent is due on the 1st of each month
P.O. Box 305
Jeffersonville, Vt. 05464
all inquiries: 644-2231
EXHIBIT 10.10
ASCUTNEY ASSOCIATES, INC.
NEW ENGLAND WIRELESS
BURLINGTON, VERMONT
CHANNEL SUBLEASE AND AGREEMENT
This Channel Sublease and Agreement ("Agreement") is made and entered
into by Ascutney Associates, Inc., ("Lessor"), having its principal place of
business at P.O. Box 186, Rexford, New York 12148, and New England Wireless,
56 Green Street, Bellows Falls, Vermont 05101 ("Lessee").
RECITALS
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licensees of Instructional Television Fixed Service ("ITFS") channels to
lease "excess capacity" on such channels for non-ITFS use, subject to
certain regulatory restrictions, and has authorized licensees of Multipoint
Distribution Service ("MDS") channels and licensees of Multichannel
Multipoint Distribution Service ("MMDS") channels to lease all of the
channel capacity on such channels; and
WHEREAS, The Federal Communications Commission has granted radio
broadcast station licenses to the licensees named and specified in Schedule
A, attached hereto, and has before it applications for the grant of radio
broadcast station licenses as named and specified in Schedule A, attached
hereto; and
WHEREAS, Lessor has entered into Channel Lease Agreements with each of
the Licensees in the Burlington, Vermont, area identified in Schedule A,
attached hereto, contemplating lease by Lessor from such Licensees of
"excess capacity" on each of such channels; and
WHEREAS, Ascutney and Lessee are parties to a letter agreement dated
May 6, 1991, whereby Lessee is given access to the licenses in the Bellows
Falls market and a letter agreement dated September 25, 1991, whereby Lessee
is given access to the licenses in Burlington, Vermont, market; and
WHEREAS, Lessor desires to lease to Lessee the excess capacity on each
of the aforesaid ITFS channels (each of which has a bandwidth of six MHZ and
meets or will meet National Television System Committee (NTSC) color video
signal specifications for color television, as defined by the FCC) which
Lessor has acquired, or will acquire, from the FCC or the FCC licensee of
each such ITFS channel, as the case may be; and
WHEREAS, Lessee desires to lease from Lessor all of the channel
capacity which Lessor has acquired and/or will acquire on ITFS channels
specified on Schedule A hereto (the "ITFS Channels") in the markets, all
subject to the terms and conditions set forth herein, in order to operate a
subscription video programming service to be offered to subscribing members
of the public via transmission capacity provided through non-cable TV over-
the-air transmission technology through ITFS, MMDS and/or MDS channels
("subscription television business" or "subscription television service"),
NOW, THEREFORE, in consideration of the mutual promises, covenants and
warranties set forth herein, Lessor and Lessee hereby agree as follows:
1. Lease of Channel Capacity (a) Lessor hereby agrees to lease to
Lessee all of the excess capacity (as hereinafter defined) on the ITFS
channels in the market, specified in Schedule A, subject to the terms and
conditions set forth herein. Lessor further agrees to lease to Lessee all
of the channel capacity that Lessor has acquired, or will acquire, pursuant
to the leases annexed hereto, or to be annexed hereto, as Schedule B (the
"Channel Leases").
(b) As used in this Agreement, the term "Excess Capacity" shall refer
to all of the channel capacity of an ITFS channel (including, without
limitation, all video, audio and subcarrier capacity and all vertical
blanking interval capacity), twenty-four (24) hours per day, seven (7) days
per week, except for the minimum number of hours per ITFS channel per week
that the ITFS channel licensee is required, under Section 74-931(e) of the
FCC's Rules and Regulations, [47 C.F.R. 74.93 1 (e)] (together with any
amendment or successor thereto the "FCC Rules"), to transmit instructional,
cultural or educational programming (hereinafter "Instructional Time").
Consistent with the FCC Rules and FCC policies in effect as of the date
hereof, Instructional Time shall initially consist of no more than twenty
(20) hours per week on each ITFS channel. Not less than ninety (90) days
prior to the initiation of program service by Lessee in each new market
hereunder, Lessor shall notify Lessee in writing of the twenty (20) specific
air time hours for the forthcoming six (6) months that the respective
licensees of each of the ITFS channels intend to utilize in such market.
(c) After the initial establishment of the schedule of Instructional
Time on each ITFS channel, if an ITFS licensee subsequently wishes to
exclude additional hours from excess capacity relating to such licensee's
ITFS channel for inclusion into Instructional Time for the provision of
"substantial use" ITFS programming, as defined by the FCC in its Second
Report and Order in MM Docket No. 83-523, 58 RR2d 559 (1985), up to a
maximum of forty (40) hours per week per ITFS channel. Lessor shall give
Lessee at least six (6) months' advance written notice of such licensee's
revised schedule for the twenty-one (21) to forty (40) specific air time
hours that such licensee intends to so utilize, provided, however, that
Lessor shall not be obligated to give Lessee any more advance notice than
Lessor shall have actually received from such licensee.
2. Term. The term of this Agreement shall commence upon the date of
its execution and shall extend for a period of ten (10) years, provided,
however, that, at the option of Lessee, and subject, in all events to due
and timely grant and renewal of all FCC licenses and other authorizations
for each of the channels, this Agreement shall be extended for one (1)
additional consecutive ten (10) year period. In the event that Lessee
determines not to exercise its renewal option hereunder, Lessee shall give
Lessor written notice of such determination at lest six (6) months prior to
the expiration of the then-current term of this Agreement.
3 . ITFS Programming. The parties hereto recognize that It is the
obligation of each licensee of the ITFS channels to transmit qualified
instructional and/or educational programming to meet applicable FCC
requirements. To the extent that Lessee's subscription television service
includes programming services (e.g., Cable News Network, C-Span, Discovery
Channel) which, in the option on any of such licensee or Local Program
Committee, would qualify as "substantial use" ITFS programming for such
licensees, and to the extent that such licensees, in concert with the Local
Program Committee, desire to transmit such programming services to meet such
licensees' FCC obligations, Lessee agrees to make such programming services
available to such licensees, subject to availability of such programming and
subject to receipt of all required consents from programming suppliers, and
at no cost to either Lessor or to any of the licensees in question. Lessee
agrees to integrate the educational programming of such licensees into the
subscription television service to be offered by Lessee to its subscribers
at no cost to Lessor. This integration shall consist of listing such
educational programming in any program guides produced by Lessee for its
subscription television service subscribers.
4. Transmission Facilities. Upon execution of this Agreement, Lessor
and Lessee shall select a location at which to co-locate the transmitter
sites for each of the channels. The parties hereto agree that such co-
location of the transmitter sites of each of the ITFS channels is of the
essence of this Agreement. Lessor shall utilize its best efforts to secure
all necessary consents from each of the licensees of the channels and/or
FCC-License applicants for each of the channels, with respect to such co-
location of transmitter sites, and Lessor shall utilize its best efforts to
ensure that each of such licensees and/or FCC-license applicants files with
the FCC, as soon as practicable, and diligently prosecutes all necessary
applications to secure all necessary FCC consents and authorizations to
effectuate co-location of such transmitter designated by Lessee and Lessor.
Upon grant by the FCC of all necessary consents and authorizations for co-
location of such transmitter sites for the ITFS channels to be leased
hereunder, Lessee or its designee shall, within a reasonable period of time,
but in no event later than thirty (30) days following the date upon which
all such FCC consents and authorization shall have been granted, commence
construction of such transmission facilities in accordance with such FCC
consents and authorizations at the transmission site designated by Lessor
and Lessee. Lessee or its designee shall purchase and install such
transmitters, transmission lines, antennas and receivers as may be required
by Lessee in connection with its subscription television business and the
fulfillment of any of the requirements for receive site installations
contained in the Air Time Lease Agreements identified in Schedule B, as soon
as practicable, in accordance with the provisions of such FCC consents and
authorizations. Any equipment used in connection with said construction
shall be leased by Lessee to Lessor pursuant to Section 8 below. (Said
equipment is hereinafter referred to as the "Leased Equipment.") Lessee
shall be responsible for supervision of the Leased Equipment.
5. Rent. (a) Commencing on a date which is the first day of the first
full month following six (6) months of operations, and continuing each month
thereafter, Lessee shall pay to Lessor a monthly connection fee (the
"Connection Fee") which shall be the product of the number of wireless cable
subscribers receiving Lessee's wireless cable operation over the MMDS
station in the market area during the previous calendar month and a per-
subscriber fee of five cents ($0.05) per month per channel. For the
purposes of computing the Connection Fee due for any month, the term
"Subscribers" shall be deemed to mean the number of paid subscribers who
have received Lessee's wireless cable programming over Lessor's station
during the prior month. For purposes of the definition of "subscriber," (1)
each single family residential dwelling and each single business office or
place shall be considered one subscriber, and (2) in those situations where
programming is sold in bulk for viewing at isolated locations in the same
facility (e.g., where a number of viewing units are grouped for billing
purposes, such as may be the case with condominiums and hotels) and the
Lessee's rates therefor are less than its prevailing monthly rate for the
sale of the Lessee's programming over Lessee's wireless cable system to
individual subscribers in the market area, the number of subscribers from
such bulk billing points shall be determined by dividing the total monthly
revenues derived from the sale of programming over Lessee's wireless cable
system to the bulk billing point by the Lessee's then-prevailing basic
monthly rate for the sale of programming to individual subscribers receiving
wireless cable programming over Lessor's channels in the market area. The
determination of the number of subscribers in any given month may be subject
to redetermination by the Lessee, with notice to the Lessor, to take into
account those subscribers who have not paid for at least one (1) full
month's subscription fee and those who the Lessee may have disconnected or
terminated for lack of payment. In such event, the Connection Fees for the
applicable month shall be recalculated at any time within three (3) months
of the end of the month in question, and deficiencies in the Connection Fee
for such month shall be paid promptly by the Lessee to the Lessor, and any
excess in the Connection Fee for such month shall be applied to offset
against any then-current payments due from the Lessee to the Lessor.
(b) If the foregoing calculation fails to generate Rental Fees equal
to or in excess of the minimum rental fees set forth below, then the Lessor
shall be entitled to receive Rental Fees in accordance with the following
table:
<TABLE>
<CAPTION>
Period Following the
Date of First Sale of Total Minimum
Subscription Television Service Monthly Rental Fee
in Each Market in Each Market
------------------------------- ------------------
<S> <C>
Months 1 through 6 No payment
Months 7 through 12 $ 500 per month
Months 13 through 18 $1,500 per month
Months 19 through 24 $3,000 per month
Months 25 through 36 $4,500 per month
Months 37 and beyond $5,000 per month
</TABLE>
The foregoing payments shall be due and payable on or before the first day
of the first month following the end of the respective periods set forth
above. In the event a payment is received later than three (3) days
following the due date, there shall be a seventy-five dollar ($75.00) late
fee and interest shall accrue at a rate of fifteen percent (15 %) APR.
(c) The monthly rental fee provided for in either Paragraph 5(a) or
Paragraph 5(b) shall be increased by the percentage increase in the Consumer
Price Index, All Urban Wage Earners and Clerical Workers, U.S. City Average,
published by the U.S. Department of Labor (or, if such index is no longer
completed, then such similar index then in service), such adjustment to
occur on the first day of the first month, and biannually thenceforth,
following the completion of thirty-six (36) months of service to
subscribers.
(d) Lessee shall, within fifteen (15) days after the end of each
month after the start date, provide Lessor with a Certificate signed by an
officer of Lessee showing the number of subscribers for the preceding month,
computed in accordance with Section 5(a). The Connection Fee or
Transmission Fee payable by Lessee to Lessor, as determined in accordance
with Sections 5(a) and/or 5(b) hereof, shall be computed on the Certificate,
and Lessee shall forward said Connection Fee or Transmission Fee to Lessor
at the time of tendering the Certificate. Lessee shall include on the
Certificate any other information reasonably requested by Lessor so that
Lessor may accurately determine that the Connection Fee tendered by Lessee
has been calculated correctly pursuant to Section 5 hereof. Any other
charges to be paid by Lessee hereunder shall be invoiced to Lessee on a
monthly basis by Lessor. Said invoices shall contain an itemization of the
charges contained therein, and shall be paid by Lessee within twenty (20)
days after the date of receipt thereof.
6. Right to Audit. Upon ten (10) business days' advance notice of one
to the other, Lessee and Lessor shall have the right to inspect or audit (at
the sole expense of the requesting party) (a) in the case of the Lessor, all
subscriber records and accounts of Lessee with respect to provision by
Lessee of subscription television service in the market via the channels,
and (b) in the case of the Lessee, all expenses and liabilities of the
Lessor, in each case to the extent necessary to assure compliance with the
terms of this Agreement. (For purposes of this Agreement, a "Business Day"
shall mean any day other than a Saturday, Sunday or nationally recognized
holiday.) Said inspection or audit may be conducted by the party or its
designees. The parties agree that they and their designees shall maintain
the confidentiality of all information so obtained and that such information
shall not be used by the inspecting party, its designees or any of their
respective officers, directors, employees, agents, representatives or
affiliates for any purpose other than verification of the amounts properly
due and payable hereunder or compliance with the terms of this Agreement.
7. Maintenance and Operation. Lessee shall maintain and operate the
transmission equipment utilized in connection with each of the channels and
shall pay all costs associated with such maintenance and operation, without
cost to or reimbursement by Lessor.
8. Channel Equipment Lease. Lessor shall lease from Lessee all Leased
Equipment to be purchased and installed by Lessee pursuant to Section 4 of
this Agreement. The Leased Equipment shall be leased by the Lessee to the
Lessor in accordance with the following terms:
(a) Rent. Lessor shall pay to Lessee one dollar ($1.00) per year for
use of the Leased Equipment. The parties hereby acknowledge that Lessor's
lease to Lessee of the channels, at the Rental Fees set forth in this
Agreement, constitutes consideration for Lessee's lease of the Leased
Equipment to Lessor.
(b) Taxes. Lessee shall be required to pay all taxes and other
charges assessed against the Leased Equipment, without cost to or
reimbursement by Lessor, and Lessee shall be entitled to claim depreciation
and any investment tax credits for income tax purposes which may flow from
ownership of the Leased Equipment. Lessor shall not do any act or thing, or
fail to do any act or thing, which would result in imposition of any lien,
charge, encumbrance, mortgage, security interest or other claim against any
of the Leased Equipment.
(c) Term. The term of the lease for the Leased Equipment shall
commence on the date of installation of the Leased Equipment and shall end
upon the date of termination of this Agreement.
(d) Equipment Leases. Lessor acknowledges that Lessee may obtain the
Leased Equipment by lease rather than purchase. Lessor agrees that its
rights with respect to any such Leased Equipment shall be subject to the
rights of the equipment lessor.
9. Programming. Lessee acknowledges that only programming of a sort
which would not have a material adverse effect on its reputation or Lessor's
reputation in the market will be transmitted by Lessee on the channels.
Lessee will use its best efforts to provide programming supplied by one or
more nationally recognized programming networks, including, but not limited
to, HBO, Showtime, The Movie Channel, Cable News Network and ESPN. The
parties hereto acknowledge the difficulties inherent in specifying exact
standards in this Section 9, and agree to use their respective best efforts
to cooperate in defining mutually acceptable programming standards for the
Lessee's subscription television business. Lessor shall have the absolute
right to deny Lessee the right to transmit on any of the channels any
program that is "obscene" as such term is defined in the context of 18
U.S.C. 1464 or that would violate FCC Rules.
10. Lessor's Representations and Warranties. Lessor represents,
warrants, covenants and agrees to each of the following at the date hereof
and at all times during the terms of this Agreement:
(a) Due Incorporation. Lessor is a corporation duly organized,
validly existing and in good standing under the laws of the state of
organization.
(b) Authorization of Agreement: No Breach. The execution, delivery
and performance of this Agreement has been duly and validly authorized and
approved by Lessor's Board of Directors.
(c) Licenses and Authorizations. As of the date hereof, except for
the FCC-license applications pending before the FCC and identified on
Schedule A attached hereto, the FCC has granted all necessary construction
permits for construction of all transmission facilities contemplated under
this Agreement, which facilities are listed on such Schedule A. As of the
date hereof, and consistent with the information set forth in Schedule A,
each of the FCC construction permits described therein is in full force and
effect, and such construction permits constitute all licenses, permits and
authorizations from the FCC and other regulatory bodies that are required
for operation of the channels and said transmission facilities, except for
licenses or other equivalent FCC authority to operate such facilities after
construction thereof has been completed. To the best of Lessor's knowledge,
after diligent inquiry, no violation of the Communications Act of 1934, as
amended, nor any violation of any other federal, state or local law or
regulation, in respect of the operation or prospective operation of the
transmission facilities described in Schedule A exists, the effect of which,
individually or in the aggregate, would materially adversely affect the
business, prospects, profits, property or condition (financial or otherwise)
of either (i) the channels or such transmission facilities, or (ii) the
subscription television business of Lessee contemplated hereunder.
Consistent with Schedule A, Lessor shall utilize its best efforts to assure
that none of the construction permits issued by the FCC and described
therein will expire or lapse, and Lessor shall utilize its best efforts to
assure that, to the extent necessary, the permittees of the transmission
facilities in Schedule A duly and timely file with the FCC all required
applications for extension of the referenced construction permits and all
necessary or desirable applications for modification of such construction
permits to implement the purposes contemplated hereunder (including, without
limitation, the co-location of transmitter sites described in Section 4
hereof) and all necessary applications for FCC licenses and other
authorizations for operation of such transmission facilities, Lessor shall
utilize its best efforts to assure that any and all such FCC applications
shall be diligently and properly prosecuted in good faith toward grant.
Lessor shall utilize its best efforts to assure that renewals of all FCC
authorizations for such transmission facilities shall be timely filed with
the FCC and diligently prosecuted.
(d) Leases. Lessor has entered into leases providing for lease of
excess channel capacity on, or has obtained licenses to use, the channels,
copies of which leases and licenses are set forth in Schedule B attached
hereto. Said leases and licenses constitute valid and binding obligations
of Lessor and of each of the other respective parties thereto and are in
full force and effect as of the date hereof and will, throughout the term of
this Agreement, constitute the valid and binding obligations of Lessor and
of all such other parties thereto and will continue to be in full force and
effect. As of the date hereof, to the best of Lessor's knowledge, after due
inquiry, neither Lessor nor any other party to any of the aforementioned
leases or licenses is in material default under, or breach or violation of,
any such lease or license, and Lessor has not received nor given notice of
any such default, breach or violation under any such lease or license from
or to any of the other parties thereto and will not have received any such
notice during the term of this Agreement. Lessor has obtained valid and
binding consents, authorizations and approvals from any and all necessary
persons and other entities, with respect to the leasing by Lessor to Lessee
of the channel capacity provided for herein, so as to ensure that Lessee
will enjoy all of the rights and privileges of Lessor under each of the
leases and/or licenses described herein.
(e) No Litigation. Except as disclosed in Schedule C attached
hereto, as of the date hereof, there is no suit (at law or in equity),
action or legal, administrative, arbitration or other proceeding or
governmental investigation pending or as to which Lessor has received notice
which would, individually or in the aggregate, materially adversely affect
Lessee's rights under this Agreement or the channel leases or the operation
of the channels and transmission facilities relating thereto and/or the
Lessee's proposed subscription television business in the market.
(f) FCC Compliance, Except as disclosed in Schedule D attached
hereto, the channels shall, during the term of this Agreement, be operated
in accordance with their respective FCC construction permits, licenses and
other authorizations, the Communications Act of 1934, as amended, and the
FCC Rules and FCC policies in effect from time to time.
11. Lessee's Representations and Warranties. Lessee represents,
warrants and agrees as follows:
(a) Due Incorporation and Standing. Lessee is a corporation duly
organized and validly existing under the laws of the State of Vermont.
(b) Authorization of Agreement. Lessee has full power, right and
authority to execute, deliver and enter into and perform this Agreement, and
the execution, delivery and consummation of this Agreement have been fully
and effectively authorized by Lessee's Board of Directors.
(c) No Litigation. There is no litigation, action at law, suit in
equity, proceeding, arbitration or governmental investigation pending or, to
the best of Lessee's knowledge, threatened that could materially adversely
affect the Lessee or its assets or the transactions contemplated hereby.
(d) No Breach. The execution and delivery of this Agreement by Lessee
and the performance of its obligations and the transactions contemplated
hereby will not result in the breach or, or constitute a default under, or
violate the Certificate of Incorporation or Bylaws of Lessee or any other
agreement, lease or contract to which Lessee is bound or any order, writ or
decree of any court, agency or governmental body.
12. Negative Covenants of Lessor. During the term of this Agreement,
Lessor will not:
(a) Enter into, or negotiate or attempt to enter into, any agreement
or other arrangement with any other party or parties that would be
inconsistent with or materially aversely affect Lessee's rights hereunder.
(b) Procure, or attempt to procure, for Lessor's own use or for the
use of any person or entity other than Lessee or lease, or attempt to lease,
to any person or entity other than Lessee any other or additional six-MHz
channels in the market.
13. Further Covenant of Lessee. During the term of this Agreement,
if Lessee desires to use in connection with the operation of its
contemplated subscription television business in the markets any channels of
a bandwidth of six-MHz in excess of the number of channels, and Lessee
notifies Lessor in writing of such desire, for a period of three hundred
sixty (360) days following the date of such notice, Lessor shall be
authorized to act as Lessee's exclusive agent in leasing such additional
channels but subject, in all events, to the direction, supervision and
control of Lessee in relation to any and all negotiations concerning such
additional channels. During such period, Lessee shall not lease, or attempt
to lease, or negotiate to lease any such additional channels directly with
any party in contravention of Lessor's aforementioned exclusive agency. In
fulfilling its obligations as agent, Lessor shall utilize its best efforts
to procure as soon as practicable a lease of additional channels as directed
by Lessee and to represent and to protect Lessee's interests in connection
with such negotiations.
14. Rights of Indemnification; Cure. (a) The parties hereby
acknowledge and agree that Lessee does not assume and shall not be obligated
to pay any liabilities of Lessor, under any of the leases or licenses
annexed to Schedule B attached hereto or under any other contracts, leases
or agreements. Lessor hereby agrees to indemnify Lessee and hold Lessee and
its successors and assigns and their respective officers, directors,
shareholders, partners, employees, agents and other representatives
(collectively "Lessee Indemnified Parties" and each individually as "Lessee
Indemnified Party") harmless from and against any and all claims,
liabilities and obligations of every kind and description, contingent or
otherwise, arising from or related to any actions or inactions of Lessor or
any of its affiliates or arising from or related to the channel leases and
from any and all other contracts, agreements, understandings and leases to
which Lessor may be a party.
(b) Lessee hereby agrees to indemnify and hold Lessor and its
successors and assigns and their respective officers, directors,
shareholders, partners, employees, agents and other representatives
(collectively, "Lessor Indemnified Parties" and each individually as "Lessor
Indemnified Party") harmless from and against:
(i) Any and all claims, liabilities and obligations of every
kind and description, contingent or otherwise arising after the date
hereof, from or related to construction of the transmission facilities
relating to the channels as provided for herein, or arising from or
related to operation by Lessee of its contemplated subscription
television service in the market;
(ii) Any and all damage, loss, liability or deficiency
resulting from any (1) misrepresentation or breach of warranty by, or
non-performance of any duty or obligation of, the Lessee under this
Agreement, or (2) from any misrepresentation in or omission from any
certificate or other instrument executed and delivered to any Lessor
Indemnified Party pursuant to this Agreement or in connection with any
of the transactions contemplated hereunder, and
(iii) Any and all actions, suits, proceedings, damages,
assessments, judgments, costs and expenses, including reasonable
attorneys' fees, incurred by any Lessor Indemnified Party as a result
of Lessee's failure or refusal to defend or compromise any claim
incident to, or failure to comply with, this Paragraph 14(b).
(c) If any claim or liability shall be asserted against any Lessor
Indemnified Party which would give rise to a claim by any Lessor Indemnified
Party against Lessee for indemnification under the provisions of Paragraph
14(b) above, such Lessor Indemnified Party shall promptly notify Lessee of
the same and give all reasonable cooperation in the defense thereof, and
Lessee shall be entitled, at its own expense, to compromise or defend any
such claim.
(d) Lessor shall promptly give Lessee notice of any default or
threatened termination under any of the leases or licenses, and Lessor shall
provide Lessee with information reasonably requested by Lessee with respect
to any purported default or other event that may trigger early termination
under any such lease or license. Regardless of whether or not notice is
given, Lessee shall have the right, but not the obligation, to cure any such
default upon fifteen (15) days prior notice to Lessor (or such lesser period
as may be required to avoid termination).
15. Termination
A. By Lessee - At Lessee's option, this Agreement may be terminated
by Lessee upon thirty (30) days' written notice to Lessor:
(a) If the FCC or any other governmental entity determines that
Lessor is not authorized to lease any or all of the channels from the
respective licensees of such channels, and/or that Lessee is not
authorized to lease any or all such channels from Lessor and to
utilize such channels in the manner contemplated hereunder,
(b) If any of the channel leases is not renewed or extended, or
in the event that any of the FCC construction permits or other
authorizations for any of the transmission facilities relating to the
channels is not renewed in the ordinary course, or expires, lapses or
is revoked;
(c) In the event of any material breach by Lessor of any of its
warranties, representations or covenants hereunder.
(d) In the event of default, the non-defaulting party shall
have the right to acquire the assets of the defaulting party at fair
market value, minus any fees or revenues owed by the defaulting party
to the non-defaulting party. An event of default is defined to
include failure to perform the obligations set forth in Paragraphs 4,
10, 12 and 14.
B. By Lessor - This Agreement may be terminated by Lessor upon thirty
(30) days' written notice to Lessee:
(a) If Lessee is in violation of any FCC rule or regulation and
Lessee shall fail to cure such violation within thirty (30) days of
last due date;
(b) Failure of Lessee to pay any monies due hereunder within
thirty (30) days of last due date;
(c) In the event of any material breach by Lessee of any of its
warranties, representations or covenants hereunder,
(d) In the event of default, the non-defaulting party shall
have the right to acquire the assets of the defaulting party relative
to this Agreement, at fair market value, minus any fees or revenues
owed by the defaulting party to the non-defaulting parry. Events of
default are defined to include, but not be limited to, failure to
perform any obligations under Paragraphs 4, 5, 6, 7, 8a, 9, 11 and 13.
Unless otherwise specified, if termination of this Agreement occurs
under any of the circumstances set forth in this Paragraph 15, each party
hereto shall be entitled to retain all equipment and materials purchased by
or owned by such party. Upon termination of this Agreement under any of the
circumstances set forth in this Paragraph 15, there shall be a final
accounting of monies due under this Agreement and, when completed, there
shall be no further liability of one party to the other.
Should either party find it necessary to pursue legal remedies to
enforce the rights hereunder, they shall be entitled to recover all fees and
expenses incurred including, but not limited to, expert and attorney fees
from the other party as additional damages.
16. Rights of First Refusal. Lessee agrees to grant to Lessor a right
of first refusal to acquire rights to and to develop and operate a
subscription television business in this market should Lessee terminate its
business or make any form of transfer of substantially all of its assets.
This right of first refusal shall be equally applicable to any subsidiary
created by Lessee for the purpose of performing Lessee's obligations
hereunder.
17. Communications with Regulators: Cooperation. Each party shall
promptly inform the other of its communications with the FCC and other
applicable federal and state regulators with respect to the channel leases.
Lessor shall provide copies of all such communications upon Lessee's
request. Lessor and Lessee shall cooperate in approaching the FCC and other
regulators in order to maximize the terms of the leases and licenses and
otherwise to maximize the benefits available to both parties under this
Agreement.
18. Specific Performance. The parties hereto acknowledge and agree
that a breach by either party of any of the provisions hereof will cause the
other party irreparable injury and damage for which there is no adequate
remedy at law. Accordingly, the terms of this Agreement shall be
specifically enforced. Neither this provision nor any exercise by any party
of rights to equitable relief of specific performance herein granted shall
constitute a waiver of any other rights which it may have to damages or
otherwise.
19. Miscellaneous.
(a) Schedules and Exhibits. All schedules and exhibits attached
to this Agreement shall be deemed to be part of this Agreement and
incorporated herein, where applicable, as if fully set forth herein.
(b) Construction. This Agreement shall be construed and
enforced in accordance with the laws of the State of Vermont.
(c) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
(d) Notices. Any notice or other communications shall be in
writing and shall be considered to have been duly given when
personally delivered or deposited as certified U.S. mail, postage
prepaid, return receipt requested, and addressed as follows:
If to Lessor:
Mr. George W. Bott
Ascutney Associates, Inc.
P.O. Box 186
Rexford, New York 12148
with a copy to:
Fleischman & Walsh, P.C.
1400 Sixteenth Street, N.W.
Washington, D.C. 20036
Attention: Charles Walsh, Esq.
If to Lessee:
Mr. Scott Wendell
New England Wireless
56 Green Street
Bellows Falls, Vermont 05101
with a copy to:
Mr. William M. Barnard, Esq.
McFadden, Evans & Sill
1726 Eye Street, N.W.
Suite 810
Washington, D.C. 20006
Any party hereto may, by giving written notice to the other parties
hereto, change the address to which notices are to be sent.
(e) Amendment. This Agreement shall not be amended or modified
in any manner except by a writing executed by all parties hereto.
(f) Severability. Notwithstanding anything contained herein to
the contrary, in the event that any part of this Agreement shall be
declared invalid by a court of competent jurisdiction, such
declaration shall not affect the remainder of said Agreement or any
part thereof.
(g) Fees and Expenses. Whether or not the transactions
contemplated by this Agreement are consummated, each of the parties
hereto shall pay the fees and expenses of their respective counsel,
accountants and other experts and all other expenses incurred by them
incident to the negotiation, preparation and execution of this
Agreement and the performance by them of their obligations hereunder.
(h) Force Majeure. In the event that Lessee's performance of
any of the terms, conditions, obligations or requirements set forth in
this Agreement is prevented, hindered, impaired or delayed due to any
cause beyond Lessee's reasonable control or not reasonably
foreseeable, such delay in performance and/or non-performance shall be
deemed to be excused, and no penalties or sanctions shall be imposed
as a result thereof, provided that Lessee has notified Lessor within
sixty (60) days of its discovery of the occurrence of such an event.
Such causes beyond Lessee's reasonable control, or not reasonably
foreseeable, shall include, but shall not be limited to, acts of God,
war, acts of war, civil emergencies and labor unrest or strikes.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized representatives as of the day and year
first above written.
ATTEST: LESSOR: Ascutney Associates, Inc.
/S/______________________________ By: /S/_____________________________
George W. Bott
President
ATTEST: LESSEE: New England Wireless
/S/______________________________ By: /S/_____________________________
Scott Wendell
President
5/17/93
EXHIBIT 10.11
BETA-SITE AGREEMENT
THIS AGREEMENT, made as of the last date indicated below (hereinafter
"Effective Date"), by and between InterDigital Communications Corporation, a
Company, having offices located at 781 Third Avenue, King of Prussia, PA,
19406-1409 (hereinafter "IDC"), and Worldwide Wireless Corporation, Inc.,
having offices at 6 East 43rd St., New York, N.Y., 10017 (hereinafter
"WWW");
WHEREAS IDC is in the process of commercializing a wireless local loop
equipment ("TrueLink(TM) ") based upon IDC's proprietary Broadband Code
Division Multiple Access(TM) (B-CDMA(TM)) wireless communications technology
product;
WHEREAS IDC is desirous of deploying initial commercial TrueLink(TM)
equipment at a site in the United States;
WHEREAS WWW is in the business of operating wireless CATV networks,
including various service territories located in Vermont and desires to
expand the scope of services to include wireless voice and other services
provided by TrueLink(TM);
WHEREAS WWW is desirous of acquiring such TrueLink(TM) equipment for use in
the Vermont Beta-Site (as hereinafter defined); and
NOW THEREFORE, in consideration of the premises and of the mutual covenants
and agreements hereinafter set forth IDC and WWW covenant and agree as
follows:
1.0 - DEFINITIONS In addition to the definitions in SCHEDULE-A (TECHNICAL
SPECIFICATION) and SCHEDULE-B, IDC's standard Terms and Conditions sheet
(Terms and Conditions), both of which are incorporated herein, the following
terms and conditions shall apply:
"TrueLink(TM) equipment" shall mean a broadband code division multiple
access wireless local loop product (including base stations and subscriber
units) as embodied in the technical specifications identified in "SCHEDULE -
A" attached hereto and made a part hereof, or as modified from time to time
according to the terms of this Agreement.
"INTELLECTUAL PROPERTY RIGHTS" shall mean the legally recognized and
enforceable ability to prohibit others from making, having made, using or
selling ideas, articles of manufacture or methods for use of articles of
manufacture, embodying B-CDMA Wireless Local Loop Product including PATENTS,
COPYRIGHTS, KNOW-HOW and TRADE SECRETS.
"BETA-SITE" shall mean a location in Vermont, mutually agreeable to
IDC and WWW where the "TrueLink(TM) " equipment is to be installed and which
is suitable for providing subscriber service to the surrounding area.
"Vendor" when referred to in SCHEDULE-B shall mean IDC.
"Purchaser" when referred to in SCHEDULE-B shall mean WWW.
"Material Breach" small mean those conditions as defined herein and
any other condition which substantially impairs the value of this Agreement
to the non-aggrieved party.
"MMDS" - Multichannel Multipoint Distribution Service. Two sets of
four channels, commonly referred to as "Wireless Cable".
2.0 - OBLIGATIONS OF IDC IDC agrees, subject to WWW's obligations
hereunder, to supply to WWW and WWW agrees to purchase from IDC,
TrueLink(TM) equipment for the purpose of providing, from a base station
location, wireless services (as specified according to SCHEDULE - A)
pursuant to a joint effort between IDC and WWW as part of what is
hereinafter referred to as a Beta-Site effort capable of supporting up to
***** numbers of lines when fully loaded, in a post Beta operative mode, as
these terms is used in the industry;
IDC agrees to cooperate with and jointly decide upon, with WWW, a
suitable site for the Beta-Site effort and appropriate specific use of the
TrueLink(TM) equipment;
IDC agrees to provide all reasonably necessary and appropriate
installation services with respect to the TrueLink(TM) equipment;
IDC agrees to provide all reasonably necessary and appropriate
propagation services utilizing the coordination and other relevant
information to be supplied by WWW;
IDC agrees, subject to receipt of WWW's payments provided hereunder,
to provide an extended limited warranty (as recited in SCHEDULE-B) covering
maintenance and operation the TrueLink(TM) equipment and Software therein,
commencing upon final Acceptance of the operation of the TrueLink(TM)
equipment and for an additional period of six (6) months beyond the warranty
period of SCHEDULE-B. Thereafter IDC agrees to provide maintenance for the
TrueLink(TM) equipment and Software according to IDC's then usual and
customary pricing, terms and conditions.
3.0 - OBLIGATIONS OF WWW Purchase Price. WWW shall pay IDC as the purchase
price(s) for the TrueLink(TM) equipment, including all services provided by
IDC herein, as follows:
$1,500.00 for each FSU, as described in SCHEDULE - A;
$80,000.00 for all infrastructure equipment necessary to accommodate
up to ten (10) FSU's, as described in SCHEDULE - A; and thereafter in order
to increase the subscriber capability of the TrueLink(TM) equipment to be
provided;
An additional $70,000.00 for all infrastructure equipment necessary to
accommodate FSU's units eleven (11) through one hundred (100), as described
in SCHEDULE - A; and thereafter in order to increase the subscriber
capability of the TrueLink(TM) equipment to be provided;
An additional $100,000.00 for all infrastructure equipment necessary
to accommodate FSU's units one hundred one (101) through five hundred (500),
as described in SCHEDULE - A
Payment for such amounts shall be as follows:
20% upon initial shipment of each piece or component of the
TrueLink(TM) equipment by or on behalf of IDC;
30% upon substantial completion of installation of the
associated piece or component of the TrueLink(TM) equipment by
or on behalf of IDC;
The remainder of 50% upon final acceptance of the associated
piece or component of the TrueLink(TM) equipment as determined
according to the specifications in SCHEDULE - A
IDC will provide all services specified and required herein for an
amount, in addition to the equipment amounts specified above, which is
estimated as not exceeding $60,000.00, payable as follows:
$600.00 per man-day, to be billed by IDC according to IDC's usual and
customary billing practices.
Travel costs associated with such services, are not included in such
services amount of $60,000.00, but shall be reimbursed in full to IDC on an
actual disbursement basis, plus 5%, billed and payable in the same fashion
as services above.
Transportation. All transportation and shipping costs for the
TrueLink(TM) equipment will be shipped according to IDC's usual and
customary practices.
Test and Design Support. WWW agrees to utilization of and cooperation
with IDC of the Beta Test site for full design and equipment verification of
all TrueLink(TM) equipment supplied by IDC.
Provide Required Access WWW shall arrange for IDC and its
subcontractors to have access to all reasonably necessary WWW facilities,
and to the extent necessary subscriber's premises as required for the
performance of this Agreement.
Information and Data WWW shall make available to IDC upon request
such information and data (such as, but not necessarily limited to: reports,
studies, documents, records, plans, surveys, photographs, drawings, etc.) as
are available to it and as required for the performance of this Contract.
WWW Furnished Facilities and Equipment
WWW shall provide all required building space, including
rehabilitation and modifications as necessary, outside plant systems, and
commercial power as may be necessary or are set forth in the Technical
Specifications in SCHEDULE-A.
The delivery, installation, Hand Over and/or acceptance test dates or
schedule ("delivery dates"), as determined in SCHEDULE-A required of IDC
under this Agreement are based upon the expectation that WWW shall perform,
on a timely basis, its obligations under this Agreement and that WWW
furnished facilities and TrueLink(TM) equipment set forth in this Agreement
are suitable for its intended use and will be available to IDC as required
in this Agreement, or, if not so stated, in sufficient time to enable IDC to
meet such delivery dates. In the event that support services or property
are not delivered to IDC by such time or times, WWW shall, upon timely
written request made by IDC, make a determination of the delay, if any,
occasioned IDC thereby, and shall equitably adjust the delivery date and any
other contractual provision affected by any such delay, in accordance with
the procedures provided for in this Agreement. In the event the facilities
are, as made available to IDC, in a condition not suitable for the intended
use, IDC shall, upon receipt thereof, notify WWW of such fact and , as
directed by WWW and at WWW's expense, effect repair or modification, in
accordance with this Agreement. Failure by WWW to render or authorize WWW
to render such facilities as suitable shall be deemed a Material Breach of
this Agreement.
4.0 - COORDINATION & TIME FOR PERFORMANCE Technical Liaison. Within ten
(10) days of the effective date of this Agreement, WWW and IDC agree to each
appoint a individual Technical Liaison ("Liaison") who shall act as
intermediaries for their respective companies. Each Liaison shall be
responsible for coordinating the exchange of all information, providing
formal review and approval of that companies technical obligations
hereunder. All technical or technically coordinated issues must be approved
in writing by each Liaison in order to be effective.
Site Selection. WWW and IDC agree to mutually select and each Liaison
shall approve an appropriate geographical location for installation of the
TrueLink(TM) equipment utilizing the mapping capabilities and related
information and assistance supplied by IDC and other relevant criteria as
defined in SCHEDULE - A within _____days of the effective date of this
Agreement.
Engineering Design & Specifications. Within _____days of the
effective date of this Agreement WWW and IDC agree to draft an appropriate
Engineering Design & Specification Document suitable to the Beta-Site and
consistent with the specifications of TrueLink(TM), and addressing relevant
technical issues such as protocols, equipment characteristics, power and the
like and when finalized and approved by each Liaison shall become a part of
SCHEDULE - A hereto. Such Engineering Design & Specifications shall address
and include, in addition to TrueLink(TM) equipment operating and performance
characteristics :
Testing (Partial & Full Loading), including testing schedules, test
parameters and the like;
B-CDMA TrueLink(TM) Equipment Acceptance criteria; and
Commercial Availability which shall be upon successful TrueLink(TM)
equipment design, installation, testing and acceptance.
ACCEPTANCE The TrueLink(TM) equipment shall be considered complete
and ready for Acceptance tests pursuant to IDC's relevant Installation
Verification Test Procedure ("IVTP") when the network base station of the
TrueLink(TM) equipment is, in IDC's judgement, in working order.
IDC shall inform WWW in writing of the completion and readiness for
Acceptance testing of the TrueLink(TM) equipment at least one (1) week in
advance of the scheduled testing. The IVTP shall be conducted by IDC for a
period of time as mutually determined in SCHEDULE-A. IDC shall promptly
correct any substantive defect for which it may be responsible.
Upon successful completion of an IVTP for the TrueLink(TM) equipment,
a certificate of Acceptance shall be issued by WWW within two (2) weeks
therefrom. If WWW does not issue the certificate of Acceptance within said
period, the Acceptance shall be deemed to have been made on the date IDC
informed WWW that the TrueLink(TM) equipment is ready for Acceptance tests,
and IDC may execute such certificate on WWW's behalf. In addition, if WWW
puts the TrueLink(TM) equipment into commercial operation before Acceptance
without IDC's consent, the Acceptance certificate shall be deemed to have
been issued by WWW as of the time commercial operations commenced, and IDC
may execute such certificate on WWW's behalf.
5.0 - INDEPENDENT RELATIONSHIP IDC and WWW are independent entities and
neither is the agent or representative of the other. Neither is authorized
to enter into any agreements to bind the other. The commercial relationship
between IDC and WWW shall remain that of seller and purchaser and nothing
herein shall create or imply any partnership, franchise, employment or
otherwise.
6.O - EXCHANGE AND RESTRICTION OF INFORMATION WWW shall not use for any
purpose other than implementation of this Agreement any portion of the
CONFIDENTIAL INFORMATION or TRADE SECRETS supplied by or garnered from IDC
hereunder or any patent, trademark, or other INTELLECTUAL PROPERTY RIGHTS of
IDC nor copy any IDC designs of any IDC products, including but not limited
to the TrueLink(TM) equipment. Acknowledging that the damages sustainable
by IDC as a consequence of any breach of WWW's obligations under this
Section may be difficult to measure in monetary terms, WWW hereby agrees
that IDC shall be entitled (1) to have the continuation of any such breach
permanently enjoined and (2) to an award of exemplary damages in an
appropriate amount determined by arbitration as provided herein.
It is understood and acknowledged by WWW that during the course of
this Agreement, WWW will be exposed to and may receive CONFIDENTIAL
INFORMATION and/or TRADE SECRETS from IDC. Accordingly, IDC agrees to make
known to WWW, and WWW agrees to receive CONFIDENTIAL INFORMATION only for
the purposes allowed by and consistent with this Agreement and subject to
SCHEDULE-B.
Upon the expiration or termination of the Agreement, unless otherwise
agreed between the parties, WWW shall promptly return to IDC all proprietary
information furnished hereunder together except for those necessary for the
use, operation and maintenance of the TrueLink(TM) equipment.
Any material or substantive change to any documents or manuals
provided by IDC requires the prior written approval of IDC.
7.0 - DISCLOSURE OF INFORMATION TO IDC WWW shall promptly disclose to IDC
the details of any and all authorized modifications, changes, or
improvements in and to said TrueLink(TM) equipment. All unauthorized
modifications, changes, or improvements in and to said TrueLink(TM)
equipment shall from that point forward void all warranties provided herein.
This clause shall survive termination of this Agreement.
8.0 - INTELLECTUAL PROPERTY RIGHTS WWW agrees to assign to IDC all
INTELLECTUAL PROPERTY RIGHTS from any modifications, changes or improvements
by WWW, whether authorized or not, or any of its employees or
subcontractors thereto, developed during the course of this Agreement or as
a result of WWW's use of the TrueLink(TM) equipment. WWW agrees to assist
IDC in perfecting such rights and warrants that its employees and/or
subcontractors are contractually and legally required to assign such rights
to or on behalf of WWW. IDC agrees to grant back to WWW personally, a
perpetual, royalty-free, non-exclusive, non-transferable, non-assignable
license to use INTELLECTUAL PROPERTY RIGHTS only on the TrueLink(TM)
equipment under this Agreement.
9.0 - COMPLIANCE WITH LAWS Compliance. Both parties herein shall comply
with all applicable federal, provincial and local laws, ordinances and
regulations in connections with their performance of this Agreement.
Licenses, Permits etc. All licenses, permits, government approvals,
customs duties, and any other documents or payments, which are required to
be executed and paid in connection with the lawful use, shipment to, and
installation of the TrueLink(TM) equipment at the Selected Site, shall be
obtained and paid for by WWW.
WWW acknowledges, represents and warrants that they have obtained all
usual and necessary licenses to operate the TrueLink(TM) equipment which
specifically include frequency and bandwidth allocation and usage permits
and/or licenses with respect to the TrueLink(TM) equipment.
10.0 - TIME TO CURE Upon the occurrence of a Material Breach, the non-
breaching party shall send Notice to the breaching party, stating with
particularity the nature of such breach and, if appropriate, a suggested
remedy. In the event that the breaching party fails to correct or cure any
material breach under this Agreement within sixty (60) calendar days after
receipt by the other party of a written notice from such party specifying
such breach, the non-breaching party shall send Notice to the breaching
party of that parties failure to cure, stating such reasons with
particularity. As a result thereof the non-breaching party, may at its
discretion, deem the contract to be breached and entitled to and pursue
relief as provided for in this Agreement.
11.0 - ASSIGNMENT OR SALE Acquisition, Assignment or Sale. With the
exception of a contemplated Initial Public Offering by WWW, WWW shall not
sell, assign, delegate, or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of IDC. Any such
attempted sale, assignment, delegation or transfer in contravention of the
terms of this Agreement shall be void and of no effect.
12.0 TERMINATION Rights of Parties on Termination. The following
provisions shall apply on the termination of this Agreement.
All indebtedness of WWW to IDC shall become immediately due and
payable without further notice or demand, which is hereby expressly waived,
and IDC shall be entitled to reimbursement for any reasonable attorneys'
fees that it may incur in collecting or enforcing payment of such
obligations.
WWW shall remove from its property and immediately discontinue all
use, directly or indirectly, of trademarks, designs, and markings owned or
controlled, now or hereafter, by IDC, or of any word, title, expression,
trademark, design, or marking that, in the opinion of IDC, is confusingly
similar thereto.
IDC shall have no obligation to repurchase or to credit WWW for its
TrueLink(TM) equipment and/or inventory of the TrueLink(TM) equipment at the
time of termination of this Agreement. IDC may, at its sole option and
without any obligation whatsoever to do so, repurchase from WWW, without
WWW's consent, the TrueLink(TM) equipment at IDC's price to WWW, less costs
and expenses incurred by IDC to that point.
If the period of non-performance or delay due to Force Majeure shall
exceed ninety (90) days from the giving of notice pursuant to this Agreement
then both parties shall meet to consult and agree on the necessary
arrangements for the further implementation of the Contract. In case no
mutual agreement is reached, then either party may, following the giving of
thirty (30) days notice to the other, terminate the Contract. In the event
of such termination, IDC shall be paid by WWW for all work undertaken. In
addition, the settlement of any other expense that IDC may have incurred in
relation to termination of this Contract by WWW pursuant to this Clause
shall be subject to negotiation by the parties. In case the parties fail to
come to an agreement, the matter shall be settled through arbitration as
provided for in this Agreement.
Termination for WWW's Default
IDC may, upon fifteen (15) days prior written notice, terminate this
Contract if WWW:
(a) should be adjudged bankrupt;
(b) should make a general assignment for the benefit of its creditors;
(c) should have a receiver appointed on account of its insolvency; or
(d) should have an attachment made upon its properties and it is not
vacated or the claim otherwise secured within fifteen (15) days
thereafter.
If WWW cures or commences cure, and diligently prosecutes the same to
completion, a default during the fifteen (15) day notice period, IDC shall
not terminate this Contract.
If this Contract is terminated as provided for immediately above, IDC
may require WWW to accept title and delivery by IDC in the manner and to the
place directed by WWW (i) any completed supplies, and (ii) such
manufacturing materials as IDC has specifically acquired for the performance
of this Contract; and WWW shall, upon direction of IDC protect and preserve
property in the possession of WWW in which IDC has an interest.
13.0 - NOTICES All notices under this Agreement shall be in writing and
given by express mail service with copy by facsimile addressed to the
parties at the addresses immediately below or to such other address of which
either party may advise the other in writing. Notices will be deemed given
when sent.
If to IDC:
InterDigital Communications Corporation
781 Third Avenue
King of Prussia, Pennsylvania 19406
Attention: General Counsel
Phone: (610) 878-7800
Fax: (610) 992-9432
With a copy to:
Technical Liaison
If to WWW:
Attention: ______________________________
Phone: (____) ________________
Fax: (____) __________________
With a copy to:
Technical Liaison
14.0 - CHANGE OF PRODUCT IDC shall have the absolute right without advance
notice to WWW to change or modify any TrueLink(TM) equipment in a manner
which does not change its functionality or performance characteristics. IDC
shall have the absolute right at any time upon ninety (90) days prior notice
to WWW to cease to manufacture and sell or otherwise supersede the
TrueLink(TM) equipment. IDC shall have no liability to WWW with respect to
any such change.
15.0 - NEW OR ENHANCED PRODUCT It is understood that WWW intends to
ultimately expand its service it provides to its subscribers to MMDS
services including POTS and ISDN services as described in SCHEDULE - A. As
such migration becomes available from IDC, IDC agrees to offer and provide
WWW the ability and assistance to migrate from the capabilities of the
"TrueLink(TM) equipment" supplied hereunder to such MMDS capable equipment,
upon reasonable terms and conditions.
16.0 - TRADEMARK AND PUBLIC DISCLOSURES WWW agrees to keep the information
contained in this Agreement, and the negotiations preceding it in
confidence.
However, it is understood that WWW may wish to disclose and/or make
public milestones and the like pursuant to this Agreement and to that end,
WWW agrees to provide IDC with a copy of any proposed disclosure and to
allow IDC to make modifications thereto in order to ensure the accuracy
thereof, including correct and appropriate use of IDC trademarks or
TrueLink(TM) descriptions, specifications or performance. WWW agrees to
provide such proposed disclosure in sufficient time to allow IDC to do such.
WWW agrees that both during the term of this Agreement and after
termination thereof, WWW will not use any trademark, service mark or trade
name of IDC or terms similar thereto in connection with the business of WWW
without the review and written approval of IDC.
17.0 - MISCELLANEOUS The headings in the Agreement are included for
convenience only and shall not be construed as limiting in any manner.
Failure to enforce any of the terms and conditions of this Agreement
shall not be deemed a waiver of any rights and privileges that a party has
under this Agreement. In order for there to be a waiver of any term or
condition of this Agreement, such waiver must be in writing and signed by
the party making the waiver.
This Agreement shall be fairly interpreted in accordance with its
terms and conditions and the terms and conditions shall not be strictly
interpreted in favor of or against either party. The use of the singular or
plural form shall include the other form and the use of the masculine,
feminine or neuter gender shall include the other.
Either party shall be excused from delays in performing or from its
failure to perform hereunder to the extent that such delays or failures
result from causes beyond the reasonable control of such party; provided
that, in order to be excused from delay or failure to perform, such party
must act diligently to remedy the cause of such delay or failure.
IDC does not grant to WWW any right or license under any INTELLECTUAL
PROPERTY RIGHTS other than those rights specifically set forth herein.
In the event of a conflict of terms as between this Agreement proper
and either SCHEDULE-A or SCHEDULE-B, the terms of this Agreement proper
shall prevail.
18.0 - ARBITRATION All issues concerning the interpretation, validity and
performance of this Agreement for non-Patent or non-Copyright-related rights
shall be governed by the laws of the Commonwealth of Pennsylvania as if this
Agreement was negotiated, executed and fully performed entirely within the
State.
IDC and WWW waive court litigation of disputes arising under this
Agreement, and agree to resolve any such disputes through binding
arbitration in King of Prussia, Pennsylvania. Both parties wish to complete
arbitration proceedings as expeditiously and as cost effectively as
possible, preferably within one hundred twenty days from initiation of
proceedings. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Sections 1-16, and any award arising from the
arbitration can be enforced in a court of law having subject matter and
personal jurisdiction.
Arbitration shall be conducted in accordance with the Center for
Public Resources Rules for Non-Administered Arbitration of Business Disputes
by a sole arbitrator. The arbitrator shall render his or her decision
strictly in accordance with the terms and provisions of this Agreement. The
arbitrator should have no authorization to award any punitive or
consequential damages. The arbitrator shall render a decision by stating
reasons therefor in a written opinion. Arbitration shall be a private
proceeding between the parties and it shall have no collateral estoppel
effect with respect to non-parties.
The arbitrator shall be an attorney having at least ten (10) years
experience in relevant wireless local loop technology. If the parties
cannot agree on an arbitrator, then one will be picked by the Center for
Public Resources from its list of arbitrators having such qualifications who
are not retained or regularly employed by IDC or WWW, or any of the
respective parties competitors.
If any accounting is ordered after a determination of liability, then
such accounting shall be conducted by a Certified Public Accountant mutually
agreeable to the parties, or if there is no agreement, one appointed by the
arbitrator, whose CPA firm is not engaged by IDC or WWW, or any of the
respective parties competitors.
The costs payable to the Center for Public Resources, the arbitrator
or the Certified Public Accountant immediately above shall be equally shared
by IDC and WWW.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
parties have duly executed this Agreement under seal effective as of the
date last written below.
ATTEST: INTERDIGITAL COMMUNICATIONS
CORPORATION
By: /s/ William A. Doyle
------------------------------------
William A. Doyle Date August 12, 1997
President
ATTEST: WORLDWIDE WIRELESS INC.
By: /s/ Scot A. Wendel
____________________________________
Scott A. Wendel Date August 12, 1997
Chief Operating Officer
SCHEDULE - A
------------
TECHNICAL SPECIFICATION
-----------------------
Initial frequency contemplated at being 1.8gHz;
Equipment Provided:
The Central Office Terminal (COT) and Radio Distribution Unit (RDU)
equipment connect the TrueLink(TM) Radio Carrier Station (RCS) to the phone
network switch. The RCSs are the "base stations". The Fixed Subscriber
Units (FSUs) are installed at the customers premises. The Local Craft
Terminals (LCTs) and Field Measurement Units (FMUs) are used for
installation and system control.
The site, when completely built-out will consist of 1 RDU, 17 COTs, 5 LCTs,
2 RCSs, 500 FSUs and 2 FMUs.
Time Frame:
The equipment, and more importantly the system's operation, will be
installed and made operational on a phased schedule. During this period
service may be interrupted as RDU, COT and RCS capacity is increased and /
or modified. The final schedule will depend on material availability,
availability of installation personnel and system performance. Phases shall
not be initiated until the installation and verification of system
performance is verified for the previous stage.
The installation of the base station equipment will start on 31 January,
1998. By 28 February, 1998, the RDU, a COT for 30 users, an RCS, and 2 test
FSUs will be installed and operating. It is anticipated the first
residential user will be making phone calls by mid March.
Starting 3 March, 1998, the initial 10 FSUs will be installed and brought
on-line in sequential order over a period of approximately 2 weeks. The
installation schedule will then proceed as follows:
From 17 Mar. to 28 Mar. 10 additional users will be brought on-line, 2 at
a time.
From 31 Mar. to 11 Apr. 15 additional users, up to 3 at a time.
From 14 Apr. to 30 Apr. 20 additional users, up to 4 at a time.
From 1 May to 30 May 30 additional users, up to 5 at a time.
From 2 Jun. on 50 to 100 additional users per month, depending on
installers available and deployment area.
Provided Services / Capabilities
32 Kbit/s ADPCM - Voice call - with dial and D(TM)F capability.
64 Kbit/s PCM channel for up to 14.4 Kbit/s FAX and 28.8 Kbit/s modem data.
All equipment is supplied for indoor installation and use only.
Network interface will be 2 wire analog provided by conversion of V5.1
interface with COT. RCS Antenna height will be the maximum that WWW can
provide. The RCS antenna will be omni-directional.
The FSU antenna height shall not extend beyond the roof line, except
where an existing TV antenna mast can be used, unless permission of the
owner is granted. There may be situations where a "line of sight" antenna
installation aimed toward the base station will not be possible without
extending above the roof line.
The FSU will require 120 VAC, 60 Hz at a maximum of 30 watts. IDC
will assume no responsibility for installation or upgrading of customer's
electrical service or outlets.
Miscellaneous
Subsequent to Beta-site installation, the capability for POTS (as that
term is used in the industry), and thereafter ISDN data capability, upon
terms and conditions as agreed upon at that time between the parties.
SCHEDULE - B
------------
TERMS AND CONDITIONS OF SALE
----------------------------
THIS CONTRACT AND THESE TERMS AND CONDITIONS, WHEN ACCEPTED BY THE
PURCHASER EXPLICITLY, BY ACCEPTANCE OF GOODS OR OTHERWISE, SHALL CONSTITUTE
AGREEMENT BETWEEN VENDOR AND PURCHASER, AND SHALL BE GOVERNED BY AND
CONSTRUED ACCORDING TO THE INTERNAL LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA, AND THE UNITED STATES OF AMERICA.
1. Delivery and Delay. All quoted delivery dates and/or periods are
approximate. The delivery periods shall commence when Vendor shall have
acknowledged receipt of complete specifications and/or applicable documents
required to effect shipment, such as letter of credit, import license,
exchange permit, shipping instructions, etc. Risk of loss or damage in
transit shall pass to the purchaser at the point where Vendor has fulfilled
its obligations under the shipping term specified in this contract. To the
extent legal title to the goods shall be deemed by law to pass to the
purchaser at the time of delivery to the freight forwarder and prior to
performance of all of the purchaser's obligations hereunder, equitable title
shall remain in Vendor until payment in full of the purchase price, and the
purchaser shall grant, and by acceptance of the goods shall be deemed to
have granted, to Vendor a first security interest and charge in all goods to
secure payment of the purchase price and other amounts owing by the
purchaser and performance of all the purchaser's obligations under this
contract of sale. Vendor may reclaim any goods delivered to the purchaser
or in transit if the purchaser shall fail to make payments when due.
Vendor reserves the right to make delivery in installments, unless
otherwise expressly stipulated in this contract; and all such installments,
when separately invoiced, shall be paid for when due per invoice, without
regard to subsequent deliveries. Delay in delivery of any installment shall
not relieve the purchaser of its obligations to accept remaining deliveries.
Vendor shall not be liable for any damage as a result of any delay due
to any cause beyond Vendor's reasonable control, including but not limited
to any act of God, act of purchaser, embargo or other governmental act,
regulation or request, fire, accident, strike, slow-down, war, riot, delay
in transportation, delayed delivery by suppliers, and inability to obtain
necessary labor and materials. In the event of any such delay, the date of
delivery shall be extended for a period equal to the time lost by reason of
the delay.
Claims for shortages or other errors must be made in writing to Vendor
within thirty (30) days after receipt of shipment, and failure to give such
notice shall constitute unqualified acceptance and a waiver of all such
claims by the purchaser.
2. Descriptive Literature and Substitutes. Catalogues, product
brochures, photographs, and other illustrations are a general representation
of the products offered but shall not be taken as precise and shall not form
part of this contract.
3. Storage. If the products are not shipped within fifteen (15) days
after notification to the purchaser that they are ready for shipping, for
any reason beyond Vendor's reasonable control, including the purchaser's
failure to give shipping instructions, Vendor may store such products at the
purchaser's risk in a warehouse or yard or on Vendor's premises: and the
purchaser shall pay handling, transportation, and storage charges at the
prevailing commercial rates on submission of invoices therefore.
4. Price and Payment. The prices for the goods covered by this offer
are Vendor's prices for such goods and/or services with (i) the exclusive
Warranty of repair or replacement of defective parts as found in Paragraph 7
(Warranties) below, and (ii) the Exclusion of Consequential Damages and
Disclaimer of Liability, as found in Paragraph 8 (Exclusion ...) below,
including the disclaimer of negligence, strict liability, and other tort
liability, enforceable against the purchaser. If the purchaser desires for
Vendor to provide a greater or additional warranty and/or to be liable for
some or all of the matters disclaimed in Paragraph 8 (Exclusion...), and/or
to be liable for consequential or incidental damages, then the purchaser
must notify Vendor before the purchaser accepts (or is deemed to accept)
this offer pursuant to Paragraph 1 (Delivery and Delay), in which event
Vendor will amend this offer to reflect higher sales prices reasonably
compensating Vendor for assuming that additional exposure. In the absence of
such a notification, by accepting this offer the purchaser is accepting such
limitations and disclaimers in exchange for the lower prices set forth
herein.
All prices listed are payable in United States Dollars. Except as
otherwise set forth in this offer, payment shall be by letter of credit. The
purchaser shall, no later than sixty (60) days prior to each scheduled
shipment date, cause to be issued for Vendor's benefit an irrevocable letter
of credit in U.S. Dollars in the full amount of the purchase price, plus
prepaid freight and insurance, such letter of credit (a) to be issued or
confirmed by a prime U.S. bank acceptable to Vendor, (b) to be subject to
and governed by the Uniform Customs and Practice for Documentary Credits
(ICC Publication No. 400) and to be otherwise acceptable in form and
substance to Vendor, and (c) to provide for payment to Vendor of the full
amount of the purchase price plus prepaid freight in U.S. Dollars, on
presentation by Vendor of sight drafts, Vendor's invoice, and such other
documents as shall be required by the letter of credit at Vendor's U.S.
bank. All banking and other charges for such letter of credit are for the
account of the purchaser.
Payment shall be "net 30"; terms of payment are cash in full no later
than thirty (30) days from the date of shipment, without discount. Payments
not made when due shall bear interest at the rate of one and one-half
percent (1 1/2%) per month from date of shipment until paid in full. If,
during the period of performance of an order, the financial condition of the
purchaser is determined by Vendor not to justify the terms of payment
specified, Vendor may demand full or partial payment in advance before
proceeding with the work, or satisfactory security or guarantees that
invoices will be promptly paid when due, or, at its option without prejudice
to other lawful remedies, may defer delivery or cancel this contract. If
delivery is deferred, the goods may be stored as provided herein and Vendor
may submit a new estimate of costs for completion based on prevailing
conditions. If the purchaser defaults on any payment when due, or in the
event any voluntary or involuntary bankruptcy or insolvency proceedings
involving the purchaser are initiated by or against the purchaser, then the
whole contract price shall immediately become due and payable on demand, or
Vendor, at its option without prejudice to its other lawful remedies, may
defer delivery or cancel this contract.
5. Taxes and Other Charges. Any manufacturer's tax, occupation tax,
use tax, sales tax, excise tax, value-added tax, duty, custom, inspection or
testing fee, or any other tax, fee, or charge of any nature whatsoever
imposed by any governmental authority on or measured by the transaction
between Vendor and the purchaser shall be paid by the purchaser in addition
to the prices quoted or invoiced. In the event the Vendor is required to
pay any such tax, fee, or charge, the purchaser shall reimburse Vendor
therefor.
6. Shipment. Except as otherwise stated hereon, prices are F.O.B.
King of Prussia, Pennsylvania USA and any charges Vendor may be required to
pay or collect with respect to the sale, purchase, delivery, storage,
processing, use, consumption, or transportation of the goods shall be for
the purchaser's account.
Method and route of shipment will be at the discretion of Vendor
unless the purchaser shall specify otherwise, and any additional expense of
the method or route of shipment specified by the purchaser shall be borne by
the purchaser.
7. Warranties. Vendor warrants equipment and parts manufactured by
it and supplied hereunder to be free from defects in materials and
workmanship (or if software, free from material defects) for a period of
twelve (12) months from date of shipment. If within such period any such
equipment or parts or software shall be proved to Vendor's satisfaction to
be so defective, such equipment or parts or software shall be repaired or
replaced at Vendor's option. Vendor's warranty obligations shall be limited
to such repair or replacement, shall be purchaser's exclusive remedy
hereunder, and shall be conditioned on Vendor's receiving written notice of
any alleged defect within ten (10) days after its discovery and, at Vendor's
option, return of such items to Vendor's factory, Duty Paid. This warranty
shall not apply to equipment or parts or software not manufactured by Vendor
or to equipment or parts or software which shall have been subject to
modification, negligence, accident, damage by circumstances beyond Vendor's
control, or improper operation, maintenance, modification, or storage, or to
other than normal use or service. With respect to equipment and parts and
software not manufactured by Vendor, the warranty obligations of Vendor
shall in all respect conform and be limited to the warranty extended to
Vendor by its supplier.
THE FOREGOING WARRANTIES ARE EXCLUSIVE AND IN LIEU OF ALL OTHER
EXPRESS AND IMPLIED WARRANTIES WHATSOEVER, INCLUDING BUT NOT LIMITED TO
IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
This exclusive remedy shall not be deemed to have failed its essential
purpose so long as the Vendor is willing and able to replace defective
products or issue a credit to the purchaser within a reasonable time after
the purchaser proves to Vendor that a defect is involved.
The warranties in this Clause are personal to Purchaser and are non-
assignable and non-transferable. Further, these warranties do not apply to
defects not caused by Vendor (such as acts of God, abuse, misuse, vandalism
or improper installation or operation, unusual physical or electrical
stress, accident, neglect, or any Force Majeure as defined herein), nor to
Equipment or Materials which have been altered or improperly repaired by a
party other than Vendor or persons expressly authorized to alter or repair
Equipment or Materials on behalf of Vendor. These warranties also exclude
any problems directly or indirectly related to interfaces, interconnections
or protocols not supplied by Vendor.
8. Exclusion of Consequential Damages and Disclaimer of Liability.
Vendor's liability with respect to breaches of warranty shall be limited as
provided in Paragraph 7 (Warranties) hereof. With respect to other breaches
of this contract, Vendor's liability shall in no event exceed the contract
price. VENDOR SHALL NOT BE SUBJECT TO AND DISCLAIMS: (1) ANY OTHER
OBLIGATIONS OR LIABILITIES ARISING OUT OF BREACH OF CONTRACT OR OF WARRANTY;
(2) ANY OBLIGATIONS WHATSOEVER ARISING FROM TORT CLAIMS (INCLUDING
NEGLIGENCE AND STRICT LIABILITY) OR ARISING UNDER OTHER THEORIES OF LAW WITH
RESPECT TO PRODUCTS SOLD OR SERVICES RENDERED BY VENDOR, OR ANY
UNDERTAKINGS, ACTS, OR OMISSIONS RELATING THERETO; AND (3) ALL
CONSEQUENTIAL, INCIDENTAL, AND CONTINGENT DAMAGES WHATSOEVER. Without
limiting the generality of the foregoing, Vendor specifically disclaims any
liability for penalties (including administrative penalties), special or
punitive damages, damages for lost profits or revenues, loss of use of
products or any associated equipment, cost of capital, facilities, or
services, downtime, shut-down, or slowdown costs, spoilage of material, or
for any other types of economic loss.
9. Technical and Other Information. Any sketches, models, samples,
or designs submitted by Vendor shall remain the property of Vendor and shall
be treated as confidential information unless the Vendor has in writing
indicated a contrary intent. No use or disclosure of such sketches, models,
and samples, or any design or production process or techniques revealed
thereby, shall be made without the express written consent of the Vendor.
CONFIDENTIAL INFORMATION shall mean information and data of a
confidential nature, including but not limited to proprietary, technical,
developmental, marketing, sales, operating, performance, cost, know-how,
business and process information, computer programming techniques, and all
record-bearing media containing or disclosing such information and
techniques which is disclosed pursuant to this AGREEMENT. CONFIDENTIAL
INFORMATION shall include any samples, models or prototypes, or parts
thereof. CONFIDENTIAL INFORMATION includes all work product generated
during the course of performance of this Agreement.
TRADE SECRET shall mean information, including a formula, pattern,
compilation, program, device, method, technique, or process, that: (i)
derives independent economic value, actual or potential, from not being
generally known to, and not being readily ascertainable by proper means by
other persons who can obtain economic value from its disclosure or use, and
(ii) is the subject of efforts that are reasonable under the circumstances
to maintain its secrecy.
All CONFIDENTIAL INFORMATION delivered pursuant to this Agreement
shall, if in written or physical form, be marked "Confidential" or similarly
labeled by Vendor before being turned over to Purchaser; shall not be
distributed, disclosed, or disseminated in any way or form by Purchaser
outside its business organization (with the exception that such
distribution, disclosure or dissemination to an associated company is
acceptable hereunder, provided the associated company agrees in writing to
Vendor to be bound by the terms and conditions of this Agreement), without
the prior written consent of Vendor; shall be maintained in confidence, and
may only be disclosed to those employees of Purchaser which are informed of
the confidentiality obligations of this Agreement and who have a need to
know the CONFIDENTIAL INFORMATION for the purposes described above; and
shall not be used by Purchaser for any purposes, except as expressly stated
herein, without the express prior written permission of Vendor.
The obligations of the immediately preceding paragraphs shall not
apply, however, to any information which: is already in the public domain at
the time of disclosure or later becomes available to the public through no
breach of this Agreement by Purchaser; was, as between Purchaser and Vendor,
lawfully in Purchaser's possession prior to receipt from Vendor without
obligation of confidentiality; or is received by Purchaser independently
from a third party free to disclose lawfully such information to the
Purchaser without any obligation of confidentiality.
Unless mutually agreed otherwise in writing, Purchaser's obligations
hereunder with respect to CONFIDENTIAL INFORMATION which do not constitute
TRADE SECRETS shall terminate ten (10) years from the date of the receipt
thereof by the Purchaser. Confidentiality obligations for TRADE SECRETS
shall survive for the life of the Trade Secret. Confidentiality obligations
shall survive termination of this Agreement.
10. Purchaser's Property. Any property of the purchaser placed in
Vendor's custody for performance of this contract is not covered by
insurance, and no risk is assumed by Vendor in the event of loss or damage
to such property by fire, water, burglary, theft, civil disorder, or any
accident beyond the reasonable control of the Vendor.
11. Force Majeure. Vendor shall not be liable for any loss or damage
as a result of Vendor's delay in or failure of delivery due to (i) any cause
beyond Vendor's reasonable control; (ii) any act of God, act of the
purchaser, embargo or other governmental act, authority, regulation or
request, fire, theft, accident, strike, slowdown, or other labor
disturbance, war, riot, delay in transportation; (iii) inability to obtain
necessary labor, materials, components, supplies, or facilities; or (v)
inability to obtain necessary export licenses, import licenses, exchange
permits, etc. Should any of the aforementioned events of force majeure
occur, Vendor, at its option, may cancel the purchaser's order with respect
to any undelivered goods or extend the delivery date for a period equal to
the time lost because of delay. Notice of such election shall be given
promptly to the purchaser. In the event Vendor elects to so cancel the
order, Vendor shall be released of and from all liability for failure to
deliver the goods, including, but not limited to, any and all claims on
behalf of the purchaser for lost profits, or for any other claim of any
nature which the purchaser may have. If shipping or progress of the work is
delayed or interrupted by the purchaser, directly or indirectly, the
purchaser shall pay Vendor for all addition charges resulting therefrom.
12. Separability. If any provisions of these Terms and Conditions of
Sale supplemented as provided herein shall be deemed illegal or
unenforceable, such illegality or unenforceability shall not effect the
validity and enforceability of any legal and enforceable provisions hereof
which shall be construed as if such illegal and unenforceable provision or
provisions had not been inserted herein, unless such illegality or
unenforceability shall destroy the underlying business purpose of these
Terms and Conditions.
13. Software License. All software products used in, for or in
connection with the equipment, parts, subsystems or derivatives thereof (the
"System") purchased hereunder, in whatever form, including, without
limitation, source code, object code, microcode and mask works, including
any computer programs and any documentation relating to or describing such
software, such as, but not limited to logic manuals and flow charts provided
by Vendor, including instructions for use of the software and formulation of
theory upon which the software is based, is furnished to the purchaser only
under a personal, non-exclusive, non-transferable license solely for
purchaser's own use only on the System equipment furnished to purchaser by
Vendor.
The software may not be copied or modified, in whole or in part, for
any purpose whatsoever. The software may not be reversed, compiled,
disassembled or otherwise reverse engineered in whole or in part.
No title to or ownership of the software or any of its parts is
transferred to purchaser or end user. Title to all patents, copyrights,
trade secrets and any other applicable rights shall remain in Vendor.
The term of the paid up license for the software is from the date
first above written to such time as purchaser or end user discontinues use
of the applicable software on the System Equipment described herein.
Notwithstanding the foregoing, Vendor shall have the right to
terminate purchaser's or end user's license and retake possession of the
System if purchaser or end user fails to pay any and all required license
fees, any other payments due to Vendor by purchaser or end user for
purchase, lease or use of the System, or otherwise fails to comply with
these terms and conditions.
14. Hold Harmless and Limitation of Liability. All persons furnished
or utilized by Purchaser pursuant to this Agreement shall be considered
solely Purchaser's employees or agents and Purchaser shall be responsible
for compliance with all laws, rules, and regulations including, but not
limited to, employment, labor, working conditions, payment of wages, and
payment of taxes, such as unemployment, social security and other payroll
taxes, including applicable contributions from such persons when required by
law.
Purchaser shall save, indemnify and hold harmless Vendor its officers,
directors, employees, successors and assigns, against all losses, damages,
or expenses of whatever form or nature, including attorneys' fees and other
costs of legal defense (for litigation or out of court settlements), whether
direct or indirect, that they, or any of them, may sustain or incur as a
result of any acts or omissions of Purchaser or any of its directors,
officers, employees, or agents, including, but not limited to, (1) breach of
any of the provisions of this Agreement, (2) negligence or other tortious
conduct, (3) representations or statements not specifically authorized by
the Vendor herein or otherwise in writing, (4) violation by Purchaser (or
any of its directors, officers, employees or agents) of any applicable law,
regulation, or order in the United States.
15. INSURANCE OF THE PROJECT
Vendor shall insure the Equipment and Materials for each System, on a
System by System basis, against all risks until Hand Over covering such
System. Coverage shall include transit insurance, warehouse and storage,
inland transportation, builders all-risk and theft, all without gaps or
exceptions, except to the extent such coverage may be commercially
unavailable or inapplicable. Such insurance shall be procured by Vendor,
upon terms and conditions consistent with sound commercial practice and
shall insure the full value of the Equipment and Materials used for
completion of the System so insured.
Any indemnification received under such insurance shall be used to
replace or repair any material damage or any loss of the Equipment and
Materials so insured or shall be used to reimburse for the replacement or
repair of such goods. Insurance shall include the cost of removal,
demolition, reinstallation, replacement or re-erection (collectively
"rework") of the Equipment and Materials and cover all services for such
rework to the extent to that Vendor is responsible for such rework under
this Contract.
EXHIBIT 10.12
SECOND MORTGAGE DEED
KNOW ALL TO WHOM THESE PRESENTS COME
That WE, NEW ENGLAND WIRELESS, INC., a Vermont Corporation with its
principal place of business in Bellows Falls, County of Windham and State of
Vermont, Grantor,
in the consideration of FORTY THOUSAND DOLLARS AND N0/100 ($40,000.00)
DOLLARS paid to our full satisfaction by PHILIP L. GOLDING and TERESA
GOLDING, husband and wife, of Weathersfield, County of Windsor, State of
Vermont, Grantees,
By these presents do freely GIVE, GRANT, SELL, CONVEY AND CONFIRM
unto the said Grantees,
PHILIP L. GOLDING and TERESA GOLDING, husband and wife,
and their heirs and assigns forever, a certain piece of land in
Weathersfield, County of Windsor, State of Vermont, described as follows,
viz:
Being all and the same lands and premises as conveyed to Philip
Golding and Teresa Golding, husband and wife, by Quitclaim Deed of Philip
Golding dated December 1, 1993, recorded in Book 86, pages 457-459 of the
Weathersfield Land Records and therein described as follows:
Being all and the same land and premises conveyed to Philip Golding
and Cheryl Golding (now deceased) husband and wife, by Warranty Deed from
Anne K. Cleveland, dated August 6, 1976 and recorded August 9, 1976 at Book
53 page(s) 317-319, of the Weathersfield Land Records.
"Being all and the same lands and premises conveyed to Anne K.
Cleveland and Leon M. Cleveland by administrator's deed of Allen C. Young,
Administrator of the Estate of Naoma H. Ingalls, under date of April 4, 1969
and recorded in the Weathersfield Town Clerk's office in Volume 45, Page 33,
to which deed and records and deeds and records contained therein reference
may be had for a more full and complete description.
"Being also the same lands and premises decreed to Anne K. Cleveland
by Order of the Windsor County Court in a certain cause of action for
divorce entitled Leon M. Cleveland v. Anne K. Cleveland, Superior Court,
Windsor County, Docket No. C63-73-WrD under date of August 9, 1974
(Paragraph #3).
"In accordance with the said order, the above premises were conveyed
to Anne K. Cleveland by Quit Claim Deed of Leon M. Cleveland under date of
April 11, 1975, which said deed is recorded in the Weathersfield Town
Clerk's office in Book 52, Pages 68-70.
"The said premises being more specifically described as follows:
"Beginning at the southwesterly corner of said tract where the
division line between said tract and land deeded to William F. Wilgus by
Clarence H. Martin intersects the public highway."
"All of that portion of the tract of land that was deeded to Leonard
W. Wilgus by Edwin Bristol and Jennie Bristol on the first day of May, 1922,
which deed is recorded in Volume 26, Page 332 of the Land Records of the
Town of Weathersfield, Vermont, bounded and described as follows: Beginning
at the southwesterly corner of said tract where the division line between
said tract and land deeded to William J. Wilgus by Clarence H. Martin
intersects the public highway leading from Ascutney to Springfield, Vermont;
thence running northerly along said highway about seven hundred eight-three
and one half feet (783.51) to a fence, thence running south eighty seven
degrees twelve minutes east (S 87' 121 E) along said fence to a point
therein distant one hundred and thirty three feet (1331) from the
intersection of the line of said fence produced and the center of said
public highway; thence in a southerly direction one hundred and sixty feet
(1601) to a point distant one hundred and eight feet (108') from the center
of said public highway measured on a line parallel to the above mentioned
second course; thence southeasterly one hundred thirty-five feet (1351) to a
point distant one hundred fifty-eight feet (1581) from the center of said
public highway measured along a line parallel to said second course; thence
south eighty-seven degrees twelve minutes east 87, 121 E) and parallel to
said second course two hundred and thirty five feed (2351); thence southerly
and at right angles to the last mentioned course two hundred and sixty feet
(2601); thence southerly two hundred and fifty five feet (2551) more or less
to a point in the said division line between said tract and land deeded to
William J. Wilgus by Clarence H. Martin distant three hundred forty-eight
feet (3481) from the intersection of said division line produced and the
center of said public highway; and thence north eighty-five degrees forty-
two minutes west (N 85' 421 W) along said division line to the place of
beginning. Said tract herein described contains four and six tenths (4.6)
acres more or less.
"This parcel is SUBJECT to the easement granted by Abbie Rollins
Caverly to William H. Fellows and Elsie Fellows by deed dated August 2,
1954, recorded in Book 34, Page 26 of the Weathersfield Land Records, being
an easement for an electric line, and reference may be had to said deed for
a more particular description. This conveyance means to include all the
remaining rights of the said Abbie Rollins Caverly to use such easement in
common.
"EXCEPTING AND RESERVING from the foregoing flowage rights decreed to
the Bellows Falls Hydro-Electric Corporation by final Decree (No.1725 of the
public Service Commission of the State of Vermont, which decree was issued
at Montpelier, in the County of Washington and State of Vermont, on July 24,
1933).
"Said parcel is SUBJECT to the provisions set forth in the section
entitled "Water System" of the certain deed from Abbie Rollins Caverly to
William H. Fellows and Elsie R. Fellows dated August 2, 1954, recorded in
Book 34 at Pages 262-264, so far as said water system applied to this
parcel; and this conveyance includes all right, title and interest of Lewis
H. Horton and Florence M. Horton as reserved and excepted in said water
system provision. Reference may be had to said referred to deed for a more
particular description of said "Water System."'
"This present conveyance is further SUBJECT to such reservations and
exceptions relating to the water system, as were set forth in the two
certain deeds from William J. Wilgus to Abbie Rollins Caverly, one dated
July 6, 1944, recorded in Book 30, at Pages 299-401; but only insofar as
such exceptions and reservations in the two deeds from Wilgus are of present
effect, and validity in favor of persons not claiming by, from or under the
said Lewis H. Horton and Florence M. Horton."
"Cheryl Golding died in Weathersfield on May 22, 1986
This property is also subject to Land Use Permit #2SO918 as amended.
TO HAVE AND TO HOLD said granted premises, with all the privileges and
appurtenances thereof, to the said Grantees,
PHILIP L. GOLDING and TERESA GOLDING,
and their heirs and assigns forever, to their own use and behoof forever;
and WE, the said Grantor,
NEW ENGLAND WIRELESS, INC., a Vermont Corporation
its successors and assigns, covenant with the said Grantees,
PHILIP L. GOLDING and TERESA GOLDING,
and their heirs and assigns, that until the ensealing of these presents we
are the owners of the premises, and have good right and title to convey the
same in manner aforesaid, that they are FREE FROM EVERY ENCUMBRANCE; except
as herein mentioned or referred to, and a First Mortgage to Claremont
Savings Bank, and we hereby engage to
WARRANT AND DEFEND the same against all lawful claims whatever. The
condition of this Deed is such that if the said,
NEW ENGLAND WIRELESS, INC.,
its successors and assigns, shall well and truly pay or cause to be paid to
the said
NEW ENGLAND WIRELESS, INC.,
the sum of FORTY THOUSAND DOLLARS ($40,000.00) according to the tenor and
effect of a certain Promissory Note of even date herewith and shall at all
times keep the buildings on said land satisfactorily insured against loss by
fire, for the benefit of the mortgagee herein, and also pay all taxes and
assessments upon said premises, then this deed to be null and void,
otherwise to remain in full force and virtue. And in case of failure to
keep such buildings so insured, or to pay such taxes or assessments, the
legal holder of this mortgage shall have the right to cause such buildings
to be so insured in the owners' names and to pay such taxes and assessments,
adding the proper expense thereof to the principal sum secured under this
mortgage. It is also expressly agreed that in case this mortgage shall be
foreclosed and a decree obtained therein, there shall be included in such
decree a reasonable solicitor's fee in addition to all sums and costs
allowed in that behalf by law. For any such breach of such statutory and/or
other conditions, the Mortgagee shall have the statutory power of sale. The
herein described premises may not be assigned, subdivided or sold nor any
interest therein without the express written consent of the Grantees herein.
A default of the First Mortgage to Claremont Savings Bank shall also
constitute a default of this mortgage.
IN WITNESS WHEREOF, I hereunto set my hand and seal this 15th day of
July, 1994.
In Presence of: New England Wireless, Inc.,
/S/______________________________ /S/_________________________________
First Witness Authorized Agent
/S/_________________________________
Second Witness
STATE OF VERMONT
Windham County, SS.
At Rockingham in the County of Windham and State of Vermont, on this
15th day of July, 1994, personally appeared (unreadable), and he
acknowledged that the signing of this instrument was his free act and deed,
(unreadable), Authorized Agent of the Corporation and he acknowledged that
the signing of this instrument was the free act and deed of the Corporation.
Before me, /S/__________________________
Notary Public
My Commission Expires: 2/10/95
PROMISSORY NOTE (SECURED)
$40,000.00 Rockingham, VT
July 15, 1994
FOR VALUE RECEIVED, WE, NEW ENGLAND WIRELESS, INC., a Vermont corporation
with its principal place of business in Rockingham, County of Windham, State
of Vermont, promise to pay to PHILIP L. GOLDING AND TERESA GOLDING, of
Weathersfield, Vermont, or order, the principal sum of FORTY THOUSAND AND
N01100 DOLLARS ($40,000.00), payable as follows:
Monthly payments of principal plus interest at eight percent (8%) per annum.
Monthly payments shall be Three Hundred Eighty Two Dollars and 27/100
(382.27 for a period of Fifteen (15) years. The first monthly payment shall
be due on the 15th day of August, 1994, and subsequent payments shall be due
on the 15th day of each month thereafter. The total principal balance, plus
any accrued interest shall become due and payable at the end of five (5)
years, or on the 15th day of July, 1999. This is secured by a second
mortgage deed.
if any installment under this Note is not paid when due and remains unpaid
for thirty (30) days after its due date, the entire principal amount
outstanding, and accrued interest on that principal amount, shall, at the
option of the Note Holder, immediately become due and payable in full. The
Note Holder may exercise this option to accelerate during any default by the
makers regardless of any prior forbearance. If suit is brought to collect
this Note, or this Note is put in the hands of an attorney for collection,
the Note Holder shall be entitled to collect all reasonable costs and
expenses' of collection or suit, including, but not limited to, reasonable
attorney's fees.
The maker of this Note shall have the right to prepayment without penalty.
Presentment, notice of dishonor and protest are waived by all makers,
sureties, guarantors, and endorsers of this Note. This Note shall be the
joint and several obligations of all makers, sureties, guarantors, and
endorsers and shall be binding upon them and their successors and assigns.
This Note shall be enforced, and its terms shall be construed in accordance
with the statutes and common law of the State of Vermont.
THIS NOTE IS SECURED BY A MORTGAGE DEED OF EVEN DATE HEREWITH.
NOTICE TO CO-SIGNERS: Your signature on this Note means that you are equally
and fully liable for the repayment of any indebtedness evidenced hereby,
NEW ENGLAND WIRELESS, INC.,
/S/______________________________ By: /S/_____________________________
First Witness Authorized Agent
/S/______________________________
Second Witness
ASSUMPTION AGREEMENT
KNOW ALL PERSONS by these Presents that New England Wireless, Inc., a
Vermont Corporation with place of business at 56 Green Street, Bellows
Falls, Vermont, does hereby assume and agree to pay the obligation secured
by a mortgage conveyed by Philip L. Golding and Teresa Golding, husband and
wife, to Claremont Savings Bank, dated December 1, 1993 and recorded in Book
86, Pages 460-470 of the Weathersfield Land Records according to the terms
of the mortgage deed and note of even date herewith, the note having A
principal balance of $37,273.07, as of July 15, 1994, a copy of which is
attached hereto and incorporated herein.
New England Wireless, Inc., for itself its successors or assigns does
hereby covenant with Philip L. Golding and Teresa Golding, husband and wife,
to indemnify and hold them harmless from any and all liability (including
reasonable attorneys fees) on the mortgage deed and note hereby assumed.
This Assumption of the mortgage and note is done pursuant to the
express written permission of the mortgagee, Claremont Savings Bank.
Dated at Bellows Falls, Vermont, this 15th day of July, 1994.
NEW ENGLAND WIRELESS, INC.
/S/______________________________ By: /S/_____________________________
First Witness Authorized Agent
/S/______________________________
Second Witness
STATE OF VERMONT
Windham COUNTY, SS.
At Rockingham, in the county of Windham and State of Vermont, on this
15th day of July, 1994, personally appeared (unreadable), and he
acknowledged that the signing of this instrument was his free act and deed,
(unreadable), Authorized Agent of the Corporation and he acknowledged that
the signing of this instrument was the free act and deed of the Corporation.
Before me, /S/_________________________
Notary Public
My Commission Expires: 2/10/95
Dated at Claremont, in the County of Sullivan and State of New
Hampshire this __, day of July, 1994.
In Presence of: CLAREMONT SAVINGS BANK
By: /S/_____________________________
Its Duly Authorized Agent
/S/______________________________
Witness
/S/_______________________________
Witness
STATE OF NEW HAMPSHIRE
SULLIVAN COUNTY, SS
At _________________________, County of _____________________, State
of New Hampshire this ________________ day of July, 1994, personally
appeared __________________________, Duly Authorized Agent, who acknowledged
this instrument by him/her, signed and sealed, to be his/her free act and
deed and the free act and deed of Claremont Savings Bank.
Before me, _________________________
Notary Public
My Commission Expires Seal of Notary
EXHIBIT 11.1
WORLDWIDE WIRELESS, INC. AND SUBSIDIARY
<TABLE>
<CAPTION>
Year
Ended Six-months Year Nine-months
December 31, Ended Ended Ended
1994 June 30, 1995 June 30, 1996 March 31, 1997
------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net (loss) $ (984,113) $ (517,943) $ (1,221,002) $ (1,221,002)
Weighted average number of common shares
outstanding (1) 2,310,391 2,763,398 2,763,398 2,788,961
Shares issuable upon the conversion of
debt (including interest converted) -- -- 75,563 50,000
Incremental shares issuable upon the
exercise of warrants (1) 299,463 299,463 318,213 318,213
Less shares assumed repurchased (299,463) (299,463) (320,713) (320,713)
-----------------------------------------------------------
Shares 2,310,391 2,763,398 2,836,461 2,836,461
===========================================================
(Loss) per share $ (0.43) $ (0.19) $ (0.40) $ (0.43)
===========================================================
<FN>
- -------------------
<F1> In accordance with the Securities and Exchange Commission's requirements,
securities issued during the twelve-month period prior to the filing of
the initial public offering have been included in the calculation, using
the treasury stock method, as if they were outstanding for all periods
prior to the offering.
</FN>
</TABLE>
EXHIBIT 21.1
SUBSIDIARIES OF WORLDWIDE WIRELESS, INC.
The following entity is a wholly owned subsidiary of the Registrant:
New England Wireless, Inc., a Vermont corporation formed on June 17, 1991.
New England Wireless, Inc. does business as New England Wireless, Inc.
EXHIBIT 23.1
CONSENT OF COUNSEL
Worldwide Wireless, Inc.
We consent to the use of our firm's name and to the statements made
with respect to our firm, as they appear under the heading "Legal Matters"
in the Prospectus for Worldwide Wireless, Inc. which is included in Part I
of this Registration Statement.
GRAVEL AND SHEA
/S/_________________________________
Burlington, Vermont
__________________________, 1997
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the inclusion in this Registration Statement on Form SB-2 of
our report dated December 2, 1996 (with respect to Note L, August 12, 1997)
on our audits of the consolidated financial statements of Worldwide
Wireless, Inc. and subsidiary. We also consent to the references to our
firm under the captions "Selected Financial Data" and "Experts".
Richard A. Eisner & Company, LLP
New York, New York
August 13, 1997
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the persons whose signatures
appear below each severally constitutes and appoints SCOTT A. WENDEL as true
and lawful attorney-in-fact and agent, with full powers of substitution and
resubstitution, for them in their name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-effective
amendments and post-effective amendments) to this Registration Statement,
any registration statement relating to the same offering as this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1993, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as they might or could do in person, hereby
ratifying and confirming all which said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do, or cause to be done by virtue
hereof.
Dated: ________________, 1997
______________________________ /S/ ____________________________
Witness Alan R. Ackerman
______________________________ /S/ ____________________________
Witness Harold Doran
______________________________ /S/ ____________________________
Witness Jack Polak
______________________________ /S/ ____________________________
Witness Scott A. Wendel
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1997
<PERIOD-END> JUN-30-1996 MAR-31-1997
<CASH> 2,396 14,477
<SECURITIES> 0 0
<RECEIVABLES> 20,000 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 77,876 83,644
<PP&E> 1,669,657 1,344,196
<DEPRECIATION> 668,017 947,628
<TOTAL-ASSETS> 1,938,316 1,591,393
<CURRENT-LIABILITIES> 2,696,660 3,561,981
<BONDS> 71,548 69,889
0 0
0 0
<COMMON> 2,788,961 2,788,961
<OTHER-SE> 403,896 579,207
<TOTAL-LIABILITY-AND-EQUITY> (1,102,892) (2,040,177)
<SALES> 323,144 260,336
<TOTAL-REVENUES> 323,144 260,336
<CGS> 799,285 631,212
<TOTAL-COSTS> 1,276,031 1,048,977
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 172,410 282,515
<INCOME-PRETAX> (1,131,245) (1,112,852)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,131,245) (1,112,852)
<EPS-PRIMARY> (.40) (.35)
<EPS-DILUTED> (.40) (.35)
</TABLE>
