As Filed with the Securities and Exchange Commission on ___________________
Registration No.______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
PRE-EFFECTIVE AMENDMENT NO. 4 TO
FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
(Name of small business issuer in its charter)
-----------------
<TABLE>
<S> <C> <C>
Nevada 860887822
(State or jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Identification No.) Classification Code No.)
</TABLE>
DOUGLAS P. HAFFER
520 Third Street, Suite 101
Oakland, CA 94607
(510) 839-6100
(Name, Address and Telephone Number of Agent for Service)
-----------------------
Copies to:
WILLIAM D. EVERS, ESQ.
Evers & Hendrickson, LLP
155 Montgomery, 12th Floor
San Francisco, CA 94104
Phone No.: (415) 772-8129 Fax No.: (415) 772-8101
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462 (c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462 (d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434
check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------- ------------------- --------------------------- ---------------------- ----------------
Title of each class of Amount to be Proposed maximum offering Proposed maximum Amount of
securities to be registered registered(1) price per unit aggregate offering registration
price(2) fee
- ---------------------------- ------------------- --------------------------- ---------------------- ----------------
<S> <C> <C> <C> <C>
Common, $ .001 par per 9,680,916 $4.50 $18,000,000 $4,752
share
- ---------------------------- ------------------- --------------------------- ---------------------- ----------------
<FN>
(1) Includes 5,680,916 shares sold pursuant to certain registration rights.
World Wide Wireless Communications, Inc., will not receive any of the proceeds
of such sales.
(2) Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as
amended (the "Securities Act"), solely for purposes of calculating the
registration fee.
</FN>
</TABLE>
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.
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is prohibited.
Initial Public Offering Prospectus
Subject to Completion, Dated ______________
World Wide Wireless
Communications, Inc.
9,680,916 shares of common stock
This is our initial public offering. We expect that the price for our
shares will be between $4.00 and $5.00 per share. This price may not reflect the
market price of our shares after this offering. This is a direct distribution by
World Wide Wireless Communications, Inc. There are no escrow arrangements, and
there are no minimum purchase requirements. Our shares are not listed on Nasdaq
or any exchange. Some of our shares are traded on the OTC Bulletin Board under
the trading symbol WLGS.
______________________
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 5.
______________________
Per Share Total
--------- -----
Public Offering Price.............................. ______ _______
Underwriting Discounts and Commissions............. ______ _______
Proceeds to company before expenses................ ______ _______
The Proceeds before expenses, above, are calculated before deducting estimated
expenses of $60,000, including registration fees and other offering costs, in
addition to legal and accounting fees.
We are registering and selling 4,000,000 shares of common stock on behalf of our
company. We will also register another 5,680,916 shares of common stock for
existing shareholders with "piggy-back" rights. We will not sell the 5,680,916
shares owned by the existing shareholders with piggy-backed rights.
Our shares will initially be sold through our executive officers who will not
receive commissions and who will be registered as sales representativee where
required. We currently do not have a broker-dealer involved with the sale of our
shares; however, we may obtain a broker-dealer to sell our shares on a best
efforts basis. If we retain a broker-dealer we anticipate paying a commission of
up to 12%. See "Summary of Offering" and "Plan of Distribution."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is _________, 2000
1
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page Page
---- ----
<S> <C> <C> <C>
Reference Data..............................2 Management...........................................17
Prospectus Summary..........................3 Executive Compensation...............................19
Summary of Financial Data...................4 Principal Shareholders...............................22
Risk Factors................................5 Certain Transactions.................................23
Forward-Looking Statements..................7 Description of Common Stock..........................23
Dividend Policy.............................8 Plan of Distribution.................................24
Use of Proceeds.............................8 Legal Matters........................................24
Dilution....................................9 Experts..............................................26
Management's Discussion and Analysis........10 Additional Information...............................26
Business....................................10 Financial Statements.................................27-50
</TABLE>
Until 90 days after the effective 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.
REFERENCE DATA
We have filed with the Securities and Exchange Commission a
registration statement on Form SB-2 under the Securities Act with respect to
this offering. This prospectus does not contain all the information set forth in
the registration statement and the exhibits and schedules thereto, as permitted
by the rules and regulations of the Commission. We will be subject to the
informational filing requirements of the Securities Exchange Act of 1934, as
amended ("Exchange Act") upon the filing of the SB-2 and the Form 8-A. We
Company intends to furnish our shareholders with annual reports containing
financial statements audited by our independent public accountants and quarterly
reports containing unaudited financial information for the first three quarters
of each fiscal year. Our fiscal year ends on September 30.
2
<PAGE>
PROSPECTUS SUMMARY
World Wide Wireless Communications, Inc.
We provide high-speed wireless Internet service in the United States
and internationally. We are also developing a new generation of chipset
technology, named VDMA (Virtual Division Multiple Access) which may
significantly enhance wireless communications in the future. The Company may
license this technology to a third party.
We are incorporated under the laws of the State of Nevada. Our offices
are located at 520 Third Street, Suite 101, Oakland, CA 94607. Our telephone
number is (510) 839-6100.
<TABLE>
<CAPTION>
Summary of the offering
<S> <C>
Type of security.....................................Common stock
Common stock registered by company...................We are registering and selling 4,000,000 shares of common
stock on behalf of our company. We will also register
another 5,680,916 shares of common stock for existing
shareholders with "piggy-back" rights. We will not sell the
5,680,916 shares owned by the existing shareholders with
piggy-backed rights.
Common stock outstanding as of
January 31, 2000................................76,818,445 shares
Common stock offered for sale
by our company in this offering.................4,000,000 shares
Common stock to be outstanding after
this offering...................................80,818,445 shares
Use of proceeds......................................For expansion of our sales force, marketing and distribution
activities, expansion of both our domestic and international
business operations, for acquiring spectrum, and for general
corporate purposes. See "Use of Proceeds" for more
information.
</TABLE>
Our common stock is being offered as a direct placement or
distribution. There is no minimum number of shares that must be sold. There can
be no assurance that all of the shares offered will be sold. Accordingly,
investors will bear the risk that we will accept subscriptions for less than
4,000,000 shares and then be unable to successfully complete all of the
anticipated uses of the proceeds of this offering as expected. If fewer than
4,000,000 shares are sold, our business, financial condition and results of
operations could be adversely affected. No officer, director, or employee has
agreed to loan us funds in the event we sell less than 4,000,000 shares.
Funds from this offering will not be placed in an escrow or trust
account and will be available for use as the funds are received. The minimum
investment per shareholder is $4,500.00 (1,000 shares). There is no maximum
investment per shareholder.
Our shares will initially be sold through our executive officers who
will not receive commissions and who will be registered as sales representatives
where required. We currently do not have a broker-dealer involved with the sale
of our shares; however, we may obtain a broker-dealer to sell our shares on a
best efforts basis. If obtained, we anticipate paying a broker-dealer a
commission of up to 12%.
3
<PAGE>
This offering will begin as of the effective date of this prospectus
and continue for twelve (12) months or such earlier date as we may terminate the
offering. If this offering terminates, all subscription payments received after
termination will be promptly returned.
SUMMARY OF FINANCIAL DATA
The summary financial data for the years ended September 30, 1998 and
1999 have been derived from the Financial Statements and Notes to Financial
Statements, audited by Reuben E. Price & Co., San Francisco independent
auditors. The selected financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements and Notes thereto included elsewhere in
this prospectus.
<TABLE>
Statements of Income Data:
<CAPTION>
Cumulative
from inception
Year ended Year ended on Sept 1, 1994 Qtr. Ended Qtr. Ended
Sept. 30, 1998 Sept. 30, 1999 to Sept. 30 1999 Dec. 31, 1999 Dec. 31, 1998
-------------- -------------- ---------------- ------------- -------------
Audited Audited Audited Unaudited Unaudited
Prepared by Prepared by
Management Management
<S> <C> <C> <C> <C> <C>
Revenue $ -- $ -- $ -- $ -- $ --
Gen. & Adm. Expenses (353,075) (2,383,330) (6,765,842) (829,189) (358,615)
Total Operating Expenses (353,075) (2,383,330) (6,765,842) (829,189) (358,615)
Operating loss (353,075) (2,383,330) (6,765,842) (829,189) (358,615)
Other income 6,701 0 6,701 0 0
Net loss (346,374) (2,383,330) (6,759,141) (829,189) (358,615)
Sept. 30, 1999 Dec. 31, 1999
Audited Unaudited
Prepared by
Management
Balance Sheet Data:
Working capital (153,646) (19,888)
Total assets 1,180,777 2,474,835
Long-term debt,
less current portion 328,000 740,000
Shareowners' equity 361,309 1,375,394
</TABLE>
4
<PAGE>
RISK FACTORS
You should carefully consider the following risks before you decide to
buy our common stock.
We have a history of losses and there is significant doubt about our ability to
continue as a going concern
We are a development stage company and our revenues for the foreseeable
future will not be sufficient to attain profitability. Our auditors have stated
in their report for the period ended September 30, 1999 that WWW Communications'
ability to meet its future financing requirements, and the success of future
operations, cannot be determined at this time. Our losses are attributable to
the lack of a sufficient subscriber base to enable us to cover our ongoing
programming, licensing, development and other costs. We expect to continue to
experience losses from operations while we develop and expand our wireless
Internet service system and other technologies.
We may not have enough capital to remain a going concern, especially if we do
not sell a significant amount of securities offered by this prospectus.
Our ability to continue as a going concern, and the growth of our
business, will require substantial investment on a continuing basis to finance
capital expenditures and related expenses. Although we believe that the proceeds
from this offering, together with nominal funds expected to be generated from
operations, will be sufficient to finance our working capital requirements for
at least twelve months following completion of this offering, there can be no
assurances that we will generate sufficient funds from this offering to fund our
operations. We do not have a bank line of credit and there can be no assurance
that any required or desired financing will be available through bank
borrowings, debt, or equity offerings, or otherwise, on acceptable terms. 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.
We do not know how many of the shares offered will be sold. Therefore,
investors will bear the risk that we will accept subscriptions for a nominal
number of shares and then be unable to exist as a going concern or accomplish
our plans as discussed in the Use of Proceeds section below. If no shares, or a
nominal number of shares are sold, our financial condition and our ability to
continue as a going concern could suffer.
As a new investor you will experience immediate and substantial dilution
If you purchase our common stock in this offering, you will experience
immediate and substantial dilution. Even if all the shares in this offering are
sold, for each share you purchase for $4.50, the book value of your shares will
be 4.288 per share, a substantial dilution. If less that the entire offering is
sold, your dilution will be even greater.
We arbitrarily determined the purchase price of our shares for this offering.
The trading price of our shares on the Over-the-Counter Bulletin Board may
decline below the price at which you are purchasing shares in this offering.
5
<PAGE>
We arbitrarily determined the purchase price of our shares in this
offering. The price of the shares offered herein bears no relationship to the
assets, book value, or net worth of WWW Communications. This is our initial
public offering. Currently, some of our shares that we originally sold as
restricted securities in private placement offerings are now trading on the
Over-the-Counter Bulletin Board under the symbol WLGS. The price of the
securities offered herein may bear no relationship to trading price of our
shares traded on the Over-the-Counter Bulletin Board.
Our stock may not meet the requirements to continue to be listed on the
Over-the-Counter Bulletin Board
This is our initial public offering. Some of our shares that we
initially sold as restricted securities are now freely trading on the
Over-the-Counter Bulletin Board under the symbol WLGS. The Securities and
Exchange Commission ("SEC") now requires that any company whose stock is trading
on the Over-the-Counter Bulletin Board apply to be registered as a reporting
company and file annual and quarterly reports on a regular basis. We have
applied to be registered as a reporting company; however, the Securities and
Exchange Commission has not yet approved our application. If our SB-2 filing is
not effective by May 17, 2000, our shares may not be tradable until the SEC
approves our filing.
Technological change may render our spectrum or services obsolete
We are in an emerging industry that is dependent on government licenses covering
certain bandwidths and on technology designed to exploit this new communications
device. The technology can change in a manner that would make our system
obsolete. Although this risk is true for more technological companies, it
appears to apply to our industry, telecommunications, with increasing frequency.
International -- Inexperience
We intend to expand our international sales efforts in the future. We
have very limited experience in marketing, selling and supporting our products
and services abroad. There is a risk that we will not be able to expand due to
this inexperience. If we are unable to grow our international
6
<PAGE>
operations successfully and in a timely manner, our business and operating
results could be seriously harmed. This could be reflected in a loss in your
investment.
International -- Particular Risks
Even if our efforts to expand in the international market are
successful, that market has some risks not normally present. These include:
o unexpected changes in regulatory requirements, taxes, trade laws and tariffs;
o differing intellectual property rights;
o differing labor regulations;
o unexpected changes in regulatory requirements;
o changes in a specific country's or region's political or economic conditions;
o greater difficulty in staffing and managing foreign operations; and
o fluctuating exchange rates.
We plan to expand our international operations in the near future, and
this will require a significant amount of attention from our management and
substantial financial resources.
Governmental regulation and legal uncertainties could impair the growth of the
Internet and decrease demand for our services or increase our cost of doing
business
It is possible that Internet laws and regulations in the United States
and foreign countries may be changed in the future. Any changes in the existing
laws may have a material affect on our ability to operate at a profit. The range
of such governmental changes cannot be predicted, but may possibly include:
o changes that directly or indirectly affect the regulatory status of Internet
services;
o changes that affect telecommunications costs, including the application of
access charges to Internet services; and
o changes that increase the likelihood or scope of competition from regional
telephone companies.
Certain other legislative initiatives including the taxation of
Internet services could also substantially harm our business. We cannot predict
the impact that future laws and regulations may have on our business.
We may have liability for Internet content
The imposition upon Internet access providers of potential liability
for information carried on or disseminated through their systems could require
us to implement measures to reduce our exposure to such liability, which may
require the expenditure of substantial resources. The increased attention
focused upon liability issues as a result of these lawsuits and legislative
actions and proposals could impact the growth of Internet services. Moreover,
any costs not covered by our general insurance policy could have a material
adverse effect on our business.
7
<PAGE>
We are dependent on the services of key individuals and the loss of any of these
individuals could significantly affect our ability to operate our business
Our development and success is significantly dependent upon Douglas P.
Haffer, Chairman, President and Chief Executive Officer; Wayne Caldwell, Vice
President and General Counsel; and Dana Miller, Vice President of Licensing and
Systems Expansion. We do not currently have key man insurance any of these
officers.
Our U.S. frequency licenses must be renewed every 10 years by the government,
and the government could decide not to renew our licenses if we violate FCC
rules or policies
Our Federal Communications Commission (FCC) licenses must be renewed
every 10 years and there is no automatic renewal for such licenses. Moreover,
our licenses are subject to cancellation for violations of the Communications
Act of 1934, as amended, or the FCC's rules and policies. Cancellation of our
licenses would have a material adverse effect on our operations.
Other companies may have rights to use our name
A company in New Hampshire named World Wide Wireless Systems, Inc., a
company in Delaware named World Wide Wireless Web Corp., and a company in Nevada
named Worldwide Wireless Networks, Inc. which trades on the Over the Counter
Bulletin Board under the symbol WWNBE are currently using names similar to our
name. They could challenge our rights to use our name or possibly claim
infringement. We have not registered our name as a Servicemark with the United
States Patent and Trademark Office. If we are forced to defend our rights to use
the name, we could incur substantial litigation costs. Moreover, if our
Servicemark is denied or litigation were to result in an unfavorable outcome,
then we could lose a substantial part of the goodwill that we have developed by
using our name.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. We intend to
identify forward-looking statements in this prospectus using words such as
"believes," "intends," "expects," "may," "will," "should," "plan," "projected,"
"contemplates," "anticipates," or similar statements. These statements are based
on our beliefs as well as assumptions we made using information currently
available to us. Because these statements reflect our current views concerning
future events, these statements involve risks, uncertainties and assumptions.
Actual future results may differ significantly from the results discussed in the
forward-looking statements. Some, but not all, of the factors that may cause
these differences include those discussed in the Risk Factors section beginning
on page 5 of this prospectus. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this prospectus.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock
and do not intend to pay dividends in the foreseeable future. We intend to
invest our future earnings, if any, to fund our growth. Therefore, you will not
receive any funds without selling your shares. We further cannot assure you that
you will receive a return on your investment when you sell your shares or that
you will not lose the entire amount of your investment.
8
<PAGE>
USE OF PROCEEDS
<TABLE>
If the entire offering is sold, the net proceeds from the sale of the
common stock, after deducting underwriting discounts and other expenses, are
estimated to be approximately $15,780,000. The net proceeds have been calculated
using an initial public offering price of $4.50. As there is no guarantee that
we will receive any proceeds, the following table presents how we intend to use
the proceeds of 25%, 50%, 75% and 100% of the offering. We expect to use the net
proceeds over a 12-month period in approximately the following amounts and
percentages:
<CAPTION>
Percentage of Offering Raised
---------------------------------------------------------------
25% 50% 75% 100%
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Expansion of Mt. Diablo, Ukiah, South Bend,
Grand Rapids and San Marcos $ 394,500 $1,183,500 $ 2,367,000 $ 3,945,000
(10%) (15%) (20%) (25%)
Initiate Internet Access $ 78,900 $ 236,700 $ 591,750 $ 946,800
(2%) (3%) (5%) (6%)
Argentina Operations $1,775,250 $3,313,800 $ 4,734,000 $ 5,523,000
(45%) (42%) (40%) (35%)
Peru Operations $ 986,250 $1,972,500 $ 2,603,700 $ 3,156,000
(25%) (25%) (22%) (20%)
Working Capital $ 710,100 $1,183,500 $ 1,538,550 $ 2,209,200
(18%) (15%) (13%) (14%)
Total $3,945,000 $7,890,000 $11,835,000 $15,780,000
(100%) (100%) (100%) (100%)
--------------------------------------------------------------
</TABLE>
We intend to expand the Mount Diablo, Ukiah, South Bend, Grand Rapids
and San Marcos systems through the purchase of digital compression equipment in
order to digitize the system and to add additional subscribers through marketing
and advertising and the upgrading of available services. The amounts allocated
to the expansion include the hiring of additional installers and repair
personnel as well as anticipated installation costs.
We intend to initiate and expand Internet access services through the
acquisition of Internet backbone connections, the purchase of telecommunications
equipment and outsource services, for marketing, advertising and promotion and
for the hiring of technical support personnel.
The amounts allocated to the Argentina operation include acquiring
spectrum, purchasing equipment, the hiring of additional installers and repair
personnel as well as anticipated installation costs and general working capital.
The amounts allocated to the Brazilian expansion include acquiring
spectrum, purchasing equipment, the hiring of additional installers and repair
personnel as well as anticipated installation costs and general working capital.
Proceeds allocated to working capital will be used to fund general
operations of the WWW Communications.
The above listed use of proceeds represents our best estimate of the
allocation of the net proceeds of this offering based upon the current status of
our business operations, our 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 our business and the
success or lack thereof of our 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 investment grade
securities or money market funds. Management believes that the funds received
from this offering will exceed the our cash flow requirements for more than
twelve months.
9
<PAGE>
No proceeds from this offering will be used to acquire assets or
finance other businesses. However, We hope to continue to acquire spectrum both
nationally and internationally consistent with its corporate objectives and
mission statement.
DILUTION
Unrealized Gain to Insiders
Our present common stockholders acquired their shares at a cost
substantially below the price at which the shares are being offered in this
offering. Investors purchasing the shares in this offering will, therefore,
incur an immediate and substantial dilution of their investment insofar as it
relates to the resulting net tangible book value of WWW Communications after
completion of the offering.
The net tangible book value of WWW Communications as of September 1999
was $.0051 per share. "Net tangible book value" per share represents the total
tangible assets of WWW Communications less total liabilities divided by the
number of shares outstanding of common stock. Under the above assumptions, on a
pro forma basis the net tangible book value of WWW Communications after the
offering will be $0.2120 per share. This represents an immediate dilution in net
tangible book value per share of $4.2880 if the entire offering is sold to new
investors purchasing shares at $4.50 per share.
<TABLE>
The following table illustrates the per share dilution that you will
experience on a pro forma basis as if all 4,000,000 shares offered herein were
outstanding as of September 30, 1999. As there is no guarantee that we will
receive any proceeds, the table presents per share dilution assuming receipt of
25%, 50%, and 100% of the offering
10
<PAGE>
<CAPTION>
Percentage of Offering Received 25% 50% 100%
------------------------------- ------- ------- -------
<S> <C> <C> <C>
Offering price per share $4.5000 $4.5000 $4.5000
Net tangible book value after sales of common shares $0.0590 $0.1128 $0.2147
------- ------- -------
Dilution to purchasers of shares $4.4441 $4.3877 $4.2853
</TABLE>
This information is based on pro forma shares outstanding on September
30, 1999 (See, "Principal Shareholders") and excludes 3,000,000 shares of common
stock that we currently have reserved for issuance pursuant to our 1998 Stock
Incentive Plan.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following should be read in conjunction with the "Risk Factors"
starting on page 5 of this prospectus and the "Financial Statements" and the
Notes thereto.
We did not generate any subscription revenues by providing wireless
cable services during fiscal 1998 and 1999 respectively. We did not have enough
subscribers in either period to generate revenues sufficient to cover our
operating expenses which totaled $353,075 and $2,383,330, respectively, in
fiscal 1998 and 1999. Our operating expenses included service costs, programming
and license fees, general and administrative expenses, and certain acquisition
expenses resulting from acquiring spectrum.
During 1998 and 1999, we experienced continuing cash shortages due to
an insufficient subscriber base. The resulting cash shortages rendered us unable
to advertise and aggressively promote our services. Management believes,
however, that the funds received from this offering will exceed WWW
Communications' cash flow requirements for the next full year.
WWW Communications currently has 11 full-time employees and anticipates
hiring more employees as we enter new markets. We believe that our future
success will depend on our continued ability to attract, hire and retain
qualified personnel. Competition for such personnel is intense, and we may be
unable to identify, attract and retain such personnel in the future.
Management does not anticipate performing any additional product
research and development for the term of the plan. Management is not planning to
purchase or sell any plants or material equipment other than the small equipment
that is needed to expand the operation of its various licenses.
During fiscal 1998 and 1999, we issued and agreed to issue options
exercisable to purchase an aggregate of 3 million shares of common stock of
which none were exercised. We also issued 19,303,950 common shares in exchange
for $2,614,074 and 4,538,000 common shares for services valued at $615,996.
We believe that all of the above transactions were in our best
interests because without the various loans and sales of restricted shares, we
would not have been able to fund our operations.
BUSINESS
Introduction
In February of 1997, Worldwide Wireless, Inc. (WWW), a Nevada
corporation, was formed to coordinate the operations of TSI Technologies, Inc.
(TSI), a Nevada corporation, and National Micro Vision Systems, Inc. (NMVS), a
Nevada corporation. Its purpose was to complete the development of its patented
advanced digital wireless telephone and network designs and to finance,
manufacture, and market these units and systems. TSI was the research and
development company formed for the purpose of creating and developing the VDMA
microchip set. NMVS was formed to operate a network of wireless Internet sites.
In April of 1998, Upland Properties Inc. (UPPI), a Nevada corporation, was
acquired for stock by WWW, TSI and NMVS and, in a reverse merger, these
companies transferred their assets to Upland Properties, Inc. Upland (then
trading under the symbol of "UPPI") then changed its name to World Wide Wireless
Communications, Inc. and is trading OTC under the symbol WLGS. Both WWW and TSI
remain significant shareholders in our company, but neither play a role in our
current operations. NMVS and WWW Communications are now completely seperate and
unrelated entities.
We have purchased and currently lease a substantial number of
high-speed wireless Internet frequencies in the United States, Argentina, and
Ghana, Africa. We are now attempting to market to our wireless Internet
frequencies directly to consumers. Furthermore, we are considering the
possibility of entering into strategic
12
<PAGE>
alliances with other companies to market access to our high-speed wireless
Internet frequencies. We plan to purchase or lease additional wireless Internet
frequencies in the United States and abroad.
In addition to developing wireless Internet frequencies, we are also
attempting to develop a new generation of wireless cellular telephone technology
that we have labeled Virtual Division Multiple Access ("VDMA"). VDMA technology
may significantly enhance wireless communications in the future by dramatically
increasing cellular telephone network capacity.
Our high-speed wireless Internet service uses MMDS technology
The industry is moving to high-speed, broadband Internet service. In
the United States, Direct Subscriber Line ("DSL") service (i.e., wired service)
is available from many telephone companies, and most cable television companies
are, or soon will be, offering high speed Internet services as well. But the
majority of residences are not close enough to major trunk telephone lines to
receive reliable and high-speed DSL service, and most businesses cannot access
cable-television service. Internationally, options are even more limited with
much slower "standard" telephone-line service being the rule and many fewer
"high-speed" options are available.
In recent years, the industry has come to the realization that for a
large number of end-users the most cost-efficient and technically reliable
source of high-speed broadband Internet connection is from wireless service.
Holt Media Group, "Market Valuation Report", April 30, 1999. The two major forms
of wireless service are Local Multipoint Distribution Service ("LMDS") and
Multi-Channel Multipoint Distribution Service ("MMDS"). LMDS operates in a
relatively high frequency range from 28GHz and above. MMDS operates, in the
United States, over what were formerly called wireless cable television licenses
in the 2.5 to 3.0 GHz range. Internationally, these frequencies vary slightly,
with the MMDS-type service being proposed for frequencies from 2.5 to 4.0 GHz
while LMDS-type service is offered on frequencies similar to the United States.
In recent months, LMDS has attracted more attention from the public
than MMDS. This is despite the fact that in April 1999 Sprint and MCI WorldCom
began an aggressive acquisition of MMDS licenses for the provision of last-mile
services. In certain specific circumstances, LMDS is a very attractive
alternative to wired services. Its major benefit is its incredible bandwidth -
enough to transmit huge amounts of data at once. On the other hand, LMDS has
severe limitations as well including high costs of build out, very short range
(under 5 kilometers) and severe problems with interference from such things as
rain, smog, etc. With these limitations in mind, LMDS would appear to have its
major potential in wireless local loops, internal wireless networks, intranets,
etc.
MMDS, while still considered a broadband service, has less bandwidth
than LMDS. Nonetheless, it has more than enough bandwidth for the great majority
of potential business and residential users. On the other hand, in the United
States, which allows 10 watts of power in transmitting data, the range of MMDS
is at least 50 kilometers and it is much less affected, if at all, by
atmospheric and meteorological phenomena. It is also much less expensive to
build-out than LMDS, in addition to the fact that, because of its greater range,
fewer transmitters are required.
Both LMDS and MMDS are transmitted over a limited number of licensed
frequencies that protect data from interference by other forms of radio or
microwave transmitters. It is critical, therefore, that any company operating or
attempting to develop a system of wireless Internet over either LMDS or MMDS
frequencies acquire these limited frequencies as quickly and as inexpensively as
possible and for as many locations and as many channels/bands as possible in
each location.
Because of the limitations of LMDS' propagation properties, and because
we believe that the more viable market for wireless high-speed services is in
the small to medium size business and residential market, we have decided to
concentrate exclusively on the MMDS and other lower-frequency services. In that
context, we have been actively engaged in the acquisition of wireless Internet
frequencies in the United States and especially abroad.
13
<PAGE>
We believe that international markets offer enormous potential for
growth. Throughout the world, the Internet has become the new buzzword. But in
many countries - even countries considered to be developed and especially in
developing countries - the combination of obsolete equipment and newly
privatized systems provide us with great opportunity. The technology we employ
allows countries such as Ghana and Argentina to establish an up-to-date, high
speed, broadband wireless Internet system equal to any on the most developed
nations with very little infra-structural costs. The same will be true in the
many other countries throughout Asia, Latin America, Africa, the Middle East and
Europe in which we are actively seeking wireless frequencies.
Our approach to providing high speed, broadband, fixed wireless
Internet service will make our service available to a broader customer base than
is possible with certain other fixed wireless services. By concentrating on the
acquisition of relatively low-frequency spectrum, we can provide service over a
substantially larger market of customers, with enhanced propagation properties,
and for substantially lower cost than can be offered by higher-frequency
LMDS-type fixed wireless services. It is our belief that the bandwidth and speed
of our service will meet the requirements of at least 90% of the potential
high-speed wireless Internet customer base, and we hope to be able to provide
this service more economically and with greater reliability than our
competition. In the international market, we should be able to provide a quantum
leap in the quality of Internet service beyond that which currently exists and
at a price point similar to that being charged by providers of the current
service.
Our strategy
Our activities are currently divided into three divisions:
1. Acquisition of Wireless Internet Frequencies (Spectrum);
2. Development of Wireless Frequencies (Build Out); and
3. Development and Licensing of VDMA Chipset Technology.
1. Acquisition of Wireless Internet Frequencies ("Spectrum")
We have determined that our primary target for acquisition of wireless
frequencies ("Spectrum") will be in the MMDS frequency range within the United
States (2.5GHz to 3.0GHz approximately) and in similar frequency ranges up to
around 5.0GHz internationally. With these frequency ranges we believe that we
will be able to provide the highest quality, broadest band, and fastest service
and the most reasonable costs to the largest number of potential customers. By
positioning ourselves to provide enhanced connectivity to the largest number of
people WWW Communications believes that it will play a significant role in the
expansion of this remarkable technological development in both the short and
long term.
Prior to 1999, we controlled MMDS and Institutional Television Fixer
Service (ITFS) licenses in only three locations - the East Bay region of San
Francisco, California, northern San Diego County, California, and South Bend,
Indiana. Since the beginning of 1999, we have acquired rights - either through
long-term leases with options to purchase or outright purchases - to additional
spectrum both in the United States and elsewhere. As of the date of this
Offering, we lease, own or possess reversionary rights to licensed frequencies
in the following additional locations:
14
<PAGE>
Location State/Country
-------- -------------
Grand Rapids Michigan
Vail Colorado
Aspen Colorado
Key West Florida
Ukiah California
La Grande Oregon
Pierre South Dakota
Casper Wyoming
Entire nation of Ghana, West Africa Ghana, West Africa
Buenos Aires Argentina, South America
Rosario Argentina, South America
Santa Fe Argentina, South America
Corrientes Argentina, South America
Mendoza Argentina, South America
Neuquen Argentina, South America
Cordoba Argentina, South America
Bahia Blanca Argentina, South America
In addition, we have acquired reversionary rights to frequency spectrum
leases expiring in an additional 32 United States cities over the next several
years that will permit us to lease or acquire those licenses for our own use. In
addition, we are currently negotiating for the acquisition of additional
spectrum in at least fifteen other countries throughout the world.
The industry is moving to high-speed, broadband Internet service. In
the United States, DSL service is available from many telephone companies and
most cable television companies are, or soon will be, offering high-speed
Internet services as well. But the majority of residences are not close enough
to major trunk telephone lines to receive reliable and high speed DSL service
and most businesses cannot access cable-television service. Internationally, the
options are even more limited with much slower "standard" telephone-line service
being the rule and many fewer "high-speed" options available. In order to
participate in the expected explosive growth of this new and enhanced Internet
connectivity, we have determined that we must join this highly competitive "Race
for Spectrum" and aggressively pursue this finite and increasingly valuable raw
material of the industry.
2. Development of Wireless Frequencies (Build Out)
As spectrum is acquired, we plan to join with local partners and other
entities in the industry to form strategic alliances in connection with the use
and implementation of high-speed wireless services.
We are currently operating a single system off of Mt. Diablo in
Concord, California, an area some thirty miles east of San Francisco. The
license at Diablo is one of only two one-channel licenses that we control, with
all the remaining ones being at least four channels. Revenue generating service
commenced in this location in December 1999. Because the high-speed wireless
component of the Diablo operations is only available in downlink mode, we have
been aware from the outset that the operations in the Concord area would not be
typical for the more conventional two-way systems. However, because the Federal
Communications Commission has yet to issue its final rules regarding two-way
data transmission over MMDS/ITFS frequencies and because of the specific
demographics within the potential Diablo footprint we determined to commence the
limited-type of service close to our headquarters in Oakland. WWW Communications
intends to use this one-way wireless system in only one additional location -
San Diego, California. The Concord and San Diego operations will use high-speed
wireless transmissions to download information from the internet and similar
data sources, but will use telephone lines, either "normal" or high-speed, for
the uplink. While this one-way service will provide users with enhanced Internet
connections, it will not offer full-time always on, high-speed two-way wireless
service that our other locations will provide.
We will build-out our next domestic system in the small town of Ukiah,
California, some ninety miles north of San Francisco. Digital authorization has
already been granted by the FCC for the Ukiah license and the remaining
locations. The proximity of Ukiah to the corporate headquarters and the
relatively compact demography and geography will provide us with a convenient
platform to commence full bi-directional wireless service. After Ukiah, the
domestic build-out program will include northern San Diego County, South Bend,
15
<PAGE>
Indiana, Grand Rapids, Michigan, Vail and Aspen, Colorado, Key West, Florida,
Pierre, South Dakota and Casper, Wyoming.
We intend to commence operations in Buenos Aires, Argentina in South
America during the first four months of 2000. Preparations have commenced to
secure the necessary backbone connections and transmitter locations in the
Greater Buenos Aires metropolitan area, which contains more than 12 million
people. Pursuant to the provisions of licenses signed by the Comision Nacional
de Comunicaciones in Buenos Aires, WWW Communications will commence transmitting
in Buenos Aires by May 27, 2000. Now that WWW Communications has acquired a
location for our Network Operations Center and has executed a tower lease, full
service should commence in July, 2000. Shortly thereafter, commencement of
service is planned in Cordoba and Mendoza, both cities with around 2 million
inhabitants. As an initial marketing approach, we expect to establish, jointly
with a current retail establishment, an Internet Cafe in Buenos Aires where the
significantly superior nature of the service we will provide will be most
quickly exposed to a large number of potential customers. In Argentina, we will
operate through our majority-owned subsidiary, Infotel Argentina, S.A. We expect
to be in operation in all eight cities in which we have obtained licenses within
eighteen months and hope to expand the number of licenses currently owned. With
the current licenses, our footprint in Argentina will cover approximately 50% of
the country's 33 million inhabitants.
This year we will commence service in Ghana, West Africa. A much
smaller economy than Argentina, with fewer people and less computer penetration,
Ghana nonetheless, along with neighboring West African nations, provides us with
significant revenue potential. Like Argentina, such public locations for service
such as Internet cafes and the country's Post Office Department are likely
starting places for revenue service. In addition, the stable political situation
in Ghana and the continuing relatively fast-pace of economic growth bodes well
for an ever-increasing demand for Internet service.
We have applied for licenses in the 3.5 GHz range in Germany and the
Czech Republic. We are awaiting a definitive response on those applications. In
addition, we are exploring additional markets in Europe - including Portugal as
well as much of Eastern Europe - for expansion of our services.
We are currently in negotiations with respect to frequencies in several
other countries in Latin America, Asia, Africa and Europe. We expect that, in
the case of any future acquisition of licensed frequencies, we will operate the
systems alone, do so in joint ventures with local entities, or transfer the
licenses to third parties for significant consideration.
3. Development and Licensing of VDMA Chipset Technology
Our patent claim on our proprietary VDMA chipset technology has been
allowed and once formally granted we intend to license the further development
and manufacture of the chip to a third party.
We are completing the development of our "VDMA" - Virtual Division
Multiple Access - communications chipsets, which eliminates the need for
repeater-infrastructure costs. Even in "sleep" mode, every VDMA telephone
handset itself serves as a mobile, low-power repeater site, and each unit in the
"field" facilitates the operation of the entire local network within a radius of
10-20 miles. A whole continent populated with our PCS units would theoretically
have no need for infrastructural support of any kind. In practice, WWW
Communications will build widely scattered (SMSA-based) "Gateway" sites that
will serve to introduce local signals into long lines, international and
satellite service providers and introduce data signals into destination networks
while providing a medium for our generation of an ongoing revenue stream.
It is expected that there will be a dramatic increase in total network
capacity and in individual and traffic-form capacities resulting from the use of
VDMA transmission technology. This transmission technique, implemented in the
chipsets that are the core of the new technology, embodies very low power
transmissions along multiple routes between two mobile or stationary points on
the network. The result is a "fabric" of transmission paths blanketing the
entire "cell" compared to the "hub and spoke" transmissions between the central
node and the multiple users of a traditional cellular system. The multiplicity
of routes between any two points that is possible with this "fabric" generates
an aggregate capacity for the network that far exceeds a hub and spoke
16
<PAGE>
system, where multiple transmission paths converge on a single hub, quickly
consuming the available radio frequency in the cell.
The low transmission powers needed for the VDMA transmission method
have the further potential to allow this new network technology to be overlaid
on existing wireless cellular installations without interfering with existing
signals in the same PCS frequency. As a result, the new technology has the
potential to provide "overbuild" capacity, incremental returns on investments in
frequency, and introduction of new, high-value data and non-voice services on
cellular franchises already in place.
This new technology is currently being engineered to operate in, among
other frequencies, the PCS frequency bands and in so-called "free" or unlicensed
frequency bands in the United States. It is readily adapted to other frequencies
- - military frequencies and frequencies that may be allocated by foreign
governments.
By licensing or otherwise transferring this technology to third parties
and retaining a substantial royalty interest in it, we will be able to
concentrate on our core business while retaining the potential for a significant
revenue stream.
Investors should be aware that this system is largely untested and is
not widely used, and WWW Communications cannot ensure that an increase in usage
will actually result.
Business Locations
WWW Communications' business headquarters is located at 520 Third
Street, Oakland, California, 94607. We also has offices located in Concord,
California and Buenos Aires, Argentina. WWW Communications' office space at One
Post Street, San Francisco, was leased on a month-to-month basis. We vacated
these offices on August 31, 1999. The actual rent paid, for the fiscal year
ended September 30, 1999, was $22,341.
In April 1999, We entered into a 5-year lease for approximately 6,000
square feet of office space in Jack London Square, Oakland, California. The
lease commenced on June 5, 1999. The triple net rental agreement is for $10,038
per month during the first year. The lease provides for an annual increase based
on the indexed cost of living adjustments. Additionally, the lease provides for
the landlord's participation in partial reimbursement over the terms of the
lease to WWW Communications for leasehold improvements paid by WWW
Communications. WWW Communications commenced its occupation of this space on
September 1, 1999. The minimum annual rent is $120,456 for the fiscal years
ended September 30, 2000, 2001, 2002 and 2003, and $81,642 for the period
October 1, 2003 to June 4, 2004.
We also entered into a lease for office space to operate its network
operation center (NOC) at 2962 Treat Boulevard, Suite C, in Concord California,
94518. The triple net rental agreement is for $1890 per month. The lease
provides for an annual increase based on the indexed cost of living adjustments.
Additionally, the lease provides for the landlord's participation in partial
reimbursement over the terms of the lease to WWW Communications for leasehold
improvements paid by WWW Communications. WWW Communications commenced its
occupation of this 1680 square foot space on May 1, 1997. The lease expires on
April 30, 2000.
WWW Communications has lease space by virtue of its acquisition of
Infotel Argentina. The lease is for approximately 1500 square feet and is leased
on a month-to-month basis. The monthly rent is approximately $2,000 per month.
The lease started on January 1, 1999 and expires on December 31, 2003.
Regulatory Situation
We intend to offer our services exclusively over licensed frequencies
in each of the countries in which we operate. In the United States, for example,
our frequencies are licensed by the Federal Communications Commission, in
Argentina, by the Comision Nacional de Comunicaciones, and in Ghana, by the
Ghana Frequency Registration and Control Board. We are either applying directly
for licenses in some countries or applying jointly with local partners in
others. Some countries require, for example, domestic control of any entity
licensed to use
17
<PAGE>
radio frequency within their territory.
Within the United States, WWW Communications operates under MMDS and
ITFS licenses issued by the FCC. These licenses are issued in the 2.5Ghz
frequency range and can be revoked if the licensee or its assignee is in
violation of any of the operation provisions under the license. The licenses are
issued in the United States for a fixed time period and can be renewed. Yearly
reports are required to be filed with the FCC to establish that the licensee or
its assignee is complying with the requirements of the license.
Outside the United States, rules and regulations are quite varied.
However, in each of the countries in which WWW Communications is or intends to
operate, an agency of the national government issues licenses for use of
specific frequency, and for a specific time period. Licenses are usually at
least ten years and up to twenty years, which may or may not be extended. As in
the United States, licenses may be revoked if the licensee violates any of the
license provisions. In each country in which we intend to operate, the national
government specifically permits the operation of two-way fixed broadband
wireless systems of Internet and data transmission.
In countries outside the United States, there is a possibility that
changes in government may result in abrupt revisions in rules and regulations
relating to these licenses. WWW Communications is attempting to limit its
involvement to countries in which, historically, such changes in administration
have not created disruptions for license holders.
Acquisitions
On December 1, 1999, we signed an agreement to acquire 51% of Infotel
Argentina, S.A., the owner of MMDS licenses in eight of the largest cities in
Argentina, including Buenos Aires. Under the agreement, WWW Communications will
appoint the majority of Infotel's directors and will be in charge of the
management of WWW Communications.
Additionally on February 10, 2000, we signed an agreement to purchase
Digital Way, S.A., a Peruvian telecommunications company. Digital Way currently
owns licenses for MMDS spectrum in the 2.3 to 2.5 GHz range, has national and
international long-distance concessions as well as value added licenses for
services in Peru. This acquisition requires the approval of the relevant
agencies of the Peruvian government.
18
<PAGE>
MANAGEMENT
<TABLE>
Our executive officers and directors and their ages as of February 9,
2000 are as follows:
<CAPTION>
Name Age Position Period of Service
- ---- --- --------- -----------------
<S> <C> <C> <C>
Douglas P. Haffer................52 Chairman of the board, April 1998 to present
CEO and CFO
Wayne Caldwell...................48 Director, vice president November 1999 to present
and secretary
Dana Miller......................40 Vice president May 1998 to present
Ramsey Sweis.....................34 Director May 1998 to present
Robert Klein.....................51 Director May 1998 to present
</TABLE>
Douglas P. Haffer has practiced law in San Francisco, Beverly Hills,
and Washington D.C. for twenty-five years. During that time he has served as
general counsel and/or vice president, and on the Board of Directors, of several
corporations, including Commercial Bank of San Francisco, Aca Joe Inc., Finet
Holdings Corporation, Worldwide Wireless Inc. and Uniprise Systems,
Incorporated. His legal practice concentrated primarily on providing legal
counseling to small or start-up businesses. In addition, a significant part of
his practice contained an international aspect involving foreign investors
seeking investment platforms in the United States. Mr. Haffer attended the
University of Wisconsin, Madison from 1965 to 1969 where he received his
Bachelor of Arts degree with honors with a major in Latin American history, and
was elected to Phi Beta Kappa. He then attended the Harvard Law School from
which he graduated in 1972 with a Juris Doctor degree. Mr. Haffer lived in Peru
for seven years and reads, writes and speaks Spanish fluently. He has been a
lecturer and adjunct professor of law at the University of San Francisco Law
School and at the Law School at the University of California at Davis.
Wayne Caldwell has served as Vice President and General Counsel since
November 1999. Mr. Caldwell is responsible for legal, governmental and
regulatory matters. Prior to joining World Wide Wireless Communications, Inc.,
Mr. Caldwell was in private practice for two decades specializing in business
and regulatory law. Mr. Caldwell is a graduate of Stanford University in
economics and received his law degree from the University of San Francisco.
Dana Miller was Director of Licensing and Acquisition for National
Micro-Vision Systems, Inc. from 1994 to 1996. He worked extensively with the
Federal Communications Commission and FCC legal counsel and was responsible for
compliance with all FCC regulations. Mr. Miller also coordinated acquisitions of
microwave television licenses throughout the United States. He has negotiated
FCC lease agreements with educational institutions and nonprofit organizations.
From 1996 to 1998 Mr. Miller was a self-employed telecommunications consultant.
He is an expert in FCC license application, FCC petition, and license
acquisition and maintenance. His accomplishments include resolution of a recent
long-term, complex conflict between WWW Communications and a second national
wireless firm, freeing up WWW Communications to implement high-speed wireless
Internet operations in the San Francisco metropolitan area.
Ramsey Sweis has had extensive experience in management and in the
product design industry. He has been a leader and developer of high performance
teams by enabling, training and motivating team members. In the recent past he
has provided computer and engineering services to General Motors and Chrysler
Corporation. In connection with those activities Mr. Sweis has developed designs
between engineering, prototype models, tooling and vendor sources. Mr. Sweis
resides in Roseville, Michigan. He has extensive experience in the product
design industry. He currently serves as a Program Manager for Hanke Training &
Design of Clawson Michigan. From 1997 to 1999 Mr. Sweis served as a designer for
Computer and Engineering Services of Auburn Hills, Michigan From 1991 to 1997,
Mr. Sweis was a design leader for Megatech Engineering of Warren Michigan.
19
<PAGE>
Robert Klein's experience includes an active twenty-year career in the
securities industry handling a wide range of duties including management roles
and institutional trading. For the past fifteen years a major emphasis has been
placed on packaging complex transactions on behalf of corporate clients
resulting in the creation and sale of marketable securities. The past five years
has been spent on public company development. Since 1992, Mr. Klein has been
self-employed through Weissgeld Capital Group, Ltd., a company he founded in the
past, he has served as a director for three brokerage firms, including Yorkton
Securities. He is currently a director of Spectrum Oil Corp. Mr. Klein has a
degree in Applied Mathematics from the University of Waterloo, and an FCSI
designation from the Canadian Securities Institute.
Director Compensation
Directors receive no compensation for serving as directors of World
Wide Wireless Communications, Inc., except that:
o Mr. Sweis received options to purchase 250,000 shares of common stock on
October 22, 1998, at an exercise price of $0.095 per share. All of Mr. Sweis'
options vested immediately upon the date of grant. The expiration date for
Mr. Sweis to exercise the options is October 21, 2003. To date, Mr. Sweis has
not exercised any options for shares of common stock.
o Mr. Klein received options to purchase 250,000 shares of common stock on
October 22, 1998, at an exercise price of $0.095 per share. All of Mr.
Klein's options vested immediately upon the date of grant. The expiration
date for Mr. Klein to exercise the options is October 21, 2003. To date, Mr.
Klein has not exercised any options for shares of common stock.
Employment Contracts
We have entered into an employment agreement with Mr. Haffer, which
provides for an initial term of three years commencing February 1, 2000 at an
initial annual base salary of $230,000 plus an annual performance bonus of not
less than $34,000. Any bonus in excess of $34,000 will be at the sole discretion
of our Board and will not be tied to a fixed set of objective criteria. Mr.
Haffer's employment agreement also contains a termination provision that
requires us to pay him his annual compensation and minimum bonus amounts
remaining on his three-year contract if he is terminated without cause.
In October of 1999, we entered into a three-year employment agreement
with Mr. Caldwell under which he will receive an annual salary of $48,000. Under
the terms of the agreement, on May 8, 2000, Mr. Caldwell's base salary will be
increased to $72,000 per year, and on November 8, 2000, Mr. Caldwell's salary
will be increased to $96,000 per year. The agreement also provides for an annual
performance bonus of not less than 5% of his base salary and not more than 100%
of his base salary. The decision to grant the bonus and the amount of the bonus
can be decided by management without the consent of our Board of Directors. We
have not established a fixed set of performance criteria on which to base Mr.
Caldwell's bonus amounts. Mr. Caldwell's employment agreement also contains a
termination provision that requires us to pay him his annual compensation and
minimum bonus amounts remaining on his three-year contract if he is terminated
without cause.
In May of 1999, we entered into a two-year employment agreement with
Mr. Miller under which he will receive an annual salary of $96,000. Mr. Miller
is not entitled to receive any bonuses. Under the terms of the employment
agreement, we issued Mr. Miller 179,000 shares of common stock in lieu of
payment of $17,000 towards a past obligation of $37,000 and the company
acknowledged that we owe Mr. Miller $20,000 for the balance of past due fees.
Mr. Miller's employment agreement does not address the issue of stock options.
If Mr. Miller is terminated without cause, he will be entitled to receive his
salary for a period of three months after termination.
20
<PAGE>
EXECUTIVE COMPENSATION
<TABLE>
The following table contains summary information for the fiscal year
ended September 30, 1999 regarding the compensation earned by each of our
officers.
<CAPTION>
Summary Compensation Table
Securities
Restricted stock Underlying
Name and Principal Position Salary Bonus awards Options/SAR
- --------------------------- ------ ----- ------ -----------
<S> <C> <C> <C> <C>
Douglas P. Haffer................................... $230,000/yr 10% base 800,000
Chairman, CEO and CFO minimum 800,000
Wayne Caldwell...................................... $48,000/yr 5% base 800,000
Director, V.P. and Secretary minimum
Dana Miller......................................... $96,000/yr $0 179,000 shares 800,000
Vice President 250,000 shares
</TABLE>
On May 2, 1999, Mr. Miller received 179,000 restricted shares in lieu
of payment of $17,000 that WWW Communications owed to him for services. Mr.
Miller also received 250,000 restricted shares from Michael Lynch for services
rendered to WWW Communications.
On May 8, 2000, Mr. Caldwell's base salary will be increased to $72,000
per year and on November 8, 2000, Mr. Caldwell's base salary will be increased
to $96,000 per year.
21
<PAGE>
Option Grants
<TABLE>
The following table sets forth information concerning grants of stock
options to each of the executive officers and directors named in the table above
for the fiscal year ending September 30, 1999. All options were granted under
the 1998 Stock Option Plan. Shareholders never approved WWW Communications' 1998
Stock Option Plan, and therefore, all incentive stock options granted under the
1998 Stock Option Plan are classified and taxed as non-statutory stock options.
<CAPTION>
Individual Grants
-----------------
Percent of
Number of Total
Securities options/SARs
Fiscal Year Underlying granted to Exercise Options
Options Options employees from Price Exercised as Expiration
Granted Granted 8/22/98 ($/Share) of 2/9/00 Date
------- ------- ------- --------- --------- ----
<S> <C> <C> <C> <C> <C>
Douglas P. Haffer....................... 1998 800,000 43% $0.095 0 10/22/03
Chairman, CEO & CFO 2000 800,000 1.62 0 2/1/05
Wayne Caldwell.......................... 1999 800,000 21% $0.63 0 10/27/05
Vice Pres. & Secretary
Dana Miller............................. 1998 800,000 21% $0.095 0 8/22/03
Vice President
Ramsey Sweis............................ 1998 250,000 7% $0.095 0 10/22/03
Director
Robert Klein............................ 1998 250,000 7% $0.095 0 10/22/03
Director
</TABLE>
In October of 1998, Mr. Haffer received an option to purchase 800,000
shares of our common stock at an exercise price of 9 1/2 cents per share. All
800,000 shares vested immediately. The expiration date is 5 years from the date
of grant. The grant of shares was intended to be an incentive stock option, but
WWW Communications' 1998 Stock Option Plan was never approved by our
shareholders; therefore, the options are being classified as non-statutory stock
options. On February 1, 2000, Mr. Haffer received another option to purchase
800,000 shares of our common stock at an exercise price "at the lowest price
permitted under our 1998 Stock Option Plan such that the grant or exercise of
the options will not create a taxable event." All 800,000 shares vested
immediately. The expiration date of the option is 5 years from the date of
grant. The option will be treated as non-statutory stock options.
On October 27, 1999, Mr. Caldwell was granted an option for 800,000
shares of our common stock at an exercise price of $0.66 per share. All 800,000
shares vested immediately. The expiration date is 5 years from the date of
grant. The shares will be classified as non-statutory because WWW
Communications' 1998 Stock Option Plan was never approved by our shareholders.
In August of 1998, Mr. Miller received an option to purchase 800,000
shares of our common stock at an exercise price of 9 1/2 cents per share. All
800,000 shares vested immediately. The expiration date is 5 years from the date
of grant. The grant of shares was intended to be an incentive stock option, but
WWW Communications' 1998 Stock Option Plan was never approved by our
shareholders; therefore, the options are being classified as non-statutory stock
options.
In October 1998, Mr. Sweis received an option to purchase 250,000
shares of our common stock at an exercise price of 9 1/2 cents per share. All
250,000 shares vested immediately. The expiration date is 5 years from the date
of grant. The options are being classified as non-statutory stock options.
In October 1998, Mr. Klein received an option to purchase 250,000
shares of our common stock at an exercise price of 9 1/2 cents per share. All
250,000 shares vested immediately. The expiration date is 5 years from the date
of grant. The options are being classified as non-statutory stock options.
22
<PAGE>
1998 Stock Option Plan
WWW Communications' Board adopted a 1998 Stock Incentive Plan in August
1998 reserving 3,000,000 shares for issuance. The Plan provides for the grant of
incentive stock options, as defined in Section 422 of the Internal Revenue Code,
to officers and employees of WWW Communications, and nonstatutory stock options
to employees, directors and consultants. It may be administered by the Board or
delegated to a Committee. Stockholders never approved WWW Communications' 1998
Stock Option Plan, and therefore, all incentive stock options granted under the
1998 Stock Option Plan are classified and taxed as non-statutory stock options.
The exercise price of incentive stock options granted under the 1998
Stock Option Plan must be at least equal to the fair market value of our common
stock on the date of grant. However, for any employee holding more than 10% of
the voting power of all classes of our stock, the exercise price will be no less
than 110% of the fair market value on the date of grant. Nonstatutory stock
options granted to a person who at the time the option is granted does not hold
more than 10% of the voting power of all classes of our stock will have an
exercise price of no less than 85% of the fair market value of the stock on the
date of grant.
Options granted to employees of WWW Communications will become
exercisable over a period of no longer than 5 years, and no less than 20% of the
shares covered will become exercisable annually. No options will be exercisable
prior to one year from the date it is granted unless the Board specifically
determines otherwise. In no event will any option be exercisable after the
expiration of 10 years from the date it is granted, and no Incentive Stock
Option granted to a holder of more than 10% of the voting power of all classes
of our stock will be exercisable after the expiration of 5 years from the date
it is granted.
If an optionee's status as an employee terminates with us for any
reason, other than death or disability, then the optionee may exercise Incentive
Stock Options in the three-month period following such cessation. The
three-month period is extended to 12-months for termination due to death or
disability. In the event of a merger or consolidation in which WWW
Communications is not the surviving entity, or a sale of all or substantially
all of the assets or capital stock of WWW Communications, if the surviving
entity does not tender to the optionees stock options or capital stock of
substantially the same economic benefit as optionees unexercised options, then
the Board may grant to optionees the right to exercise any unexpired options for
a period of thirty days.
The 1998 Stock Option Plan will terminate in July 2008, unless sooner
terminated by the Board of Directors.
Piggy-Back Registration Rights
The following table sets forth information concerning grants of
piggyback registration rights. WWW Communications is registering 5,680,916
shares of common stock for existing shareholders with "piggy-back" rights. We
will not sell the 5,680,916 shares owned by the existing shareholders with
piggy-backed rights.
Patrick McCleary 350,000
Darryl Pohl 1,400,000
Ridge Capital 1,818,182
Behrooz Sarafraz 1,000,000
Bud Jenkins 400,000
Hubbard 20,000
Continental Capital 210,000
Credit Bancorp 482,734
23
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of our common
stock as of February 9, 2000 and as adjusted to reflect the sale of the shares
of common stock offered hereby:
o the chief executive officer, each of the executive officers named in the
summary compensation table and each of our directors;
o all executive officers and directors as a group; and
o each person or entity who is known by World Wide Wireless Communications,
Inc. to own beneficially more than 5% of World Wide Wireless Communications,
Inc.'s outstanding common stock.
Unless otherwise indicated, the address for each of the named
individuals and entities is c/o World Wide Wireless Communications, Inc., 520
Third Street, Suite 101, Oakland, CA 94607. Except as otherwise indicated, and
subject to applicable community property laws, the persons named in the table
have sole voting and investment power with respect to all shares of common stock
held by them.
<TABLE>
Applicable ownership is based on 76,818,445 shares of common stock
outstanding as of January 31, 2000 and 80,818,445 shares outstanding immediately
following the completion of this offering. Beneficial ownership is determined in
accordance with the rules of the SEC. Shares of common stock subject to options
or warrants that are presently exercisable or exercisable within 60 days of
February 9, 2000 are deemed outstanding for the purpose of computing the
percentage ownership of the person or entity holding options or warrants, but
are not treated as outstanding for the purpose of computing the percentage
ownership of any other person or entity. If any shares are issued upon exercise
of options, warrants or other rights to acquire our capital stock that are
presently outstanding or granted in the future or reserved for future issuance
under our stock plan, there will be further dilution to new public investors.
<CAPTION>
Percentage of
Shares Outstanding
Number of Shares Prior to After
Named Executive Officers and Directors Beneficially Owned Offering Offering
- -------------------------------------- ------------------ -------- --------
<S> <C> <C> <C>
Douglas P. Haffer............................................... 6,831,034 8.9% 8.4%
Wayne Caldwell.................................................. 800,000 1.0% *
Dana Miller..................................................... 1,229,000 1.6% 1.5%
Ramsey Sweis.................................................... 250,000 * *
Robert Klein.................................................... 250,000 * *
Executive Officers and Directors as a Group..................... 9,360,034 12.1% 11.5%
Name of Beneficial Owners
World Wide Wireless, Inc........................................ 16,120,679 20.9% 19.9%
Kenn Olson...................................................... 7,969,633 10.3% 9.8%
TSI Technologies, Inc........................................... 6,042,020 7.8% 7.4%
Albert and Francis Kutcher...................................... 3,955,000 5.1% 4.9%
<FN>
* Less than 1%.
</FN>
</TABLE>
24
<PAGE>
CERTAIN RELATED PARTY TRANSACTIONS
As of September 1999, other than employment agreements and stock option
plans, there have been no transactions to which we were a party involving
$60,000 or more and in which any director executive officer or holder of more
than five percent of our capital stock had a material interest.
DESCRIPTION OF COMMON STOCK
WWW Communications has authorized 100,000,000 shares of common stock,
$0.001 par value. Immediately prior to this Offering, there were 77,148,445
shares of common stock outstanding. Owners of common stock are entitled to one
vote for each share held of record on all matters to be voted on by
shareholders, except that, upon giving the legally required notice, shareholders
may cumulate their votes in the election of directors. The owners of common
stock are entitled to receive dividends when, as and if declared by the Board of
Directors out of funds legally available therefore. In the event of liquidation,
dissolution or winding up of WWW Communications, the common stock shareholders
are entitled to share ratably in all assets remaining which are available for
distribution to them after payment of liabilities. common stock shareholders
have no conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to the common stock. All of the outstanding
shares of common stock are, and the shares of common stock offered by this
Offering Circular, when issued for the consideration set forth in this Offering
Circular, will be fully paid and non-assessable.
WWW Communications has 3,000,000 shares of common stock that have been
reserved for issuance under our 1998 Stock Option Plan.
Common stock is the only class of stock issued and outstanding. Our
Articles of Incorporation do not authorize us to issue shares of preferred
stock. No shares of preferred stock have been issued.
PRICE RANGE OF COMMON STOCK
WWW Communications' common stock has been traded on the
Over-the-Counter Bulletin Board and listed in the "pink sheets" listing of stock
quotations published by the National Quotation Bureau reflecting inter-deal
prices without retail mark-up, mark-down or commission from January 1998 to
present. The security traded under the symbol UPPI from October 1997 through
July 1998. However, there were no inside quotes reported for 1997. The market
for our common stock has often been sporadic and limited.
The following table sets forth in the periods indicated the range of
high and low bid prices per share of our Common Stock traded as reported by the
National Quotation Bureau.
- -------------------------- ----------------------- ------------------------
Quarter End Low Bid High Bid
----------- ------- --------
- -------------------------- ----------------------- ------------------------
3/31/98 0.25 0.3125
- -------------------------- ----------------------- ------------------------
6/30/98 0.25 2.05
- -------------------------- ----------------------- ------------------------
9/30/98 0.11 0.6
- -------------------------- ----------------------- ------------------------
12/31/98 0.09 0.51
- -------------------------- ----------------------- ------------------------
3/31/99 0.12 0.515
- -------------------------- ----------------------- ------------------------
6/30/99 0.25 3.9688
- -------------------------- ----------------------- ------------------------
9/30/99 1.00 1.12
- -------------------------- ----------------------- ------------------------
12/31/99 1.04 1.15
- -------------------------- ----------------------- ------------------------
25
<PAGE>
<TABLE>
PLAN OF DISTRIBUTION
<S> <C>
Type of security................................. Common stock
Common stock registered by company............... We are registering and selling 4,000,000 shares of common
stock on behalf of our company. We will also register
another 5,680,916 shares of common stock for existing
shareholders with "piggy-back" rights. We will not sell the
5,680,916 shares owned by the existing shareholders with
piggy-backed rights.
Common stock outstanding before
this offering as of January 31, 2000........ 76,818,445 shares
Common stock offered for sale
by our company in this offering............. 4,000,000 shares
Common stock to be outstanding after
this offering............................... 80,818,445 shares
Use of proceeds.................................. For expansion of our sales force, marketing and distribution
activities, expansion of both our domestic and international
business operations, for acquiring spectrum, and for general
corporate purposes. See "Use of Proceeds" for more
information.
</TABLE>
Our common stock is being offered as a direct placement or
distribution. There is no minimum number of shares that must be sold. There can
be no assurance that all of the shares offered will be sold. Accordingly,
investors will bear the risk that we will accept subscriptions for less than
4,000,000 shares and then be unable to successfully complete all of the
anticipated uses of the proceeds of this offering. If fewer than 4,000,000
shares are sold, our business, financial condition, and results of operations
could be adversely affected. No officer, director, or employee has agreed to
loan us funds in the event we sell less than 4,000,000 shares.
Funds from this offering will not be placed in an escrow or trust
account and will be available for use as the funds are received. The minimum
investment per shareholder is $4,500 (1,000 shares). There is no maximum
investment per shareholder.
The shares will initially be sold through our executive officers who
will not receive commissions and who will be registered as sales representatives
where required. We currently do not have a broker-dealer involved with the sale
of our shares; however, we anticipate obtaining a broker-dealer to sell our
shares on a best efforts basis. We anticipate paying a broker-dealer a
commission of 12%. This offering will begin as of the effective date of this
prospectus and continue for twelve (12) months or such earlier date as we may
terminate the offering. If this offering terminates, all subscription payments
that we have not accepted will be promptly returned.
LEGAL MATTERS
WWW Communications currently engages two law firms to provide legal
services to the Company. The principal firm, providing WWW Communications
general legal counsel as well as securities advice and litigation assistance, is
the San Francisco-based firm of Evers & Hendrickson, LLP. In addition, WWW
Communications engages the services of both the San Diego and Los Angeles
offices of Luce, Forward, Hamilton & Scripps LLP for Southern California based
litigation and other matters.
26
<PAGE>
On April 12, 1999, WWW Communications, under terms of a Settlement and
General Release, issued 825,000 shares of common stock to a former director and
a former employee for compensation, approximating $81,000.
On May 25, 1999, WWW Communications, under terms of a Compromise and
Settlement Agreement, issued 750,000 shares of common stock to cover
approximately $310,000 of various outstanding obligations of the Company to
Corporate Solutions, LLC for services rendered.
In November 1998, WWW Communications and its predecessor affiliates
filed an action against the lessor of its leases for the Concord and San Marcos,
California multipoint distribution service (MDS) channels. The complaint alleged
breach of contract as well as intentional and negligent interference with
prospective economic advantage. WWW Communications also sought a preliminary
injunction as a result of the lessor's assertion that the predecessor companies
and the Company were in default on said leases. The Superior Court of California
for the County of Los Angeles issued a preliminary injunction against the lessor
to restrain it from taking any further action against WWW Communications and its
predecessors. Thereafter, the lessor cross-complained against WWW Communications
and its predecessors alleging breach of contract. The preliminary injunction of
WWW Communications against the lessor remained in effect until December 9, 1999,
when a settlement agreement was signed.
The settlement provided for WWW Communications to pay $27,375 to the
lessor, relating to lease obligations. WWW Communications further agreed to sign
a consulting agreement with the lessor for one year, whereby WWW Communications
will issue the equivalent of $20,000 of its restricted common stock, the value
of which is to be computed at 80% of the market value of WWW Communications'
unrestricted shares. Additionally, under this consulting agreement, WWW
Communications agreed to execute a promissory note in favor of the lessor in the
amount of $40,000, payable at $1,000 per month, commencing December 1, 1999,
with a final payment of $28,000 on December 1, 2000.
WWW Communications borrowed from Credit Bancorp $328,000 in August 1999
and $412,000 in October 1999. On August 26, 1999, WWW Communications filed suit
against Credit Bancorp, in U.S. District Court in San Francisco, regarding
improprieties on the part of Credit Bancorp relating to the August loan granted
to WWW Communications by Credit Bancorp. The case was settled on October 11,
1999. As part of the settlement agreement, Credit Bancorp agreed to convert the
original loans granted to WWW Communications to a convertible debenture in the
amount of $740,000. On October 11, 1999, WWW Communications issued a convertible
unsecured debenture for $740,000 to Credit Bancorp in settlement of this
obligation. The terms of this convertible unsecured debenture are 7% interest
per annum payable, semiannually on the last day of February and September, with
the principal due September 30, 2002. All amounts of unpaid principal and
accrued interest of this debenture are convertible at any time at the conversion
price of $1.60 per share of unregistered, restricted shares of WWW
Communications' stock, adjusted for any stock splits. As of the date of this
filing, Credit Bancorp has agreed to convert the $740,000 convertible debenture,
along with any accrued interest due and owing on the debenture, into 482,734
shares of WWW Communications common stock. This common stock has piggy-back
rights, and will be registered in this registration. WWW communications will not
sell the 482,734 shares owned by Credit Bancorp.
In November 1999, the Securities and Exchange Commission (SEC) filed
suit against Credit Bancorp alleging violations of various securities laws in
connection with its actions in relation to WWW Communications (and others), and
seeking various forms of relief including disgorgement of its illegal gains. At
this time, management believes that if the suit is successful, certain benefits
may accrue to WWW Communications, including monetary remuneration.
EXPERTS
The summary financial data for the years ended September 30, 1998 and
1999 have been derived from the Financial Statements and Notes to Financial
Statements, audited by Reuben E. Price & Co., San Francisco, independent
auditors.
ADDITIONAL INFORMATION
A registration statement on Form SB-2, including amendments, relating
to the shares offered has been filed with the Securities and Exchange
Commission, Office of Small Business Policy, Washington, D.C. This prospectus
does not contain all of the information set forth in the registration statement
and the exhibits and schedules to the registration statement. Statements made in
this prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, we refer you to the copy of the
contract or other document filed as an exhibit to the registration statement.
Each statement about those contracts and other documents is qualified in all
respects by that reference.
27
<PAGE>
Following the offering, we will become subject to the reporting
requirements of the Securities Exchange Act Of 1934. In accordance with that
law, we will be required to file reports and other information with the SEC. The
registration statement and exhibits and schedules, as well as those other
reports and other information when so filed, can be inspection without charge
and copies, at proscribed rates, at the public reference facilities maintained
by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information the on operation of the Public Reference Room by calling the
Securities and Exchange Commission at L-800-SEC-0300. In addition the Commission
maintains a World Wide Web site on the Internet at http://www.sec.gov that
contains reports, proxy and information. statements and other documents filed
electronically with the Commission, including the registration statement.
We intend to furnish our shareholders with annual reports containing
financial statements audited by our independent public accountants and quarterly
reports containing unaudited financial information for the first three quarters
of each fiscal year.
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
REUBEN E. PRICE & CO.
REUBEN E. PRICE, C.P.A. (1904-1986) PUBLIC ACCOUNTANCY CORPORATION MEMBERS
________ FOUNDED 1942 AMERICAN INSTITUTE OF
RICHARD A. PRICE CERTIFIED PUBLIC ACCOUNTANTS
703 MARKET STREET _______
SAN FRANCISCO, CA 94103 SECURITIES AND EXCHANGE
________ COMMISSION PRACTICE SECTION
(415) 982-3556 OF THE AMERICAN INSTITUTE OF
FAX (415) 957-1178 CERTIFIED PUBLIC ACCOUNTANTS
_______
CALIFORNA SOCIETY OF
CERTIFIED PUBLIC ACCOUNTANTS
</TABLE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
World Wide Wireless Communications, Inc.
We have audited the accompanying balance sheet of World Wide Wireless
Communications Inc. (A Development Stage Company), as of September 30, 1999, and
the related statements of operations, statements of cash flows, and statements
of stockholders' equity for the years September 30, 1999 and 1998, and from
inception on September 1, 1994 through September 30, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of World Wide Wireless
Communications, Inc. as of September 30, 1999, and the results of its
operations, cash flows, and stockholders' equity for the years September 30,
1999 and 1998, and from inception on September 1, 1994 through September 30,
1999 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 2, the
Company has been in the development stage since its inception on September 1,
1994, and has suffered recurring losses and has a net capital deficiency that
raise substantial doubt about its ability to continue as a going concern.
Realization of a major portion of the assets is dependent upon the Company's
ability to meet its future financing requirements, and the success of future
operations, the outcome of which cannot be determined at this time. Management's
plans in regard to these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Reuben E. Price & Co.
January 24, 2000,
Except for Note 9 SUBSEQUENT EVENTS, Affiliations in new locations, Other, as to
which the date is February 11, 2000
29
<PAGE>
World Wide Wireless Communications Inc.
(A Development Stage Company)
Balance Sheet
Assets
September 30,
1999
-----------
Current Assets:
Cash and cash equivalents $ 275,082
Prepaid and other 62,740
-----------
Total Current Assets 337,822
-----------
Fixed Assets:
Furniture, fixtures and equipment 74,906
Leasehold improvements 261,478
Accumulated depreciation and amortization (13,506)
-----------
Total Fixed Assets 322,878
-----------
Other Assets:
Prepaid lease expense 500,000
Rental deposit 20,077
-----------
Total Other Assets 520,077
-----------
Total Assets $ 1,180,777
===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accrued expenses $ 491,468
-----------
Total Current Liabilities 491,468
-----------
Long-Term Liabilities:
Loan payable 328,000
-----------
Total Long-Term Liabilities 328,000
-----------
Total Liabilities 819,468
-----------
Commitments and Contigencies --
Stockholders' Equity:
Common stock, par value $ .001 per share,
100,000,000 shares authorized, 71,183,943 issued
and outstanding at September 30, 1999
71,184
Additional paid-in capital 7,049,266
Deficit accumulated during development stage (6,759,141)
-----------
Total Stockholders' Equity 361,309
-----------
Total Liabilities and Stockholders' Equity $ 1,180,777
===========
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
<TABLE>
World Wide Wireless Communications Inc.
(A Development Stage Company)
Statements of Operations
<CAPTION>
Cumulative
from
Inception on
For the Year For the Year September 1, 1994
Ended Ended through
September 30, September 30, September 30,
1999 1998 1999
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
------------ ------------ ------------
General & Administrative Expenses (2,383,330) (353,075) (6,765,842)
------------ ------------ ------------
Total Operating Expenses (2,383,330) (353,075) (6,765,842)
------------ ------------ ------------
Operating Loss (2,383,330) (353,075) (6,765,842)
Other Income 0 6,701 6,701
------------ ------------ ------------
Net Loss $ (2,383,330) $ (346,374) $ (6,759,141)
============ ============ ============
Basic Loss Per Share $ (0.04) $ (0.01)
============ ============
Basic Weighted Average Shares Outstanding 56,113,645 39,330,520
============ ============
Diluted Loss Per Share $ (0.04) $ (0.01)
============ ============
Diluted Weighted Average Shares Outstanding 56,411,173 39,330,520
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
31
<PAGE>
<TABLE>
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Statements of Cash Flows
<CAPTION>
Cumulative
from
For the Year For the Year Inception on
Ended Ended September 1, 1994
September 30, September 30, through
1999 1998 September 30, 1999
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(2,383,330) $ (346,374) $(6,759,141)
Adjustments to reconcile net loss from operations
to net cash used by operating activities:
Common stock issued for services 615,996 30,400 646,396
Depreciation and amortization expense 13,506 0 13,506
Changes in operating assets and liabilities:
(Increase) in prepaid and other (62,740) 0 (62,740)
(Increase) in prepaid lease expense (500,000) 0 (500,000)
(Increase) in other assets (20,077) 0 (20,077)
Increase in accrued expenses 4,321 1,194 491,468
----------- ----------- -----------
Net Cash (Used) by Operating Activities (2,332,324) (314,780) (6,190,588)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES: 0 0 0
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) in fixed assets (336,384) 0 (336,384)
Proceeds from loan 328,000 0 328,000
Proceeds from issuance of common stock 2,614,074 316,451 6,474,054
----------- ----------- -----------
Net Cash Provided by Financing Activities 2,605,690 316,451 6,465,670
----------- ----------- -----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 273,366 1,671 275,082
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,716 45 0
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 275,082 $ 1,716 $ 275,082
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
32
<PAGE>
<TABLE>
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
<CAPTION>
Common Stock (1)
------------------------------------------- Deficit
Accumulated
Additional during
Paid-in Development Total
Shares Amount Capital Stage Equity
---------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Inception, September 1, 1994 -- $ -- $ -- $ -- $ --
Common stock issued to founders 9,127,600 9,128 9,128
Net loss for the fiscal year
ended September 30, 1995 (5,721) (5,721)
---------- ----------- ----------- ---------- -----------
Balance September 30, 1995 9,127,600 9,128 0 (5,721) 3,407
Common stock issued for cash
at $2.65 a share 268,800 268 712,932 713,200
Net loss for the fiscal year
ended September 30, 1996 (773,097) (773,097)
---------- ----------- ----------- ---------- -----------
Balance September 30, 1996 9,396,400 9,396 712,932 (778,818) (56,490)
Common stock issued for cash:
at $2.65 a share 16,650 17 44,183 44,200
at $4.69 a share 586,160 586 2,749,414 2,750,000
Common stock issued to above shareholders
as anti-dilutive in recognization of
market price devaluation 27,000,783 27,001 27,001
Net loss for the fiscal year
ended September 30, 1997 (3,250,619) (3,250,619)
---------- ----------- ----------- ---------- -----------
Balance September 30, 1997 36,999,993 37,000 3,506,529 (4,029,437) (485,908)
Issuance of common stock in reorganization 8,024,000 8,024 13,427 21,451
Common stock issued in private placement
between $ .0667 and $.25 per share 2,100,000 2,100 292,900 295,000
Common stock issued for services 218,000 218 30,182 30,400
Net loss for the fiscal year
ended September 30, 1997 (346,374) (346,374)
---------- ----------- ----------- ---------- -----------
Balance September 30, 1998 47,341,993 47,342 3,843,038 (4,375,811) (485,431)
Common stock issued in private placement
between $ .05 and $.435 per share 19,303,950 19,304 2,594,770 2,614,074
Common stock issued for services 4,538,000 4,538 611,458 615,996
Net loss for the fiscal year ended
September 30, 1999 (2,383,330) (2,383,330)
---------- ----------- ----------- ---------- -----------
Balance, September 30, 1999 71,183,943 $ 71,184 $ 7,049,266 (6,759,141) $ 361,309
========== =========== =========== ========== ===========
<FN>
(1) The common stock information has been retroactively restated to give effect to the reorganization of May 7, 1998 (See Note 2 to
the financial statements).
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
33
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The financial statements presented are those of World Wide Wireless
Communications, Inc., (the Company) (a development stage company). The
Company is engaged in activities related to advanced wireless
communications, including the acquisition of radio-frequency spectrum
both in the United States and internationally. The Company also plans
to license its Virtual Division Multiple Access "VDMA" chipset
technology.
Basic and Diluted Net Loss Per Share
The calculation of basic and diluted net loss per share is in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share".
The following data show the amounts used in computing loss per share
and the effect on loss and the weighted average number of shares of
dilutive potential common stock.
Loss from continuing operations $(2,383,330)
------------
Weighted average number of common
shares used in basic loss per share 56,113,645
Effect of dilutive securities:
Stock options 297,528
------------
Weighted average number of common
shares and dilutive potential
common stock used in diluted
loss per share 54,411,173
==========
The following transactions occurred after fiscal years ended September
30, 1999 and 1998, which, had they taken place during fiscal 1999 and
1998, would have changed the number of shares used in the computations
of loss per share:
1999 1998
---- ----
Common shares issued in
private placement 5,964,502 19,303,950
Common shares issued
for services 4,438,000
Debenture convertible into shares
issued in exchange for a
loan payable 462,250
Options 3,200,000
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents. Balances in bank accounts may, from time
to time, exceed federal insured limits. The Company has never
experienced any loss, and believes its credit risk to be limited.
34
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Comprehensive Income, Statement of Financial Accounting Standards No.
130
The Company has no material components of other comprehensive income.
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes". Under this
statement, the liability method is used in accounting for income taxes.
Fixed Assets
Furniture, fixtures and equipment are depreciated over their useful
lives of 5 to 10 years, using the straight-line method of depreciation.
Leasehold improvements are amortized over a 5-year period that
coincides with the initial period of the lease, using the straight-line
method of amortization.
Long-Lived Assets
The Company reviews its long-lived assets on an annual basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards No. 121.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
For cash and cash equivalents and accrued expenses, the carrying
amounts in the Balance Sheet represent their fair market value. The
carrying amount of the loan payable approximates fair value because of
similar current rates at which the Company could borrow funds with
consistent remaining maturities.
NOTE 2 - REORGANIZATION
On May 7, 1998, the Company entered into a reverse merger transaction,
whereby it acquired control of a public shell. The reorganization
resulted in the issuance of 36,999,993 shares of common stock,
representing 82.2% of the total shares outstanding. The value of
$21,451 assigned to the 8,024,000 shares, or 17.8% retained by the
public shell shareholders, represents the net assets acquired from the
public shell. The reorganization was accounted for as a reverse merger
under the purchase method.
The Company has been in the development stage since its formation on
September 1, 1994. It is primarily engaged in activities related to
advanced wireless communications, including the acquisition of
radio-frequency spectrum both in the United States and internationally.
The Company also plans to license its Virtual Division Multiple Access
"VDMA" chipset technology.
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business.
35
<PAGE>
NOTE 2 - REORGANIZATION (CONTINUED)
The Company has experienced losses since inception, and had an
accumulated deficit of $6,759,141 at September 30, 1999. Net losses are
expected for the foreseeable future. Management plans to continue the
implementation of its business plan to place the company's assets in
service to generate related revenue. Simultaneously, the Company is
continuing to secure the additional required capital through sales of
common stock through the current operating cycle.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
Litigation
On April 12, 1999, the Company, under terms of a Settlement and General
Release, issued 825,000 shares of common stock to a former director and
a former employee for compensation, approximating $81,000, at a per
share price of $0.098. This per share price is in line with the sale of
common stock for cash at this period of time.
On May 25, 1999, the Company, under terms of a Compromise and
Settlement Agreement, issued 750,000 shares of common stock to cover
approximately $310,000 of various outstanding obligations of the
Company to Corporate Solutions, LLC for services rendered, at a per
share price of $0.40. This per share price is in line with the sale of
common stock for cash at this period of time.
In November 1998, the Company and its predecessor affiliates filed an
action against the lessor of its leases for the Concord and San Marcos,
California multipoint distribution service (MDS) channels. The
complaint alleged breach of contract as well as intentional and
negligent interference with prospective economic advantage. The Company
also sought a preliminary injunction as a result of the lessor's
assertion that the predecessor companies and the Company were in
default on said leases. The Superior Court of California for the County
of Los Angeles issued a preliminary injunction against the lessor to
restrain it from taking any further action against the Company and its
predecessors. Thereafter, the lessor cross-complained against the
Company and its predecessors alleging breach of contract. The
preliminary injunction of the Company against the lessor remained in
effect until December 9, 1999, when a settlement agreement was signed.
The settlement provided for the Company to pay $27,375 to the lessor,
relating to lease obligations. This amount is recorded as an expense in
the financial statements for the fiscal years ended September 30 1998
and 1999. The Company further agreed to sign a consulting agreement
with the lessor for one year, whereby the Company will issue the
equivalent of $20,000 of its restricted common stock, the value of
which is to be computed at 80% of the market value of the Company's
unrestricted shares. Additionally, under this consulting agreement, the
Company agreed to execute a promissory note in favor of the lessor in
the amount of $40,000, payable at $1,000 per month, commencing December
1, 1999, with a final payment of $28,000 on December 1, 2000.
The Company borrowed from Credit Bancorp $328,000 in August 1999 and
$412,000 in October 1999. The terms of this loan are 7% interest per
annum payable, semiannually on the last day of February and September,
with the principal due September 30, 2002. On August 26, 1999, the
Company filed suit against Credit Bancorp, in U.S. District Court in
San Francisco, regarding improprieties on the part of Credit Bancorp
relating to the August 1999 loan. The case was settled on October 11,
1999. As part of the settlement agreement, Credit Bancorp agreed to
convert the original loans granted to the Company to a convertible
debenture in the amount of $740,000. On October 11, 1999, the Company
issued a convertible unsecured debenture for $740,000 to Credit Bancorp
in settlement of this obligation. The terms of this convertible
unsecured debenture are 7% interest per annum payable semiannually on
the last day of February and September, with the principal due
September 30, 2002. All amounts of unpaid principal and accrued
interest of this debenture are convertible at any time at the
conversion price of $1.60 per share of unregistered, restricted shares
of the Company's stock, adjusted for any stock splits.
36
<PAGE>
NOTE 3 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
Litigation (Continued)
In November 1999, the Securities and Exchange Commission (SEC) filed
suit against Credit Bancorp alleging violations of various securities
laws in connection with its actions in relation to the Company (and
others), and seeking various forms of relief including disgorgement of
its illegal gains. At this time, management believes that if the suit
is successful, certain benefits may accrue to the Company, including
the cancellation of the $740,000 convertible debenture.
Operating Leases
The Company's office space at One Post Street, San Francisco, was
leased on a month to month basis. The Company vacated these offices on
August 31, 1999. The actual rent paid, for the fiscal year ended
September 30, 1999, was $22,341.
In April 1999, the Company entered into a 5-year lease for
approximately 6,000 square feet of office space in Jack London Square,
Oakland, California. The lease commenced on June 5, 1999. The triple
net rental agreement is for $10,038 per month during the first year,
with a rental deposit of $20,077 shown as an Other Asset on the
financial statements. The lease provides for an annual increase based
on the indexed cost of living adjustments. Additionally, the lease
provides for the landlord's participation in partial reimbursement over
the terms of the lease to the Company for leasehold improvements paid
by the Company. The Company commenced its occupancy of this space on
September 1, 1999. The minimum annual rent is $120,456 for the fiscal
years ended September 30, 2000, 2001, 2002 and 2003, and $81,642 for
the period October 1, 2003 to June 4, 2004.
The Company leases (under assignment) all of the channel capacity for
certain multipoint distribution service (MDS) and multi-channel
multipoint distribution service (MMDS) channels from three carriers
that are licensed by the FCC as specified in 47 C.F.R. Paragraph
21.901(b). These MDS/MMDS leases provide for a monthly lease fee of 2%
of gross subscriber revenue or a minimum monthly rental aggregating
approximately $1,150. The minimum aggregate annual rent is $13,800 for
1999, $67,160 for 2000, and $9,500 for 2001, adjusted annually by
changes in the Consumer Price Index. Each of the leases contain three
ten-year renewal options, and an option to purchase each license for
$225,000, adjusted upon changes in the Consumer Price Index since lease
inception.
In conjunction with the MDS/MMDS licenses, the Company has acquired
(under assignment) transmission sites in the geographical areas covered
by the licenses. These site leases have varying terms and conditions,
and at September 30, 1999, the minimum annual rental is $42,000 per
fiscal year ending September 30, 2000 through 2004.
Rents paid for fiscal years ended September 30, 1999 and 1998 are as
follows:
1999 1998
-------- --------
Former office location, San Francisco $ 22,341 $ 10,163
Current office location, Oakland 38,814 0
Distribution service channel leases 21,300 2,859
Transmission sites 42,000 10,406
-------- --------
Total $124,455 $ 23,428
======== ========
<TABLE>
The minimum annual rentals under current lease obligations for future
fiscal years ended September 30 are as follows:
<CAPTION>
2000 2001 2002 2003 2004 Remainder
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C>
Current office location, Oakland $120,456 $120,456 $120,456 $120,456 $ 81,842 None
Distribution service channel leases 67,160 9,500 0 0 0 None
Transmission sites 42,000 42,000 42,000 42,000 42,000 None
-------- -------- -------- -------- -------- ----
Total $229,616 $171,956 $164,456 $164,456 $123,842 None
======== ======== ======== ======== ======== ====
</TABLE>
37
<PAGE>
NOTE 4- STOCKHOLDERS EQUITY
During the fiscal year ended September 30, 1999, the Company sold
19,303,950 shares of its common stock for net cash proceeds of
$2,614,074 and issued 4,538,000 shares of its common stock for services
at an aggregate value of $615,996. Stock issued for services was at the
cash price for the shares at the time of issuance.
During the fiscal year ended September 30, 1998, the Company sold
2,100,000 shares of its common stock for net cash proceeds of $295,000
and issued 218,000 shares of its common stock for services at an
aggregate value of $30,400. Stock issued for services was at the cash
price for the shares at the time of issuance.
NOTE 5- PREPAID LEASE EXPENSE
On November 25, 1998, the Company entered into an option agreement with
Shekinah Network to pay $500,000 to lease eight Instructional
Television Fixed Service (ITFS) channels for the Company's high-speed
wireless internet connections, as authorized by the Federal
Communication Commission (FCC). This agreement also provides the
Company an exclusive option to lease excess capacity on Shekinah's
remaining thirty-two ITFS channels, as they become available. The
monthly minimum transmission fee to be paid to Shekinah for each
license or application optioned, will be five percent (5%) of the gross
system receipts or five hundred dollars, whichever is greater.
Amortization of the licenses will begin when the available channels are
placed in service, which management expects to begin in approximately
April 2000.
ITFS licenses can only be owned by FCC approved educational, religious
or non-profit entities. In the event FCC rules and regulations change
to allow commercial companies to own these licenses or the Company
establishes an educational, religious or non-profit affiliate, the
agreement also provides the Company an option to pay Shekinah $150,000
per-market or channel group on an individual basis or $3,500,000 for
all forty channels. The option period extends for ten years, with three
additional ten-year term renewals.
NOTE 6- INCOME TAXES
A reconciliation between the actual income tax benefit and the federal
statutory rate follows:
Fiscal years ended September 30,
--------------------------------
1999 1998
---- ----
Amount % Amount %
------ - ------ -
Computed income tax benefit at
statutory rate 810,332 34% 117,767 34%
Operating loss with no current
tax benefit -810,332 -34% -117,767 -34%
-------------------------------
Income tax benefit None None
----- ----
At September 30 1999, the Company had a net operating loss carryforward
for federal tax purposes of approximately $6,760,000 which if unused to
offset future taxable income, will expire between the years 2010 to
2019, and approximately $2,154,000 for state tax purposes, which will
expire if unused in 2004 and 2005. A valuation allowance has been
recognized to offset the related deferred tax assets due to the
uncertainty of realizing any benefit therefrom. During 1999 and 1998,
no changes occurred in the conclusions regarding the need for a 100%
valuation allowance in all tax jurisdictions.
Under section 382 of the Internal Revenue Code, the utilization of net
operating loss carryforwards is limited after an ownership change, as
defined, to an annual amount equal to the market value of the loss
corporation's outstanding stock immediately before the date of the
ownership change multiplied by the highest Federal long-term tax exempt
rate in effect for any month in the 3 calendar month period ending in
the calendar month in which the ownership change occurred. Due to the
ownership changes as a result of the May 1998 reorganization and
subsequent stock issuances, any future realization of the Company's net
operating losses will be severely limited.
38
<PAGE>
NOTE 6- INCOME TAXES (CONTINUED)
Significant components of the Company's deferred tax assets are as
follows:
Fiscal years ended September 30,
1999 1998
---- ----
Net operating loss carryforwards $2,383,330 $346.374
Valuation allowance (2,383,330) (346,374)
----------------------------
Net deferred tax assets 0 0
----------------------------
NOTE 7 - ACCRUED EXPENSES
Accrued expenses consist of the following:
Professional fees $191,601
Payroll and related payroll taxes $104,986
Leasehold Improvements $ 55,288
Other $139,593
--------
Total $491,468
========
NOTE 8 - STOCK OPTION PLANS
Nonstatutory Stock Options
The Company has issued stock options under nonstatutory stock option
agreements. The options are granted at the fair market value of the
shares at the date the option is granted. The options are granted for a
period of 5 years, and are fully exercisable during the term of the
option period or within thirty (30) days of the participant's
resignation or termination.
Combined transactions in non-employee options for the fiscal years
ended September 30, 1999 and 1998 are as follows:
1999 1998
-----------------------------------
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
------ ----- ------ -----
Options outstanding October 1 - - - -
Granted 500,000 0.095 - -
Cancelled - - - -
Exercised - - - -
--------------------------------
Options outstanding September 30 500,000 0.095 - -
======= ===== ======= =====
Combined transactions in employee options for the fiscal years ended
September 30, 1999 and 1998 are as follows:
1999 1998
------------------------------------
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
------ ----- ------ -----
Options outstanding October 1 - - - -
Granted 2,700,000 0.095 - -
Cancelled - - - -
Exercised - - - -
--------------------------------
Options outstanding September 30 2,700,000 0.095 - -
========= ===== ======= =====
39
<PAGE>
NOTE 8 - STOCK OPTION PLANS (CONTINUED)
Incentive Stock Plan
The Company adopted an incentive stock plan on August 5, 1998, which
has not yet been approved by the shareholders. The options are granted
at the fair market value of the shares at the date that the option is
granted. The options are granted for a period of 10 years, and are
exercisable after one year from the date of grant, at a vested rate of
20% per year during the term of the option period or within thirty (30)
days of the participant's resignation or termination. The Company has
limited the number of shares under this plan to 3,000,000 shares of its
capital stock for this plan. The number of shares of stock covered by
each outstanding option, and the exercise price per share thereof set
forth in each such option, shall be proportionately adjusted for any
stock split, and or, stock dividend. As of September 30, 1999, the
Company did not issue any options under this plan; however, subsequent
to the date of this financial statement, options, for 800,000 shares of
common stock, were granted under the incentive stock plan to an
employee within his employment agreement, but are being treated as
nonstatutory stock options until the incentive stock plan is approved
by the shareholders.
Compensation Costs
The Company applies APB Opinion 25 in accounting for its stock
compensation plans discussed above. Accordingly, no compensation costs
have recognized for these plans in 1999 or 1998. Had compensation costs
been determined on the basis of fair value pursuant to FASB Statement
No. 123, net loss and loss per share would have been increased as
follows:
1999 1998
---- ----
Net loss:
As reported $2,383,330 $346,374
========== ========
Pro forma $2,441,575 $346,374
========== ========
Basic loss per share:
As reported $(0.04) $(0.01)
======= =======
Pro forma $(0.04) $(0.01)
======= =======
Diluted loss per share:
As reported $(0.04) $(0.01)
======= =======
Pro forma $(0.04) $(0.01)
======= =======
The fair value of each option granted is estimated on the grant date
using the Black-Scholls model. The following assumptions were made in
estimating fair value.
Assumption Plans
Dividend yield 0%
Risk-free interest rate 7%
Expected life 5 years
Expected volatility 97%
40
<PAGE>
NOTE 9 - SUBSEQUENT EVENTS
Affiliations in new locations
Argentina
On November 30, 1999, the Company entered into an agreement to acquire
a controlling interest in Infotel Argentina S.A., a Buenos Aires based
company which owns MMDS licenses in eight of the largest Argentine
cities including Buenos Aires. The purchase price was $1,500,000, of
which $900,000 was paid in cash and $600,000 is to be paid in shares of
restricted stock of the Company.
Peru
On February 10, 2000, the Company signed letters of intent to purchase
a Peruvian telecommunications company, Digital Way S.A. This
acquisition is contingent upon the execution of final agreements, as
well as the approval of the relevant foreign government agencies.
41
<PAGE>
INTERIM FINANCIAL STATEMENTS
World Wide Wireless Communications Inc.
(A Development Stage Company)
Balance Sheet
UNAUDITED
Prepared by Management
Assets
December 31, 1999
-----------------
Current Assets:
Cash and cash equivalents $ 337,103
Prepaid and other 2,160
-----------
Total Current Assets 339,263
-----------
Fixed Assets:
Furniture, fixtures and equipment 172,355
Leasehold improvements 278,549
Accumulated depreciation and amortization (35,409)
-----------
Total Fixed Assets 415,495
-----------
Other Assets:
Prepaid lease expense 500,000
Investment 1,200,000
Other 20,077
-----------
Total Other Assets 1,720,077
-----------
Total Assets $ 2,474,835
===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accrued expenses $ 359,151
-----------
Total Current Liabilities 359,151
-----------
Long-Term Liabilities:
CLoanrpayableebenture 740,000
-----------
Total Long-Term Liabilities 740,000
-----------
Total Liabilities 1,099,151
-----------
Commitments and Contigencies --
Stockholders' Equity:
Common stock, par value $.001 per share 73,889
100,000,000 shares authorized, 73,888,973 issued
and outstanding at December 31, 1999
Additional paid-in capita 8,890,125
Deficit accumulated during development stage (7,588,330)
-----------
Total Stockholders' Equity 1,375,684
-----------
Total Liabilities and Stockholders' Equity $ 2,474,835
===========
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
<TABLE>
World Wide Wireless Communications Inc.
(A Development Stage Company)
Statement of Operations
UNAUDITED
Prepared by Management
<CAPTION>
Cumulative
from
For the Quarter For the Quarter Inception on
Ended Ended September 1, 1994
December 31, December 31, through
1999 1998 December 31, 1999
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
------------ ------------ ------------
General & Administrative Expenses (829,189) (358,615) (7,595,031)
------------ ------------ ------------
Total Operating Expenses (829,189) (358,615) (7,595,031)
------------ ------------ ------------
Operating Loss (829,189) (358,615) (7,595,031)
Other Income 0 6,701 6,701
------------ ------------ ------------
Net Loss $ (829,189) $ (351,914) $ (7,588,330)
============ ============ ============
Basic Loss Per Share $ (0.01) $ (0.01)
============ ============
Basic Weighted Average Shares Outstanding 71,791,046 52,723,058
============ ============
Diluted Loss Per Share $ (0.01) $ (0.01)
============ ============
Diluted Weighted Average Shares Outstanding 74,991,046 55,098,058
============ ============
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
43
<PAGE>
<TABLE>
World Wide Wireless Communications, Inc.
(A Development Stage Company)
Statements of Cash Flows
UNAUDITED
Prepared by Management
<CAPTION>
Cumulative
from
For the Quarter For the Quarter Inception on
Ended Ended September 1, 1994
December 31, December 31, through
1999 1998 December 31, 1999
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (829,189) $ (358,615) $(7,588,330)
Adjustments to reconcile net loss from operations
to net cash used by operating activities:
Common stock issued for services 15,910 0 662,306
Common stock issued for investment 600,000 600,000
Depreciation and amortization expense 21,903 0 35,409
Changes in operating assets and liabilities:
(Increase)/ decrease in prepaid and other 60,580 0 (2,160)
(Increase) in prepaid lease expense 0 (500,000) (500,000)
(Increase) in other assets 0 0 (20,077)
Increase/ (decrease) in accrued expenses (132,317) 424,546 359,151
----------- ----------- -----------
Net Cash (Used) by Operating Activities (263,113) (434,069) (6,453,701)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) in investments (1,200,000) 0 (1,200,000)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Increase) in fixed assets (114,520) 0 (450,904)
Proceeds from loan 412,000 0 740,000
Proceeds from issuance of common stock 1,227,654 602,273 7,701,708
----------- ----------- -----------
Net Cash Provided by Financing Activities 1,525,134 602,273 7,990,804
----------- ----------- -----------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 62,021 168,204 337,103
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 275,082 1,716 0
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 337,103 $ 169,920 $ 337,103
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
44
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The financial statements presented are those of World Wide Wireless
Communications, Inc., (the Company) (a development stage company). The
Company is engaged in activities related to advanced wireless
communications, including the acquisition of radio-frequency spectrum
both in the United States and internationally. The Company also plans
to license its Virtual Division Multiple Access "VDMA" chipset
technology.
Basic and Diluted Net Loss Per Share
The calculation of basic and diluted net loss per share is in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share".
The following data show the amounts used in computing loss per share
and the effect on loss and the weighted average number of shares of
dilutive potential common stock.
Loss from continuing operations $(829,189)
----------
Weighted average number of common
shares used in basic loss per share 71,791,046
Effect of dilutive securities:
Stock options 3,200,000
-----------
Weighted average number of common
shares and dilutive potential
common stock used in diluted
loss per share 74,991,046
==========
The following transactions occurred after quarters ended December 31,
1999 and 1998, which, had they taken place during the quarters ended
December 31, 1999 and 1998, would have changed the number of shares
used in the computations of loss per share:
1999 1998
---- ----
Common shares issued in
private placement 3,259,742 17,958,072
Common shares issued
for services 4,538,000
Debenture convertible into shares
issued in exchange for a
loan payable 462,250 462,250
Options 3,200,000
Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
highly liquid investments with an original maturity of three months or
less to be cash equivalents. Balances in bank accounts may, from time
to time, exceed federal insured limits. The Company has never
experienced any loss, and believes its credit risk to be limited.
Comprehensive Income, Statement of Financial Accounting Standards No.
130
The Company has no material components of other comprehensive income.
45
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
The Company accounts for income taxes using Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes". Under this
statement, the liability method is used in accounting for income taxes.
Fixed Assets
Furniture, fixtures and equipment are depreciated over their useful
lives of 5 to 10 years, using the straight-line method of depreciation.
Leasehold improvements are amortized over a 5-year period that
coincides with the initial period of the lease, using the straight-line
method of amortization.
Long-Lived Assets
The Company reviews its long-lived assets on an annual basis to
determine any impairment in accordance with Statement of Financial
Accounting Standards No. 121.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments
For cash and cash equivalents and accrued expenses, the carrying
amounts in the Balance Sheet represent their fair market value. The
carrying amount of the loan payable approximates fair value because of
similar current rates at which the Company could borrow funds with
consistent remaining maturities.
NOTE 2 - REORGANIZATION
On May 7, 1998, the Company entered into a reverse merger transaction,
whereby it acquired control of a public shell. The reorganization
resulted in the issuance of 36,999,993 shares of common stock,
representing 82.2% of the total shares outstanding. The value of
$21,451 assigned to the 8,024,000 shares, or 17.8% retained by the
public shell shareholders, represents the net assets acquired from the
public shell. The reorganization was accounted for as a reverse merger
under the purchase method.
The Company has been in the development stage since its formation on
September 1, 1994. It is primarily engaged in activities related to
advanced wireless communications, including the acquisition of
radio-frequency spectrum both in the United States and internationally.
The Company also plans to license its Virtual Division Multiple Access
"VDMA" chipset technology.
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business.
The Company has experienced losses since inception, and had an
accumulated deficit of $7,588,330 at December 31, 1999. Net losses are
expected for the foreseeable future. Management plans to continue the
implementation of its business plan to place the company's assets in
service to generate related revenue. Simultaneously, the Company is
continuing to secure the additional required capital through sales of
common stock through the current operating cycle.
46
<PAGE>
NOTE 3 - COMMITMENTS AND CONTIGENCIES
Litigation
In November 1998, the Company and its predecessor affiliates filed an
action against the lessor of its leases for the Concord and San Marcos,
California multipoint distribution service (MDS) channels. The
complaint alleged breach of contract as well as intentional and
negligent interference with prospective economic advantage. The Company
also sought a preliminary injunction as a result of the lessor's
assertion that the predecessor companies and the Company were in
default on said leases. The Superior Court of California for the County
of Los Angeles issued a preliminary injunction against the lessor to
restrain it from taking any further action against the Company and its
predecessors. Thereafter, the lessor cross-complained against the
Company and its predecessors alleging breach of contract. The
preliminary injunction of the Company against the lessor remained in
effect until December 9, 1999, when a settlement agreement was signed.
The settlement provided for the Company to pay $27,375 to the lessor,
relating to lease obligations. This amount is recorded as an expense in
the financial statements for the fiscal years ended September 30 1998
and 1999. The Company further agreed to sign a consulting agreement
with the lessor for one year, whereby the Company will issue the
equivalent of $20,000 of its restricted common stock, the value of
which is to be computed at 80% of the market value of the Company's
unrestricted shares. Additionally, under this consulting agreement, the
Company agreed to execute a promissory note in favor of the lessor in
the amount of $40,000, payable at $1,000 per month, commencing December
1, 1999, with a final payment of $28,000 on December 1, 2000.
The Company borrowed from Credit Bancorp $328,000 in August 1999 and
$412,000 in October 1999. The terms of this loan are 7% interest per
annum payable, semiannually on the last day of February and September,
with the principal due September 30, 2002. On August 26, 1999, the
Company filed suit against Credit Bancorp, in U.S. District Court in
San Francisco, regarding improprieties on the part of Credit Bancorp
relating to the August 1999 loan. The case was settled on October 11,
1999. As part of the settlement agreement, Credit Bancorp agreed to
convert the original loans granted to the Company to a convertible
debenture in the amount of $740,000. On October 11, 1999, the Company
issued a convertible unsecured debenture for $740,000 to Credit Bancorp
in settlement of this obligation. The terms of this convertible
unsecured debenture are 7% interest per annum payable semiannually on
the last day of February and September, with the principal due
September 30, 2002. All amounts of unpaid principal and accrued
interest of this debenture are convertible at any time at the
conversion price of $1.60 per share of unregistered, restricted shares
of the Company's stock, adjusted for any stock splits.
In November 1999, the Securities and Exchange Commission (SEC) filed
suit against Credit Bancorp alleging violations of various securities
laws in connection with its actions in relation to the Company (and
others), and seeking various forms of relief including disgorgement of
its illegal gains. At this time, management believes that if the suit
is successful, certain benefits may accrue to the Company, including
the cancellation of the $740,000 convertible debenture.
Operating Leases
The Company's office space at One Post Street, San Francisco, was
leased on a month to month basis. The Company vacated these offices on
August 31, 1999. The actual rent paid, for the fiscal year ended
September 30, 1999, was $22,341.
In April 1999, the Company entered into a 5-year lease for
approximately 6,000 square feet of office space in Jack London Square,
Oakland, California. The lease commenced on June 5, 1999. The triple
net rental agreement is for $10,038 per month during the first year.
The lease provides for an annual increase based on the indexed cost of
living adjustments. Additionally, the lease provides for the landlord's
participation in partial reimbursement over the terms of the lease to
the Company for leasehold improvements paid by the Company. The Company
commenced its occupancy of this space on September 1, 1999. The minimum
annual rent is $120,456 for the fiscal years ended September 30, 2000,
2001, 2002 and 2003, and $81,642 for the period October 1, 2003 to June
4, 2004.
47
<PAGE>
NOTE 3 - COMMITMENTS AND CONTIGENCIES (CONTINUED)
The Company leases (under assignment) all of the channel capacity for
certain multipoint distribution service (MDS) and multi-channel
multipoint distribution service (MMDS) channels from three carriers
that are licensed by the FCC as specified in 47 C.F.R. Paragraph
21.901(b). These MDS/MMDS leases provide for a monthly lease fee of 2%
of gross subscriber revenue or a minimum monthly rental aggregating
approximately $1,150. The minimum aggregate annual rent is $13,800 for
1999, $67,160 for 2000, and $9,500 for 2001, adjusted annually by
changes in the Consumer Price Index. Each of the leases contain three
ten-year renewal options, and an option to purchase each license for
$225,000, adjusted upon changes in the Consumer Price Index since lease
inception.
In conjunction with the MDS/MMDS licenses, the Company has acquired
(under assignment) transmission sites in the geographical areas covered
by the licenses. These site leases have varying terms and conditions,
and at September 30, 1999, the minimum annual rental is $42,000 per
fiscal year ending September 30, 2000 through 2004.
Rents paid for quarters ended December 31, 1999 and 1998 are as
follows:
1999 1998
-------- --------
Former office location, San Francisco $ 0 $ 5,540
Current office location, Oakland 32,115 0
Distribution service channel leases 26,643 0
Transmission sites 50,500 2,625
-------- --------
Total $109,258 $ 8,165
======== ========
<TABLE>
The minimum annual rentals under current lease obligations for future
fiscal years ended September 30 are as follows:
<CAPTION>
2000 2001 2002 2003 2004 Remainder
---- ---- ---- ---- ---- ---------
<S> <C> <C> <C> <C> <C>
Current office location, Oakland $120,456 $120,456 $120,456 $120,456 $ 81,842 None
Distribution service channel leases 67,160 9,500 0 0 0 None
Transmission sites 42,000 42,000 42,000 42,000 42,000 None
-------- -------- -------- -------- --------
Total $229,616 $171,956 $164,456 $164,456 $123,842 None
======== ======== ======== ======== ========
</TABLE>
NOTE 4- STOCKHOLDERS EQUITY
During the quarter ended December 31, 1999, the Company sold 2,150,485
shares of its common stock for net cash proceeds of $1,227,654. The
Company also issued 454,545 shares of its common stock for an aggregate
value of $600,000 as a partial payment for an investment in a
telecommunications company. The Company issued 100,000 shares of its
common stock for services at an aggregate value of $15,910. Stock
issued for the investment was at the market price on the day of
issuance. Stock issued for services was at the cash price for the
shares at the time of issuance.
During the quarter ended December 31, 1998, the Company sold 7,310,650
shares of its common stock for net cash proceeds of $602,273.
NOTE 5- PREPAID LEASE EXPENSE
On November 25, 1998, the Company entered into an option agreement with
Shekinah Network to pay $500,000 to lease eight Instructional
Television Fixed Service (ITFS) channels for the Company's high-speed
wireless internet connections, as authorized by the Federal
Communication Commission (FCC). This agreement also provides the
Company an exclusive option to lease excess capacity on Shekinah's
remaining thirty-two ITFS channels, as they become available. The
monthly minimum transmission fee to be paid to Shekinah for each
license or application optioned, will be five percent (5%) of the gross
system receipts or five hundred dollars, whichever is greater.
Amortization of the licenses will begin when the available channels are
placed in service, which management expects to begin in approximately
April 2000.
48
<PAGE>
NOTE 5- PREPAID LEASE EXPENSE (CONTINUED)
ITFS licenses can only be owned by FCC approved educational, religious
or non-profit entities. In the event FCC rules and regulations change
to allow commercial companies to own these licenses or the Company
establishes an educational, religious or non-profit affiliate, the
agreement also provides the Company an option to pay Shekinah $150,000
per-market or channel group on an individual basis or $3,500,000 for
all forty channels. The option period extends for ten years, with three
additional ten-year term renewals.
NOTE 6- INCOME TAXES
A reconciliation between the actual income tax benefit and the federal
statutory rate follows:
Quarters ended December 31,
---------------------------
1999 1998
Amount % Amount %
Computed income tax benefit at
statutory rate 281,924 34% 121,929 34%
Operating loss with no current
tax benefit -281,924 -34% -121,929 -34%
--------------------------------
Income tax benefit None None
----- ----
At December 31 1999, the Company had a net operating loss carryforward
for federal tax purposes of approximately $7,500,000 which if unused to
offset future taxable income, will expire between the years 2010 to
2019, and approximately $2,154,000 for state tax purposes, which will
expire if unused in 2004 and 2005. A valuation allowance has been
recognized to offset the related deferred tax assets due to the
uncertainty of realizing any benefit therefrom. During 1999 and 1998,
no changes occurred in the conclusions regarding the need for a 100%
valuation allowance in all tax jurisdictions.
Under section 382 of the Internal Revenue Code, the utilization of net
operating loss carryforwards is limited after an ownership change, as
defined, to an annual amount equal to the market value of the loss
corporation's outstanding stock immediately before the date of the
ownership change multiplied by the highest Federal long-term tax exempt
rate in effect for any month in the 3 calendar month period ending in
the calendar month in which the ownership change occurred. Due to the
ownership changes as a result of the May 1998 reorganization and
subsequent stock issuances, any future realization of the Company's net
operating losses will be severely limited.
Significant components of the Company's deferred tax assets are as
follows:
Quarters ended December 31,
1999 1998
---- ----
Net operating loss carryforwards $ 829,189 $ 358,615
Valuation allowance (829,189) (358,615)
--------- ---------
Net deferred tax assets 0 0
--------- ---------
NOTE 7 - ACCRUED EXPENSES
Accrued expenses consist of the following:
Professional fees $196,352
Payroll and related payroll taxes $ 45,000
Other $117,799
--------
Total $359,151
========
49
<PAGE>
NOTE 8 - STOCK OPTION PLANS
Nonstatutory Stock Options
The Company has issued stock options under nonstatutory stock option
agreements. The options are granted at the fair market value of the
shares at the date the option is granted. The options are granted for a
period of 5 years, and are fully exercisable during the term of the
option period or within thirty (30) days of the participant's
resignation or termination.
<TABLE>
Combined transactions in non-employee options for the quarters ended
December 30, 1999 and 1998 are as follows:
<CAPTION>
1999 1998
-------------------------------------------
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Options outstanding October 1 500,000 0.095 - -
Granted - - 500,000 0.095
Cancelled - - - -
Exercised - - - -
------------------------------------------
Options outstanding September 30 500,000 0.095 500,000 0.095
======= ========= ======= =====
</TABLE>
<TABLE>
Combined transactions in employee options for the quarters ended
December 30, 1999 and 1998 are as follows:
<CAPTION>
1999 1998
---------------------------------------
Number Average Number Average
of Exercise of Exercise
Shares Price Shares Price
------ ----- ------ -----
<S> <C> <C> <C> <C>
Options outstanding October 1 2,700,000 0.095 - -
Granted - - 1,875,000 0.095
Cancelled - - - -
Exercised - - - -
------------------------------------------
Options outstanding September 30 2,700,000 0.095 1,875,000 0.095
========= ===== ========= =====
</TABLE>
Incentive Stock Plan
The Company adopted an incentive stock plan on August 5, 1998, which
has not yet been approved by the shareholders. The options are granted
at the fair market value of the shares at the date that the option is
granted. The options are granted for a period of 10 years, and are
exercisable after one year from the date of grant, at a vested rate of
20% per year during the term of the option period or within thirty (30)
days of the participant's resignation or termination. The Company has
limited the number of shares under this plan to 3,000,000 shares of its
capital stock for this plan. The number of shares of stock covered by
each outstanding option, and the exercise price per share thereof set
forth in each such option, shall be proportionately adjusted for any
stock split, and or, stock dividend. As of December 31, 1999, the
Company did not issue any options under this plan; however, subsequent
to the date of this financial statement, options, for 800,000 shares of
common stock, were granted under the incentive stock plan to an
employee within his employment agreement, but are being treated as
nonstatutory stock options until the incentive stock plan is approved
by the shareholders.
50
<PAGE>
NOTE 8 - STOCK OPTION PLANS (CONTINUED)
Compensation Costs
The Company applies APB Opinion 25 in accounting for its stock
compensation plans discussed above. Accordingly, no compensation costs
have recognized for these plans in 1999 or 1998. Had compensation costs
been determined on the basis of fair value pursuant to FASB Statement
No. 123, net loss and loss per share would have been increased for the
quarters ended December 31, 1999 and 1998 as follows:
1999 1998
---- ----
Net loss:
As reported $ 829,189 $351,914
========== ========
Pro forma $1,043,296 $422,091
========== ========
Basic loss per share:
As reported $(0.01) $(0.01)
======= =======
Pro forma $(0.01) $(0.01)
======= =======
Diluted loss per share:
As reported $(0.01) $(0.01)
======= =======
Pro forma $(0.01) $(0.01)
======= =======
The fair value of each option granted is estimated on the grant date
using the Black-Scholls model. The following assumptions were made in
estimating fair value for the quarters ended December 31, 1999 and
1998.
Assumption Plans
1999 1998
---- ----
Dividend yield 0% 0%
Risk-free interest rate 7% 7%
Expected life 5 years 5 years
Expected volatility 280% 76%
NOTE 9 - INVESTMENT
Argentina
On November 30, 1999, the Company entered into an agreement to acquire
a controlling interest in Infotel Argentina S.A., a Buenos Aires based
company which owns MMDS licenses in eight of the largest Argentine
cities including Buenos Aires. The purchase price was $1,500,000, of
which $600,000 was paid in cash and $600,000 was paid in shares of
restricted stock of the Company. The final $300,000 was paid subsequent
to December 31, 1999.
51
<PAGE>
NOTE 10 - SUBSEQUENT EVENTS
Affiliations in new locations
Peru
The Company is in the process of purchasing a Peruvian
telecommunications company, Digital Way S.A. This acquisition, in
progress, is contingent upon the approval of the relevant foreign
government agencies.
52
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Bylaws provide that we may indemnify any director, officer, agent or
employee against all expenses and liabilities, including counsel fees,
reasonably incurred by or imposed upon them in connection with any proceeding to
which they may become involved by reason of their being or having been a
director, officer, employee or agent of our Company. Moreover, our Bylaws
provide that we shall have the right to purchase and maintain insurance on
behalf of any such persons whether or not we would have the power to indemnify
such person against the liability insured against. Insofar as indemnification
for liabilities arising under the Securities Act, we have been informed that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses of the Registrant in connection with the issuance and distribution of
the securities being registered are estimated as follows, assuming the Maximum
offering amount is sold:
Securities and Exchange Commission filing fee $ 4,752
Accountant's fees and expenses $10,000
Legal fees and expenses $25,000
Printing $ 5,000
Marketing expenses $10,000
Postage $ 5,000
Miscellaneous $ 1,000
-------
Total $60,752
The Registrant will bear all expenses shown above.
Item 26. RECENT SALES OF UNREGISTERED SECURITIES
<TABLE>
a) The following information is given for all securities that we sold
within the past three years without registering the securities
under the Securities Act.
<CAPTION>
Shares
Offering Exemption Dates Issued Par Value Paid-In-Capital
- ------------------ ----- ------ --------- ---------------
<S> <C> <C> <C> <C>
Rule 504 01/13/98- 16,285,000 $16,285 $ 736,380
12/08/98
Rule 506 12/28/98- 19,164,452 $19,164 $4,310,505
12/31/99
Officers/Directors 07/21/98- 36,774,993 $36,775 $3,462,990
Employees/Reorg. 05/14/99
Corporate Solutions 05/28/99 750,000 $ 750 $ 299,250
Settlement
Employee Settlement 04/12/99 825,000 $ 825 $ 81,000
---------- ------- ----------
Issuances through 12/31/99 73,799,445 $73,799 $8,890,125
========== ======= ==========
Rule 504 01/19/00- 3,349,000
01/28/00 ==========
<FN>
53
<PAGE>
b) No underwriters were used in connection with the issuances any shares or options. The class of persons
to whom we issued shares were:
1. Accredited;
2. Employees, Directors, and Private Investors.
c) Sales commissions and finders fees were paid to various entities
that were not registered broker-dealers. The transactions and the
types and amounts of consideration received by the Company were:
1. Cash
2. Services
d) The Company is claiming an exemption under Rule 506 of the
Securities Act of 1933, as amended.
</FN>
</TABLE>
54
<PAGE>
Item 27. EXHIBITS
ITEM (601) DOCUMENT PAGE
3.1 Articles of Incorporation,
3.2 Amendment to Articles of Incorporation filed
3.3 Amendment to Articles of Incorporation filed
3.4 By-laws
4.1 Form of certificate evidencing shares of Common Stock of World Wide
Wireless Communications, Inc.
5. Opinion of Evers & Hendrickson, LLP with respect to the legality of the
shares being registered
10.1 Lease Agreement Between World Wide Wireless Communications, Inc. and
Shekinah Network
10.2 South Bend Mmds Lease Agreement
10.3 Lease Agreement Between World Wide Wireless Communications, Inc. And
Shekinah Network Vail, Colorado
10.4 Lease Agreement Between World Wide Wireless Communications, Inc. And
Shekinah Network Aspen, Colorado
10.5 Lease Agreement Between World Wide Wireless Communications, Inc. And
Shekinah Network Casper, Wyoming
10.6 Lease Agreement Between World Wide Wireless Communications, Inc. And
Shekinah Network Grand Rapids, Michigan
10.7 Lease Agreement Between World Wide Wireless Communications, Inc. And
Shekinah Network La Grande, Oregon
10.8 Lease Agreement Between World Wide Wireless Communications, Inc. And
Shekinah Network Pierre, South Dakota
10.9 Lease Agreement Between World Wide Wireless Communications, Inc. And
Shekinah Network Ukiah, California
23.1 Consent of Evers & Hendrickson, LLP
23.2 Consent of Reuben E. Price & Co.
Item 28. UNDERTAKINGS
a) The Registrant hereby undertakes that it will:
1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
55
<PAGE>
(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the registration
statement; and
(iii) Include any additional or changed material
information on the plan of distribution.
2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the bona fide
offering.
3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the Offering.
e) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe the registrant
meets all of the requirements of filing on Form SB-2 and authorized this
registration statement (pre-effective amendment no. 4) to be signed on its
behalf by the undersigned on April 25, 2000.
World Wide Wireless Communications, Inc.
By:/s/ Wayne Caldwell By:/s/ Douglas P. Haffer
------------------------ ---------------------------------
Wayne Caldwell Douglas P. Haffer
Vice President President and Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement (pre-effective amendment no. 4) has been signed by the
following persons in the capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
________________________ President & CEO & Chairman April 25, 2000
Douglas P. Haffer
________________________ Vice President and Director April 25, 2000
Wayne Caldwell
56
EXHIBIT 3.1
Articles of Incorporation
(PURSUANT TO NRS 78)
STATE OF NEVADA
Secretary of State
1. NAME OF CORPORATION: TAX ENCOUNTERS, INC.
2. RESIDENT AGENT:
Name of Resident Agent: The Corporation Trust Company of Nevada
Street Address: One East First Street, Reno, Nevada 89501
3. SHARES:
Number of shares with par value: 100,000,000 Par Value: $0.001
Number of shares without par value:
4. GOVERNING BOARD: Shall be styled as Directors
The FIRST BOARD OF DIRECTORS shall consist of 2 members and the names and
addresses are as follows:
Cindy Robison 3157 E. Linden, Tuscon, AZ 85716
Joel Watkins 3653 E. 2nd, #205, Tuscon, AZ 85716
5. PURPOSE: The purpose of the corporation shall be:
6. FURTHER MATTERS:
7. SIGNATURES OF INCORPORATORS:
The names and addresses of the incorporators signing the articles:
Candice Maerz Terrie L. Bates
3225 N. Central Ave. 3225 N. Central Ave.
Phoenix, AZ 85012 Phoenix, AZ 85012
/s/ Candice Maerz /s/ Terrie L. Bates
----------------------- ----------------------
Signature Signature
State of Arizona County of Maricopa State of Arizona County of Maricopa
This instrument was acknowledged This instrument was acknowledged
before me on September 10, 1996, before me on September 10, 1996,
by Candice Maerz as by Terrie L. Bates as
incorporator of TAX ENCOUNTERS, INC. incorporator of TAX ENCOUNTERS, INC.
/s/ /s/
----------------------- -----------------------
8. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
The Corporation Trust Company of Nevada hereby accepts appointment as
Resident Agent for the above name corporation.
The Corporation Trust Company of Nevada By:
/s/ 9/11/96
---------------------- --------------
Signature of Resident Agent Date
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
OF
UPLAND PROPERTIES, INC.
We the undersigned President and Secretary of UPLAND PROPERTIES, INC.
do hereby certify as follows:
That the Board of Directors of said corporation at a meeting duly
convened, held on May 16, 1998, adopting a resolution to record the Amended
Articles of Incorporation filed on September 12, 1996 as follows:
ARTICLE I is hereby amended to read as follows:
That the name of the corporation is:
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
The number of shares of the corporation outstanding and entitled to
vote on as amendment to the articles of incorporation 8,024,000, that said
amendment has been consented to and approved by a majority vote of the
stockholders holding at least a majority of each class of stock outstanding and
entitled to vote thereon pursuant to an action by written consent of the
shareholders of UPLAND PROPERTIES, INC.
/s/ Douglas Haffer
------------------
DOUGLAS HAFFER
President
/s/
------------------
Secretary
CERTIFICATE OF AMENDMENT OF ARTICLES OF INCORPORATION
Candice Maerz and Terrie L. Bates certify that:
1. They constitute at least two-thirds of the original incorporators of
the directors of TAX ENCOUNTERS, INC., a Nevada corporation.
2. The original Articles were filed in the Office of the Secretary of
State on September 12, 1996.
3. As of the date of this certificate, no stock of the corporation has
been issued.
4. They hereby adopt the following amendments to the articles of
incorporation of this corporation: Article 1 is amended to read as follows:
NAME OF CORPORATION: UPLAND PROPERTIES, INC.
/s/ Candice Maerz
-------------------
Signature
/s/ Terrie L. Bates
-------------------
Signature
>
BY LAWS
OF
TAX ENCOUNTERS, INC.
ARTICLE I. OFFICERS
The principle office of the Corporation in the State of Nevada shall be
located in Tucson, Arizona, County of Pima. The Corporation may have such
offices, either within or without the State of Arizona, as the Board of
Directors may designate or as the business of the Corporation may require from
time to time.
ARTICLE II. SHAREHOLDERS
SECTION 1. Annual Meeting. The annual meeting of the shareholders shall
be held on the 15th day of the month of January in each year, beginning with the
year 1996, at the hour of 10:00 a.m., for the purpose of electing Directors and
for the transaction of such other business as may come before the meeting. If
the day fixed for the annual meeting shall be a legal holiday in the State of
Arizona, such meeting shall be held on the next succeeding business day. If the
election of Directors shall not be held on the day designated herein for any
annual meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as conveniently may be.
SECTION 2. Special Meetings. Special meetings of the shareholders, for
any purpose, unless otherwise prescribed by statute, may be called by the
President of the Board of Directors, and shall be called by the President at the
request of the holders of not less than twenty-five percent (25%) of all
outstanding shares of the Corporation entitled to vote at the meeting.
SECTION 3. Place of the Meeting. The Board of Directors may designate
any place, either within or without the State of Arizona, unless otherwise
prescribed by statute, as the place of meeting for any annual meeting or for any
special meeting. A waiver of notice signed by all shareholders entitled to vote
at a meeting may designate any place, either within or without the State of
Arizona, unless otherwise prescribed by statute, as the place for the holding of
such meeting. If no designation is made, the place of the meeting shall be the
principal office of the Corporation.
SECTION 4. Notice of Meeting. Written notice stating the place, day and
hour of the meeting and, in case of a special meeting, the purpose or purposes
of which the meeting is called, shall unless otherwise prescribed by statute, be
delivered not less than 15 days nor more than 45 days before the date of the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail, addressed to the shareholder at his address as it appears on the
stock transfer book of the corporation, with postage thereon prepaid.
SECTION 5. Closing of Transfer Books of Fixing of Record. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders of any adjournment thereof, of shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period, but not to exceed in any case fifty days. If the stock transfer
books shall be closed for the purpose of determining shareholders entitled to
notice of or to vote at a meeting of shareholders, such books
<PAGE>
shall be closed for at least 45 days immediately preceding such meeting. In lieu
of closing the stock transfer books, the Board of Directors may fix in advance a
date as the record date for any such determination of shareholders, such date in
any case to be not more than 60 days and, in particular action requiring such
determination of shareholders is to be taken. IF the stock transfer books are
not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the date on which notice of the
meeting is mailed of the date on which the resolution of the Board of Directors
declaring such dividend is adopted, as the case my be, shall be the record date
for such determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
SECTION 6. Voting List. The officer or agent having charge of the stock
transfer books for shares of the corporation shall make a complete list of the
shareholders entitled to vote at each meeting of shareholders or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each. Such list shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder
during the whole time of the meeting for the purpose thereof.
SECTION 7. Quorum. A majority of the outstanding shares of the
corporation entitled to vote, represented in person or proxy, shall constitute a
quorum at a meeting of shareholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
SECTION 8. Proxies. At all meetings of shareholders, a shareholder may
vote in person or by proxy executed in wiring by the shareholder or by his or
her duly authorized attorney-in-fact. Such proxy shall be filed with the
secretary of the Corporation before or at the time of the meeting. A meeting of
the Board of Directors may be had by means of a telephone conference or similar
communication equipment by which all persons participating in the meeting can
hear each other, and participation in a meeting under such circumstances shall
constitute presence at the meeting.
SECTION 9. Voting of Shares. Each outstanding share entitle to vote
shall be entitled to one vote upon each matter submitted to a vote at a meeting
of shareholders.
SECTION 10. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as the
Bylaws of such Corporation may prescribe or, in the absence of such provision,
as the Board of Directors of such Corporation may determine.
Shares held by an administrator, executor, guardian or conservator may
be voted by him either in person or by proxy, without a transfer of such shares
into his name. Shares standing in the name of a trustee may be voted by him,
either in person or by proxy, but no trustee shall be entitled to vote share
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his name, if authority to do so
be contained in an appropriate order of the court by which receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation shall not be voted
directly or indirectly, at any meeting, and shall not be counted in determining
the total number of outstanding shares at any given time.
<PAGE>
SECTION 11. Informal Action by Shareholders. Unless otherwise provided
by law, any action required to be taken at a meeting of the shareholders, or any
other action which may be taken at a meeting of the shareholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the shareholders entitled to vote with respect to the
subject matter thereof.
ARTICLE III. BOARD OF DIRECTORS
SECTION 1. General Powers. The business and affairs of the Corporation
shall be managed by its Board of Directors.
SECTION 2. Number, Tenure and Qualifications. The number of Directors
of the Corporation shall be fixed by the Board of Directors, but in no event
shall be less than one (1) of more than fifteen (15). Each Director shall hold
office until the next annual meeting of shareholders and until his successor
shall have been elected and qualified.
SECTION 3. Regular Meetings. A regular meeting of the Board of
Directors shall be held without other notice than this Bylaw immediately after,
and at he same place as, the annual meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place for the holding of
additional regular meetings without notice other than such resolution.
SECTION 4. Special Meetings. Special Meetings of the Board of Directors
may be called by or at the request of the President or any two Directors. The
person or persons authorized to call special meetings of the Board of Directors
may fix the place for holding any special meeting of the Board of Directors
called by them.
SECTION 5. Notice. Notice of any special meeting shall be given at
least one (1) day previous thereto by written notice delivered personally or
mailed to each Director at his business address, or by telegram. If mailed, such
notice shall be deemed to be delivered when deposited in the United States Mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company. Any Directors may waive notice of any meeting. The Attendance
of a Director at a meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose of objecting
to the transaction of any business because the meeting is not lawfully called or
convened.
SECTION 6. Quorum. A majority of the number of Directors fixed by
Section 2 of this Article III shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors, but if less than such
majority is present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice.
SECTION 7. Manner of Acting. The act of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors.
SECTION 8. Action Without a Meeting. Any action that may be taken by
the Board of Directors at a meeting may be taken without a meeting if consent in
writing, setting forth the action so to be taken, shall be signed before such
action by all of the Directors.
SECTION 9. Vacancies. Any vacancy occurring in the Board of Directors
may be filled by the affirmative vote of a majority of the remaining Directors
though less than a quorum of the Board of Directors, unless otherwise provided
by law. A Director elected to fill a vacancy shall be elected for the unexpired
term of his predecessor in office. Any Directorship to be filled by reason of an
increase in the number of Directors may be filled by election by the Board of
Directors for a term of office continuing only until the next election of
Directors by the shareholders.
<PAGE>
SECTION 10. Compensation. By resolution of the Board of Directors, each
Director may be paid his expenses, if any, of attendance at each meeting of the
Board of Directors, and may be paid a stated salary as Director a fixed sum of
attendance each meeting of the Board of Directors or both. No such payment shall
preclude any Director from serving the Corporation in any other capacity and
receiving compensation thereof.
SECTION 11. Presumption of Assent. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the Secretary
of the meeting before the adjournment thereof, or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a Director
who voted in favor of such action.
ARTICLE IV: OFFICERS
SECTION 1. Number. The Officers of the Corporation shall be a
President, one or more Vice Presidents, a Secretary and a Treasurer, each of
whom shall be elected by the Board of Directors. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by the
Board of Directors, including a Chairman of the Board. In its discretion, the
Board of Directors may leave unfilled for any such period as it may determine
any office except those of President and Secretary. Any two or more offices may
beheld by the same person, except for the offices of President and Secretary
which may not be held by the same person. Officers may be Directors or
shareholders of the Corporation.
SECTION 2. Election and term of Officer. The officers of the
Corporation to be elected by the Board of Directors shall be elected annually by
the Board of Directors at the first meeting of the Board of Directors held after
each annual meeting of the shareholders. If the election of officers shall not
be held at such meeting, such election shall be held as soon thereafter as
conveniently may be. Each officer shall hold office until his successor shall
have been duly elected and shall have qualified, or until his
SECTION 3. Removal. Any officer or agent may be removed by the Board of
Directors whenever, in its judgment, the best interests of the Corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, ofd the person so removed. Election or appointment of an officer
or agent shall not of itself create contract rights, and such appointment shall
be terminable at will.
SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
SECTION 5. President. The President shall be the principal executive
officer of the Corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the Corporation. He shall, when present, preside at all meetings of
the shareholders and of the Board of Directors, unless there is a Chairman of
the Board, in which case the Chairman shall preside. He may sign, with the
Secretary or any other proper officer of the Corporation thereunto authorized by
the Board of Directors, certificates for shares of the Corporation, any deeds,
mortgages, bonds, contracts, or other instruments which the Board of Directors
has authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the Board of Directors or by these
Bylaws to some other officer or agent of the Corporation, or shall be required
by law to be otherwise signed or executed; and in general shall perform all
duties incident to the office of the President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 6. The Vice President. In the absence of the President or in
the event of his death, inability or refusal to act, the Vice President shall
perform the duties of the President, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the President. The Vice
President shall perform such other duties as from time to time may be assigned
to him by the President of the Board of Director. If there is more than one Vice
President, each Vice President shall succeed to the duties of the President in
order of rank as determined by the Board of Director. If no rank has been
determined, then each Vice President shall succeed to the duties of the
President in order of date of election, the earliest date having the first rank.
<PAGE>
SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the
proceedings of the shareholders and of the Board of Directors in one or more
minute books provided for that purpose; (b) see that all notices are duly given
in accordance with the provisions of the Bylaws or required by law; (c) be
custodian of the corporate records and of the seal of the Corporation and see
that the seal of the Corporation is affixed to all documents, the execution of
which on behalf of the Corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) sign with the President certificates
of shares of the Corporation, the issuance of which shall have been authorized
by resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the Corporation; and (g) in general perform all duties
incident to the office of the Secretary and such other duties as from time to
time may be assigned him by the President or by the Board of Directors.
SECTION 8. Treasurer. The Treasurer shall: (a) have charge and custody
of and be responsible for all funds and securities of the Corporation; (b)
receive and give receipts for money due and payable to the Corporation from any
source whatsoever, and deposit all such monies in the name of the Corporation in
such banks, trust companies or other depositories as shall be selected in
accordance with the provisions of Article VI of these Bylaws; and (c) in general
perform all of the duties as from time tot time may be assigned to him by the
President or by the Board of Directors. If required by the Board of Directors,
the Treasurer shall give a bond for the faithful discharge of his duties in such
sum and with such sureties as the Board of Directors shall determine.
SECTION 9. The salaries of the officers shall be fixed from time to
time by the Board of Directors, and no officer shall be prevented from receiving
such salary by reason of the fact that he is also a Director of the Corporation.
ARTICLE V: INDEMNITY
The Corporation shall indemnify its Directors, officers and employees
as follows:
A. Every Director, officer, or employee of the Corporation shall be
indemnified by the Corporation against all expenses and liabilities, including
counsel fees, reasonably incurred by or imposed upon him in connection with any
proceeding to which he may become involved, by reason of his being or having
been a Director, officer, employee or agent of the Corporation or is or was
serving at the request of the Corporation as a Director, officer, employee or
agent of the corporation, partnership, joint venture, trust, or enterprise, or
any settlement thereof, whether or not he is a Director, officer, employee or
agent at the time such expenses are incurred, except in such cases wherein the
Director, officer, or employee is adjudged guilty of willful misfeasance or
malfeasance in the performance of his duties; provided that in the event of a
settlement the indemnification herein shall apply only when the Board of
Directors approves such settlement and reimbursement as being for the best
interest of the Corporation.
B. The Corporation shall provide to any person who is or was a
director, officer, employee, or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee, or agent of the
corporation, partnership, joint venture, trust or enterprise, the indemnity
against expenses of suit, litigation or other proceedings which is specifically
permissible under applicable law.
C. The Board of Directors may, in its discretion, direct the purchase
of liability insurance by way of implementing the provisions of this Article V.
<PAGE>
ARTICLE VI: CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. Contracts. The Board of Directors may authorize any officer
of officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
SECTION 2. Loans. No loans shall be contracted on behalf of the
Corporation and no evidences of indebtedness shall be issued in its name unless
authorized by a resolution of the Board of Directors. Such authority may be
general or confined to specific instances.
SECTION 3. Checks, Drafts, Etc. All checks, drafts or other orders for
the payment of money, notes, or other evidences of indebtedness issued in the
name of the Corporation, shall be signed by such officers or officers, agent or
agents of the Corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors.
SECTION 4. Deposits. All funds of the Corporation not otherwise
employed shall be deposited from time to time to the credit of the Corporation
in such banks, trust companies or other depositories as the Board of Directors
may select.
ARTICLE VII: CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. Certificates for Shares. Certificates representing shares of
the Corporation shall be in form as shall be determined by the Board of
Directors. Such certificates shall be signed by the P resident and by the
Secretary or by such other officers authorized by law and by the Board of
Directors so to do, and sealed with the corporate seal. All certificates for
shares shall be consecutively numbered or otherwise indemnified The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the stock transfer
books of the Corporation. All certificates surrendered to the Corporation for
transfer shall be canceled and no new certificates shall be issued until the
former certificates for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefore upon such terms and indemnity to the Corporation
as the Board of Directors may prescribe.
SECTION 2. Transfer of Shares. Transfer of shares of the Corporation
shall be made only on the stock transfer books of the Corporation by the holder
of record thereof or by his legal representative, who shall furnish proper
evidence of authority to transfer, or by his attorney thereunto authorized by
power of attorney duly executed and filed with the Secretary of the Corporation,
and on surrender for cancellation of the certificate for such shares. The person
on whose name shares stand on the books of the Corporation shall be deemed by
the Corporation to be the owner thereof for all purposes. Provided, however,
that upon any action undertaken by the shareholders to elect S Corporation
Status pursuant to Section 1362 of the Internal Revenue Code and upon any
shareholders agreement thereto restricting the transfer of said shares so as to
disqualify said S Corporation Status, said restriction or transfer shall be made
a part of the Bylaws so long as said agreement is in force and effect.
ARTICLE VIII: FISCAL YEAR
The fiscal year of the Corporation shall begin on the 1st day of
January and end on the 31st day of December of each year.
<PAGE>
ARTICLE IX: DIVIDENDS
The Board of Directors may from time to time declare, and the
Corporation may pay, d dividends on its outstanding shares in the manner and
upon the terms and conditions provided by law and its Articles of Incorporation.
ARTICLE X: CORPORATE SEAL
The Board of Directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation
and the State of the incorporation and the words, "Corporate Seal."
ARTICLE XI: WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any shareholder or director of the Corporation under the provisions of
these Bylaws or under the provisions of the Articles of Incorporation or under
the provisions of the applicable Business Corporation Act, a waiver thereof in
writing, signed by the person or persons entitled to such notice, whether before
or after the time stated therein, shall be deemed equivalent to the giving of
such notice.
ARTICLE XII: AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board of Directors at any regular or special meeting of the Board
of Directors.
The above Bylaws are certified to have been adopted by the Board of
Directors of the Corporation on the 12th day of September 1996.
---------------------------------
Secretary
WWW
NUMBER SHARES
WW 2847
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
COMMON STOCK
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT CUSIP 981550 10 9
SPECIMEN CERTIFICATE
SPECIMEN CERTIFICATE SPECIMEN CERTIFICATE
to the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF
$.001 PER SHARE OF
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
(hereinafter called the "Corporation") transferable on the books of the
Corporation in person or by duly authorized attorney upon surrender of this
Certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the
Certificate of Incorporation and By-Laws of the Corporation and the amendments
from time to time made thereto, copies of which are or will be on file at the
principal office of the Corporation, to all of which the holder by acceptance
hereof assents. This Certificate is not valid unless countersigned by the
Transfer Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
?????????????????????? ????????????????????
SECRETARY PRESIDENT
[SEAL]
Countersigned and Registered:
MANHATTAN TRANSFER REGISTRAR CO.
(HOLBROOK, N.Y)
Transfer Agent
and Registrar
By
Authorized Signature
Evers &
Hendrickson, LLP
Lawyers and Counselors At Law
- ------------------------------------
March 23, 2000
Securities and Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: World Wide Wireless Communications, Inc., Legality of Shares
Dear Madam/Sirs:
We have made reasonable inquiry and are of the opinion that the
securities being offered, will, when sold, be legally issued, fully paid and
non-assessable.
We are not opining as to any other statements contained in the Form
SB-2 registration statement, nor as to matters that occur after the date
thereof.
Very truly yours,
EVERS & HENDRICKSON, LLP
/s/ William D. Evers
-----------------------------
By: William D. Evers, Partner
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
THIS AGREEMENT is made this 25th day of November 1998 (the "Effective
Date"), by and between World Wide Wireless Communications, Inc. a Nevada
Corporation, and Shekinah Network, a California non-profit Corporation and World
Wide Communications, Inc. and Shekinah Network shall hereinafter be individually
referred to as a "Party" or collectively as the "Parties."
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users for the
transmission of commercial programming;
WHEREAS, Shekinah Network has received licenses from the FCC License to
construct and operate ITFS systems on the channels and in the markets listed in
Exhibit A, attached hereto and incorporated by reference herein (the "Licenses")
for the transmission of educational and instructional video programming;
WHEREAS, Shekinah Network has filed applications at the FCC to
construct and operate ITFS systems on the channels and in the markets listed in
exhibit B, attached hereto and incorporated by reference herein (the
"Applications") for the transmission of educational and instructional video
programming (the channels listed in Exhibit A and Exhibit B are hereinafter
referred to as the "Channels");
WHEREAS, with respect to the Licenses and the Applications, Shekinah
Network has entered into the Excess Capacity Lease Airtime Agreements listed in
Exhibit C, attached hereto and incorporated by reference herein (the "Existing
Lease Agreements"), pursuant to which certain non-ITFS users ("Existing
Lessees") are not providing, or will provide, access to satellite reception
equipment, transmission and reception equipment, operational support and
royalties in exchange for access to capacity on the channels covered by the
Licenses and the Applications, consistent with the rules and regulations of the
FCC;
WHEREAS, subject to the terms and conditions set forth herein, Shekinah
Network desires to grant to World Wide Wireless Communications, Inc. an
exclusive and irrevocable option to lease excess capacity on the Channels, and
potentially to acquire the Channels;
WHEREAS, subject to the terms and conditions set forth herein, World
Wide Wireless Communications, Inc. desires to acquire from Shekinah Network an
exclusive and irrevocable option to lease excess capacity on the Channels and
potentially to acquire the Channels;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations, warranties, covenants and promises contained
herein, the Parties, intending to be legally bound, hereby agree as follows:
<PAGE>
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, representations, warranties, covenants and promises contained
herein, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
OPTION
1.1. Grant of option. Subject to the terms and conditions herein, Shekinah
Network hereby grants to World Wide Wireless Communications, Inc. the exclusive,
irrevocable right and option to lease from Shekinah Network excess capacity
under each License and Application, and the exclusive, irrevocable right and
option to acquire from Shekinah Network each License and Application (the
"Option") as follows:
1.1.1. Within sixty days (60) days following the exercise of the
Option with respect to any License or Application pursuant to Section 1.5
hereof, subject to Sections 1.1.2 and 1.1.3 hereof, Shekinah Network and World
Wide Wireless Communications, Inc. shall enter into an Excess Capacity Lease
Airtime Agreement ("World Wide Wireless Communications, Inc. Lease Agreement")
for such License or Application substantially in the form of Exhibit D, attached
hereto and incorporated by reference herein. The World Wide Wireless
Communications, Inc. Lease Agreement shall specify a consideration to Shekinah
Network of the amount of a One Dollar ($1) Signing Fee, and a monthly minimum
Transmission Fee of Five percent (5%) of the Gross system receipts or Five
Hundred Dollars whichever is greater.
1.1.2. In the event that the FCC's rules and regulations change such
that World Wide Wireless Communications, Inc. is permitted to acquire the
Channels outright and to utilize the Channels for purposes other than the
transmission of educational and commercial programming, and Shekinah Network
desires to sell its Channels and World Wide Wireless Communications, Inc.
desires to so acquire the Channels, then upon the exercise of the Option with
respect to the Channels covered by any License or Application pursuant to
Section 1.5 hereof, World Wide Wireless Communications, Inc. shall notify
Shekinah Network in writing within sixty (60) days of its intention to acquire
such Channels, and Shekinah Network and World Wide Wireless Communications, Inc.
shall enter into an Asset Purchase Agreement for the purchase and sale of such
Channels ("Purchase Agreement"). The Purchase Agreement shall contain terms and
conditions which are reasonable and customary for purchase agreements of such
Channels and shall specify a consideration to Shekinah Network of One Hundred
and Fifty Thousan Dollars ($150,000) per-market or channel Group on and
individual basis, or all markets or channel groups can be purchased for the sum
of Three Million Five Hundred Thousand Dollars ($3,500,000). This would apply to
World Wide Wireless Communications, Inc. or a FCC approved educational
non-profit entity designated in writing by World Wide Wireless Communications,
Inc..
1.2 Term of Option. The Option shall have a term of ten (10) years from the
date hereof (the "Option Term"). World Wide Wireless Communications, Inc. shall
have a right to renew this option for three (3) additional terms of ten years
each, following the other provisions of this Agreement.
1.3. Payment. In consideration for the grant of the Option, World Wide
Wireless Communications, Inc. hereby agrees to pay to Shekinah Network Five
Hundred Thousan Dollars ($500,000.00), payable in cash by World Wide Wireless
Communications, Inc. by certified or cashier's check or by wire or interbank
transfer as follows:
1.3.1. The non-refundable sum of Fifty-Thousand Dollars ($50,000.00)
shall be paid by World Wide Wireless Communications, Inc. to Shekinah on the
Effective Date.
<PAGE>
1.3.2. The non-refundable sum of Twenty-Five Thousand Dollars
($25,000.00) shall be paid by World Wide Wirelss Communications, Inc. to
Shekinah on or before January 25, 1999 (sixty days (60) following the Effective
Date).
1.3.3. The balance of Four Hundred and Twenty-Five Thousand Dollars
($425,000.00) shall be paid by World Wide Wireless Communications, Inc. to
Shekinah on or before February 25, 1999 (ninety days (90) following the
Effective Date).
1.4 Exercise of the Option. The Option granted under this Agreement shall
be exercised by World Wide Wireless Communications, Inc. only as follows:
1.4.1. The Option with respect to each License and Application shall
be exercisable by World Wide Wireless Communications, Inc. only upon the
occurrence of one of the following events (a "Termination Event"): (i) the
termination of the associated Existing Lease Agreement due to breach thereunder
of the Existing Lessee; (ii) the termination of the associated Existing Lease
Agreement due to the mutual consent of the parties thereto; or (iii) the
expiration of the associated Existing Lease Agreement; provided that Skekinah
Network and the Existing Lease have not entered into a new lease agreement
pursuant to the terms of such Existing Lease Agreement. Shekinah Network shall
provide written notice to World Wide Wireless Communications, Inc. for any
Termination Event within thirty (30) days following the occurrence thereof (each
such notice hereinafter referred to as a "Termination Notice"). (iv) The
Availability of a License or Application not otherwise subject to an Existing
Lease Agreement.
1.4.2. Within ninety (90) days following the receipt of a Termination
Notice by Shekinah Network with respect to any License of Application (the
"Exercise Period"), World Wide Wireless Communications, Inc. shall provide
written notice to Shekinah Network of its intent to exercise its Option for the
License or Application (and the Channels covered thereunder) at issue. If World
Wide Wireless Communications, Inc. declines to exercise the Option for any given
License or Application within the applicable Exercise Period, Shekinah Network
shall have no further obligations to World Wide Communications, Inc. with
respect to such License or Application.
1.4.3. Notwithstanding anything to the contrary in this Agreement, the
Option with respect to each License and Application shall be expressly subject
to any rights of first refusal of Existing Licenses which are contained in the
Existing Lease Agreements.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1. Shekinah Network. Shekinah Network hereby represents and warrants to
World Wide Wireless Communications, Inc. as follows:
2.1.1. Organization. It is a non-profit corporation duly organized,
validly existing and in good standing under the laws of the State of California
and has full power and authority to carry on its business as said business as
said business is now being conducted and to own or to lease the assets it now
owns or leases.
2.1.2. Authority/Enforceability. It has the full power and authority
to execute and deliver this Agreement, and all other documents required to be
executed and delivered by it hereunder, to consummate the transactions hereby
contemplated to fully perform its obligations hereunder and to take all other
actions required to be taken by it pursuant to the provisions hereof. The
execution and delivery of this Agreement, and all other documents required to be
executed and delivered by it hereunder, and its performance hereunder and
thereunder have been duly authorized by all requisite action. This Agreement
<PAGE>
and all other documents required to be executed and delivered by it hereunder
have been duly executed and delivered by it and constitute valid and legally
binding agreements and obligations enforceable in accordance with their
respective terms against it. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein, Shekinah Network makes no
representation whatsoever with respect to the Licenses or the Applications.
2.1.3. No Conflicts. Except for any FCC approval which may be required
prior to the execution and consummation of any agreement under Sections 1.1.1 or
1.2 hereof, the execution, and delivery and performance by it of this Agreement,
or any other document required to be executed and delivered by it hereunder, in
accordance with its terms will not, other than as disclosed by it to World Wide
Wireless Communications, Inc.: (i) violate any order or decree of any court or
governmental authority by which, with it is bound, (iii) violate, result in a
breach of, constitute a default (or an event which, with or without the giving
of notice, lapse of time or both, would constitute a default) under, result in
the invalidity of, accelerate the performance required by or cause the
acceleration of the maturity or, terminate or modify or give any third party the
right to terminate or modify, or otherwise, instrument, note, mortgage, lease,
license, franchise, permit or other authorization, right, restriction or
obligation to which it is a party or by which it is bound, (iv) constitute an
act of bankruptcy, preference, insolvency or fraudulent conveyance under any
bankruptcy act or other law for the protection of debtors or creditors, or (v)
conflict with or result in any breach or violation of the terms, conditions or
provisions of its organizational documents.
2.2. World Wide Wireless Communications, Inc.. World Wide Wireless
Communications, Inc. hereby represents and warrants to Shekinah Network, as
follows:
2.2.1. Organization. It is corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada and has full
power and authority to carry on its business as said business is now being
conducted and to own or to lease the assets it now owns or leases.
2.2.2. Authority/Enforceability. It has the full power and authority
to execute and deliver this Agreement, and all other documents required to be
executed and delivered by it hereunder, to consummate the transactions hereby
contemplated, to fully perform its obligations hereunder and to take all other
actions required to be taken by it pursuant to the provisions hereof. The
execution and delivery of this Agreement, and all other documents required to be
executed and delivered by it hereunder, and its performance hereunder and
thereunder have been duly authorized by all requisite action. This Agreement and
all other documents required to be executed and delivered by it hereunder have
been duly executed and delivered by it and constitute valid and legally binding
agreements and obligations enforceable in accordance with their respective terms
against it.
2.2.3. No Conflicts. Except for any FCC approval which may be required
prior to the execution and consummation of any agreement under Sections 1.1.1.
or 1.2 hereof, the execution, and delivery and performance by it of this
Agreement, or any other document required to be executed and delivered by it
hereunder, in accordance with its terms will not, other than as disclosed by it
to Shekinah Network: (i) violate any provisions of any law, rule or regulation
which is applicable to it, (ii) violate any order or decree of any court or
governmental authority by which it is bound, (iii) violate, result in a breach
of, constitute a default (or an event which, with or without the giving of
notice, lapse of time or both, would constitute a default) under, result in the
invalidity of, accelerate the performance required by or cause the acceleration
of the maturity of, terminate or modify or give any third party the right to
terminate or modify, or other authorization, right, restriction or obligation to
which it is insolvency or fraudulent conveyance under any bankruptcy act or
other law for the protection of debtors or creditors, or (v) conflict with or
result in any breach or violation of the terms, conditions or provisions of its
organizational documents.
<PAGE>
ARTICLE 3
RIGHTS AND REMEDIES
3.1. Indemnification.
3.1.1. Each party shall indemnify, defend and hold the other Party and
their officers, managers, directors, employees, agents and representatives free
and harmless from and against any and all claims, actions, suits, liability,
loss, damages, costs, expenses, judgments, deficiencies, charges and reasonable
fees or legal counsel arising out of or in connection with any material breach
by the Party of any representation, warrant or covenant of this Agreement or any
failure by the Party to perform its obligations hereunder. World Wide Wireless
Communications, Inc. shall further indemnify defend and hold Shekinah Network,
its officer, directors, employees, agents and representatives harmless from and
against any and all claims, actions, suits, liabilities, damages, costs,
expenses, judgments, deficiencies, charges and reasonable fees of legal counsel
arising out of or in connection with any challenge by an Existing Lessee to the
termination of an Existing Lease Agreement with respect to any License or
Application; provided that World Wide Wireless Communications, Inc. exercises
the Option with respect to such License or Application and Shekinah Network and
World Wide Wireless Communications, Inc. actually enter into any agreement
pursuant to Sections 1.1.1 or 1.1.2 with respect to such License or Application
following such termination.
3.1.2. If claim by a third party is made against a Party indemnified
under Section 3.1.1, above ("Indemnitee"), and the Indemnitee intends to seek
indemnification with respect thereto, it shall promptly give written notice to
the indemnifying Party ("Indemnitor") of such claim; provided, however, that
failure by Indemnitee to give prompt notice of a claim shall not relieve
Indemnitor of its obligations unless said failure materially prejudices
Indemnitor's ability to defend the claim. Indemnitor shall have ten (10)
business days after said notice is given to elect by written notice given to
Indemnitee to undertake, conduct and control, through counsel of its own
choosing (subject, as to choice of counsel, to the consent of Indemnitee, such
consent not to be unreasonably withheld) and at its sole expense, the good faith
settlement or defense of the claim and Indemnitee shall cooperate with
Indemnitor in connection there with; provided further that if the defendants in
an action include all of the Parties and any Party shall reasonably conclude
that there may be reasonable defenses available to it which are different from
or in addition to those available to the other Party or if the interests of one
Party reasonably may be deemed to conflict with the interests of the other
Party, each Party shall have the right to select separate counsel and to assumen
such legal defenses and otherwise to participate in the defense of such action,
with the expenses and fees of such separate counsel and other expenses related
to such participation to be paid by each Party as incurred. So as long as the
Indemnitor is contesting a claim in good faith, Indemnitee shall not pay or
settle the claim. If Indemnitor does not make timely election to undertake the
good faith defense or settlement of the claim afore-said, or if Indemnitor fails
to proceed with the good faith defense or settlement of the matter after making
such election, then, in either such event, Indemnitee shall, upon ten (10) days'
written notice to Indemnitor, have the right to contest the claim at its
exclusive discreation, at the risk and expense of Indemnitor to the full extent
set forth in Section 3.2.1 above, as applicable.
3.2. Termination
3.2.1. This Agreement may be terminated, without limiting any other
legal or equitable rights or remedies the terminating Party may have, as
follows; (i) Immediately upon the mutual written consent of the Parties; (ii) By
the non-breaching Party in the event of a material breach of a representation,
warranty, covenant or agreement by the other Party upon thirty (30) days written
notice by the non-breaching Party to the breaching Party in the event that the
breaching Party has not cured the breach within said thirty (30) day period;
provided, however, that in the event that World Wide Wireless Communications,
Inc. shall fail to make any of the payments specified in Section 1.3 when due,
Shekinah Network shall be entitled immediately to terminate this Agreement and
any Excess Capacity Lease agreements that may have been entered into by parties
and Shekinah Network shall have no further
<PAGE>
liabilities or obligations to World Wide Wireless Communications, Inc. of any
kind; (iii) By any Party if the other Party shall generally not pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding adjudicating a party as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property; or the other Party
shall take any action to authorize or facilitate any of the actions set forth
above in this subsection (iii).
3.2.2. In the event of a material breach by a Party under this
Agreement, the other Party, in addition to having the right to terminate this
Agreement without liability, may pursue such other remedies as may be available
to it at law or in equity. Neither termination nor expiration of this Agreement
shall relieve the Parties of liabilities previously accrued hereunder or any
liability, obligation or agreement which is to survive or be performed after
such termination or expiration. However, the exclusive remedy for failure to
meet payments under section 1.3.2 is termination of this option agreement and
the termination of any Excess Capacity Lease agreements that may have been
entered into by parties.
ARTICLE 4
MISCELLANEOUSE
4.1. Assignment. The Parties agree that this Agreement and all of the
rights, privileges, obligations and liabilities hereunder shall be freely
assignable. The Parties further agree to execute any documents necessary and to
cooperate fully in carrying out any such assignment. The Parties hereto hereby
expressly acknowledge and agree that, subject to the receipt of FCC approval
therefore, Shekinah Network intends to assign each of the Licenses and the
Applications to a ITFS qualified entity, and to assign to such entity all of the
rights, privileges, obligations and liabilities under this Agreement.
4.2. Compliance With The Communications Act and FCC Rules. This Agreement
and any agreement concluded under Sections 1.1.1 and 1.1.2 hereof may be subject
to the Communications Act of 1934, as amended, and the rules and regulations and
policies of the FCC 9collectively, the "Act"). If the consummation of the
transactions contemplated by this Agreement shall be held by the FCC or a court
of competent jurisdiction to be violative of the Act, the parties shall use
their best efforts in good faith to arrange for the consummation of those
transactions (without any practical alteration of the consideration to be
received by either Party) in a manner consistent with the required and to
cooperate fully with each other in order to obtain FCC approval of this
transaction if any such approval is required.
4.3. Severability. Each provision of this Agreement shall be considered
severable and if for any reason any provision or provisions of this Agreement of
the application thereof are determined to be invalid or contrary to any existing
or future law of any jurisdiction or any rule or regulation of any government
authority, such invalidity shall not impair the operation of or affect those
provisions in any other jurisdiction or any other provisions hereof which are
valid.
4.4. Entire Agreement. This Agreement constitutes and contains the entire
agreement and understating concerning the subject matters and replaces all prior
negotiations and all agreements proposed or otherwise, whether written or oral,
concerning the subject matter hereof. This is an integrated document.
4.5. Governing Law. This agreement shall be deemed to have been executed
and delivered within the state of California, and the rights and obligations of
the parties hereunder shall be construed and enforced in accordance with, and
governed by, the principals of conflict of laws. Any disputes regarding the
application or effect of any FCC Rules and/or Regulations shall be governed by
the rules of the FCC.
<PAGE>
4.6. Construction. Each Party has cooperated in the drafting and
preparation of the Agreement. Hence, in any construction to be made of this
Agreement, the same shall not be construed against any Party on the basis that
the Party was its drafter.
4.7. Modification and Waiver. This agreement may not be modified in any way
unless by a writing executed by both Parties hereto. No waiver of any breach of
any term or provision of this Agreement shall not be, or shall be binding unless
in writing and signed by the Party waiving the breach.
4.8. Attorneys' Fees. In the event of litigation in connection with or
concerning the subject matter of this Agreement, the Parties agree that the
prevailing Party shall be reimbursed its attorneys' fees and costs. Any legal
costs incurred in connection with the termination of the Existing Lease
Agreements associated with those Licenses or Applications for which World Wide
Wireless Communications, Inc. exercises the Option shall be born by World Wide
Wireless Communications, Inc.
4.9. Binging on Successors. The terms, conditions and provisions of this
Agreement shall inure to the benefit of, and be binding upon, the Parties and
their respective heirs, successors, transferees and assigns.
4.10. Notices. All notices or other communications required or permitted
hereunder shall be in writing (which shall include communications by telex and
telecopier); shall be deemed to have been given when delivered by had, telecopy
followed by mailed notices as hereinafter provided), overnight delivery service,
with acknowledged receipt, or when received by the United States mail if sent by
registered or certified mail postage prepaid, return receipt requested,
addressed to a Party at the addresses set forth for that Party on the signature
page of this Agreement with copies (which shall not constitute notice) to the
individuals or entities designated by the Party on the signature page of this
Agreement, or such other address which the Party shall have given in writing for
such purpose by notice hereunder.
4.11. Third Parties. Nothing herein shall be construed to be to the benefit
of or enforceable by any third party including, but not limited to , any
creditor of the Parties.
4.12. Cooperation. Each of the Parties agrees to cooperate fully and to
execute any and all supplementary documents and to take all additional actions
that may be necessary or appropriate to give full force to the basic terms and
intent of this Agreement.
4.13. Counterparts. This Agreements may be executed in counterparts, each
of which shall be deemed an original, and all counterparts taken together shall
constitute the Agreement of the Parties.
<PAGE>
IN WITNESS WHEREOF, The Parties have caused this Agreement to be
executed as of the day and year first above written.
Shekinah Network
By: ______________________________
Name: Charles J. McKee
Title: President
World Wide Wireless Communications, Inc.
By: ______________________________
Name: Doug Haffer
Title: President
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Attn: Charles McKee, President
Phone/Fax: (805) 438-3341
Gardner, Carton & Douglas
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
Douglass P. Haffer
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 956-9190
Fax: (415) 391 3199
<PAGE>
EXHIBIT A
FCC LICENSES
Albuquerque, New Mexico BPLIF-921015DB, -granted 8/5/94-, Call Sign WNC-373
Anchorage, Alaska BPLIF-951016AG, -granted 5/2/96-, Call Sign WNC-732
Aspen, Colorado BPLIF-951018AK, -granted 5/4/98-, Call Sign WND-368
Carlsbad, New Mexico BMPLIF-971024DB, -granted 12/8/94-, Call Sign WNC-533
Champaign, Illinois BMPLIF-960729dw, -granted 2/28/95,- Call Sign WNC-552
Des Moines, Iowa BPLIF-951020BS, -granted ?-. Call Sign WND-401
Fairbanks, Alaska BMPLIF-970819DI, -granted 7/5/96-, Call Sign WNC-773
Fairmont, Minnesota BPLIF-951017AL, -granted 10/10/96-, Call Sign WND-329
Grand Rapids, Michigan BMPLIF-980429K, -granted 9/3/93-. Call sign WLX-950
Hilo, Hawaii BPLIF-951020B4, -granted 3/14/97-, Call Sign WNC-810
Hot Springs, Arkansas BPLIF-951018AV, -granted 4/20/98-, Call Sign WND-348
Key West, Florida BPLIF-951018AV, -granted 5/30/97-, Call Sign WND-798
La Crosse, Wisconsin BPLIF-951020ZW, -granted 10/31/97-, Sall Sign WNC-868
La Grande, Oregon BPLIF-951020EY, -granted 7/25/97-, Call Sign WNC-956
Medford, Oregon BMPLIF-950308DA, -granted 10/8/93-, Call Sign WLX-975
Nashville, Tennessee BMPLIF-940819EC, -granted 4/24/95,- Call Sign WLX-978
Opelika, Alabama BPLIF-951020GB, -granted 3/20/98-, Call Sign WND-321
Pierre, South Dakota BMPLIF-971121DE, -granted 5/23/96-, Call Sign WNC-797
Pocatello, Idaho BPLIF-951020UQ, -granted 8/24/98-, Call Sign WND-465
Redding, California BMPLIF-950523DZ, -granted 9/2/94,- Call Sign WNC-407
Reno/Carson City, Nevada BPLIF-951020DE, -granted 8/21/98-. Call Sign WND-476
Santa Barbara, California BMPLIF-980213DH, -granted 12/6/93-, Call Sign WLX-994
Sebring, Florida BPLIF-951020JX, -granted 8/22/97-, Call Sign WNC-904
Sheridan, Wyoming BPLIF-930108DC, -granted 9/-29-94-, Call Sign WNC-426
St. Croix, Virgin Islands BPLIF-951020JL, -granted 10/22/97-, Call Sign WND-210
St. Thomas, Virgin Islands BPLIF-951018AG, -granted 2/12/98-, Call Sign WNC-892
Ukiah, California BPLIF951017AK, -granted 7/25/97-, Call Sign WNC-893
<PAGE>
Vail, Colorado BPLIF-951018AL, -granted 4/15/98-, Call Sign WND-352
Visalia, California BPLIF-951020MQ, -granted 7-5-96-, Call Sign WNC-787
Wenatchee, Washington BMPLIF-980227DW, -granted 8-23-95-, Call Sign WNC-661
Yuma Arizona BPLIF-920708DC, -granted 7/9/93-, Call Sign WLX-919
<PAGE>
EXHIBIT B
APPLICATION FILED BY SHKINAH NETWORK
Alamosa, Colorado BPLIF-951018AN, -filed 10-95-
Casper, Wyoming BPLIF-951020ED, -filed 10-95
Columbus, Ohio BPLIF-951020YS, -filed 10-95-
Del Rio, Texas BPLIF-951020QA, -filed 10-95-
Elizabeth City (Midway), North Carolina BPLIF-951019BJ, -filed 10-95-
Eureka, California BPLIF-951017AM, -filed 10-95-
Grand Junction, Colorado BPLIF-951020FH, -filed 10-95-
Las Vegas, New Mexico BPLIF951020TA, -filed 10-95-
Springfield, Missouri BPLIF-951020KQ, -filed 10-95-
<PAGE>
EXHIBIT C
ITFS EXCESS CAPACITY
AIRTIME LEASE AGREEMENTS
Alamosa, Colorado
By and between Shekihan Network and "MPO Industries." ECLS Date 10-15-94
Albuquerque
By and between Shekihan Network and "Multimedia TV." ECLA Date 7-7-92
Anchorage, Alaska
By and between Shekihan Network and "ATI of Anchorage." ECLA Date 12-21-92
Aspen, Colorado
By and between Shekihan Network and "NONE" (Terminated)
Carlsbad, New Mexico
By and between Shekihan Network and "Multimedia TV." ECLA Date 10-20-97
Casper, Wyoming
By and between Shekihan Network and " NONE" (Terminated)
Champaign, Illinois
By and between Shekihan Network and "Heartland Wireless of Champaign." ECLA Date
12-27-93
Columbus, Ohio
By and between Shekihan Network and "ATI of Columbus." ECLA Date 12-12-92
Del Rio, Texas
By and between Shekihan Network and "All-Tex Wireless Video, Inc." ECLA Date
10-10-95
Des Moines/Grimes, Iowa
By and between Shekihan Network and "Des Moines F Partnership." ECLA Date
10-1-95
Elizabeth City (Midway), North Carolina
By and between Shekihan Network and "Wireless One of North Carolina." ECLA Date
8/25/97
Eureka, California
By and between Shekihan Network and "MPO Industries." ECLA Date 9-10-94
Fairbanks, Alaska
By and between Shekihan Network and "Alaska Wireless Cable." ECLA Date 5-1-95
Fairmont, Minnesota
By and between Shekihan Network and "Starcom/Fairmont Wireless." ECLAS Date
9-23-95
Grand Junction, Colorado
By and between Shekihan Network and "Wireless Cable of Grand Junction." ECLA
Date 4-15-93
Grand Rapids, Michigan
By and between Shekihan Network and "NONE" (Terminated)
Hilo, Hawaii
By and between Shekihan Network and "Hilo Wireless Cable, Ltd. "ECLA Date
10-1-95
Hot Springs, Arkansas
By and between Shekihan Network and "Skyview Wireless Cable, Inc." ECLA Date
10-1-95
<PAGE>
Key West, Florida
By and between Shekihan Network and "NONE" (Terminated)
La Crosse, Wisconsin
By and between Shekihan Network and "Wisconsin Wireless Cable." ECLA Date 1-1-95
La Grande, Oregon
By and between Shekihan Network and "NONE" (Terminated)
Las Vegas, New Mexico
By and between Shekihan Network and "Las Vegas Wireless Cable." ECLA Date
10-1-95
Medford, Oregon
By and between Shekihan Network and and "ATI of Medford." ECLA Date 5-5-92
Nashville, Tennessee
By and between Shekihan Network and "Nashville Wireless Cable Television, Inc."
ECLA Date 3-25-94
Opelika, Alabama
By and between Shekihan Network and Wireless One (no current information!)
Pierre, South Dakota
By and between Shekihan Network and "NONE" (Terminated)
Pocatello, Idaho
By and between Shekihan Network and "Centimeter Wave Television, Inc." ECLA Date
10-1-95
Redding, California
By and between Shekihan Network and "ATI Of Redding." ECLA Date 8-14-92
Reno/Carson City, Nevada
By and between Shekihan Network and "Quadravision." ECLA Date 8-10-95
Santa Barbara, California
By and between Shekihan Network and "ATI of Santa Barbara." ECLA Date 6-9-92
Sebring, Florida
By and between Shekihan Network and "ATI of Sebring." ECLA Date 9-14-95
Sheridan, Wyoming
By and between Shekihan Network and "ATI of Sheridan." ECLA Date 5-5-92
Springfield, Missouri
By and between Shekihan Network and "Hearthland Wireless Cable, Inc." ECLA Date
10-10-95
St. Croix/Friedensfeld, Virgin Islands
By and between Shekihan Network and "Antilles Wireless Cable TV, Co." ECLA Date
9-12-95
St. Thomas/Charlotte Amalie, Virgin Islands
By and between Shekihan Network and "Antilles Wireless Cable TV, Co." ECLA Date
9-12-95
Ukiah, California
By and between Shekihan Network and "NONE" (Terminated)
Vail, Colorado
By and between Shekihan Network and "NONE" (Terminated)
<PAGE>
Visalia, California
By and between Shekihan Network and "ATI of Visalia." ECLA Date 1-14-93
Wenatchee, Washington
By and between Shekihan Network and "ATI of Wenatchee." ECLA Date 12-1-94
Yuma, Arizona
By and between Shekihan Network and "Cardiff Broadcasting Partnertship II." ECLA
Date 5-5-92
SOUTH BEND
MMDS LEASE AGREEMENT
THIS AGREEMENT OF LICENSE made and entered into this 22 day of
December, 1992 by and between OI Capital Corporation a corporation organized and
existing under the laws of the State of Indiana, with its principal office at
421 South Second Street, Elkhart, IN 46516, herein called LICENSOR, AND National
Micro Vision Systems, Inc., a Nevada Corporation herein called LICENSEE:
WITNESSETH:
That, for and in consideration of the mutual promises of LICENSOR and
LICENSEE, herein contained, and the respective performances thereof, the
LICENSOR grants to the LICENSEE a nonexclusive License to use its 700 foot
tower, transmitter building (Premises) at the base of said tower or in close
proximity, together with such other portion of its property located in the South
One-Third (1/3) of the West Half (1/2) of the Northwest Quarter (1/4) of Section
33, Township 37 North, Range 3 East, containing approximately 8.209 acres in St.
Joseph County, Indiana, as is herein specified, but for no other purposes,
subject to the following terms and conditions:
1. This License is granted to enable the LICENSEE to rent space and
install equipment for the purpose operating MMDS wireless cable system E Group
For South Bend, Ind. at its own risk and expense. The use of the property
granted by this License is for the installation, operation, and maintenance of
said equipment, including base station, antenna pole or mast, wiring, and
accessories used therewith at places designated by LICENSOR.
2. The term of the License shall be for a period of five years
commencing on the 1st day of January, 1993, and ending on the 31st day of
December, 1998; provided, however, that either the LICENSOR or the LICENSEE may
cancel this agreement by One Hundred Twenty (120) days written notice ot the
other party. After the term of this agreement expires, this contract shall
continue for successive additional periods of one (1) month, provided that
either LICENSOR or LICENSEE may terminate this agreement at any time with or
without cause upon written notice other the other party sent by certified or
registered mail. LICENSEE shall have the option to renew this License upon
completion of the term of said License, except that the rental factor shall be
renegotiated between both parties for the renewal period.
3. LICENSOR agrees that this License Agreement becomes binding only
upon issuance, by the Federal Communications Commission, of the LICENSEE'S
Operating License or Permit.
4. The LICENSEE may install an antenna for the heretofore related
equipment, at the 675 foot level on said tower. A base station for such system
may be installed in the transmitter building. Associated transmission line may
be installed between the base station in the transmitter building and the
antenna on the tower. The location and quality of the installation, removal
maintenance and operation of all such equipment shall be subject to the absolute
control and approval of the LICENSOR or it's agents. All costs and expenses of
each installation, removal, relocation, operation and maintenance shall be paid
by the LICENSEE, except the power supply as hereinafter mentioned. No equipment
shall be installed by the LICENSEE until it is determined to the satisfaction of
the LICENSOR or it's agent that said equipment will not interfere in any way
with the normal operation of existing communications and broadcast equipment at
the site. If, at any time, LICENSEE'S equipment shall interfere in any way with
the normal operation of existing communications and broadcast equipment at the
site, any cost connected with the adjustment of LICENSEE'S or any other
occupant's transmitting equipment, made necessary by the LICENSEE'S
installation, shall be borne solely by the LICENSEE. LICENSEE further agrees
that at any time during the term of this License, should the Licensor or it's
agents determine that it is in the best interest of the tower site or the other
occupants of the tower for the LICENSEE to relocate it's antenna or place it's
transmitting equipment on an antenna jointly used by other occupants of the
tower, the LICENSEE shall do so at it's expense, provided that this can be done
without any undue harm to the LICENSEE'S signal. LICENSOR shall make no
unreasonable request of LICENSEE, and any request shall be supported by adequate
technical information.
<PAGE>
5. The LICENSEE shall pay to the LICENSOR the sum of Two Thousand &
00/100 Dollars ($2000.00) per month for each such MMDS wireless cable system
installed and operated under this License. Said payments for each system shall
begin on the day of commencement of installation of equipment for that system or
90 days from the date of this License which ever occurs first, and end on the
day of the removal of the last of such equipment for that system. Said monthly
payments shall be paid in advance and on the first day of each monthly period
while the equipment for such system is on the property of the LICENSOR. Power
required for each such MMDS wireless cable system shall be paid for, but not
guaranteed, by the LICENSOR as a part of said rental consideration. LICENSEE
agrees to the LICENSOR increasing the monthly rental rate, not to exceed fifteen
percent (15%), at the end of the third (3rd) year of the LICENSE AGREEMENT.
6. The LICENSEE shall pay to and deposit with the LICENSOR the sum of
Two Thousand & 00/100 Dollars ($2000.00) prior to the commencement of the term
of this License Agreement, which said amount shall be held by LICENSOR as
security for the full and timely performance by the LICENSEE of all the terms
and conditions hereof. The rights of the LICENSOR against the LICENSEE for a
breach of this agreement shall in no way be limited or restricted to the amount
of the security deposit and the LICENSOR shall have the right to pursue any
available remedy to protect its interest herein. The deposit shall be returned
to the LICENSEE at the final termination of this agreement, provided that all
the terms and conditions herein have been fully performed.
7. In the event the an additional MMDS System or group is installed by
the LICENSEE upon the premises, then the additional sum of One Thousand Five
Hundred & 00/100 Dollars ($1500.00) per month shall be paid by the LICENSEE to
the LICENSOR. The LICENSOR agrees that the LICENSEE may further license others
to use it's equipment located upon the premises, but any such sublicenses shall
be subject to the increased payment provisions of this License Agreement. The
LICENSEE hereby agrees to indemnify and save harmless the LICENSOR from and
against any and all claims, demands, damages, and liabilities of every kind and
nature resulting from such sublicense agreements, except liability caused solely
by the negligence of the LICENSOR.
8. Rights of ingress and egress over the property of the LICENSOR are
hereby granted to the LICENSEE for the purpose of conducting the business for
which this License is granted; provided, however, that such rights and the
exercise thereof are subject to the absolute control and approval of the
LICENSOR.
9. At the termination of this License, by the expiration of timer,
cancellation, or otherwise, the LICENSEE shall promptly remove all property
placed on the premises under this License and restore the LICENSOR'S property to
the condition it was in at the date of the execution of this Agreement,
reasonable wear and tear excepted. All such repairs to all of the LICENSOR'S
property used under this License shall be made by the LICENSEE at the times and
in the manner determined and directed by the LICENSOR.
10. The LICENSEE hereby covenants with the LICENSOR to indemnify and
save harmless the LICENSOR against and from any and all liability of every kind
and nature whatsoever resulting form the existence of this License and all
operations and activities thereunder. To provide the LICENSOR with the indemnity
herein set forth, the LICENSEE agrees to maintain a policy of insurance issued
by a company authorized to do business in Indiana in an amount not less than
$500,000.00 for bodily injury, including death, to any one person, and
$1,000,000.00 for all bodily injuries, including death, sustained by more than
one person in any one occurrence and $300,000.00 for property damage in any one
occurrence. The LICENSEE shall furnish the LICENSOR with a certificate of
insurance issued by said company evidencing the existence of such insurance
annually.
<PAGE>
11. To secure the payment of the License Agreement monthly fee and
other liabilities of the LICENSEE hereunder, LICENSEE hereby grants to LICENSOR,
which shall continue upon default by LICENSEE, as defined in this License
Agreement, a security interest in all of LICENSEE'S personal property;
(including without limitation LICENSEE'S transmission equipment, feedline,
antenna, dishes, etc.; whether now or hereinafter acquired) which is now or
hereinafter located at the premises and in the proceeds thereof, including tort
claims and insurance (all hereinafter collectively referred to as "collateral").
LICENSEE shall not permit the removal of any collateral from the premises,
except with the permission of the LICENSOR. Upon the occurrence of default of
this License Agreement, LICENSOR shall have the remedies of a secured party
available under Indiana law. Theses remedies shall include, without limitation,
the right to take possession of the secured collateral and for that purpose
LICENSOR may enter the premises and remove it and LICENSEE shall hold LICENSOR
harmless from any and all liability sustained thereby, except through wonton or
willful misbehavior. LICENSOR may require that LICENSEE make the collateral
available to LICENSOR at a place to be designated convenient to both parties.
LICENSOR shall give LICENSEE at least 10 days prior to notice of the time and
place of any public sale thereof or of the time at which any private sale or any
other intended disposition thereof is to be made Expenses of retaking, holding,
preparing for sale, selling and the like shall include LICENSOR'S reasonable
attorney's fees and legal expenses.
12. This Agreement is subject to all Federal, State, and Municipal laws
and rules, regulations, and order of governmental agencies, including, but not
limited to, the rules, regulations, and order of the Federal Communications
Commission.
13. Neither this Agreement nor any right or privileges thereunder may
be assigned or transferred by operation of law or otherwise without the written
consent of the LICENSOR.
14. Failure or delay on the part of the LICENSOR or the LICENSEE to
exercise any right, power or privilege hereunder shall not operate as a waiver
thereof.
15. All notices and demands which may or are required to be given by
either party to the other hereunder shall be in writing and shall be sent by
United Stated Certified or registered mail, postage prepaid, addressed to the
LICENSEE at 17138 Von Karman, Irvine, California 92714 and addressed to the
LICENSOR at 421 South Second Street, Elkhart, IN 46516, or to such other firm or
to such other place as LICENSOR or it's agents may from time to time designate
in writing.
16. This contract constitutes the entire agreement of the parties
hereto and shall supersede all other prior offers, negotiations and agreements.
17. Licensee at it's discretion, may install an electrical generator
for the operation of it's equipment. The location and installation procedure
shall require prior written approval of license.
Executed at Elkhart, Indiana, the day and year first above written.
OI CAPITAL CORPORATION
By: _________________________
LICENSOR
NATIONAL MICRO VISION SYSTEMS, INC.
By: __________________________
LICENSEE
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
Vail, Colorado
ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT
THIS AGREEMENT is made this 1st day of August 1999 by Shekinah Network
(hereinafter referred to as "Lessor") having its principal place of business at
14875 Powerline Road, Atascadero, CA 93422 and World Wide Wireless
Communications, Inc. (hereinafter referred to as "Lessee") having its principal
place of business at One Post Street, Suite 2600 San Francisco, CA 94104.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users; and
WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-798
(the "License") for the Channel group C1-4 (the "ITFS Channels") in Vail,
Colorado ("The Market"); and
WHEREAS, Lessee is in the business of providing voice, video, data and
other services via microwave transmission in the Market Area and desires to
lease the excess ITFS capacity of the ITFS channels; and
WHEREAS, Lessor has determined that there will be excess airtime
capacity available on the ITFS Channels and desires to lease this excess airtime
capacity to Lessee.
NOW, THEREFORE, in consideration of the mutual promises, undertakings,
covenants and conditions set forth herein, the Lessor and Lessee do hereby agree
and warrant as follows:
1. TERM OF AGREEMENT
A. Initial Term. This Agreement shall be effective upon the date of its
execution and shall extend for an initial term of five (5) years (the
"Initial Term").
B. Renewal Term Provided that the License is renewed by the FCC, Lessee
shall have the right to extend this Agreement on its then existing
terms and conditions for one (1) additional five (5) year term (the
"Renewal Term"). The Renewal Term shall automatically go into effect
upon the conclusion of the Initial Term unless Lessee notifies Lessor
at least one hundred eighty days (180) before the end of the Initial
Term that Lessee does not wish to extend this Agreement.
C. New Lease Agreement/Right of first Refusal.
(1) Providing that Lessor's FCC license remains in good standing
and/or Lessor seeks to renew such license, Lessee and Lessor shall
negotiate in good faith for a new excess capacity airtime lease
agreement (hereinafter referred to as "New Lease Agreement") no later
than one hundred eighty days (180) prior to the end of the latter of
(i) Initial Term or (ii) the Renewal Term if the Agreement is extended
for the Renewal Term.
<PAGE>
(2) If Lessor elects to not reasonably pursue a New Lease Agreement
with Lessee, then Lessor shall so notify Lessee in writing of such
intent no later than one hundred eighty (180) days prior to the end of
the Renewal Term.
(3) If Lessor and Lessee do not enter into a New Lease Agreement,
Lessor grants Lessee a right of first refusal on any competing
proposals for lease agreements or transfers or assignments of any part
of the ITFS Channels received by Lessor during the twelve (12) months
following the expiration of the latter of (i) the Initial Term or (ii)
the Renewal Term, if the Agreement is extended for the Renewal Term.
If any acceptable offer to lease or acquire the ITFS Channels is made
to Lessor, Lessor shall give written notice to Lessee describing the
person to whom the proposed lease or transfer is to be made, the fees,
charges, rental or other consideration to be received fro the lease or
transfer, the terms thereof and generally the relevant other terms and
conditions of the lease or transfer. Lessee shall have a period of
thirty (30) days after its receipt of such notice from Lessor in which
to elect, by giving written notice to Lessor, to lease or, if
eligible, obtain any or all of the ITFS Channels for the same fees,
charges, rental or other consideration for which Lessor proposed to
lease or transfer to the third person.
(i) The fees, charges, rental or consideration shall be paid by such
third person or Lessee in cash.
(ii) If Lessor does not believe Lessee's stated offer is in an amount
fairlyequivalent to the fair value of the consideration payable by the
third person and so notifies Lessee in writing within seven (7) days
after Lessor's receipt of Lessee's notice of election to so lease or
purchase, Lessee may within five (5) days after its receipt of such
notice from Lessor elect to refer such question for determination by
an impartial arbitrator and the right of first refusal of Lessee shall
then be held open until (5) days after Lessee is notified of such
determination. Such arbitrator shall be chosen either by agreement of
Lessee and Lessor at the time such question arises, or, at the option
of either party, by referring the question to the American Arbitration
Association with instructions that the American Arbitration
Association select a single arbitrator under a request from the
parties for expedited and accelerated determination. The determination
of the arbitrator chosen under either option contained in this
subparagraph shall be final and binding upon Lessee and Lessor. The
parties shall share equally in the costs and fees of the arbitration
(iii) In the event Lessee shall elect to exercise its right of first
refusal, the lease agreement or other transfer or assignment shall be
consummated within thirty (30) days of the latest of: (1) the day on
which Lessor received notice of Lessee's election to exercise the
right of first refusal; (2) the day upon which any question required
to be determined by the arbitrator hereunder has been determined; or
(3) the date of any FCC approval in the case of assignment or
transfer; or at such other time as may be mutually agreed. The right
of first refusal is terminated either by the lease or other transfer
to Lessee as provided herein or by notice to Lessee of the Lessor's
proposal to lease or otherwise transfer the ITFS Channels or any part
to a third person and Lessee's unwillingness or failure to meet and
accept such a bona fide offer pursuant to the times and procedures as
set forth above; provided that such proposed lease or transfer is
consummated at the same fees, charges, rental or other consideration
and upon the same terms as to which such right of first refusal
applied, within thirty (30) days after Lessee's right of first refusal
had expired or had been specifically waived by written notice given to
Lessor by Lessee, or within thirty (30) days following FCC approval in
the case of assignment or transfer.
<PAGE>
C) Operation During End of Term. If Lessor and Lessee do not enter into
New Lease Agreement before the end of the Initial Term, Lessee shall
cease leasing the ITFS Channels on the last day of the Initial Term.
D) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this
Agreement shall not give rise to any rights or remedies beyond the
expiration of any FCC license necessary for the continued operation of
the ITFS Channels. Provided, however, that while this Agreement is in
effect, Lessor shall obtain and maintain in force all licenses,
permits and authorizations required or desired in connection with the
use of the ITFS Channels. Lessor shall take all necessary steps to
renew the licenses for the ITFS Channels and shall not commit any act
or engage in any activity which could reasonably be expected to cause
the FCC to impair, restrict, revoke, cancel, suspend or refuse to
renew the ITFS licenses. Lessor shall take all reasonable steps to
comply with the Communications Act of 1934, as amended and the rules
and regulations of the FCC, and shall file all reports, schedules
and/or forms required by the FCC to be filed by Lessor. All expenses,
including attorneys fees and filing fees, incurred in preparing and
filing such reports, schedules and/or forms required by the FCC shall
be paid by the Lessee.
2. ALLOCATION OF AIRTIME.
A. Excess Capacity Airtime. To the extent allowed by the FCC rules and
regulations and any amendments thereof, Lessor agrees to lease to
Lessee the exclusive use of all excess capacity not utilized by Lessor
("Excess Capacity Airtime").
B. Lessor's Primary Airtime. During analog transmission over the ITFS
Channels, Lessor reserves for its exclusive use a minimum of twenty
(20) hours of airtime per-channel per-week to be used for its ITFS
scheduled programs. During digital transmission ovr the ITFS Channels,
Lessor shall have the exclusive use of 12.5% of the total capacity
available on the Lessor's ITFS Channels. This airtime shall be know as
"Lessor's Primary Airtime".
C. Schedule of Airtime. The schedule which depicts the agreement of the
parties as to use of Lessor's Channels shall be attached hereto and
made a part hereof as Exhibit A which is subject to change upon
agreement by both parties.
D. Lessee's use of its Excess Capacity Airtime. Lessee shall have the
right to utilize its Excess Capacity Airtime for any purpose allowed
or authorized by the FCC including but not limited to voice, video and
data transmission.
E. Alternate Use and Vertical Blanking Intervals. Lessor shall have the
right to use the second audio carrier ("SAP") and vertical blanking
intervals. ("VBI") on which Lessor's ITFS programming is being
transmitted. Lessee shall at all times have the right to use the VBI
and SAP not utilized by Lessor and 100% of the response frequencies
associated with the ITFS Channels. Lessor shall be responsible for any
equipment needed to utilize the VBI and/or SAP and such equipment
shall be compatible with Lessee's system.
F. Lessor's Use of ITFS Channels. Lessor agrees that its program services
and airtime use will not harm or interfere with Lessee's current or
future signal paths utilized within Lessee's System for program
encryption, pilot carrier signaling and other technical needs utilized
for the operation of and such services provided by Lessee's System.
Nor will Lessor, by its own action, or through a third party, utilize
any part of its licensed frequency spectrum to create or operate a
<PAGE>
service that is in competition with current, planned or future
services provided by Lessee's System. Lessor agrees to use its Primary
Airtime in accordance with the FCC's rules and regulations. Lessor
shall not take or fail to take any action which may have a material
adverse effect on Lessee's right to utilize its Excess Capacity
Airtime.
G. Expanded System Capacity. Lessee shall have the right at anytime to
require Lessor to file with the FCC any necessary application to
expand the channel capacity to Lessor's station to enable it to carry
more than one video signal per channel or digital data services;
provided however, before Lessee can exercise this right, it must
demonstrate to the Lessor's reasonable satisfaction that such
modification will not materially degrade the performance of the
station nor impair signal quality at the registered ITFS receive
sites. Once such modification has been constructed, the modified
facilities shall automatically be considered a part of this agreement
and subject to all terms and conditions hereof. It is understood that
Lessee shall have the full-time use of the Expanded Channels to the
extend permitted by FCC rules.
3. TRANSMISSION SITE AND FACILITIES.
A. Primary Transmission Site. Lessor's ITFS Channels are located at Key
West, FL, Lessee agrees to provide Lessor space at the Primary
Transmission site for Lessor's audio and video transmission equipment
which shall not exceed on rack. Such space shall be leased to Lessor
pursuant to Exhibit D hereto. This site shall hereinafter be described
as the "Primary Transmission Site". At Lessee's sole expense, Lessee
shall contract for a lease of space at the Transmission Site upon such
terms as the parties agree. The Transmission Site shall comply with
the standards, specifications and regulations of the FCC rules and
orders pertaining to Lessor's ITFS license.
B. Relocation of Transmission Site.
(i) Lessor acknowledges that the location of the Primary Transmission
Site for ITFS Channels is critical to the Lessee's business and
agrees that it will not relocate the transmission facilities for
ITFS Channels from the Primary Transmission Site without Lessee's
prior written consent.
(ii) Lessor further acknowledges that possibility that, as a result of
currently unforeseen events, the Primary Transmission Site may
not be the optimum site for the location of the ITFS Channels or
Lessee's business throughout the term of this Lease Agreement.
Lessor therefore agrees that if at any time or from time to time
Lessee requests in writing that the transmission facilities for
the ITFS Channels be relocated, Lessor shall file with the FCC
and any other regulatory body having jurisdicition over the ITFS
Channels all applications, amendments, and requests for
modification that may be necessary to obtain any necessary
consents to permit such relocation to such location within or
adjacent to the Market as may be requested by Lessee; provided,
however, that Lessor shall not be obligated to submit or
procecute any application, amendment, or request for modification
that Lessor reasonably determines, upon advice of counsel
contained in a written opinion, would be in violation of the
terms of the License, any statute, rule, or regulations regarding
the operation of the ITFS Channels or the submission of materials
to the FCC, or any of its obligations as an ITFS licensee; and
<PAGE>
provided, further, that any such relocation will not result in
loss of service to Lessor's registered receive sites served by
the transmission facilities in the event that the authorization
is obtained to relocate the ITFS Channels to the location
requested by Lessee, Lessor shall relocate such channels to such
new location as soon as reasonably possible after authorization
is obtained. Lessee shall bear reasonable costs associated with
such relocation, including engineering and construction, and all
reasonable costs associated with obtaining FCC or any other
regulatory approval therefore.
(iii) Lessor agrees to file modification applications requested by
Lessee. Such modifications may include but shall not be limited
to the following: power increase or decrease, polarization,
transmit antenna patterns, digital, two-way (return path) use of
the ITFS Channels, boosters, beam benders or repeaters, cells,
sectorization, channel swaps, channel loading, channel shifting
and application within five (5) business days or receipt of the
modification application from Lessee or during any FCC designated
filing window. Lessee will use reasonable efforts to provide
Lessor with the engineering for the modification thirty (30) days
prior to the request for filing. If Lessor believes that such
modification will have an adverse effect on Lessor's ability to
provide its services to its receive sites, Lessor agrees to file
the modification application as presented by Lessee and within
the time limit requested by Lessee; however, Lessee agrees not to
implement construction and Lessor agrees not to withdraw the
application until the parties have adequately addressed and
resolved the potential material adverse effect or the matter has
been submitted to arbitration pursuant to Section 16 and a final
decision has been rendered by arbitrator. Although Lessee intends
to file such modification applications, it may elect not to
construct the Channels in that manner and may desire to utilize
the Channels as currently licensed. A copy of the modification
application, bearing the FCC's date stamp, shall be mailed to
Lessee by Lessor, within fourteen (14) days of the filing of the
modification application. Lessee shall be solely responsible for
all engineering and legal costs associated with the preparation,
review and filing of the modification application. In the event
that any license modification requested by Lessee requires
receive site upgrades in order for Lessor's receive sites to
continue to receive Lessor's services, then Lessee agrees to pay
for all costs to complete such upgrade prior to implementing the
license modification.
C. System Construction. Lessee shall within a reasonable period of time,
but not later than six (6) months after the FCC grant of digital
authority for the ITFS Channels, purchase equipment such as the
antenna, waveguide or transmitters specified on the authorization for
the ITFS Channels. At Lessee's expense, Lessee shall purchase and
install such transmitters, transmission line, modulators, antennas and
other equipment as required to operate the ITFS Channels in accordance
with the provision of such authorization. Any equipment so used in
such construction shall be leased to lessor pursuant to Paragraph 5
hereof. Such equipment is hereinafter referred to as the "Leased
Equipment". Lessee shall retain title to the Leased Equipment except
as noted by Paragraph 15 herein.
D. Maintenance of Transmission Equipment. At Lessee's expense and subject
to Lessor's right to supervise the maintenance of this equipment,
Lessee shall maintain and operate the Leased Equipment during the
terms of this Agreement for a nominal fee. Lessee shall also pay all
taxes and other charges assessed against the Leased Equipment.
E. Transmission of Programming. At no cost or expense to Lessor, Lessee
shall provide the necessary labor and equipment capabilities to
transmit on the ITFS Channels programming required to be carried
pursuant to this Agreement such as Lessor's ITFS programming and TBN.
Lessee shall also comply with Lessor's instructions regarding the
transmission of such programming such as the dates and times to
transmit programming.
<PAGE>
F. Interference. Lessee shall operate the Leased Equipment so that such
operation does not create or increase interference with electronic
transmission of any other FCC licensees entitles to protection under
FCC rules and regulations. If Lessee's entitled to protection under
FCC rules and regulations. If Lessee's operation of the Lease
Equipment does so create or increase interference, Lessee shall pay
all of the reasonable engineering and legal fees necessary to resolve
the interference problem so created.
G. Alterations and Attachments. Lessee, at its own expense, may make
alterations of or attachments to the ITFS equipment or the common
equipment as defined in Exhibit C (including the installation of
encoding and/or addressing equipment) as may be reasonably required
from time to time by the nature of its business; provided however,
that such alterations or attachments do not interfere with Lessor's
signal or ongoing operations or violate any FCC rules or regulations;
and provided further that FCC authorization, if required, is obtained
in advance of any such alteration or attachment at the sole cost of
Lessee. to the extent any FCC authorization pertaining to the ITFS
equipment is required, Lessor agrees to use its best efforts to obtain
such authorization.
H. Licensee Control and Liability. Nothing herein shall derogate from
such licensee control of operations of the ITFS Channels that Lessor,
as an FCC licensee, shall be required to maintain and Lessee
acknowledges the reservation by Lessor of such control. Lessor shall
at all times retain ultimate and exclusive responsibility for the
operation and control of the ITFS Channels including policy decisions.
4. LESSOR'S RECEIVE SITES.
Attached hereto as Exhibit B is list of the registered receive sites
designated by Lessor to receive its ITFS programming and to be installed at the
expense of Lessee. Those receive sites so listed shall be installed with a
Standard Installation. If as the result of any relocation of the Primary
Transmit Site, the equipment at Lessor's existing registered receive sites must
be reoriented, Lessee shall pay the cost of same. As used herein for the
purposes of this Agreement, the phrase "Standard Installation" shall mean an
installation consisting of the placement of the ITFS/MMDS receiving antenna at
an elevation (not to exceed thirty [30] feet above the base mounting location)
which could normally receive the line-of-sight transmission from the
Transmission Site; the coupling thereto of a block-down converter; and a
sufficient amount of transmission line (coaxial cable) to connect the received
ITFS programming to the input of (i) one classroom designated by Lessor to
receive the ITFS programming or (ii) the receive site internal/external
distribution system. Also, if as the result of any relocation of the Transmit
Site, the equipment at Lessor's existing receive sites must be reoriented,
Lessee shall pay the cost of same. Lessee also agrees that for digital
transmission of the ITFS Channels Lessee will purchase and install at Lessee's
expense, one single-point modem to receive its ITFS programming.
5. LEASE OF EQUIPMENT.
A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall
lease from Lessee the Leased Equipment during the terms of this Agreement. A
list of this equipment is attached hereto as Exhibit C and incorporated by
reference herein. Lessor shall have no responsibility for the loss of or damage
to the Leased Equipment during the terms of this Agreement and Lessee shall bear
all such responsibility.
<PAGE>
6. FEES.
A) Lessor's Service Fee. In consideration of the lease of the Leased
Equipment, and for its share of the projected costs to maintain the Transmission
Site and the Lease Equipment, Lessor shall pay Lessee an annual fee provided for
in Exhibit D.
B) Subscriber Royalty Fees or Percentage. Beginning on the Execution
Date of this Agreement and continuing thereafter during the Initial Term of this
Agreement, Lessee shall pay to Lessor the Subscriber Royalty Fee, System
Percentage or monthly minimum, whichever is greater as set out in Exhibit D
which is attached herewith and incorporated by reference herein. If the
Execution Date shall be a date other than the first day of a calendar month,
then the Subscriber Royalty Fee for the partial month shall be paid on a
proportionate basis. A late fee of 10% (ten percent) will be assessed to past
due accounts, and a finance charge of one and one-half percent (1.5%) per month
will be assessed in addition to the late fee until paid.
C) Notice of Construction and Required Certificate. Within thirty (30)
days of completion of construction at the Transmission Site, Lessee shall notify
Lessor of such completion of construction in writing. Within thirty (30) days of
the end of each month in which Excess Capacity Airtime is leased hereunder,
Lessee shall provide Lessor with a certificate, certified as accurate and
correct by an authorized agent of Lessee, showing the number of subscribers
served during such month.
D) Right to Audit. Lessee shall for a period of three (3) years after
their creation, keep, maintain and preserve complete and accurate records and
accounts, including all invoices, correspondence, ledgers, financial and other
records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's
charges hereunder; and such records and corporate accounts shall be available
for inspection and audit at Lessee's corporate offices or at Lessee's offices in
the Market, as designated by Lessee, at any time or times during the term of
this Agreement or within ninety (90) days thereafter, during reasonable business
hours, by Lessor or its nominee. In the event that there is discovered an
underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above,
Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of
each such underpayment. All information obtained by Lessor during any audit
herein shall be maintained by Lessor in strict confidence.
7. PROGRAMMING.
A) Control Over Programming.
(i) Program Content. Lessee intends that only programming of a sort
which would not serve to place Lessor's reputation in the community in jeopardy
will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize
disputes, recognizing the difficulties inherent in specifying exact standards
herein, it is agreed that Lessee shall have the right to market the programming
provided by the networks and services listed on Exhibit E. If, however, the
programming content of any networks and services listed on Exhibit E materially
changes, Lessor shall have the right, upon ninety (90) days notice, to deny
Lessee the right to continue transmitting such programming if Lessor would have
the right to deny Lessee the right to transmit such programming under the
provisions of this paragraph in the first instance. If Lessee proposes to
transmit the programming of any new programming service, the Lessee shall notify
Lessor in writing specifying in detail the nature of the new programming service
and Lessor shall have the right, upon written served upon Lessee within thirty
(30) days after Lessor's receipt of any such notice from Lessee, to deny to
Lessee the right to transmit such service if such programming is obscene and/or
contradicting local, state and/or federal laws or otherwise violates any
federal, state or local laws or regulations. If no such denial notice is
received by Lessee within such thirty (30) days, lessee shall be authorized to
transmit all such services for which no denial notice is received. There shall
be no reduction in fees required under this Agreement for any such programming
not permitted to be transmitted.
B) Availability of Programming. It is understood by Lessee and Lessor
that there is expected to be no direct out-of-pocket annual costs for the
acquisition of the qualified ITFS educational
<PAGE>
programming for Lessor's use during Lessor's Primary Airtime on the ITFS
channels, based on current plans. In the event that this ITFS educational
programming either; (1) ceases to be available, or, (2) becomes available only
at a fee, then Lessor may incur direct out-of-pocket costs in Lessor's
acquisition of ITFS programming. Lessee agrees to provide its best efforts to
assist Lessor in the acquisition of alternative programming, if necessary.
Additionally, Lessee agrees to make payment to Lessor for the actual, direct
programming costs incurred. If any; If Lessor, after expending its best efforts,
is unable to obtain suitable ITFS programming for a cost equal to the amount to
be paid by Lessee, Lessor and Lessee shall use their best efforts to reach
agreement on modifications to this Agreement to avoid any un-reimbursed ITFS
programming costs to Lessor. If no such agreement can be reached, Lessor may
terminate this agreement. In the case of such termination, Lessor shall use its
best efforts (with out-of-pocket costs of Lessor to be paid by Lessee, with
Lessee's prior approval) to transfer the license for the ITFS Channels to
another qualified educational entity, subject to FCC approval, with the intent
of assigning this Agreement from Lessor to the new educational entity.
C) Integration of Lessor's Programming. Lessee agrees to integrate
Lessor's programming into the overall communications service offered to
subscribers, without cost to Lessor. This integration shall include, but not be
limited to, listing Lessor's material in any program guides produced by Lessee
for subscribers.
D) Carriage of TBN. In the event that Lessor's ITFS Channels are used
for analog video transmission and TBN is not transmitted on a local VHF or UHF
station, with a market coverage equivalent to both area and signal quality of
our ITFS channels, and Lessee does not have local off-air insertion as part of
its standard installation, then, if so designated by Lessor, Lessee agrees to
transmit on one of the ITFS Channels the programming of Trinity Broadcasting
Network ("TBN") during those time periods such channel is not used for Lessor's
ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a
fee for carriage of TBN. In the event that Lessee is permitted to program the
hours previously occupied by TBN, then Lessee shall increase, in proportion to
the increase in Excess Capacity Airtime, the amount of minimum fees and
subscriber royalty fees payable under the provision 6 (B) of this agreement
during the remainder of the term(s) of the agreement. For purposes of
calculating any such proportionate increase, the parties acknowledge and agree
that the minimum fee and subscriber royalty fee agreed to herein are based on
Lessee's equivalent use of three full-time ITFS channels.
E) Station Identification. During Lessee's use of Lessor's excess
channel capacity, Lessee shall transmit Lessor's call sign for each respective
station as required by the FCC.
8. PROCECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES.
A) Best Efforts to Secure Approval of this Agreement. The parties
recognize that certain approvals will be required from the FCC in order to
effectuate this Agreement. Both parties shall use their best efforts to prepare,
file and prosecute before the FCC all petitions, waivers, applications and other
documents necessary to secure any FCC approval required to effectuate this
Agreement. Lessee shall assist in the preparation and prosecution of such
applications and as provided for herein, shall pay all filing fees, attorneys'
fees, engineering fees, and all other expenses in connection therewith. Lessor
also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDs and
MMDS operators to co-locate at the Transmission Site. Notwithstanding anything
in this Agreement to the contrary, it is understood that no filing shall be made
with the FCC with respect to this Agreement unless both parties have reviewed
such filing and consented in writing to its submission, such consent not be
unreasonably withheld.
B) Further Efforts. Throughout the Initial Term of this Agreement,
Lessor shall use its best efforts to obtain and maintain in force all licenses,
permits and authorizations required for Lessee and Lessor to use the ITFS
Channels as contemplated by this Agreement. Lessee shall be responsible for all
cash expenses incurred to obtain and maintain in force such licenses, permits
and authorizations. When mutually agreed by the parties and at Lessee's sole
expense, Lessor shall apply for, and use its best efforts
<PAGE>
to obtain those reasonable license modifications which would assist Lessee in
its business. Lessor also shall consider filing, at Lessee's sole expense, such
reasonable protests, comments or other petitions to deny any other ITFS, MMDS,
MDS and/or OFS applications or amendments as may be requested by Lessee in the
mutual best interests of the parties and the public. Lessor and Lessee shall
promptly notify each other of any event of which it has knowledge that may
affect any of the licenses, permits or authorization affecting the ITFS
Channels.
C) Attorneys' Fees. With respect to any legal work conducted pursuant
to Paragraph 8(A) and (B) above, Lessee shall be responsible for all attorneys'
fees in connection therewith and shall make payments directly to the attorney.
However, any attorney fees paid by Lessee shall be approved in advance by
Lessee.
9. REPRESENTATIONS AND WARRANTIES.
A) Representations and Warranties of Lessor. Lessor represents and
warrants to Lesse as follows:
(i) Organization. Lessor is a non-profit organization duly organized
and existing in good standing under the laws of the State of California, and it
has full power and authority to carry out all of the transactions contemplated
by this Agreement and all other agreement, certificates or instruments executed
and delivered in connection herewith.
(ii) No Violation. Neither the execution nor delivery of this agreement
or any other agreements, certificates or instruments executed and delivered
herewith, nor the performance of the transactions contemplated hereby constitute
or will constitute a violation of , be in conflict with, or a default under any
term or provision of the governing instruments or Lessor or any agreement or
commitment to which Lessor is bound, or any judgment, decree, order, regulation
or rule of any court or governmental authority, or consent of any federal, state
or local authority is required in connection with the execution and delivery of
this Agreement or any other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transaction contemplated
hereby.
B) Representations and Warranties of Lessee. Lessee represents and
warrants to Lessor as follows:
(ii) Organization. Lessee is duly organized, validly existing and in
good standing under the laws of the State of its incorporation and it has full
power and authority to own property and carry all of the transactions
contemplated by this Agreement, and all other agreements, certificates or
instruments executed and delivered by Lessee in connection herewith.
(ii) Corporation Action; Valid and Binding Agreements. Lessee has taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and all other agreements, certificates or instruments executed and
delivered in connection herewith. Upon execution and delivery, this Agreement
and all other agreements, certificates or instruments executed and delivered by
Lessee in connection herewith will constitute valid and binding agreements of
Lessee enforceable in accordance with their respective terms.
(iii) Litigation and Investigations. There is no action, suit,
proceeding or investigation pending or, to the best of Lessee's knowledge,
threatened against Lessee, its principals or related entities before any court,
administrative agency or other governmental body, and Lessee does not know nor
is aware of any reason for commencement of any such action, proceeding or
investigation.
(iv) Misrepresentation of Material Fact. To the best of Lessee's
knowledge, information and believe, no document or contract that was shown to
Lessor and which in any way affects any of the properties, assets or proposed
transactions of Lessee as such relates to this Agreement, no certificate or
<PAGE>
statement furnished by or on behalf of Lessee in connection with this Agreement,
nor this Agreement itself contains any untrue statement of material fact or
omits to state a material fact which would make the statements contained herein
misleading.
C) Survival or Representations and Warranties. The representations and
warranties contained in this Agreement shall be deemed to be continuing during
the Initial terms of this Agreement, and each Party shall have the duty promptly
to notify the notify the other of any event or circumstance which might
reasonably be deemed to constitute a breach of or lead to a breach of its
warranties or representations hereunder. The waiver by either Party of any
breach of any presentation or warranty under this Agreement shall not constitute
a waiver of any other representation or warranty or of any failure in the future
by the other Party to fulfill such representation or warranty.
10. TERMINATION.
A) Termination of FCC Authorization. Without further liability to
either Lessor or Lessee, this Agreement shall terminate in the event that for
any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii)
the FCC shall terminate or diminish Lessor's authority to lease the ITFS
Channels in accordance with the terms of this Agreement.
B) Termination by Reason of Default or Nonperformance. At the option of
the non-defaulting party, this Agreement may be terminated upon the material
breach or default by the defaulting party of its duties and obligations
hereunder is such breach or default is not cured by such defaulting party and is
breach or default shall continue for a period of thirty (30) consecutive days
after such defaulting party's receipt of notice thereof from the non-defaulting
party. It is understood and agreed that any failure on the part of Lessee to
make any payment required under Paragraph 6 hereof shall be a material breach of
default of its duties and obligations hereunder. It is also understood and
agreed that any consequences resulting from the loss of local participating
receive sites shall not be considered a material breach or default by Lessor of
its duties and obligations hereunder.
C) Remedies to Continue. In the event of termination of this Agreement
pursuant to Paragraph 10(B), such termination shall not affect or diminish the
rights or claims or remedies available in equity or at law to the non-defaulting
party arising by reason of a breach or default of this Agreement. However, no
liability shall arise on the part of Lessor or Lessee upon termination of this
Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license
occurs as a result of the default of either party.
11. TRANSFER OF RIGHTS AND OBLIGATIONS.
Lessee shall have the right to assign its rights under this lease as
collateral for any financing arrangements it makes. Lessee shall also have the
right to pledge the Leased Equipment as collateral security for any loans it
makes; provided, however, that any pledge of the Leased Equipment shall be made
subject to the provisions of this lease. Lessee shall further have the right to
subcontract any portion of its obligations under this Agreement to any
partnership, joint venture, corporation or entity which Lessee may choose,
provided that Lessee gives Lessor notice of any proposed subcontracting and,
provided further, that no such subcontracting shall release Lessee from
fulfilling all of its obligations under this Agreement. Lessee shall have the
right to assign or transfer its rights, benefits, duties and obligations under
this Agreement to a commonly-owned company without the prior consent of Lessor.
Apart from the foregoing, neither party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably witheld.
<PAGE>
12. INDEMNIFICATION.
A) By Lessor. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, arising directly or indirectly out of (i) the
willful misconduct of Lessor, its agents or employees, in connection with the
performance of this Agreement; (ii) any programming transmitted by Lessor during
any of Lessor's Airtime.
B) By Lessee. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, which arise directly or indirectly out of (i) the
negligence or willful misconduct of Lessee, its agents or employees, in
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessee or any of its authorized agents or subcontractors with the
public, third parties and subscribers to the Lessee's programming service; or
(iv) any maintenance, installation or other work performed by Lessee or any
authorized agent or subcontractor under this Agreement.
C) Notice of Claim; Defense of Claim. Each party shall notify the other
of any such claim promptly upon receipt of same. Either party (hereinafter
referred to as appropriate the "Indemnitor" or Indemnitee") shall have the
option to defend, at its own expense, any claims arising under this Paragraph.
In Indemnitor assumes the defense of any such claim, Indemnitee shall delegate
complete and sole authority to the Indemnitor to defend or settle same and
Indemnitee shall cooperate with Indemnitor in the defense thereof.
13) INSURANCE.
A) Policies Required. At its expense, Lessee shall secure and maintain
with financially reputable insurers, one or more policies of insurance insuring
the Leased Equipment and Lessee's utilization of the ITFS Channels against
casualty and other losses of the kinds customarily insured against by firms of
established reputations engaged in the same or similar line of business, or such
types and in such amounts as are customarily carried under similar circumstances
by such firms, including, without limitation: (i) "All Risk" property insurance
covering the ITFS Equipment and the common Equipment to the extent of one
hundred percent (100%) of its full replacement value without deduction for
depreciation: (ii) comprehensive general public liability insurance covering
liability resulting from lessee's operation of the ITFS equipment on an
occurrence basis having minimum limits of liability in an amount of not less
than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or
death to any person or persons in any one occurrence, and not less than Two
Million Dollars ($2,000,000.00) in the aggregate for all such losses during each
policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with
respect to damage to property; (ii) all workers compensation, automobile
liability and similar insurance required by law.
B) Insurance Policy Forms. All policies of insurance required by this
Paragraph shall, whre appropriate, designate Lessor as either the insured party
or as a named additionally insured party, shall be written as primary policies,
not contributory with and not in excess of any coverage which Lessor shall
carry, and shall contain a provision that the issuer shall give to Lessor thirty
(30) days prior written notice of any cancellation or lapse of such insurance or
of any change in the coverage thereof.
C) Proof of Insurance. Executed copies of the policies of insurance
required under this section or certificates thereof shall be delivered to Lessor
not later than ten (10) after execution of this agreement. Lessee shall furnish
Lessor evidence of renewal of each such policy not later than thirty (30) days
prior to the expiration of the term thereof.
<PAGE>
14. RELATIONSHIP OF PARTIES.
By the provisions of this Agreement, Lessor and Lessee intend to enter
an airtime lease relationship and not a joint venture. They will carry out this
Agreement to preserve that intent. Neither party shall represent itself as the
other party, nor as having any relationship with one another, except as Lessor
and Lessee under the terms of this Agreement.
15. EQUIPMENT PURCHASE.
A) Lessor's Option to Purchase. In the event that this Agreement is
terminated, Lessor shall have the option to purchase the Leased
Equipment used exclusively for Lessor's ITFS license. Any equipment
which is used in a shared fashion (such as transmit antenna,
decoders and combiners) in providing signals other than Lessor's
signals are excluded from this option to purchase. The intent of
the purchase option provided for in Paragraphs 16(A) is to provide
Lessor with the capability to continue to perform on Lessor's ITFS
license. The purchase price shall be the market value of such
equipment noted above as determined by mutual agreement or by
averaging the values obtained from two (2) appraisals, with one
appraiser each chosen by Lessor and Lessee.
B) Lessee's Option to Purchase. If during the terms of this Agreement
the FCC modifies its rules so as to enable Lessee to be licensed to
operate the ITFS frequencies, Lessee shall have a right of first
refusal to acquire such licenses subject to the same terms and
conditions as the right provided for in Paragraph 1(B).
16. NON-DISCLOSURE
Lessor acknowledges that there may be made available to it pursuant to
this Agreement proprietary information of Lessee relating to the encoding and/or
decoding system associated with the ITFS channel equipment and its patented
processes including, but not limited to, improvements, innovations, adaptation,
inventions, results of experimentation, processes and methods, whether or not
deemed patentable, and certain business and marketing techniques (all herein
referred to as "Confidential Information"). Lessor acknowledges that this
Confidential Information has been developed by Lessee at considerable effort and
expense and represents special, unique and valuable proprietary assets of
Lessee, the value of which may be destroyed by unauthorized dissemination.
Accordingly, Lessor covenants and agrees that, except as may be required for the
performance of this Agreement or by law or court order, neither it nor any of
its agents or affiliates shall disclose such Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, such
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof.
17. NON-COMPETITION
During the term of this Agreement, Lessor agrees not to transmit
programming or to lease or sublease any channel capacity on its ITFS Facilities
for the transmission of programming that is competitive with the programming
transmitted by Lessee.
18. FORCE MAJEURE
If by reason of Force Majeure either party is unable in whole or in
part to perform its obligations hereunder, the party shall not be deemed in
violation of default during the period of such inability. As used herein, the
phrase "Force Majeure", shall mean the following: act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivisions, thereof which are not the result of a
breach of this Agreement, orders of any military authority insurrections, riots,
epidemics, fires, civil disturbances, explosions, or any other cause or event
not reasonably within control of the adversely affected party.
19. CONDITION PRECEDENT
This Agreement is conditional on the issuance of a Final Order by the
FCC granting Lessor a construction permit for the ITFS Channels in the Market
from the Transmission Site. By "Final Order" the parties mean an action or order
of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled
or suspended and
<PAGE>
with respect to which no timely-filed request for administrative or judicial
review is pending and as to which the time for filing any such request, or for
the FCC to set aside the action on its own motion, has expired.
20. NOTICE
Any notice required to be given to Lessor under any provision of this
Agreement shall be delivered personally or by certified mail to Lessor at the
address first written above. Any notice required to be given to Lessee under any
provision of this Agreement shall be delivered personally or by certified mail
to Lessee at the address first written above.
21. SEVERABILITY
Should any court or agency determine that any provision of this
Agreement is invalid, the remainder of the Agreement shall remain in effect.
22. WAIVER
A waiver by either Lessor or Lessee of a breach of any provision of
this Agreement shall not be deemed to constitute a waiver of any preceding or
subsequent breach of the same provision or of any other provision.
23. PAYMENT OF EXPENSES AND SIGNING FEES
A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall
pay all costs and expenses incident to fulfilling or modifying this Agreement,
such as, attorneys' fees or, if necessary, any travel expenses approved in
advance by Lessee, FCC filing fees, and engineering costs.
24. VENUE AND GOVERNING LAW
Venue for any cause of action brought by or between Lessor and/or
Lessee relating to this Agreement shall be in California and all provisions of
this Agreement shall be construed under the laws of the State of California and
County of Lessor.
25. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument, and shall become effective when each of the parties hereto
shall have delivered to it this Agreement duly executed by each of the other
parties hereto.
26. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral or written provisions of any kind. The parties further
agree that this Agreement may only be modified by written Agreement signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this day of July 1st, 1999.
SHEKINAH NETWORK
By: ______________________________
Name: Charles J. McKee
Title: President
<PAGE>
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Name: Douglas P. Haffer
Title: President
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Phone/Fax: (805) 438-3341
Attn: Charles McKee, President
Gardner, Carton & Douglas
Attn: Laura Mow
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
World Wide Wireless Communications, Inc.
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 981- 7777
Fax: (415) 391-3199
<PAGE>
EXHIBIT A
Schedule of Airtime
<PAGE>
EXHIBIT B
Receive Sites
There shall be attached hereto and incorporated by reference a copy of
FCC Form 330 Section IV listing Lessor" receive sites.
<PAGE>
EXHIBIT C
Leased Equipment
Noted below is a list of equipment that Lessee is leasing to Lessor:
(1) Four (4) ITFS tansmitters and related hardware
(2) Lessor's ITFS receive site antennas and related hardware
*(3) Combining network, transmission line and antenna
*Common Equipment
<PAGE>
EXHIBIT D
Service and Royalty Fees
1. Lessor's Service Fee
Services Provided Annual Fee
----------------- ----------
(a) Lease of Leased Equipment [6(A)] $1.00
(b) Maintenance of Leased Equipment [3(D)] $1.00
(c) Lease of space at Primary Transmission Site [3A)] $1.00
2. Lessee's Subscriber Royalty Fee
Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's
Gross receipts or a monthly minimum payment of $500 per month whichever is
greater.
Payment shall be as follows: Commencing on the Execution (Effective) Date and as
defined in Paragraph 6)B, payments for each month shall be made by the twentieth
(20th) day of the following month.
<PAGE>
EXHIBIT E
Programming
In addition to digital data services, such as the Internet or Intranet, the
following is a list of video programming services Lessee may provide over
Lessee's System.
TLC - The Leaning Channel
TWC - The Weather Channel
Lifetime
ESPN - Sports
AMC - American Movie Classics
SCOLA
WHTN - World Harvest Television Network
ECO - Galavision
CNN - Cable News Network
CNN - Headline News
C-Span I
C-Span II
BET - Black Entertainment Network
CNBC - Consumer News & Business Channel
Nickelodeon
The Discovery Channel
A&E - Arts and Entertainment
The Family Channel
The Disney Channel
PBS - Public Broadcasting Service
TBN - Trinity Broadcasting Network
TNIN - The New Inspirational Network
ME/U - Mind Extension Network
The International Channel
BRAVO Network
The Travel Channel
Family Network
Keystone Inspirational Network
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
Aspen, Colorado
ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT
THIS AGREEMENT is made this 1st day of August 1999 by Shekinah Network
(hereinafter referred to as "Lessor") having its principal place of business at
14875 Powerline Road, Atascadero, CA 93422 and World Wide Wireless
Communications, Inc. (hereinafter referred to as "Lessee") having its principal
place of business at One Post Street, Suite 2600 San Francisco, CA 94104.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users; and
WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-798
(the "License") for the Channel group C1-4 (the "ITFS Channels") in Aspen,
Colorado ("The Market"); and
WHEREAS, Lessee is in the business of providing voice, video, data and
other services via microwave transmission in the Market Area and desires to
lease the excess ITFS capacity of the ITFS channels; and
WHEREAS, Lessor has determined that there will be excess airtime
capacity available on the ITFS Channels and desires to lease this excess airtime
capacity to Lessee.
NOW, THEREFORE, in consideration of the mutual promises, undertakings,
covenants and conditions set forth herein, the Lessor and Lessee do hereby agree
and warrant as follows:
3. TERM OF AGREEMENT
A. Initial Term. This Agreement shall be effective upon the date of its
execution and shall extend for an initial term of five (5) years (the
"Initial Term").
B. Renewal Term Provided that the License is renewed by the FCC, Lessee
shall have the right to extend this Agreement on its then existing
terms and conditions for one (1) additional five (5) year term (the
"Renewal Term"). The Renewal Term shall automatically go into effect
upon the conclusion of the Initial Term unless Lessee notifies Lessor
at least one hundred eighty days (180) before the end of the Initial
Term that Lessee does not wish to extend this Agreement.
C. New Lease Agreement/Right of first Refusal.
(1) Providing that Lessor's FCC license remains in good standing
and/or Lessor seeks to renew such license, Lessee and Lessor shall
negotiate in good faith for a new excess capacity airtime lease
agreement (hereinafter referred to as "New Lease Agreement") no later
than one hundred eighty days (180) prior to the end of the latter of
(i) Initial Term or (ii) the Renewal Term if the Agreement is extended
for the Renewal Term.
<PAGE>
(3) If Lessor elects to not reasonably pursue a New Lease Agreement
with Lessee, then Lessor shall so notify Lessee in writing of such
intent no later than one hundred eighty (180) days prior to the end of
the Renewal Term.
(3) If Lessor and Lessee do not enter into a New Lease Agreement,
Lessor grants Lessee a right of first refusal on any competing
proposals for lease agreements or transfers or assignments of any part
of the ITFS Channels received by Lessor during the twelve (12) months
following the expiration of the latter of (i) the Initial Term or (ii)
the Renewal Term, if the Agreement is extended for the Renewal Term.
If any acceptable offer to lease or acquire the ITFS Channels is made
to Lessor, Lessor shall give written notice to Lessee describing the
person to whom the proposed lease or transfer is to be made, the fees,
charges, rental or other consideration to be received fro the lease or
transfer, the terms thereof and generally the relevant other terms and
conditions of the lease or transfer. Lessee shall have a period of
thirty (30) days after its receipt of such notice from Lessor in which
to elect, by giving written notice to Lessor, to lease or, if
eligible, obtain any or all of the ITFS Channels for the same fees,
charges, rental or other consideration for which Lessor proposed to
lease or transfer to the third person.
(i) The fees, charges, rental or consideration shall be paid by such
third person or Lessee in cash.
(iv) If Lessor does not believe Lessee's stated offer is in an amount
fairly equivalent to the fair value of the consideration payable by
the third person and so notifies Lessee in writing within seven (7)
days after Lessor's receipt of Lessee's notice of election to so lease
or purchase, Lessee may within five (5) days after its receipt of such
notice from Lessor elect to refer such question for determination by
an impartial arbitrator and the right of first refusal of Lessee shall
then be held open until (5) days after Lessee is notified of such
determination. Such arbitrator shall be chosen either by agreement of
Lessee and Lessor at the time such question arises, or, at the option
of either party, by referring the question to the American Arbitration
Association with instructions that the American Arbitration
Association select a single arbitrator under a request from the
parties for expedited and accelerated determination. The determination
of the arbitrator chosen under either option contained in this
subparagraph shall be final and binding upon Lessee and Lessor. The
parties shall share equally in the costs and fees of the arbitration
(v) In the event Lessee shall elect to exercise its right of first
refusal, the lease agreement or other transfer or assignment shall be
consummated within thirty (30) days of the latest of: (1) the day on
which Lessor received notice of Lessee's election to exercise the
right of first refusal; (2) the day upon which any question required
to be determined by the arbitrator hereunder has been determined; or
(3) the date of any FCC approval in the case of assignment or
transfer; or at such other time as may be mutually agreed. The right
of first refusal is terminated either by the lease or other transfer
to Lessee as provided herein or by notice to Lessee of the Lessor's
proposal to lease or otherwise transfer the ITFS Channels or any part
to a third person and Lessee's unwillingness or failure to meet and
accept such a bona fide offer pursuant to the times and procedures as
set forth above; provided that such proposed lease or transfer is
consummated at the same fees, charges, rental or other consideration
and upon the same terms as to which such right of first refusal
applied, within thirty (30) days after Lessee's right of first refusal
had expired or had been specifically waived by written notice given to
Lessor by Lessee, or within thirty (30) days following FCC approval in
the case of assignment or transfer.
C) Operation During End of Term. If Lessor and Lessee do not enter into
New Lease Agreement before the end of the Initial Term, Lessee shall
cease leasing the ITFS Channels on the last day of the Initial Term.
<PAGE>
D) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this
Agreement shall not give rise to any rights or remedies beyond the
expiration of any FCC license necessary for the continued operation of
the ITFS Channels. Provided, however, that while this Agreement is in
effect, Lessor shall obtain and maintain in force all licenses,
permits and authorizations required or desired in connection with the
use of the ITFS Channels. Lessor shall take all necessary steps to
renew the licenses for the ITFS Channels and shall not commit any act
or engage in any activity which could reasonably be expected to cause
the FCC to impair, restrict, revoke, cancel, suspend or refuse to
renew the ITFS licenses. Lessor shall take all reasonable steps to
comply with the Communications Act of 1934, as amended and the rules
and regulations of the FCC, and shall file all reports, schedules
and/or forms required by the FCC to be filed by Lessor. All expenses,
including attorneys fees and filing fees, incurred in preparing and
filing such reports, schedules and/or forms required by the FCC shall
be paid by the Lessee.
4. ALLOCATION OF AIRTIME.
A. Excess Capacity Airtime. To the extent allowed by the FCC rules and
regulations and any amendments thereof, Lessor agrees to lease to
Lessee the exclusive use of all excess capacity not utilized by Lessor
("Excess Capacity Airtime").
B. Lessor's Primary Airtime. During analog transmission over the ITFS
Channels, Lessor reserves for its exclusive use a minimum of twenty
(20) hours of airtime per-channel per-week to be used for its ITFS
scheduled programs. During digital transmission ovr the ITFS Channels,
Lessor shall have the exclusive use of 12.5% of the total capacity
available on the Lessor's ITFS Channels. This airtime shall be know as
"Lessor's Primary Airtime".
C. Schedule of Airtime. The schedule which depicts the agreement of the
parties as to use of Lessor's Channels shall be attached hereto and
made a part hereof as Exhibit A which is subject to change upon
agreement by both parties.
D. Lessee's use of its Excess Capacity Airtime. Lessee shall have the
right to utilize its Excess Capacity Airtime for any purpose allowed
or authorized by the FCC including but not limited to voice, video and
data transmission.
E. Alternate Use and Vertical Blanking Intervals. Lessor shall have the
right to use the second audio carrier ("SAP") and vertical blanking
intervals. ("VBI") on which Lessor's ITFS programming is being
transmitted. Lessee shall at all times have the right to use the VBI
and SAP not utilized by Lessor and 100% of the response frequencies
associated with the ITFS Channels. Lessor shall be responsible for any
equipment needed to utilize the VBI and/or SAP and such equipment
shall be compatible with Lessee's system.
F. Lessor's Use of ITFS Channels. Lessor agrees that its program services
and airtime use will not harm or interfere with Lessee's current or
future signal paths utilized within Lessee's System for program
encryption, pilot carrier signaling and other technical needs utilized
for the operation of and such services provided by Lessee's System.
Nor will Lessor, by its own action, or through a third party, utilize
any part of its licensed frequency spectrum to create or operate a
service that is in competition with current, planned or future
services provided by
<PAGE>
Lessee's System. Lessor agrees to use its Primary Airtime in
accordance with the FCC's rules and regulations. Lessor shall not take
or fail to take any action which may have a material adverse effect on
Lessee's right to utilize its Excess Capacity Airtime.
G. Expanded System Capacity. Lessee shall have the right at anytime to
require Lessor to file with the FCC any necessary application to
expand the channel capacity to Lessor's station to enable it to carry
more than one video signal per channel or digital data services;
provided however, before Lessee can exercise this right, it must
demonstrate to the Lessor's reasonable satisfaction that such
modification will not materially degrade the performance of the
station nor impair signal quality at the registered ITFS receive
sites. Once such modification has been constructed, the modified
facilities shall automatically be considered a part of this agreement
and subject to all terms and conditions hereof. It is understood that
Lessee shall have the full-time use of the Expanded Channels to the
extend permitted by FCC rules.
3. TRANSMISSION SITE AND FACILITIES.
C. Primary Transmission Site. Lessor's ITFS Channels are located at Key
West, FL, Lessee agrees to provide Lessor space at the Primary
Transmission site for Lessor's audio and video transmission equipment
which shall not exceed on rack. Such space shall be leased to Lessor
pursuant to Exhibit D hereto. This site shall hereinafter be described
as the "Primary Transmission Site". At Lessee's sole expense, Lessee
shall contract for a lease of space at the Transmission Site upon such
terms as the parties agree. The Transmission Site shall comply with
the standards, specifications and regulations of the FCC rules and
orders pertaining to Lessor's ITFS license.
D. Relocation of Transmission Site.
(i) Lessor acknowledges that the location of the
Primary Transmission Site for ITFS Channels is critical to the
Lessee's business and agrees that it will not relocate the
transmission facilities for ITFS Channels from the Primary
Transmission Site without Lessee's prior written consent.
(ii) Lessor further acknowledges that possibility
that, as a result of currently unforeseen events, the Primary
Transmission Site may not be the optimum site for the location
of the ITFS Channels or Lessee's business throughout the term
of this Lease Agreement. Lessor therefore agrees that if at
any time or from time to time Lessee requests in writing that
the transmission facilities for the ITFS Channels be
relocated, Lessor shall file with the FCC and any other
regulatory body having jurisdicition over the ITFS Channels
all applications, amendments, and requests for modification
that may be necessary to obtain any necessary consents to
permit such relocation to such location within or adjacent to
the Market as may be requested by Lessee; provided, however,
that Lessor shall not be obligated to submit or procecute any
application, amendment, or request for modification that
Lessor reasonably determines, upon advice of counsel contained
in a written opinion, would be in violation of the terms of
the License, any statute, rule, or regulations regarding the
operation of the ITFS Channels or the submission of materials
to the FCC, or any of its obligations as an ITFS licensee; and
provided, further, that any such relocation will not result in
loss of service to Lessor's registered receive sites served by
the transmission facilities in the event that the
authorization is obtained to relocate the ITFS Channels to the
location requested by Lessee, Lessor shall relocate such
channels to such new location as soon as reasonably
<PAGE>
possible after authorization is obtained. Lessee shall bear
reasonable costs associated with such relocation, including
engineering and construction, and all reasonable costs
associated with obtaining FCC or any other regulatory approval
therefore.
(iii) Lessor agrees to file modification applications
requested by Lessee. Such modifications may include but shall
not be limited to the following: power increase or decrease,
polarization, transmit antenna patterns, digital, two-way
(return path) use of the ITFS Channels, boosters, beam benders
or repeaters, cells, sectorization, channel swaps, channel
loading, channel shifting and application within five (5)
business days or receipt of the modification application from
Lessee or during any FCC designated filing window. Lessee will
use reasonable efforts to provide Lessor with the engineering
for the modification thirty (30) days prior to the request for
filing. If Lessor believes that such modification will have an
adverse effect on Lessor's ability to provide its services to
its receive sites, Lessor agrees to file the modification
application as presented by Lessee and within the time limit
requested by Lessee; however, Lessee agrees not to implement
construction and Lessor agrees not to withdraw the application
until the parties have adequately addressed and resolved the
potential material adverse effect or the matter has been
submitted to arbitration pursuant to Section 16 and a final
decision has been rendered by arbitrator. Although Lessee
intends to file such modification applications, it may elect
not to construct the Channels in that manner and may desire to
utilize the Channels as currently licensed. A copy of the
modification application, bearing the FCC's date stamp, shall
be mailed to Lessee by Lessor, within fourteen (14) days of
the filing of the modification application. Lessee shall be
solely responsible for all engineering and legal costs
associated with the preparation, review and filing of the
modification application. In the event that any license
modification requested by Lessee requires receive site
upgrades in order for Lessor's receive sites to continue to
receive Lessor's services, then Lessee agrees to pay for all
costs to complete such upgrade prior to implementing the
license modification.
C. System Construction. Lessee shall within a reasonable
period of time, but not later than six (6) months after the
FCC grant of digital authority for the ITFS Channels, purchase
equipment such as the antenna, waveguide or transmitters
specified on the authorization for the ITFS Channels. At
Lessee's expense, Lessee shall purchase and install such
transmitters, transmission line, modulators, antennas and
other equipment as required to operate the ITFS Channels in
accordance with the provision of such authorization. Any
equipment so used in such construction shall be leased to
lessor pursuant to Paragraph 5 hereof. Such equipment is
hereinafter referred to as the "Leased Equipment". Lessee
shall retain title to the Leased Equipment except as noted by
Paragraph 15 herein.
D. Maintenance of Transmission Equipment. At Lessee's expense
and subject to Lessor's right to supervise the maintenance of
this equipment, Lessee shall maintain and operate the Leased
Equipment during the terms of this Agreement for a nominal
fee. Lessee shall also pay all taxes and other charges
assessed against the Leased Equipment.
E. Transmission of Programming. At no cost or expense to
Lessor, Lessee shall provide the necessary labor and equipment
capabilities to transmit on the ITFS Channels programming
required to be carried pursuant to this Agreement such as
Lessor's ITFS programming and TBN. Lessee shall also comply
with Lessor's instructions regarding the transmission of such
programming such as the dates and times to transmit
programming.
<PAGE>
F. Interference. Lessee shall operate the Leased Equipment so
that such operation does not create or increase interference
with electronic transmission of any other FCC licensees
entitles to protection under FCC rules and regulations. If
Lessee's entitled to protection under FCC rules and
regulations. If Lessee's operation of the Lease Equipment does
so create or increase interference, Lessee shall pay all of
the reasonable engineering and legal fees necessary to resolve
the interference problem so created.
G. Alterations and Attachments. Lessee, at its own expense,
may make alterations of or attachments to the ITFS equipment
or the common equipment as defined in Exhibit C (including the
installation of encoding and/or addressing equipment) as may
be reasonably required from time to time by the nature of its
business; provided however, that such alterations or
attachments do not interfere with Lessor's signal or ongoing
operations or violate any FCC rules or regulations; and
provided further that FCC authorization, if required, is
obtained in advance of any such alteration or attachment at
the sole cost of Lessee. to the extent any FCC authorization
pertaining to the ITFS equipment is required, Lessor agrees to
use its best efforts to obtain such authorization.
H. Licensee Control and Liability. Nothing herein shall
derogate from such licensee control of operations of the ITFS
Channels that Lessor, as an FCC licensee, shall be required to
maintain and Lessee acknowledges the reservation by Lessor of
such control. Lessor shall at all times retain ultimate and
exclusive responsibility for the operation and control of the
ITFS Channels including policy decisions.
4. LESSOR'S RECEIVE SITES.
Attached hereto as Exhibit B is list of the registered receive sites
designated by Lessor to receive its ITFS programming and to be installed at the
expense of Lessee. Those receive sites so listed shall be installed with a
Standard Installation. If as the result of any relocation of the Primary
Transmit Site, the equipment at Lessor's existing registered receive sites must
be reoriented, Lessee shall pay the cost of same. As used herein for the
purposes of this Agreement, the phrase "Standard Installation" shall mean an
installation consisting of the placement of the ITFS/MMDS receiving antenna at
an elevation (not to exceed thirty [30] feet above the base mounting location)
which could normally receive the line-of-sight transmission from the
Transmission Site; the coupling thereto of a block-down converter; and a
sufficient amount of transmission line (coaxial cable) to connect the received
ITFS programming to the input of (i) one classroom designated by Lessor to
receive the ITFS programming or (ii) the receive site internal/external
distribution system. Also, if as the result of any relocation of the Transmit
Site, the equipment at Lessor's existing receive sites must be reoriented,
Lessee shall pay the cost of same. Lessee also agrees that for digital
transmission of the ITFS Channels Lessee will purchase and install at Lessee's
expense, one single-point modem to receive its ITFS programming.
5. LEASE OF EQUIPMENT.
A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall
lease from Lessee the Leased Equipment during the terms of this Agreement. A
list of this equipment is attached hereto as Exhibit C and incorporated by
reference herein. Lessor shall have no responsibility for the loss of or damage
to the Leased Equipment during the terms of this Agreement and Lessee shall bear
all such responsibility.
6. FEES.
A) Lessor's Service Fee. In consideration of the lease of the Leased
Equipment, and for its share of the projected costs to maintain the Transmission
Site and the Lease Equipment, Lessor shall pay Lessee an annual fee provided for
in Exhibit D.
B) Subscriber Royalty Fees or Percentage. Beginning on the Execution
Date of this Agreement and continuing thereafter during the Initial Term of this
Agreement, Lessee shall pay to
<PAGE>
Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum,
whichever is greater as set out in Exhibit D which is attached herewith and
incorporated by reference herein. If the Execution Date shall be a date other
than the first day of a calendar month, then the Subscriber Royalty Fee for the
partial month shall be paid on a proportionate basis. A late fee of 10% (ten
percent) will be assessed to past due accounts, and a finance charge of one and
one-half percent (1.5%) per month will be assessed in addition to the late fee
until paid.
C) Notice of Construction and Required Certificate. Within thirty (30)
days of completion of construction at the Transmission Site, Lessee shall notify
Lessor of such completion of construction in writing. Within thirty (30) days of
the end of each month in which Excess Capacity Airtime is leased hereunder,
Lessee shall provide Lessor with a certificate, certified as accurate and
correct by an authorized agent of Lessee, showing the number of subscribers
served during such month.
D) Right to Audit. Lessee shall for a period of three (3) years after
their creation, keep, maintain and preserve complete and accurate records and
accounts, including all invoices, correspondence, ledgers, financial and other
records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's
charges hereunder; and such records and corporate accounts shall be available
for inspection and audit at Lessee's corporate offices or at Lessee's offices in
the Market, as designated by Lessee, at any time or times during the term of
this Agreement or within ninety (90) days thereafter, during reasonable business
hours, by Lessor or its nominee. In the event that there is discovered an
underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above,
Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of
each such underpayment. All information obtained by Lessor during any audit
herein shall be maintained by Lessor in strict confidence.
7. PROGRAMMING.
A) Control Over Programming.
(i) Program Content. Lessee intends that only programming of a sort
which would not serve to place Lessor's reputation in the community in jeopardy
will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize
disputes, recognizing the difficulties inherent in specifying exact standards
herein, it is agreed that Lessee shall have the right to market the programming
provided by the networks and services listed on Exhibit E. If, however, the
programming content of any networks and services listed on Exhibit E materially
changes, Lessor shall have the right, upon ninety (90) days notice, to deny
Lessee the right to continue transmitting such programming if Lessor would have
the right to deny Lessee the right to transmit such programming under the
provisions of this paragraph in the first instance. If Lessee proposes to
transmit the programming of any new programming service, the Lessee shall notify
Lessor in writing specifying in detail the nature of the new programming service
and Lessor shall have the right, upon written served upon Lessee within thirty
(30) days after Lessor's receipt of any such notice from Lessee, to deny to
Lessee the right to transmit such service if such programming is obscene and/or
contradicting local, state and/or federal laws or otherwise violates any
federal, state or local laws or regulations. If no such denial notice is
received by Lessee within such thirty (30) days, lessee shall be authorized to
transmit all such services for which no denial notice is received. There shall
be no reduction in fees required under this Agreement for any such programming
not permitted to be transmitted.
B) Availability of Programming. It is understood by Lessee and Lessor
that there is expected to be no direct out-of-pocket annual costs for the
acquisition of the qualified ITFS educational programming for Lessor's use
during Lessor's Primary Airtime on the ITFS channels, based on current plans. In
the event that this ITFS educational programming either; (1) ceases to be
available, or, (2) becomes available only at a fee, then Lessor may incur direct
out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees
to provide its best efforts to assist Lessor in the acquisition of alternative
programming, if necessary. Additionally, Lessee agrees to make payment to Lessor
for the actual, direct programming costs incurred. If any; If Lessor, after
expending its best efforts, is unable to
<PAGE>
obtain suitable ITFS programming for a cost equal to the amount to be paid by
Lessee, Lessor and Lessee shall use their best efforts to reach agreement on
modifications to this Agreement to avoid any un-reimbursed ITFS programming
costs to Lessor. If no such agreement can be reached, Lessor may terminate this
agreement. In the case of such termination, Lessor shall use its best efforts
(with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior
approval) to transfer the license for the ITFS Channels to another qualified
educational entity, subject to FCC approval, with the intent of assigning this
Agreement from Lessor to the new educational entity.
C) Integration of Lessor's Programming. Lessee agrees to integrate
Lessor's programming into the overall communications service offered to
subscribers, without cost to Lessor. This integration shall include, but not be
limited to, listing Lessor's material in any program guides produced by Lessee
for subscribers.
D) Carriage of TBN. In the event that Lessor's ITFS Channels are used
for analog video transmission and TBN is not transmitted on a local VHF or UHF
station, with a market coverage equivalent to both area and signal quality of
our ITFS channels, and Lessee does not have local off-air insertion as part of
its standard installation, then, if so designated by Lessor, Lessee agrees to
transmit on one of the ITFS Channels the programming of Trinity Broadcasting
Network ("TBN") during those time periods such channel is not used for Lessor's
ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a
fee for carriage of TBN. In the event that Lessee is permitted to program the
hours previously occupied by TBN, then Lessee shall increase, in proportion to
the increase in Excess Capacity Airtime, the amount of minimum fees and
subscriber royalty fees payable under the provision 6 (B) of this agreement
during the remainder of the term(s) of the agreement. For purposes of
calculating any such proportionate increase, the parties acknowledge and agree
that the minimum fee and subscriber royalty fee agreed to herein are based on
Lessee's equivalent use of three full-time ITFS channels.
E) Station Identification. During Lessee's use of Lessor's excess
channel capacity, Lessee shall transmit Lessor's call sign for each respective
station as required by the FCC.
8. PROCECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES.
A) Best Efforts to Secure Approval of this Agreement. The parties
recognize that certain approvals will be required from the FCC in order to
effectuate this Agreement. Both parties shall use their best efforts to prepare,
file and prosecute before the FCC all petitions, waivers, applications and other
documents necessary to secure any FCC approval required to effectuate this
Agreement. Lessee shall assist in the preparation and prosecution of such
applications and as provided for herein, shall pay all filing fees, attorneys'
fees, engineering fees, and all other expenses in connection therewith. Lessor
also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDs and
MMDS operators to co-locate at the Transmission Site. Notwithstanding anything
in this Agreement to the contrary, it is understood that no filing shall be made
with the FCC with respect to this Agreement unless both parties have reviewed
such filing and consented in writing to its submission, such consent not be
unreasonably withheld.
B) Further Efforts. Throughout the Initial Term of this Agreement,
Lessor shall use its best efforts to obtain and maintain in force all licenses,
permits and authorizations required for Lessee and Lessor to use the ITFS
Channels as contemplated by this Agreement. Lessee shall be responsible for all
cash expenses incurred to obtain and maintain in force such licenses, permits
and authorizations. When mutually agreed by the parties and at Lessee's sole
expense, Lessor shall apply for, and use its best efforts to obtain those
reasonable license modifications which would assist Lessee in its business.
Lessor also shall consider filing, at Lessee's sole expense, such reasonable
protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or
OFS applications or amendments as may be requested by Lessee in the mutual best
interests of the parties and the public. Lessor and Lessee shall promptly notify
each other of any event of which it has knowledge that may affect any of the
licenses, permits or authorization affecting the ITFS Channels.
<PAGE>
C) Attorneys' Fees. With respect to any legal work conducted pursuant
to Paragraph 8(A) and (B) above, Lessee shall be responsible for all attorneys'
fees in connection therewith and shall make payments directly to the attorney.
However, any attorney fees paid by Lessee shall be approved in advance by
Lessee.
9. REPRESENTATIONS AND WARRANTIES.
A) Representations and Warranties of Lessor. Lessor represents and
warrants to Lesse as follows:
(i) Organization. Lessor is a non-profit organization duly organized
and existing in good standing under the laws of the State of California, and it
has full power and authority to carry out all of the transactions contemplated
by this Agreement and all other agreement, certificates or instruments executed
and delivered in connection herewith.
(ii) No Violation. Neither the execution nor delivery of this agreement
or any other agreements, certificates or instruments executed and delivered
herewith, nor the performance of the transactions contemplated hereby constitute
or will constitute a violation of , be in conflict with, or a default under any
term or provision of the governing instruments or Lessor or any agreement or
commitment to which Lessor is bound, or any judgment, decree, order, regulation
or rule of any court or governmental authority, or consent of any federal, state
or local authority is required in connection with the execution and delivery of
this Agreement or any other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transaction contemplated
hereby.
B) Representations and Warranties of Lessee. Lessee represents and
warrants to Lessor as follows:
(ii) Organization. Lessee is duly organized, validly existing and in
good standing under the laws of the State of its incorporation and it has full
power and authority to own property and carry all of the transactions
contemplated by this Agreement, and all other agreements, certificates or
instruments executed and delivered by Lessee in connection herewith.
(ii) Corporation Action; Valid and Binding Agreements. Lessee has taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and all other agreements, certificates or instruments executed and
delivered in connection herewith. Upon execution and delivery, this Agreement
and all other agreements, certificates or instruments executed and delivered by
Lessee in connection herewith will constitute valid and binding agreements of
Lessee enforceable in accordance with their respective terms.
(iii) Litigation and Investigations. There is no action, suit,
proceeding or investigation pending or, to the best of Lessee's knowledge,
threatened against Lessee, its principals or related entities before any court,
administrative agency or other governmental body, and Lessee does not know nor
is aware of any reason for commencement of any such action, proceeding or
investigation.
(iv) Misrepresentation of Material Fact. To the best of Lessee's
knowledge, information and believe, no document or contract that was shown to
Lessor and which in any way affects any of the properties, assets or proposed
transactions of Lessee as such relates to this Agreement, no certificate or
statement furnished by or on behalf of Lessee in connection with this Agreement,
nor this Agreement itself contains any untrue statement of material fact or
omits to state a material fact which would make the statements contained herein
misleading.
C) Survival or Representations and Warranties. The representations and
warranties
<PAGE>
contained in this Agreement shall be deemed to be continuing during the Initial
terms of this Agreement, and each Party shall have the duty promptly to notify
the notify the other of any event or circumstance which might reasonably be
deemed to constitute a breach of or lead to a breach of its warranties or
representations hereunder. The waiver by either Party of any breach of any
presentation or warranty under this Agreement shall not constitute a waiver of
any other representation or warranty or of any failure in the future by the
other Party to fulfill such representation or warranty.
10. TERMINATION.
A) Termination of FCC Authorization. Without further liability to
either Lessor or Lessee, this Agreement shall terminate in the event that for
any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii)
the FCC shall terminate or diminish Lessor's authority to lease the ITFS
Channels in accordance with the terms of this Agreement.
B) Termination by Reason of Default or Nonperformance. At the option of
the non-defaulting party, this Agreement may be terminated upon the material
breach or default by the defaulting party of its duties and obligations
hereunder is such breach or default is not cured by such defaulting party and is
breach or default shall continue for a period of thirty (30) consecutive days
after such defaulting party's receipt of notice thereof from the non-defaulting
party. It is understood and agreed that any failure on the part of Lessee to
make any payment required under Paragraph 6 hereof shall be a material breach of
default of its duties and obligations hereunder. It is also understood and
agreed that any consequences resulting from the loss of local participating
receive sites shall not be considered a material breach or default by Lessor of
its duties and obligations hereunder.
C) Remedies to Continue. In the event of termination of this Agreement
pursuant to Paragraph 10(B), such termination shall not affect or diminish the
rights or claims or remedies available in equity or at law to the non-defaulting
party arising by reason of a breach or default of this Agreement. However, no
liability shall arise on the part of Lessor or Lessee upon termination of this
Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license
occurs as a result of the default of either party.
11. TRANSFER OF RIGHTS AND OBLIGATIONS.
Lessee shall have the right to assign its rights under this lease as
collateral for any financing arrangements it makes. Lessee shall also have the
right to pledge the Leased Equipment as collateral security for any loans it
makes; provided, however, that any pledge of the Leased Equipment shall be made
subject to the provisions of this lease. Lessee shall further have the right to
subcontract any portion of its obligations under this Agreement to any
partnership, joint venture, corporation or entity which Lessee may choose,
provided that Lessee gives Lessor notice of any proposed subcontracting and,
provided further, that no such subcontracting shall release Lessee from
fulfilling all of its obligations under this Agreement. Lessee shall have the
right to assign or transfer its rights, benefits, duties and obligations under
this Agreement to a commonly-owned company without the prior consent of Lessor.
Apart from the foregoing, neither party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably witheld.
12. INDEMNIFICATION.
A) By Lessor. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, arising directly or indirectly out of (i) the
willful misconduct of Lessor, its agents or employees, in
<PAGE>
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessor during any of Lessor's Airtime.
B) By Lessee. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, which arise directly or indirectly out of (i) the
negligence or willful misconduct of Lessee, its agents or employees, in
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessee or any of its authorized agents or subcontractors with the
public, third parties and subscribers to the Lessee's programming service; or
(iv) any maintenance, installation or other work performed by Lessee or any
authorized agent or subcontractor under this Agreement.
C) Notice of Claim; Defense of Claim. Each party shall notify the other
of any such claim promptly upon receipt of same. Either party (hereinafter
referred to as appropriate the "Indemnitor" or Indemnitee") shall have the
option to defend, at its own expense, any claims arising under this Paragraph.
In Indemnitor assumes the defense of any such claim, Indemnitee shall delegate
complete and sole authority to the Indemnitor to defend or settle same and
Indemnitee shall cooperate with Indemnitor in the defense thereof.
13) INSURANCE.
A) Policies Required. At its expense, Lessee shall secure and maintain
with financially reputable insurers, one or more policies of insurance insuring
the Leased Equipment and Lessee's utilization of the ITFS Channels against
casualty and other losses of the kinds customarily insured against by firms of
established reputations engaged in the same or similar line of business, or such
types and in such amounts as are customarily carried under similar circumstances
by such firms, including, without limitation: (i) "All Risk" property insurance
covering the ITFS Equipment and the common Equipment to the extent of one
hundred percent (100%) of its full replacement value without deduction for
depreciation: (ii) comprehensive general public liability insurance covering
liability resulting from lessee's operation of the ITFS equipment on an
occurrence basis having minimum limits of liability in an amount of not less
than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or
death to any person or persons in any one occurrence, and not less than Two
Million Dollars ($2,000,000.00) in the aggregate for all such losses during each
policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with
respect to damage to property; (ii) all workers compensation, automobile
liability and similar insurance required by law.
B) Insurance Policy Forms. All policies of insurance required by this
Paragraph shall, whre appropriate, designate Lessor as either the insured party
or as a named additionally insured party, shall be written as primary policies,
not contributory with and not in excess of any coverage which Lessor shall
carry, and shall contain a provision that the issuer shall give to Lessor thirty
(30) days prior written notice of any cancellation or lapse of such insurance or
of any change in the coverage thereof.
C) Proof of Insurance. Executed copies of the policies of insurance
required under this section or certificates thereof shall be delivered to Lessor
not later than ten (10) after execution of this agreement. Lessee shall furnish
Lessor evidence of renewal of each such policy not later than thirty (30) days
prior to the expiration of the term thereof.
27. RELATIONSHIP OF PARTIES.
By the provisions of this Agreement, Lessor and Lessee intend to enter
an airtime lease relationship and not a joint venture. They will carry out this
Agreement to preserve that intent. Neither party shall represent itself as the
other party, nor as having any relationship with one another, except as Lessor
and Lessee under the terms of this Agreement.
<PAGE>
28. EQUIPMENT PURCHASE.
C) Lessor's Option to Purchase. In the event that this Agreement is
terminated, Lessor shall have the option to purchase the Leased
Equipment used exclusively for Lessor's ITFS license. Any
equipment which is used in a shared fashion (such as transmit
antenna, decoders and combiners) in providing signals other than
Lessor's signals are excluded from this option to purchase. The
intent of the purchase option provided for in Paragraphs 16(A) is
to provide Lessor with the capability to continue to perform on
Lessor's ITFS license. The purchase price shall be the market
value of such equipment noted above as determined by mutual
agreement or by averaging the values obtained from two (2)
appraisals, with one appraiser each chosen by Lessor and Lessee.
D) Lessee's Option to Purchase. If during the terms of this
Agreement the FCC modifies its rules so as to enable Lessee to be
licensed to operate the ITFS frequencies, Lessee shall have a
right of first refusal to acquire such licenses subject to the
same terms and conditions as the right provided for in Paragraph
1(B).
29. NON-DISCLOSURE
Lessor acknowledges that there may be made available to it pursuant to
this Agreement proprietary information of Lessee relating to the encoding and/or
decoding system associated with the ITFS channel equipment and its patented
processes including, but not limited to, improvements, innovations, adaptation,
inventions, results of experimentation, processes and methods, whether or not
deemed patentable, and certain business and marketing techniques (all herein
referred to as "Confidential Information"). Lessor acknowledges that this
Confidential Information has been developed by Lessee at considerable effort and
expense and represents special, unique and valuable proprietary assets of
Lessee, the value of which may be destroyed by unauthorized dissemination.
Accordingly, Lessor covenants and agrees that, except as may be required for the
performance of this Agreement or by law or court order, neither it nor any of
its agents or affiliates shall disclose such Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, such
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof.
30. NON-COMPETITION
During the term of this Agreement, Lessor agrees not to transmit
programming or to lease or sublease any channel capacity on its ITFS Facilities
for the transmission of programming that is competitive with the programming
transmitted by Lessee.
31. FORCE MAJEURE
If by reason of Force Majeure either party is unable in whole or in
part to perform its obligations hereunder, the party shall not be deemed in
violation of default during the period of such inability. As used herein, the
phrase "Force Majeure", shall mean the following: act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivisions, thereof which are not the result of a
breach of this Agreement, orders of any military authority insurrections, riots,
epidemics, fires, civil disturbances, explosions, or any other cause or event
not reasonably within control of the adversely affected party.
32. CONDITION PRECEDENT
This Agreement is conditional on the issuance of a Final Order by the
FCC granting Lessor a construction permit for the ITFS Channels in the Market
from the Transmission Site. By "Final Order" the parties mean an action or order
of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled
or suspended and with respect to which no timely-filed request for
administrative or judicial review is pending and as to which the time for filing
any such request, or for the FCC to set aside the action on its own motion, has
expired.
<PAGE>
33. NOTICE
Any notice required to be given to Lessor under any provision of this
Agreement shall be delivered personally or by certified mail to Lessor at the
address first written above. Any notice required to be given to Lessee under any
provision of this Agreement shall be delivered personally or by certified mail
to Lessee at the address first written above.
34. SEVERABILITY
Should any court or agency determine that any provision of this
Agreement is invalid, the remainder of the Agreement shall remain in effect.
35. WAIVER
A waiver by either Lessor or Lessee of a breach of any provision of
this Agreement shall not be deemed to constitute a waiver of any preceding or
subsequent breach of the same provision or of any other provision.
36. PAYMENT OF EXPENSES AND SIGNING FEES
A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall
pay all costs and expenses incident to fulfilling or modifying this Agreement,
such as, attorneys' fees or, if necessary, any travel expenses approved in
advance by Lessee, FCC filing fees, and engineering costs.
37. VENUE AND GOVERNING LAW
Venue for any cause of action brought by or between Lessor and/or
Lessee relating to this Agreement shall be in California and all provisions of
this Agreement shall be construed under the laws of the State of California and
County of Lessor.
38. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument, and shall become effective when each of the parties hereto
shall have delivered to it this Agreement duly executed by each of the other
parties hereto.
39. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral or written provisions of any kind. The parties further
agree that this Agreement may only be modified by written Agreement signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this day of July 1st, 1999.
SHEKINAH NETWORK
By: ______________________________
Name: Charles J. McKee
Title: President
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Name: Douglas P. Haffer
Title: President
<PAGE>
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Phone/Fax: (805) 438-3341
Attn: Charles McKee, President
Gardner, Carton & Douglas
Attn: Laura Mow
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
World Wide Wireless Communications, Inc.
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 981- 7777
Fax: (415) 391-3199
<PAGE>
EXHIBIT A
Schedule of Airtime
<PAGE>
EXHIBIT B
Receive Sites
There shall be attached hereto and incorporated by reference a copy of
FCC Form 330 Section IV listing Lessor" receive sites.
<PAGE>
EXHIBIT C
Leased Equipment
Noted below is a list of equipment that Lessee is leasing to Lessor:
(3) Four (4) ITFS tansmitters and related hardware
(4) Lessor's ITFS receive site antennas and related hardware
*(3) Combining network, transmission line and antenna
*Common Equipment
<PAGE>
EXHIBIT D
Service and Royalty Fees
1. Lessor's Service Fee
Services Provided Annual Fee
----------------- ----------
(d) Lease of Leased Equipment [6(A)] $1.00
(e) Maintenance of Leased Equipment [3(D)] $1.00
(f) Lease of space at Primary Transmission Site [3A)] $1.00
2. Lessee's Subscriber Royalty Fee
Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's
Gross receipts or a monthly minimum payment of $500 per month whichever is
greater.
Payment shall be as follows: Commencing on the Execution (Effective) Date and as
defined in Paragraph 6)B, payments for each month shall be made by the twentieth
(20th) day of the following month.
<PAGE>
EXHIBIT E
Programming
In addition to digital data services, such as the Internet or Intranet, the
following is a list of video programming services Lessee may provide over
Lessee's System.
TLC - The Leaning Channel
TWC - The Weather Channel
Lifetime
ESPN - Sports
AMC - American Movie Classics
SCOLA
WHTN - World Harvest Television Network
ECO - Galavision
CNN - Cable News Network
CNN - Headline News
C-Span I
C-Span II
BET - Black Entertainment Network
CNBC - Consumer News & Business Channel
Nickelodeon
The Discovery Channel
A&E - Arts and Entertainment
The Family Channel
The Disney Channel
PBS - Public Broadcasting Service
TBN - Trinity Broadcasting Network
TNIN - The New Inspirational Network
ME/U - Mind Extension Network
The International Channel
BRAVO Network
The Travel Channel
Family Network
Keystone Inspirational Network
<PAGE>
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
Casper, Wyoming
ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT
THIS AGREEMENT is made this 1st day of August 1999 by Shekinah Network
(hereinafter referred to as "Lessor") having its principal place of business at
14875 Powerline Road, Atascadero, CA 93422 and World Wide Wireless
Communications, Inc. (hereinafter referred to as "Lessee") having its principal
place of business at One Post Street, Suite 2600 San Francisco, CA 94104.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users; and
WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-798
(the "License") for the Channel group C1-4 (the "ITFS Channels") in Casper,
Wyoming ("The Market"); and
WHEREAS, Lessee is in the business of providing voice, video, data and
other services via microwave transmission in the Market Area and desires to
lease the excess ITFS capacity of the ITFS channels; and
WHEREAS, Lessor has determined that there will be excess airtime
capacity available on the ITFS Channels and desires to lease this excess airtime
capacity to Lessee.
NOW, THEREFORE, in consideration of the mutual promises, undertakings,
covenants and conditions set forth herein, the Lessor and Lessee do hereby agree
and warrant as follows:
5. TERM OF AGREEMENT
A. Initial Term. This Agreement shall be effective upon the date of its
execution and shall extend for an initial term of five (5) years (the
"Initial Term").
B. Renewal Term Provided that the License is renewed by the FCC, Lessee
shall have the right to extend this Agreement on its then existing
terms and conditions for one (1) additional five (5) year term (the
"Renewal Term"). The Renewal Term shall automatically go into effect
upon the conclusion of the Initial Term unless Lessee notifies Lessor
at least one hundred eighty days (180) before the end of the Initial
Term that Lessee does not wish to extend this Agreement.
C. New Lease Agreement/Right of first Refusal.
(1) Providing that Lessor's FCC license remains in good standing
and/or Lessor seeks to renew such license, Lessee and Lessor shall
negotiate in good faith for a new excess capacity airtime lease
agreement (hereinafter referred to as "New Lease Agreement") no later
than one hundred eighty days (180) prior to the end of the latter of
(i) Initial Term or (ii) the Renewal Term if the Agreement is extended
for the Renewal Term.
<PAGE>
(4) If Lessor elects to not reasonably pursue a New Lease Agreement
with Lessee, then Lessor shall so notify Lessee in writing of such
intent no later than one hundred eighty (180) days prior to the end of
the Renewal Term.
(3) If Lessor and Lessee do not enter into a New Lease Agreement,
Lessor grants Lessee a right of first refusal on any competing
proposals for lease agreements or transfers or assignments of any part
of the ITFS Channels received by Lessor during the twelve (12) months
following the expiration of the latter of (i) the Initial Term or (ii)
the Renewal Term, if the Agreement is extended for the Renewal Term.
If any acceptable offer to lease or acquire the ITFS Channels is made
to Lessor, Lessor shall give written notice to Lessee describing the
person to whom the proposed lease or transfer is to be made, the fees,
charges, rental or other consideration to be received fro the lease or
transfer, the terms thereof and generally the relevant other terms and
conditions of the lease or transfer. Lessee shall have a period of
thirty (30) days after its receipt of such notice from Lessor in which
to elect, by giving written notice to Lessor, to lease or, if
eligible, obtain any or all of the ITFS Channels for the same fees,
charges, rental or other consideration for which Lessor proposed to
lease or transfer to the third person.
(i) The fees, charges, rental or consideration shall be paid by such
third person or Lessee in cash.
(vi) If Lessor does not believe Lessee's stated offer is in an amount
fairly equivalent to the fair value of the consideration payable by
the third person and so notifies Lessee in writing within seven (7)
days after Lessor's receipt of Lessee's notice of election to so lease
or purchase, Lessee may within five (5) days after its receipt of such
notice from Lessor elect to refer such question for determination by
an impartial arbitrator and the right of first refusal of Lessee shall
then be held open until (5) days after Lessee is notified of such
determination. Such arbitrator shall be chosen either by agreement of
Lessee and Lessor at the time such question arises, or, at the option
of either party, by referring the question to the American Arbitration
Association with instructions that the American Arbitration
Association select a single arbitrator under a request from the
parties for expedited and accelerated determination. The determination
of the arbitrator chosen under either option contained in this
subparagraph shall be final and binding upon Lessee and Lessor. The
parties shall share equally in the costs and fees of the arbitration
(vii) In the event Lessee shall elect to exercise its right of first
refusal, the lease agreement or other transfer or assignment shall be
consummated within thirty (30) days of the latest of: (1) the day on
which Lessor received notice of Lessee's election to exercise the
right of first refusal; (2) the day upon which any question required
to be determined by the arbitrator hereunder has been determined; or
(3) the date of any FCC approval in the case of assignment or
transfer; or at such other time as may be mutually agreed. The right
of first refusal is terminated either by the lease or other transfer
to Lessee as provided herein or by notice to Lessee of the Lessor's
proposal to lease or otherwise transfer the ITFS Channels or any part
to a third person and Lessee's unwillingness or failure to meet and
accept such a bona fide offer pursuant to the times and procedures as
set forth above; provided that such proposed lease or transfer is
consummated at the same fees, charges, rental or other consideration
and upon the same terms as to which such right of first refusal
applied, within thirty (30) days after Lessee's right of first refusal
had expired or had been specifically waived by written notice given to
Lessor by Lessee, or within thirty (30) days following FCC approval in
the case of assignment or transfer.
C) Operation During End of Term. If Lessor and Lessee do not enter into
New Lease Agreement before the end of the Initial Term, Lessee shall
cease leasing the ITFS Channels on the last day of the Initial Term.
<PAGE>
D) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this
Agreement shall not give rise to any rights or remedies beyond the
expiration of any FCC license necessary for the continued operation of
the ITFS Channels. Provided, however, that while this Agreement is in
effect, Lessor shall obtain and maintain in force all licenses,
permits and authorizations required or desired in connection with the
use of the ITFS Channels. Lessor shall take all necessary steps to
renew the licenses for the ITFS Channels and shall not commit any act
or engage in any activity which could reasonably be expected to cause
the FCC to impair, restrict, revoke, cancel, suspend or refuse to
renew the ITFS licenses. Lessor shall take all reasonable steps to
comply with the Communications Act of 1934, as amended and the rules
and regulations of the FCC, and shall file all reports, schedules
and/or forms required by the FCC to be filed by Lessor. All expenses,
including attorneys fees and filing fees, incurred in preparing and
filing such reports, schedules and/or forms required by the FCC shall
be paid by the Lessee.
6. ALLOCATION OF AIRTIME.
A. Excess Capacity Airtime. To the extent allowed by the FCC rules and
regulations and any amendments thereof, Lessor agrees to lease to
Lessee the exclusive use of all excess capacity not utilized by Lessor
("Excess Capacity Airtime").
B. Lessor's Primary Airtime. During analog transmission over the ITFS
Channels, Lessor reserves for its exclusive use a minimum of twenty
(20) hours of airtime per-channel per-week to be used for its ITFS
scheduled programs. During digital transmission ovr the ITFS Channels,
Lessor shall have the exclusive use of 12.5% of the total capacity
available on the Lessor's ITFS Channels. This airtime shall be know as
"Lessor's Primary Airtime".
C. Schedule of Airtime. The schedule which depicts the agreement of the
parties as to use of Lessor's Channels shall be attached hereto and
made a part hereof as Exhibit A which is subject to change upon
agreement by both parties.
D. Lessee's use of its Excess Capacity Airtime. Lessee shall have the
right to utilize its Excess Capacity Airtime for any purpose allowed
or authorized by the FCC including but not limited to voice, video and
data transmission.
E. Alternate Use and Vertical Blanking Intervals. Lessor shall have the
right to use the second audio carrier ("SAP") and vertical blanking
intervals. ("VBI") on which Lessor's ITFS programming is being
transmitted. Lessee shall at all times have the right to use the VBI
and SAP not utilized by Lessor and 100% of the response frequencies
associated with the ITFS Channels. Lessor shall be responsible for any
equipment needed to utilize the VBI and/or SAP and such equipment
shall be compatible with Lessee's system.
F. Lessor's Use of ITFS Channels. Lessor agrees that its program services
and airtime use will not harm or interfere with Lessee's current or
future signal paths utilized within Lessee's System for program
encryption, pilot carrier signaling and other technical needs utilized
for the operation of and such services provided by Lessee's System.
Nor will Lessor, by its own action, or through a third party, utilize
any part of its licensed frequency spectrum to create or operate a
service that is in competition with current, planned or future
services provided by
<PAGE>
Lessee's System. Lessor agrees to use its Primary Airtime in
accordance with the FCC's rules and regulations. Lessor shall not take
or fail to take any action which may have a material adverse effect on
Lessee's right to utilize its Excess Capacity Airtime.
G. Expanded System Capacity. Lessee shall have the right at anytime to
require Lessor to file with the FCC any necessary application to
expand the channel capacity to Lessor's station to enable it to carry
more than one video signal per channel or digital data services;
provided however, before Lessee can exercise this right, it must
demonstrate to the Lessor's reasonable satisfaction that such
modification will not materially degrade the performance of the
station nor impair signal quality at the registered ITFS receive
sites. Once such modification has been constructed, the modified
facilities shall automatically be considered a part of this agreement
and subject to all terms and conditions hereof. It is understood that
Lessee shall have the full-time use of the Expanded Channels to the
extend permitted by FCC rules.
3. TRANSMISSION SITE AND FACILITIES.
E. Primary Transmission Site. Lessor's ITFS Channels are located at Key
West, FL, Lessee agrees to provide Lessor space at the Primary
Transmission site for Lessor's audio and video transmission equipment
which shall not exceed on rack. Such space shall be leased to Lessor
pursuant to Exhibit D hereto. This site shall hereinafter be described
as the "Primary Transmission Site". At Lessee's sole expense, Lessee
shall contract for a lease of space at the Transmission Site upon such
terms as the parties agree. The Transmission Site shall comply with
the standards, specifications and regulations of the FCC rules and
orders pertaining to Lessor's ITFS license.
F. Relocation of Transmission Site.
(i) Lessor acknowledges that the location of the
Primary Transmission Site for ITFS Channels is critical to the
Lessee's business and agrees that it will not relocate the
transmission facilities for ITFS Channels from the Primary
Transmission Site without Lessee's prior written consent.
(ii) Lessor further acknowledges that possibility
that, as a result of currently unforeseen events, the Primary
Transmission Site may not be the optimum site for the location
of the ITFS Channels or Lessee's business throughout the term
of this Lease Agreement. Lessor therefore agrees that if at
any time or from time to time Lessee requests in writing that
the transmission facilities for the ITFS Channels be
relocated, Lessor shall file with the FCC and any other
regulatory body having jurisdicition over the ITFS Channels
all applications, amendments, and requests for modification
that may be necessary to obtain any necessary consents to
permit such relocation to such location within or adjacent to
the Market as may be requested by Lessee; provided, however,
that Lessor shall not be obligated to submit or procecute any
application, amendment, or request for modification that
Lessor reasonably determines, upon advice of counsel contained
in a written opinion, would be in violation of the terms of
the License, any statute, rule, or regulations regarding the
operation of the ITFS Channels or the submission of materials
to the FCC, or any of its obligations as an ITFS licensee; and
provided, further, that any such relocation will not result in
loss of service to Lessor's registered receive sites served by
the transmission facilities in the event that the
authorization is obtained to relocate the ITFS Channels to the
location requested by Lessee, Lessor shall relocate such
channels to such new location as soon as reasonably
<PAGE>
possible after authorization is obtained. Lessee shall bear
reasonable costs associated with such relocation, including
engineering and construction, and all reasonable costs
associated with obtaining FCC or any other regulatory approval
therefore.
(iii) Lessor agrees to file modification applications
requested by Lessee. Such modifications may include but shall
not be limited to the following: power increase or decrease,
polarization, transmit antenna patterns, digital, two-way
(return path) use of the ITFS Channels, boosters, beam benders
or repeaters, cells, sectorization, channel swaps, channel
loading, channel shifting and application within five (5)
business days or receipt of the modification application from
Lessee or during any FCC designated filing window. Lessee will
use reasonable efforts to provide Lessor with the engineering
for the modification thirty (30) days prior to the request for
filing. If Lessor believes that such modification will have an
adverse effect on Lessor's ability to provide its services to
its receive sites, Lessor agrees to file the modification
application as presented by Lessee and within the time limit
requested by Lessee; however, Lessee agrees not to implement
construction and Lessor agrees not to withdraw the application
until the parties have adequately addressed and resolved the
potential material adverse effect or the matter has been
submitted to arbitration pursuant to Section 16 and a final
decision has been rendered by arbitrator. Although Lessee
intends to file such modification applications, it may elect
not to construct the Channels in that manner and may desire to
utilize the Channels as currently licensed. A copy of the
modification application, bearing the FCC's date stamp, shall
be mailed to Lessee by Lessor, within fourteen (14) days of
the filing of the modification application. Lessee shall be
solely responsible for all engineering and legal costs
associated with the preparation, review and filing of the
modification application. In the event that any license
modification requested by Lessee requires receive site
upgrades in order for Lessor's receive sites to continue to
receive Lessor's services, then Lessee agrees to pay for all
costs to complete such upgrade prior to implementing the
license modification.
C. System Construction. Lessee shall within a reasonable
period of time, but not later than six (6) months after the
FCC grant of digital authority for the ITFS Channels, purchase
equipment such as the antenna, waveguide or transmitters
specified on the authorization for the ITFS Channels. At
Lessee's expense, Lessee shall purchase and install such
transmitters, transmission line, modulators, antennas and
other equipment as required to operate the ITFS Channels in
accordance with the provision of such authorization. Any
equipment so used in such construction shall be leased to
lessor pursuant to Paragraph 5 hereof. Such equipment is
hereinafter referred to as the "Leased Equipment". Lessee
shall retain title to the Leased Equipment except as noted by
Paragraph 15 herein.
D. Maintenance of Transmission Equipment. At Lessee's expense
and subject to Lessor's right to supervise the maintenance of
this equipment, Lessee shall maintain and operate the Leased
Equipment during the terms of this Agreement for a nominal
fee. Lessee shall also pay all taxes and other charges
assessed against the Leased Equipment.
E. Transmission of Programming. At no cost or expense to
Lessor, Lessee shall provide the necessary labor and equipment
capabilities to transmit on the ITFS Channels programming
required to be carried pursuant to this Agreement such as
Lessor's ITFS programming and TBN. Lessee shall also comply
with Lessor's instructions regarding the transmission of such
programming such as the dates and times to transmit
programming.
F. Interference. Lessee shall operate the Leased Equipment so
that such operation does not create or increase interference
with electronic transmission of any other FCC
<PAGE>
licensees entitles to protection under FCC rules and
regulations. If Lessee's entitled to protection under FCC
rules and regulations. If Lessee's operation of the Lease
Equipment does so create or increase interference, Lessee
shall pay all of the reasonable engineering and legal fees
necessary to resolve the interference problem so created.
G. Alterations and Attachments. Lessee, at its own expense,
may make alterations of or attachments to the ITFS equipment
or the common equipment as defined in Exhibit C (including the
installation of encoding and/or addressing equipment) as may
be reasonably required from time to time by the nature of its
business; provided however, that such alterations or
attachments do not interfere with Lessor's signal or ongoing
operations or violate any FCC rules or regulations; and
provided further that FCC authorization, if required, is
obtained in advance of any such alteration or attachment at
the sole cost of Lessee. to the extent any FCC authorization
pertaining to the ITFS equipment is required, Lessor agrees to
use its best efforts to obtain such authorization.
H. Licensee Control and Liability. Nothing herein shall
derogate from such licensee control of operations of the ITFS
Channels that Lessor, as an FCC licensee, shall be required to
maintain and Lessee acknowledges the reservation by Lessor of
such control. Lessor shall at all times retain ultimate and
exclusive responsibility for the operation and control of the
ITFS Channels including policy decisions.
4. LESSOR'S RECEIVE SITES.
Attached hereto as Exhibit B is list of the registered receive sites
designated by Lessor to receive its ITFS programming and to be installed at the
expense of Lessee. Those receive sites so listed shall be installed with a
Standard Installation. If as the result of any relocation of the Primary
Transmit Site, the equipment at Lessor's existing registered receive sites must
be reoriented, Lessee shall pay the cost of same. As used herein for the
purposes of this Agreement, the phrase "Standard Installation" shall mean an
installation consisting of the placement of the ITFS/MMDS receiving antenna at
an elevation (not to exceed thirty [30] feet above the base mounting location)
which could normally receive the line-of-sight transmission from the
Transmission Site; the coupling thereto of a block-down converter; and a
sufficient amount of transmission line (coaxial cable) to connect the received
ITFS programming to the input of (i) one classroom designated by Lessor to
receive the ITFS programming or (ii) the receive site internal/external
distribution system. Also, if as the result of any relocation of the Transmit
Site, the equipment at Lessor's existing receive sites must be reoriented,
Lessee shall pay the cost of same. Lessee also agrees that for digital
transmission of the ITFS Channels Lessee will purchase and install at Lessee's
expense, one single-point modem to receive its ITFS programming.
5. LEASE OF EQUIPMENT.
A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall
lease from Lessee the Leased Equipment during the terms of this Agreement. A
list of this equipment is attached hereto as Exhibit C and incorporated by
reference herein. Lessor shall have no responsibility for the loss of or damage
to the Leased Equipment during the terms of this Agreement and Lessee shall bear
all such responsibility.
6. FEES.
A) Lessor's Service Fee. In consideration of the lease of the Leased
Equipment, and for its share of the projected costs to maintain the Transmission
Site and the Lease Equipment, Lessor shall pay Lessee an annual fee provided for
in Exhibit D.
B) Subscriber Royalty Fees or Percentage. Beginning on the Execution
Date of this Agreement and continuing thereafter during the Initial Term of this
Agreement, Lessee shall pay to
<PAGE>
Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum,
whichever is greater as set out in Exhibit D which is attached herewith and
incorporated by reference herein. If the Execution Date shall be a date other
than the first day of a calendar month, then the Subscriber Royalty Fee for the
partial month shall be paid on a proportionate basis. A late fee of 10% (ten
percent) will be assessed to past due accounts, and a finance charge of one and
one-half percent (1.5%) per month will be assessed in addition to the late fee
until paid.
C) Notice of Construction and Required Certificate. Within thirty (30)
days of completion of construction at the Transmission Site, Lessee shall notify
Lessor of such completion of construction in writing. Within thirty (30) days of
the end of each month in which Excess Capacity Airtime is leased hereunder,
Lessee shall provide Lessor with a certificate, certified as accurate and
correct by an authorized agent of Lessee, showing the number of subscribers
served during such month.
D) Right to Audit. Lessee shall for a period of three (3) years after
their creation, keep, maintain and preserve complete and accurate records and
accounts, including all invoices, correspondence, ledgers, financial and other
records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's
charges hereunder; and such records and corporate accounts shall be available
for inspection and audit at Lessee's corporate offices or at Lessee's offices in
the Market, as designated by Lessee, at any time or times during the term of
this Agreement or within ninety (90) days thereafter, during reasonable business
hours, by Lessor or its nominee. In the event that there is discovered an
underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above,
Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of
each such underpayment. All information obtained by Lessor during any audit
herein shall be maintained by Lessor in strict confidence.
7. PROGRAMMING.
A) Control Over Programming.
(i) Program Content. Lessee intends that only programming of a sort
which would not serve to place Lessor's reputation in the community in jeopardy
will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize
disputes, recognizing the difficulties inherent in specifying exact standards
herein, it is agreed that Lessee shall have the right to market the programming
provided by the networks and services listed on Exhibit E. If, however, the
programming content of any networks and services listed on Exhibit E materially
changes, Lessor shall have the right, upon ninety (90) days notice, to deny
Lessee the right to continue transmitting such programming if Lessor would have
the right to deny Lessee the right to transmit such programming under the
provisions of this paragraph in the first instance. If Lessee proposes to
transmit the programming of any new programming service, the Lessee shall notify
Lessor in writing specifying in detail the nature of the new programming service
and Lessor shall have the right, upon written served upon Lessee within thirty
(30) days after Lessor's receipt of any such notice from Lessee, to deny to
Lessee the right to transmit such service if such programming is obscene and/or
contradicting local, state and/or federal laws or otherwise violates any
federal, state or local laws or regulations. If no such denial notice is
received by Lessee within such thirty (30) days, lessee shall be authorized to
transmit all such services for which no denial notice is received. There shall
be no reduction in fees required under this Agreement for any such programming
not permitted to be transmitted.
B) Availability of Programming. It is understood by Lessee and Lessor
that there is expected to be no direct out-of-pocket annual costs for the
acquisition of the qualified ITFS educational programming for Lessor's use
during Lessor's Primary Airtime on the ITFS channels, based on current plans. In
the event that this ITFS educational programming either; (1) ceases to be
available, or, (2) becomes available only at a fee, then Lessor may incur direct
out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees
to provide its best efforts to assist Lessor in the acquisition of alternative
programming, if necessary. Additionally, Lessee agrees to make payment to Lessor
for the actual, direct programming costs incurred. If any; If Lessor, after
expending its best efforts, is unable to
<PAGE>
obtain suitable ITFS programming for a cost equal to the amount to be paid by
Lessee, Lessor and Lessee shall use their best efforts to reach agreement on
modifications to this Agreement to avoid any un-reimbursed ITFS programming
costs to Lessor. If no such agreement can be reached, Lessor may terminate this
agreement. In the case of such termination, Lessor shall use its best efforts
(with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior
approval) to transfer the license for the ITFS Channels to another qualified
educational entity, subject to FCC approval, with the intent of assigning this
Agreement from Lessor to the new educational entity.
C) Integration of Lessor's Programming. Lessee agrees to integrate
Lessor's programming into the overall communications service offered to
subscribers, without cost to Lessor. This integration shall include, but not be
limited to, listing Lessor's material in any program guides produced by Lessee
for subscribers.
D) Carriage of TBN. In the event that Lessor's ITFS Channels are used
for analog video transmission and TBN is not transmitted on a local VHF or UHF
station, with a market coverage equivalent to both area and signal quality of
our ITFS channels, and Lessee does not have local off-air insertion as part of
its standard installation, then, if so designated by Lessor, Lessee agrees to
transmit on one of the ITFS Channels the programming of Trinity Broadcasting
Network ("TBN") during those time periods such channel is not used for Lessor's
ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a
fee for carriage of TBN. In the event that Lessee is permitted to program the
hours previously occupied by TBN, then Lessee shall increase, in proportion to
the increase in Excess Capacity Airtime, the amount of minimum fees and
subscriber royalty fees payable under the provision 6 (B) of this agreement
during the remainder of the term(s) of the agreement. For purposes of
calculating any such proportionate increase, the parties acknowledge and agree
that the minimum fee and subscriber royalty fee agreed to herein are based on
Lessee's equivalent use of three full-time ITFS channels.
E) Station Identification. During Lessee's use of Lessor's excess
channel capacity, Lessee shall transmit Lessor's call sign for each respective
station as required by the FCC.
8. PROCECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES.
A) Best Efforts to Secure Approval of this Agreement. The parties
recognize that certain approvals will be required from the FCC in order to
effectuate this Agreement. Both parties shall use their best efforts to prepare,
file and prosecute before the FCC all petitions, waivers, applications and other
documents necessary to secure any FCC approval required to effectuate this
Agreement. Lessee shall assist in the preparation and prosecution of such
applications and as provided for herein, shall pay all filing fees, attorneys'
fees, engineering fees, and all other expenses in connection therewith. Lessor
also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDs and
MMDS operators to co-locate at the Transmission Site. Notwithstanding anything
in this Agreement to the contrary, it is understood that no filing shall be made
with the FCC with respect to this Agreement unless both parties have reviewed
such filing and consented in writing to its submission, such consent not be
unreasonably withheld.
B) Further Efforts. Throughout the Initial Term of this Agreement,
Lessor shall use its best efforts to obtain and maintain in force all licenses,
permits and authorizations required for Lessee and Lessor to use the ITFS
Channels as contemplated by this Agreement. Lessee shall be responsible for all
cash expenses incurred to obtain and maintain in force such licenses, permits
and authorizations. When mutually agreed by the parties and at Lessee's sole
expense, Lessor shall apply for, and use its best efforts to obtain those
reasonable license modifications which would assist Lessee in its business.
Lessor also shall consider filing, at Lessee's sole expense, such reasonable
protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or
OFS applications or amendments as may be requested by Lessee in the mutual best
interests of the parties and the public. Lessor and Lessee shall promptly notify
each other of any event of which it has knowledge that may affect any of the
licenses, permits or authorization affecting the ITFS Channels.
<PAGE>
C) Attorneys' Fees. With respect to any legal work conducted pursuant
to Paragraph 8(A) and (B) above, Lessee shall be responsible for all attorneys'
fees in connection therewith and shall make payments directly to the attorney.
However, any attorney fees paid by Lessee shall be approved in advance by
Lessee.
9. REPRESENTATIONS AND WARRANTIES.
A) Representations and Warranties of Lessor. Lessor represents and
warrants to Lesse as follows:
(i) Organization. Lessor is a non-profit organization duly organized
and existing in good standing under the laws of the State of California, and it
has full power and authority to carry out all of the transactions contemplated
by this Agreement and all other agreement, certificates or instruments executed
and delivered in connection herewith.
(ii) No Violation. Neither the execution nor delivery of this agreement
or any other agreements, certificates or instruments executed and delivered
herewith, nor the performance of the transactions contemplated hereby constitute
or will constitute a violation of , be in conflict with, or a default under any
term or provision of the governing instruments or Lessor or any agreement or
commitment to which Lessor is bound, or any judgment, decree, order, regulation
or rule of any court or governmental authority, or consent of any federal, state
or local authority is required in connection with the execution and delivery of
this Agreement or any other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transaction contemplated
hereby.
B) Representations and Warranties of Lessee. Lessee represents and
warrants to Lessor as follows:
(ii) Organization. Lessee is duly organized, validly existing and in
good standing under the laws of the State of its incorporation and it has full
power and authority to own property and carry all of the transactions
contemplated by this Agreement, and all other agreements, certificates or
instruments executed and delivered by Lessee in connection herewith.
(ii) Corporation Action; Valid and Binding Agreements. Lessee has taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and all other agreements, certificates or instruments executed and
delivered in connection herewith. Upon execution and delivery, this Agreement
and all other agreements, certificates or instruments executed and delivered by
Lessee in connection herewith will constitute valid and binding agreements of
Lessee enforceable in accordance with their respective terms.
(iii) Litigation and Investigations. There is no action, suit,
proceeding or investigation pending or, to the best of Lessee's knowledge,
threatened against Lessee, its principals or related entities before any court,
administrative agency or other governmental body, and Lessee does not know nor
is aware of any reason for commencement of any such action, proceeding or
investigation.
(iv) Misrepresentation of Material Fact. To the best of Lessee's
knowledge, information and believe, no document or contract that was shown to
Lessor and which in any way affects any of the properties, assets or proposed
transactions of Lessee as such relates to this Agreement, no certificate or
statement furnished by or on behalf of Lessee in connection with this Agreement,
nor this Agreement itself contains any untrue statement of material fact or
omits to state a material fact which would make the statements contained herein
misleading.
<PAGE>
C) Survival or Representations and Warranties. The representations and
warranties contained in this Agreement shall be deemed to be continuing during
the Initial terms of this Agreement, and each Party shall have the duty promptly
to notify the notify the other of any event or circumstance which might
reasonably be deemed to constitute a breach of or lead to a breach of its
warranties or representations hereunder. The waiver by either Party of any
breach of any presentation or warranty under this Agreement shall not constitute
a waiver of any other representation or warranty or of any failure in the future
by the other Party to fulfill such representation or warranty.
10. TERMINATION.
A) Termination of FCC Authorization. Without further liability to
either Lessor or Lessee, this Agreement shall terminate in the event that for
any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii)
the FCC shall terminate or diminish Lessor's authority to lease the ITFS
Channels in accordance with the terms of this Agreement.
B) Termination by Reason of Default or Nonperformance. At the option of
the non-defaulting party, this Agreement may be terminated upon the material
breach or default by the defaulting party of its duties and obligations
hereunder is such breach or default is not cured by such defaulting party and is
breach or default shall continue for a period of thirty (30) consecutive days
after such defaulting party's receipt of notice thereof from the non-defaulting
party. It is understood and agreed that any failure on the part of Lessee to
make any payment required under Paragraph 6 hereof shall be a material breach of
default of its duties and obligations hereunder. It is also understood and
agreed that any consequences resulting from the loss of local participating
receive sites shall not be considered a material breach or default by Lessor of
its duties and obligations hereunder.
C) Remedies to Continue. In the event of termination of this Agreement
pursuant to Paragraph 10(B), such termination shall not affect or diminish the
rights or claims or remedies available in equity or at law to the non-defaulting
party arising by reason of a breach or default of this Agreement. However, no
liability shall arise on the part of Lessor or Lessee upon termination of this
Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license
occurs as a result of the default of either party.
11. TRANSFER OF RIGHTS AND OBLIGATIONS.
Lessee shall have the right to assign its rights under this lease as
collateral for any financing arrangements it makes. Lessee shall also have the
right to pledge the Leased Equipment as collateral security for any loans it
makes; provided, however, that any pledge of the Leased Equipment shall be made
subject to the provisions of this lease. Lessee shall further have the right to
subcontract any portion of its obligations under this Agreement to any
partnership, joint venture, corporation or entity which Lessee may choose,
provided that Lessee gives Lessor notice of any proposed subcontracting and,
provided further, that no such subcontracting shall release Lessee from
fulfilling all of its obligations under this Agreement. Lessee shall have the
right to assign or transfer its rights, benefits, duties and obligations under
this Agreement to a commonly-owned company without the prior consent of Lessor.
Apart from the foregoing, neither party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably witheld.
12. INDEMNIFICATION.
A) By Lessor. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, arising directly or indirectly out of (i) the
willful misconduct of Lessor, its agents or employees, in
<PAGE>
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessor during any of Lessor's Airtime.
B) By Lessee. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, which arise directly or indirectly out of (i) the
negligence or willful misconduct of Lessee, its agents or employees, in
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessee or any of its authorized agents or subcontractors with the
public, third parties and subscribers to the Lessee's programming service; or
(iv) any maintenance, installation or other work performed by Lessee or any
authorized agent or subcontractor under this Agreement.
C) Notice of Claim; Defense of Claim. Each party shall notify the other
of any such claim promptly upon receipt of same. Either party (hereinafter
referred to as appropriate the "Indemnitor" or Indemnitee") shall have the
option to defend, at its own expense, any claims arising under this Paragraph.
In Indemnitor assumes the defense of any such claim, Indemnitee shall delegate
complete and sole authority to the Indemnitor to defend or settle same and
Indemnitee shall cooperate with Indemnitor in the defense thereof.
13) INSURANCE.
A) Policies Required. At its expense, Lessee shall secure and maintain
with financially reputable insurers, one or more policies of insurance insuring
the Leased Equipment and Lessee's utilization of the ITFS Channels against
casualty and other losses of the kinds customarily insured against by firms of
established reputations engaged in the same or similar line of business, or such
types and in such amounts as are customarily carried under similar circumstances
by such firms, including, without limitation: (i) "All Risk" property insurance
covering the ITFS Equipment and the common Equipment to the extent of one
hundred percent (100%) of its full replacement value without deduction for
depreciation: (ii) comprehensive general public liability insurance covering
liability resulting from lessee's operation of the ITFS equipment on an
occurrence basis having minimum limits of liability in an amount of not less
than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or
death to any person or persons in any one occurrence, and not less than Two
Million Dollars ($2,000,000.00) in the aggregate for all such losses during each
policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with
respect to damage to property; (ii) all workers compensation, automobile
liability and similar insurance required by law.
B) Insurance Policy Forms. All policies of insurance required by this
Paragraph shall, whre appropriate, designate Lessor as either the insured party
or as a named additionally insured party, shall be written as primary policies,
not contributory with and not in excess of any coverage which Lessor shall
carry, and shall contain a provision that the issuer shall give to Lessor thirty
(30) days prior written notice of any cancellation or lapse of such insurance or
of any change in the coverage thereof.
C) Proof of Insurance. Executed copies of the policies of insurance
required under this section or certificates thereof shall be delivered to Lessor
not later than ten (10) after execution of this agreement. Lessee shall furnish
Lessor evidence of renewal of each such policy not later than thirty (30) days
prior to the expiration of the term thereof.
40. RELATIONSHIP OF PARTIES.
By the provisions of this Agreement, Lessor and Lessee intend to enter
an airtime lease relationship and not a joint venture. They will carry out this
Agreement to preserve that intent. Neither party shall represent itself as the
<PAGE>
other party, nor as having any relationship with one another, except as Lessor
and Lessee under the terms of this Agreement.
41. EQUIPMENT PURCHASE.
E) Lessor's Option to Purchase. In the event that this Agreement is
terminated, Lessor shall have the option to purchase the Leased Equipment used
exclusively for Lessor's ITFS license. Any equipment which is used in a shared
fashion (such as transmit antenna, decoders and combiners) in providing signals
other than Lessor's signals are excluded from this option to purchase. The
intent of the purchase option provided for in Paragraphs 16(A) is to provide
Lessor with the capability to continue to perform on Lessor's ITFS license. The
purchase price shall be the market value of such equipment noted above as
determined by mutual agreement or by averaging the values obtained from two (2)
appraisals, with one appraiser each chosen by Lessor and Lessee.
F) Lessee's Option to Purchase. If during the terms of this Agreement
the FCC modifies its rules so as to enable Lessee to be licensed to operate the
ITFS frequencies, Lessee shall have a right of first refusal to acquire such
licenses subject to the same terms and conditions as the right provided for in
Paragraph 1(B).
42. NON-DISCLOSURE
Lessor acknowledges that there may be made available to it pursuant to
this Agreement proprietary information of Lessee relating to the encoding and/or
decoding system associated with the ITFS channel equipment and its patented
processes including, but not limited to, improvements, innovations, adaptation,
inventions, results of experimentation, processes and methods, whether or not
deemed patentable, and certain business and marketing techniques (all herein
referred to as "Confidential Information"). Lessor acknowledges that this
Confidential Information has been developed by Lessee at considerable effort and
expense and represents special, unique and valuable proprietary assets of
Lessee, the value of which may be destroyed by unauthorized dissemination.
Accordingly, Lessor covenants and agrees that, except as may be required for the
performance of this Agreement or by law or court order, neither it nor any of
its agents or affiliates shall disclose such Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, such
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof.
43. NON-COMPETITION
During the term of this Agreement, Lessor agrees not to transmit
programming or to lease or sublease any channel capacity on its ITFS Facilities
for the transmission of programming that is competitive with the programming
transmitted by Lessee.
44. FORCE MAJEURE
If by reason of Force Majeure either party is unable in whole or in
part to perform its obligations hereunder, the party shall not be deemed in
violation of default during the period of such inability. As used herein, the
phrase "Force Majeure", shall mean the following: act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivisions, thereof which are not the result of a
breach of this Agreement, orders of any military authority insurrections, riots,
epidemics, fires, civil disturbances, explosions, or any other cause or event
not reasonably within control of the adversely affected party.
45. CONDITION PRECEDENT
This Agreement is conditional on the issuance of a Final Order by the
FCC granting Lessor a construction permit for the ITFS Channels in the Market
from the Transmission Site. By "Final Order" the parties mean an action or order
of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled
or suspended and with respect to which no timely-filed request for
administrative or judicial review is pending and as to which the time for filing
any such request, or for the FCC to set aside the action on its own motion, has
expired.
<PAGE>
46. NOTICE
Any notice required to be given to Lessor under any provision of this
Agreement shall be delivered personally or by certified mail to Lessor at the
address first written above. Any notice required to be given to Lessee under any
provision of this Agreement shall be delivered personally or by certified mail
to Lessee at the address first written above.
47. SEVERABILITY
Should any court or agency determine that any provision of this
Agreement is invalid, the remainder of the Agreement shall remain in effect.
48. WAIVER
A waiver by either Lessor or Lessee of a breach of any provision of
this Agreement shall not be deemed to constitute a waiver of any preceding or
subsequent breach of the same provision or of any other provision.
49. PAYMENT OF EXPENSES AND SIGNING FEES
A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall
pay all costs and expenses incident to fulfilling or modifying this Agreement,
such as, attorneys' fees or, if necessary, any travel expenses approved in
advance by Lessee, FCC filing fees, and engineering costs.
50. VENUE AND GOVERNING LAW
Venue for any cause of action brought by or between Lessor and/or
Lessee relating to this Agreement shall be in California and all provisions of
this Agreement shall be construed under the laws of the State of California and
County of Lessor.
51. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument, and shall become effective when each of the parties hereto
shall have delivered to it this Agreement duly executed by each of the other
parties hereto.
52. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral or written provisions of any kind. The parties further
agree that this Agreement may only be modified by written Agreement signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this day of July 1st, 1999.
SHEKINAH NETWORK
By: ______________________________
Name: Charles J. McKee
Title: President
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Name: Douglas P. Haffer
Title: President
<PAGE>
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Phone/Fax: (805) 438-3341
Attn: Charles McKee, President
Gardner, Carton & Douglas
Attn: Laura Mow
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
World Wide Wireless Communications, Inc.
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 981- 7777
Fax: (415) 391-3199
<PAGE>
EXHIBIT A
Schedule of Airtime
<PAGE>
EXHIBIT B
Receive Sites
There shall be attached hereto and incorporated by reference a copy of
FCC Form 330 Section IV listing Lessor" receive sites.
<PAGE>
EXHIBIT C
Leased Equipment
Noted below is a list of equipment that Lessee is leasing to Lessor:
(5) Four (4) ITFS tansmitters and related hardware
(6) Lessor's ITFS receive site antennas and related hardware
*(3) Combining network, transmission line and antenna
*Common Equipment
<PAGE>
EXHIBIT D
Service and Royalty Fees
1. Lessor's Service Fee
Services Provided Annual Fee
----------------- ----------
(g) Lease of Leased Equipment [6(A)] $1.00
(h) Maintenance of Leased Equipment [3(D)] $1.00
(i) Lease of space at Primary Transmission Site [3A)] $1.00
2. Lessee's Subscriber Royalty Fee
Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's
Gross receipts or a monthly minimum payment of $500 per month whichever is
greater.
Payment shall be as follows: Commencing on the Execution (Effective) Date and as
defined in Paragraph 6)B, payments for each month shall be made by the twentieth
(20th) day of the following month.
<PAGE>
EXHIBIT E
Programming
In addition to digital data services, such as the Internet or Intranet, the
following is a list of video programming services Lessee may provide over
Lessee's System.
TLC - The Leaning Channel
TWC - The Weather Channel
Lifetime
ESPN - Sports
AMC - American Movie Classics
SCOLA
WHTN - World Harvest Television Network
ECO - Galavision
CNN - Cable News Network
CNN - Headline News
C-Span I
C-Span II
BET - Black Entertainment Network
CNBC - Consumer News & Business Channel
Nickelodeon
The Discovery Channel
A&E - Arts and Entertainment
The Family Channel
The Disney Channel
PBS - Public Broadcasting Service
TBN - Trinity Broadcasting Network
TNIN - The New Inspirational Network
ME/U - Mind Extension Network
The International Channel
BRAVO Network
The Travel Channel
Family Network
Keystone Inspirational Network
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
Grand Rapids, Michigan
ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT
THIS AGREEMENT is made this 1st day of August 1999 by Shekinah Network
(hereinafter referred to as "Lessor") having its principal place of business at
14875 Powerline Road, Atascadero, CA 93422 and World Wide Wireless
Communications, Inc. (hereinafter referred to as "Lessee") having its principal
place of business at One Post Street, Suite 2600 San Francisco, CA 94104.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users; and
WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-798
(the "License") for the Channel group C1-4 (the "ITFS Channels") in Grand
Rapids, Michigan ("The Market"); and
WHEREAS, Lessee is in the business of providing voice, video, data and
other services via microwave transmission in the Market Area and desires to
lease the excess ITFS capacity of the ITFS channels; and
WHEREAS, Lessor has determined that there will be excess airtime
capacity available on the ITFS Channels and desires to lease this excess airtime
capacity to Lessee.
NOW, THEREFORE, in consideration of the mutual promises, undertakings,
covenants and conditions set forth herein, the Lessor and Lessee do hereby agree
and warrant as follows:
7. TERM OF AGREEMENT
A. Initial Term. This Agreement shall be effective upon the date of its
execution and shall extend for an initial term of five (5) years (the
"Initial Term").
B. Renewal Term Provided that the License is renewed by the FCC, Lessee
shall have the right to extend this Agreement on its then existing
terms and conditions for one (1) additional five (5) year term (the
"Renewal Term"). The Renewal Term shall automatically go into effect
upon the conclusion of the Initial Term unless Lessee notifies Lessor
at least one hundred eighty days (180) before the end of the Initial
Term that Lessee does not wish to extend this Agreement.
C. New Lease Agreement/Right of first Refusal.
(1) Providing that Lessor's FCC license remains in good standing
and/or Lessor seeks to renew such license, Lessee and Lessor shall
negotiate in good faith for a new excess capacity airtime lease
agreement (hereinafter referred to as "New Lease Agreement") no later
than one hundred eighty days (180) prior to the end of the latter of
(i) Initial Term or (ii) the Renewal Term if the Agreement is extended
for the Renewal Term.
<PAGE>
(5) If Lessor elects to not reasonably pursue a New Lease Agreement
with Lessee, then Lessor shall so notify Lessee in writing of such
intent no later than one hundred eighty (180) days prior to the end of
the Renewal Term.
(3) If Lessor and Lessee do not enter into a New Lease Agreement,
Lessor grants Lessee a right of first refusal on any competing
proposals for lease agreements or transfers or assignments of any part
of the ITFS Channels received by Lessor during the twelve (12) months
following the expiration of the latter of (i) the Initial Term or (ii)
the Renewal Term, if the Agreement is extended for the Renewal Term.
If any acceptable offer to lease or acquire the ITFS Channels is made
to Lessor, Lessor shall give written notice to Lessee describing the
person to whom the proposed lease or transfer is to be made, the fees,
charges, rental or other consideration to be received fro the lease or
transfer, the terms thereof and generally the relevant other terms and
conditions of the lease or transfer. Lessee shall have a period of
thirty (30) days after its receipt of such notice from Lessor in which
to elect, by giving written notice to Lessor, to lease or, if
eligible, obtain any or all of the ITFS Channels for the same fees,
charges, rental or other consideration for which Lessor proposed to
lease or transfer to the third person.
(i) The fees, charges, rental or consideration shall be paid by such
third person or Lessee in cash.
(viii) If Lessor does not believe Lessee's stated offer is in an
amount fairly equivalent to the fair value of the consideration
payable by the third person and so notifies Lessee in writing within
seven (7) days after Lessor's receipt of Lessee's notice of election
to so lease or purchase, Lessee may within five (5) days after its
receipt of such notice from Lessor elect to refer such question for
determination by an impartial arbitrator and the right of first
refusal of Lessee shall then be held open until (5) days after Lessee
is notified of such determination. Such arbitrator shall be chosen
either by agreement of Lessee and Lessor at the time such question
arises, or, at the option of either party, by referring the question
to the American Arbitration Association with instructions that the
American Arbitration Association select a single arbitrator under a
request from the parties for expedited and accelerated determination.
The determination of the arbitrator chosen under either option
contained in this subparagraph shall be final and binding upon Lessee
and Lessor. The parties shall share equally in the costs and fees of
the arbitration
(ix) In the event Lessee shall elect to exercise its right of first
refusal, the lease agreement or other transfer or assignment shall be
consummated within thirty (30) days of the latest of: (1) the day on
which Lessor received notice of Lessee's election to exercise the
right of first refusal; (2) the day upon which any question required
to be determined by the arbitrator hereunder has been determined; or
(3) the date of any FCC approval in the case of assignment or
transfer; or at such other time as may be mutually agreed. The right
of first refusal is terminated either by the lease or other transfer
to Lessee as provided herein or by notice to Lessee of the Lessor's
proposal to lease or otherwise transfer the ITFS Channels or any part
to a third person and Lessee's unwillingness or failure to meet and
accept such a bona fide offer pursuant to the times and procedures as
set forth above; provided that such proposed lease or transfer is
consummated at the same fees, charges, rental or other consideration
and upon the same terms as to which such right of first refusal
applied, within thirty (30) days after Lessee's right of first refusal
had expired or had been specifically waived by written notice given to
Lessor by Lessee, or within thirty (30) days following FCC approval in
the case of assignment or transfer.
C) Operation During End of Term. If Lessor and Lessee do not enter into
New Lease Agreement before the end of the Initial Term, Lessee shall
cease leasing the ITFS Channels on the last day of the Initial Term.
<PAGE>
D) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this
Agreement shall not give rise to any rights or remedies beyond the
expiration of any FCC license necessary for the continued operation of
the ITFS Channels. Provided, however, that while this Agreement is in
effect, Lessor shall obtain and maintain in force all licenses,
permits and authorizations required or desired in connection with the
use of the ITFS Channels. Lessor shall take all necessary steps to
renew the licenses for the ITFS Channels and shall not commit any act
or engage in any activity which could reasonably be expected to cause
the FCC to impair, restrict, revoke, cancel, suspend or refuse to
renew the ITFS licenses. Lessor shall take all reasonable steps to
comply with the Communications Act of 1934, as amended and the rules
and regulations of the FCC, and shall file all reports, schedules
and/or forms required by the FCC to be filed by Lessor. All expenses,
including attorneys fees and filing fees, incurred in preparing and
filing such reports, schedules and/or forms required by the FCC shall
be paid by the Lessee.
8. ALLOCATION OF AIRTIME.
A. Excess Capacity Airtime. To the extent allowed by the FCC rules and
regulations and any amendments thereof, Lessor agrees to lease to
Lessee the exclusive use of all excess capacity not utilized by Lessor
("Excess Capacity Airtime").
B. Lessor's Primary Airtime. During analog transmission over the ITFS
Channels, Lessor reserves for its exclusive use a minimum of twenty
(20) hours of airtime per-channel per-week to be used for its ITFS
scheduled programs. During digital transmission ovr the ITFS Channels,
Lessor shall have the exclusive use of 12.5% of the total capacity
available on the Lessor's ITFS Channels. This airtime shall be know as
"Lessor's Primary Airtime".
C. Schedule of Airtime. The schedule which depicts the agreement of the
parties as to use of Lessor's Channels shall be attached hereto and
made a part hereof as Exhibit A which is subject to change upon
agreement by both parties.
D. Lessee's use of its Excess Capacity Airtime. Lessee shall have the
right to utilize its Excess Capacity Airtime for any purpose allowed
or authorized by the FCC including but not limited to voice, video and
data transmission.
E. Alternate Use and Vertical Blanking Intervals. Lessor shall have the
right to use the second audio carrier ("SAP") and vertical blanking
intervals. ("VBI") on which Lessor's ITFS programming is being
transmitted. Lessee shall at all times have the right to use the VBI
and SAP not utilized by Lessor and 100% of the response frequencies
associated with the ITFS Channels. Lessor shall be responsible for any
equipment needed to utilize the VBI and/or SAP and such equipment
shall be compatible with Lessee's system.
F. Lessor's Use of ITFS Channels. Lessor agrees that its program services
and airtime use will not harm or interfere with Lessee's current or
future signal paths utilized within Lessee's System for program
encryption, pilot carrier signaling and other technical needs utilized
for the operation of and such services provided by Lessee's System.
Nor will Lessor, by its own action, or through a third party, utilize
any part of its licensed frequency spectrum to create or operate a
service that is in competition with current, planned or future
services provided by
<PAGE>
Lessee's System. Lessor agrees to use its Primary Airtime in
accordance with the FCC's rules and regulations. Lessor shall not take
or fail to take any action which may have a material adverse effect on
Lessee's right to utilize its Excess Capacity Airtime.
G. Expanded System Capacity. Lessee shall have the right at anytime to
require Lessor to file with the FCC any necessary application to
expand the channel capacity to Lessor's station to enable it to carry
more than one video signal per channel or digital data services;
provided however, before Lessee can exercise this right, it must
demonstrate to the Lessor's reasonable satisfaction that such
modification will not materially degrade the performance of the
station nor impair signal quality at the registered ITFS receive
sites. Once such modification has been constructed, the modified
facilities shall automatically be considered a part of this agreement
and subject to all terms and conditions hereof. It is understood that
Lessee shall have the full-time use of the Expanded Channels to the
extend permitted by FCC rules.
3. TRANSMISSION SITE AND FACILITIES.
G. Primary Transmission Site. Lessor's ITFS Channels are located at Key
West, FL, Lessee agrees to provide Lessor space at the Primary
Transmission site for Lessor's audio and video transmission equipment
which shall not exceed on rack. Such space shall be leased to Lessor
pursuant to Exhibit D hereto. This site shall hereinafter be described
as the "Primary Transmission Site". At Lessee's sole expense, Lessee
shall contract for a lease of space at the Transmission Site upon such
terms as the parties agree. The Transmission Site shall comply with
the standards, specifications and regulations of the FCC rules and
orders pertaining to Lessor's ITFS license.
H. Relocation of Transmission Site.
(i) Lessor acknowledges that the location of the
Primary Transmission Site for ITFS Channels is critical to the
Lessee's business and agrees that it will not relocate the
transmission facilities for ITFS Channels from the Primary
Transmission Site without Lessee's prior written consent.
(ii) Lessor further acknowledges that possibility
that, as a result of currently unforeseen events, the Primary
Transmission Site may not be the optimum site for the location
of the ITFS Channels or Lessee's business throughout the term
of this Lease Agreement. Lessor therefore agrees that if at
any time or from time to time Lessee requests in writing that
the transmission facilities for the ITFS Channels be
relocated, Lessor shall file with the FCC and any other
regulatory body having jurisdicition over the ITFS Channels
all applications, amendments, and requests for modification
that may be necessary to obtain any necessary consents to
permit such relocation to such location within or adjacent to
the Market as may be requested by Lessee; provided, however,
that Lessor shall not be obligated to submit or procecute any
application, amendment, or request for modification that
Lessor reasonably determines, upon advice of counsel contained
in a written opinion, would be in violation of the terms of
the License, any statute, rule, or regulations regarding the
operation of the ITFS Channels or the submission of materials
to the FCC, or any of its obligations as an ITFS licensee; and
provided, further, that any such relocation will not result in
loss of service to Lessor's registered receive sites served by
the transmission facilities in the event that the
authorization is obtained to relocate the ITFS Channels to the
location requested by Lessee, Lessor shall relocate such
channels to such new location as soon as reasonably
<PAGE>
possible after authorization is obtained. Lessee shall bear
reasonable costs associated with such relocation, including
engineering and construction, and all reasonable costs
associated with obtaining FCC or any other regulatory approval
therefore.
(iii) Lessor agrees to file modification applications
requested by Lessee. Such modifications may include but shall
not be limited to the following: power increase or decrease,
polarization, transmit antenna patterns, digital, two-way
(return path) use of the ITFS Channels, boosters, beam benders
or repeaters, cells, sectorization, channel swaps, channel
loading, channel shifting and application within five (5)
business days or receipt of the modification application from
Lessee or during any FCC designated filing window. Lessee will
use reasonable efforts to provide Lessor with the engineering
for the modification thirty (30) days prior to the request for
filing. If Lessor believes that such modification will have an
adverse effect on Lessor's ability to provide its services to
its receive sites, Lessor agrees to file the modification
application as presented by Lessee and within the time limit
requested by Lessee; however, Lessee agrees not to implement
construction and Lessor agrees not to withdraw the application
until the parties have adequately addressed and resolved the
potential material adverse effect or the matter has been
submitted to arbitration pursuant to Section 16 and a final
decision has been rendered by arbitrator. Although Lessee
intends to file such modification applications, it may elect
not to construct the Channels in that manner and may desire to
utilize the Channels as currently licensed. A copy of the
modification application, bearing the FCC's date stamp, shall
be mailed to Lessee by Lessor, within fourteen (14) days of
the filing of the modification application. Lessee shall be
solely responsible for all engineering and legal costs
associated with the preparation, review and filing of the
modification application. In the event that any license
modification requested by Lessee requires receive site
upgrades in order for Lessor's receive sites to continue to
receive Lessor's services, then Lessee agrees to pay for all
costs to complete such upgrade prior to implementing the
license modification.
C. System Construction. Lessee shall within a reasonable
period of time, but not later than six (6) months after the
FCC grant of digital authority for the ITFS Channels, purchase
equipment such as the antenna, waveguide or transmitters
specified on the authorization for the ITFS Channels. At
Lessee's expense, Lessee shall purchase and install such
transmitters, transmission line, modulators, antennas and
other equipment as required to operate the ITFS Channels in
accordance with the provision of such authorization. Any
equipment so used in such construction shall be leased to
lessor pursuant to Paragraph 5 hereof. Such equipment is
hereinafter referred to as the "Leased Equipment". Lessee
shall retain title to the Leased Equipment except as noted by
Paragraph 15 herein.
D. Maintenance of Transmission Equipment. At Lessee's expense
and subject to Lessor's right to supervise the maintenance of
this equipment, Lessee shall maintain and operate the Leased
Equipment during the terms of this Agreement for a nominal
fee. Lessee shall also pay all taxes and other charges
assessed against the Leased Equipment.
E. Transmission of Programming. At no cost or expense to
Lessor, Lessee shall provide the necessary labor and equipment
capabilities to transmit on the ITFS Channels programming
required to be carried pursuant to this Agreement such as
Lessor's ITFS programming and TBN. Lessee shall also comply
with Lessor's instructions regarding the transmission of such
programming such as the dates and times to transmit
programming.
F. Interference. Lessee shall operate the Leased Equipment so
that such operation does not create or increase interference
with electronic transmission of any other FCC
<PAGE>
licensees entitles to protection under FCC rules and
regulations. If Lessee's entitled to protection under FCC
rules and regulations. If Lessee's operation of the Lease
Equipment does so create or increase interference, Lessee
shall pay all of the reasonable engineering and legal fees
necessary to resolve the interference problem so created.
G. Alterations and Attachments. Lessee, at its own expense,
may make alterations of or attachments to the ITFS equipment
or the common equipment as defined in Exhibit C (including the
installation of encoding and/or addressing equipment) as may
be reasonably required from time to time by the nature of its
business; provided however, that such alterations or
attachments do not interfere with Lessor's signal or ongoing
operations or violate any FCC rules or regulations; and
provided further that FCC authorization, if required, is
obtained in advance of any such alteration or attachment at
the sole cost of Lessee. to the extent any FCC authorization
pertaining to the ITFS equipment is required, Lessor agrees to
use its best efforts to obtain such authorization.
H. Licensee Control and Liability. Nothing herein shall
derogate from such licensee control of operations of the ITFS
Channels that Lessor, as an FCC licensee, shall be required to
maintain and Lessee acknowledges the reservation by Lessor of
such control. Lessor shall at all times retain ultimate and
exclusive responsibility for the operation and control of the
ITFS Channels including policy decisions.
4. LESSOR'S RECEIVE SITES.
Attached hereto as Exhibit B is list of the registered receive sites
designated by Lessor to receive its ITFS programming and to be installed at the
expense of Lessee. Those receive sites so listed shall be installed with a
Standard Installation. If as the result of any relocation of the Primary
Transmit Site, the equipment at Lessor's existing registered receive sites must
be reoriented, Lessee shall pay the cost of same. As used herein for the
purposes of this Agreement, the phrase "Standard Installation" shall mean an
installation consisting of the placement of the ITFS/MMDS receiving antenna at
an elevation (not to exceed thirty [30] feet above the base mounting location)
which could normally receive the line-of-sight transmission from the
Transmission Site; the coupling thereto of a block-down converter; and a
sufficient amount of transmission line (coaxial cable) to connect the received
ITFS programming to the input of (i) one classroom designated by Lessor to
receive the ITFS programming or (ii) the receive site internal/external
distribution system. Also, if as the result of any relocation of the Transmit
Site, the equipment at Lessor's existing receive sites must be reoriented,
Lessee shall pay the cost of same. Lessee also agrees that for digital
transmission of the ITFS Channels Lessee will purchase and install at Lessee's
expense, one single-point modem to receive its ITFS programming.
5. LEASE OF EQUIPMENT.
A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall
lease from Lessee the Leased Equipment during the terms of this Agreement. A
list of this equipment is attached hereto as Exhibit C and incorporated by
reference herein. Lessor shall have no responsibility for the loss of or damage
to the Leased Equipment during the terms of this Agreement and Lessee shall bear
all such responsibility.
6. FEES.
A) Lessor's Service Fee. In consideration of the lease of the Leased
Equipment, and for its share of the projected costs to maintain the Transmission
Site and the Lease Equipment, Lessor shall pay Lessee an annual fee provided for
in Exhibit D.
B) Subscriber Royalty Fees or Percentage. Beginning on the Execution
Date of this Agreement and continuing thereafter during the Initial Term of this
Agreement, Lessee shall pay to
<PAGE>
Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum,
whichever is greater as set out in Exhibit D which is attached herewith and
incorporated by reference herein. If the Execution Date shall be a date other
than the first day of a calendar month, then the Subscriber Royalty Fee for the
partial month shall be paid on a proportionate basis. A late fee of 10% (ten
percent) will be assessed to past due accounts, and a finance charge of one and
one-half percent (1.5%) per month will be assessed in addition to the late fee
until paid.
C) Notice of Construction and Required Certificate. Within thirty (30)
days of completion of construction at the Transmission Site, Lessee shall notify
Lessor of such completion of construction in writing. Within thirty (30) days of
the end of each month in which Excess Capacity Airtime is leased hereunder,
Lessee shall provide Lessor with a certificate, certified as accurate and
correct by an authorized agent of Lessee, showing the number of subscribers
served during such month.
D) Right to Audit. Lessee shall for a period of three (3) years after
their creation, keep, maintain and preserve complete and accurate records and
accounts, including all invoices, correspondence, ledgers, financial and other
records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's
charges hereunder; and such records and corporate accounts shall be available
for inspection and audit at Lessee's corporate offices or at Lessee's offices in
the Market, as designated by Lessee, at any time or times during the term of
this Agreement or within ninety (90) days thereafter, during reasonable business
hours, by Lessor or its nominee. In the event that there is discovered an
underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above,
Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of
each such underpayment. All information obtained by Lessor during any audit
herein shall be maintained by Lessor in strict confidence.
7. PROGRAMMING.
A) Control Over Programming.
(i) Program Content. Lessee intends that only programming of a sort
which would not serve to place Lessor's reputation in the community in jeopardy
will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize
disputes, recognizing the difficulties inherent in specifying exact standards
herein, it is agreed that Lessee shall have the right to market the programming
provided by the networks and services listed on Exhibit E. If, however, the
programming content of any networks and services listed on Exhibit E materially
changes, Lessor shall have the right, upon ninety (90) days notice, to deny
Lessee the right to continue transmitting such programming if Lessor would have
the right to deny Lessee the right to transmit such programming under the
provisions of this paragraph in the first instance. If Lessee proposes to
transmit the programming of any new programming service, the Lessee shall notify
Lessor in writing specifying in detail the nature of the new programming service
and Lessor shall have the right, upon written served upon Lessee within thirty
(30) days after Lessor's receipt of any such notice from Lessee, to deny to
Lessee the right to transmit such service if such programming is obscene and/or
contradicting local, state and/or federal laws or otherwise violates any
federal, state or local laws or regulations. If no such denial notice is
received by Lessee within such thirty (30) days, lessee shall be authorized to
transmit all such services for which no denial notice is received. There shall
be no reduction in fees required under this Agreement for any such programming
not permitted to be transmitted.
B) Availability of Programming. It is understood by Lessee and Lessor
that there is expected to be no direct out-of-pocket annual costs for the
acquisition of the qualified ITFS educational programming for Lessor's use
during Lessor's Primary Airtime on the ITFS channels, based on current plans. In
the event that this ITFS educational programming either; (1) ceases to be
available, or, (2) becomes available only at a fee, then Lessor may incur direct
out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees
to provide its best efforts to assist Lessor in the acquisition of alternative
programming, if necessary. Additionally, Lessee agrees to make payment to Lessor
for the actual, direct programming costs incurred. If any; If Lessor, after
expending its best efforts, is unable to
<PAGE>
obtain suitable ITFS programming for a cost equal to the amount to be paid by
Lessee, Lessor and Lessee shall use their best efforts to reach agreement on
modifications to this Agreement to avoid any un-reimbursed ITFS programming
costs to Lessor. If no such agreement can be reached, Lessor may terminate this
agreement. In the case of such termination, Lessor shall use its best efforts
(with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior
approval) to transfer the license for the ITFS Channels to another qualified
educational entity, subject to FCC approval, with the intent of assigning this
Agreement from Lessor to the new educational entity.
C) Integration of Lessor's Programming. Lessee agrees to integrate
Lessor's programming into the overall communications service offered to
subscribers, without cost to Lessor. This integration shall include, but not be
limited to, listing Lessor's material in any program guides produced by Lessee
for subscribers.
D) Carriage of TBN. In the event that Lessor's ITFS Channels are used
for analog video transmission and TBN is not transmitted on a local VHF or UHF
station, with a market coverage equivalent to both area and signal quality of
our ITFS channels, and Lessee does not have local off-air insertion as part of
its standard installation, then, if so designated by Lessor, Lessee agrees to
transmit on one of the ITFS Channels the programming of Trinity Broadcasting
Network ("TBN") during those time periods such channel is not used for Lessor's
ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a
fee for carriage of TBN. In the event that Lessee is permitted to program the
hours previously occupied by TBN, then Lessee shall increase, in proportion to
the increase in Excess Capacity Airtime, the amount of minimum fees and
subscriber royalty fees payable under the provision 6 (B) of this agreement
during the remainder of the term(s) of the agreement. For purposes of
calculating any such proportionate increase, the parties acknowledge and agree
that the minimum fee and subscriber royalty fee agreed to herein are based on
Lessee's equivalent use of three full-time ITFS channels.
E) Station Identification. During Lessee's use of Lessor's excess
channel capacity, Lessee shall transmit Lessor's call sign for each respective
station as required by the FCC.
8. PROCECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES.
A) Best Efforts to Secure Approval of this Agreement. The parties
recognize that certain approvals will be required from the FCC in order to
effectuate this Agreement. Both parties shall use their best efforts to prepare,
file and prosecute before the FCC all petitions, waivers, applications and other
documents necessary to secure any FCC approval required to effectuate this
Agreement. Lessee shall assist in the preparation and prosecution of such
applications and as provided for herein, shall pay all filing fees, attorneys'
fees, engineering fees, and all other expenses in connection therewith. Lessor
also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDs and
MMDS operators to co-locate at the Transmission Site. Notwithstanding anything
in this Agreement to the contrary, it is understood that no filing shall be made
with the FCC with respect to this Agreement unless both parties have reviewed
such filing and consented in writing to its submission, such consent not be
unreasonably withheld.
B) Further Efforts. Throughout the Initial Term of this Agreement,
Lessor shall use its best efforts to obtain and maintain in force all licenses,
permits and authorizations required for Lessee and Lessor to use the ITFS
Channels as contemplated by this Agreement. Lessee shall be responsible for all
cash expenses incurred to obtain and maintain in force such licenses, permits
and authorizations. When mutually agreed by the parties and at Lessee's sole
expense, Lessor shall apply for, and use its best efforts to obtain those
reasonable license modifications which would assist Lessee in its business.
Lessor also shall consider filing, at Lessee's sole expense, such reasonable
protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or
OFS applications or amendments as may be requested by Lessee in the mutual best
interests of the parties and the public. Lessor and Lessee shall promptly notify
each other of any event of which it has knowledge that may affect any of the
licenses, permits or authorization affecting the ITFS Channels.
<PAGE>
C) Attorneys' Fees. With respect to any legal work conducted pursuant
to Paragraph 8(A) and (B) above, Lessee shall be responsible for all attorneys'
fees in connection therewith and shall make payments directly to the attorney.
However, any attorney fees paid by Lessee shall be approved in advance by
Lessee.
9. REPRESENTATIONS AND WARRANTIES.
A) Representations and Warranties of Lessor. Lessor represents and
warrants to Lesse as follows:
(i) Organization. Lessor is a non-profit organization duly organized
and existing in good standing under the laws of the State of California, and it
has full power and authority to carry out all of the transactions contemplated
by this Agreement and all other agreement, certificates or instruments executed
and delivered in connection herewith.
(ii) No Violation. Neither the execution nor delivery of this agreement
or any other agreements, certificates or instruments executed and delivered
herewith, nor the performance of the transactions contemplated hereby constitute
or will constitute a violation of , be in conflict with, or a default under any
term or provision of the governing instruments or Lessor or any agreement or
commitment to which Lessor is bound, or any judgment, decree, order, regulation
or rule of any court or governmental authority, or consent of any federal, state
or local authority is required in connection with the execution and delivery of
this Agreement or any other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transaction contemplated
hereby.
B) Representations and Warranties of Lessee. Lessee represents and
warrants to Lessor as follows:
(ii) Organization. Lessee is duly organized, validly existing and in
good standing under the laws of the State of its incorporation and it has full
power and authority to own property and carry all of the transactions
contemplated by this Agreement, and all other agreements, certificates or
instruments executed and delivered by Lessee in connection herewith.
(ii) Corporation Action; Valid and Binding Agreements. Lessee has taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and all other agreements, certificates or instruments executed and
delivered in connection herewith. Upon execution and delivery, this Agreement
and all other agreements, certificates or instruments executed and delivered by
Lessee in connection herewith will constitute valid and binding agreements of
Lessee enforceable in accordance with their respective terms.
(iii) Litigation and Investigations. There is no action, suit,
proceeding or investigation pending or, to the best of Lessee's knowledge,
threatened against Lessee, its principals or related entities before any court,
administrative agency or other governmental body, and Lessee does not know nor
is aware of any reason for commencement of any such action, proceeding or
investigation.
(iv) Misrepresentation of Material Fact. To the best of Lessee's
knowledge, information and believe, no document or contract that was shown to
Lessor and which in any way affects any of the properties, assets or proposed
transactions of Lessee as such relates to this Agreement, no certificate or
statement furnished by or on behalf of Lessee in connection with this Agreement,
nor this Agreement itself contains any untrue statement of material fact or
omits to state a material fact which would make the statements contained herein
misleading.
<PAGE>
C) Survival or Representations and Warranties. The representations and
warranties contained in this Agreement shall be deemed to be continuing during
the Initial terms of this Agreement, and each Party shall have the duty promptly
to notify the notify the other of any event or circumstance which might
reasonably be deemed to constitute a breach of or lead to a breach of its
warranties or representations hereunder. The waiver by either Party of any
breach of any presentation or warranty under this Agreement shall not constitute
a waiver of any other representation or warranty or of any failure in the future
by the other Party to fulfill such representation or warranty.
10. TERMINATION.
A) Termination of FCC Authorization. Without further liability to
either Lessor or Lessee, this Agreement shall terminate in the event that for
any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii)
the FCC shall terminate or diminish Lessor's authority to lease the ITFS
Channels in accordance with the terms of this Agreement.
B) Termination by Reason of Default or Nonperformance. At the option of
the non-defaulting party, this Agreement may be terminated upon the material
breach or default by the defaulting party of its duties and obligations
hereunder is such breach or default is not cured by such defaulting party and is
breach or default shall continue for a period of thirty (30) consecutive days
after such defaulting party's receipt of notice thereof from the non-defaulting
party. It is understood and agreed that any failure on the part of Lessee to
make any payment required under Paragraph 6 hereof shall be a material breach of
default of its duties and obligations hereunder. It is also understood and
agreed that any consequences resulting from the loss of local participating
receive sites shall not be considered a material breach or default by Lessor of
its duties and obligations hereunder.
C) Remedies to Continue. In the event of termination of this Agreement
pursuant to Paragraph 10(B), such termination shall not affect or diminish the
rights or claims or remedies available in equity or at law to the non-defaulting
party arising by reason of a breach or default of this Agreement. However, no
liability shall arise on the part of Lessor or Lessee upon termination of this
Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license
occurs as a result of the default of either party.
11. TRANSFER OF RIGHTS AND OBLIGATIONS.
Lessee shall have the right to assign its rights under this lease as
collateral for any financing arrangements it makes. Lessee shall also have the
right to pledge the Leased Equipment as collateral security for any loans it
makes; provided, however, that any pledge of the Leased Equipment shall be made
subject to the provisions of this lease. Lessee shall further have the right to
subcontract any portion of its obligations under this Agreement to any
partnership, joint venture, corporation or entity which Lessee may choose,
provided that Lessee gives Lessor notice of any proposed subcontracting and,
provided further, that no such subcontracting shall release Lessee from
fulfilling all of its obligations under this Agreement. Lessee shall have the
right to assign or transfer its rights, benefits, duties and obligations under
this Agreement to a commonly-owned company without the prior consent of Lessor.
Apart from the foregoing, neither party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably witheld.
12. INDEMNIFICATION.
A) By Lessor. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, arising directly or indirectly out of (i) the
willful misconduct of Lessor, its agents or employees, in
<PAGE>
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessor during any of Lessor's Airtime.
B) By Lessee. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, which arise directly or indirectly out of (i) the
negligence or willful misconduct of Lessee, its agents or employees, in
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessee or any of its authorized agents or subcontractors with the
public, third parties and subscribers to the Lessee's programming service; or
(iv) any maintenance, installation or other work performed by Lessee or any
authorized agent or subcontractor under this Agreement.
C) Notice of Claim; Defense of Claim. Each party shall notify the other
of any such claim promptly upon receipt of same. Either party (hereinafter
referred to as appropriate the "Indemnitor" or Indemnitee") shall have the
option to defend, at its own expense, any claims arising under this Paragraph.
In Indemnitor assumes the defense of any such claim, Indemnitee shall delegate
complete and sole authority to the Indemnitor to defend or settle same and
Indemnitee shall cooperate with Indemnitor in the defense thereof.
13) INSURANCE.
A) Policies Required. At its expense, Lessee shall secure and maintain
with financially reputable insurers, one or more policies of insurance insuring
the Leased Equipment and Lessee's utilization of the ITFS Channels against
casualty and other losses of the kinds customarily insured against by firms of
established reputations engaged in the same or similar line of business, or such
types and in such amounts as are customarily carried under similar circumstances
by such firms, including, without limitation: (i) "All Risk" property insurance
covering the ITFS Equipment and the common Equipment to the extent of one
hundred percent (100%) of its full replacement value without deduction for
depreciation: (ii) comprehensive general public liability insurance covering
liability resulting from lessee's operation of the ITFS equipment on an
occurrence basis having minimum limits of liability in an amount of not less
than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or
death to any person or persons in any one occurrence, and not less than Two
Million Dollars ($2,000,000.00) in the aggregate for all such losses during each
policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with
respect to damage to property; (ii) all workers compensation, automobile
liability and similar insurance required by law.
B) Insurance Policy Forms. All policies of insurance required by this
Paragraph shall, whre appropriate, designate Lessor as either the insured party
or as a named additionally insured party, shall be written as primary policies,
not contributory with and not in excess of any coverage which Lessor shall
carry, and shall contain a provision that the issuer shall give to Lessor thirty
(30) days prior written notice of any cancellation or lapse of such insurance or
of any change in the coverage thereof.
C) Proof of Insurance. Executed copies of the policies of insurance
required under this section or certificates thereof shall be delivered to Lessor
not later than ten (10) after execution of this agreement. Lessee shall furnish
Lessor evidence of renewal of each such policy not later than thirty (30) days
prior to the expiration of the term thereof.
53. RELATIONSHIP OF PARTIES.
By the provisions of this Agreement, Lessor and Lessee intend to enter
an airtime lease relationship and not a joint venture. They will carry out this
Agreement to preserve that intent. Neither party shall represent itself as the
<PAGE>
other party, nor as having any relationship with one another, except as Lessor
and Lessee under the terms of this Agreement.
54. EQUIPMENT PURCHASE.
G) Lessor's Option to Purchase. In the event that this Agreement is
terminated, Lessor shall have the option to purchase the Leased
Equipment used exclusively for Lessor's ITFS license. Any equipment
which is used in a shared fashion (such as transmit antenna, decoders
and combiners) in providing signals other than Lessor's signals are
excluded from this option to purchase. The intent of the purchase
option provided for in Paragraphs 16(A) is to provide Lessor with the
capability to continue to perform on Lessor's ITFS license. The
purchase price shall be the market value of such equipment noted above
as determined by mutual agreement or by averaging the values obtained
from two (2) appraisals, with one appraiser each chosen by Lessor and
Lessee.
H) Lessee's Option to Purchase. If during the terms of this Agreement the
FCC modifies its rules so as to enable Lessee to be licensed to
operate the ITFS frequencies, Lessee shall have a right of first
refusal to acquire such licenses subject to the same terms and
conditions as the right provided for in Paragraph 1(B).
55. NON-DISCLOSURE
Lessor acknowledges that there may be made available to it pursuant to
this Agreement proprietary information of Lessee relating to the encoding and/or
decoding system associated with the ITFS channel equipment and its patented
processes including, but not limited to, improvements, innovations, adaptation,
inventions, results of experimentation, processes and methods, whether or not
deemed patentable, and certain business and marketing techniques (all herein
referred to as "Confidential Information"). Lessor acknowledges that this
Confidential Information has been developed by Lessee at considerable effort and
expense and represents special, unique and valuable proprietary assets of
Lessee, the value of which may be destroyed by unauthorized dissemination.
Accordingly, Lessor covenants and agrees that, except as may be required for the
performance of this Agreement or by law or court order, neither it nor any of
its agents or affiliates shall disclose such Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, such
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof.
56. NON-COMPETITION
During the term of this Agreement, Lessor agrees not to transmit
programming or to lease or sublease any channel capacity on its ITFS Facilities
for the transmission of programming that is competitive with the programming
transmitted by Lessee.
57. FORCE MAJEURE
If by reason of Force Majeure either party is unable in whole or in
part to perform its obligations hereunder, the party shall not be deemed in
violation of default during the period of such inability. As used herein, the
phrase "Force Majeure", shall mean the following: act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivisions, thereof which are not the result of a
breach of this Agreement, orders of any military authority insurrections, riots,
epidemics, fires, civil disturbances, explosions, or any other cause or event
not reasonably within control of the adversely affected party.
58. CONDITION PRECEDENT
This Agreement is conditional on the issuance of a Final Order by the
FCC granting Lessor a construction permit for the ITFS Channels in the Market
from the Transmission Site. By "Final Order" the parties mean an action or order
of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled
or suspended and with respect to which no timely-filed request for
administrative or judicial review is pending and as to which the time for filing
any such request, or for the FCC to set aside the action on its own motion, has
expired.
<PAGE>
59. NOTICE
Any notice required to be given to Lessor under any provision of this
Agreement shall be delivered personally or by certified mail to Lessor at the
address first written above. Any notice required to be given to Lessee under any
provision of this Agreement shall be delivered personally or by certified mail
to Lessee at the address first written above.
60. SEVERABILITY
Should any court or agency determine that any provision of this
Agreement is invalid, the remainder of the Agreement shall remain in effect.
61. WAIVER
A waiver by either Lessor or Lessee of a breach of any provision of
this Agreement shall not be deemed to constitute a waiver of any preceding or
subsequent breach of the same provision or of any other provision.
62. PAYMENT OF EXPENSES AND SIGNING FEES
A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall
pay all costs and expenses incident to fulfilling or modifying this Agreement,
such as, attorneys' fees or, if necessary, any travel expenses approved in
advance by Lessee, FCC filing fees, and engineering costs.
63. VENUE AND GOVERNING LAW
Venue for any cause of action brought by or between Lessor and/or
Lessee relating to this Agreement shall be in California and all provisions of
this Agreement shall be construed under the laws of the State of California and
County of Lessor.
64. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument, and shall become effective when each of the parties hereto
shall have delivered to it this Agreement duly executed by each of the other
parties hereto.
65. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral or written provisions of any kind. The parties further
agree that this Agreement may only be modified by written Agreement signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this day of July 1st, 1999.
SHEKINAH NETWORK
By: ______________________________
Name: Charles J. McKee
Title: President
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Name: Douglas P. Haffer
Title: President
<PAGE>
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Phone/Fax: (805) 438-3341
Attn: Charles McKee, President
Gardner, Carton & Douglas
Attn: Laura Mow
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
World Wide Wireless Communications, Inc.
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 981- 7777
Fax: (415) 391-3199
<PAGE>
EXHIBIT A
Schedule of Airtime
<PAGE>
EXHIBIT B
Receive Sites
There shall be attached hereto and incorporated by reference a copy of
FCC Form 330 Section IV listing Lessor" receive sites.
<PAGE>
EXHIBIT C
Leased Equipment
Noted below is a list of equipment that Lessee is leasing to Lessor:
(7) Four (4) ITFS tansmitters and related hardware
(8) Lessor's ITFS receive site antennas and related hardware
*(3) Combining network, transmission line and antenna
*Common Equipment
<PAGE>
EXHIBIT D
Service and Royalty Fees
1. Lessor's Service Fee
Services Provided Annual Fee
----------------- ----------
(j) Lease of Leased Equipment [6(A)] $1.00
(k) Maintenance of Leased Equipment [3(D)] $1.00
(l) Lease of space at Primary Transmission Site [3A)] $1.00
2. Lessee's Subscriber Royalty Fee
Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's
Gross receipts or a monthly minimum payment of $500 per month whichever is
greater.
Payment shall be as follows: Commencing on the Execution (Effective) Date and as
defined in Paragraph 6)B, payments for each month shall be made by the twentieth
(20th) day of the following month.
<PAGE>
EXHIBIT E
Programming
In addition to digital data services, such as the Internet or Intranet, the
following is a list of video programming services Lessee may provide over
Lessee's System.
TLC - The Leaning Channel
TWC - The Weather Channel
Lifetime
ESPN - Sports
AMC - American Movie Classics
SCOLA
WHTN - World Harvest Television Network
ECO - Galavision
CNN - Cable News Network
CNN - Headline News
C-Span I
C-Span II
BET - Black Entertainment Network
CNBC - Consumer News & Business Channel
Nickelodeon
The Discovery Channel
A&E - Arts and Entertainment
The Family Channel
The Disney Channel
PBS - Public Broadcasting Service
TBN - Trinity Broadcasting Network
TNIN - The New Inspirational Network
ME/U - Mind Extension Network
The International Channel
BRAVO Network
The Travel Channel
Family Network
Keystone Inspirational Network
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
La Grande, Oregon
ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT
THIS AGREEMENT is made this 1st day of August 1999 by Shekinah Network
(hereinafter referred to as "Lessor") having its principal place of business at
14875 Powerline Road, Atascadero, CA 93422 and World Wide Wireless
Communications, Inc. (hereinafter referred to as "Lessee") having its principal
place of business at One Post Street, Suite 2600 San Francisco, CA 94104.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users; and
WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-798
(the "License") for the Channel group C1-4 (the "ITFS Channels") in La Grande,
Oregon ("The Market"); and
WHEREAS, Lessee is in the business of providing voice, video, data and
other services via microwave transmission in the Market Area and desires to
lease the excess ITFS capacity of the ITFS channels; and
WHEREAS, Lessor has determined that there will be excess airtime
capacity available on the ITFS Channels and desires to lease this excess airtime
capacity to Lessee.
NOW, THEREFORE, in consideration of the mutual promises, undertakings,
covenants and conditions set forth herein, the Lessor and Lessee do hereby agree
and warrant as follows:
9. TERM OF AGREEMENT
A. Initial Term. This Agreement shall be effective upon the date of its
execution and shall extend for an initial term of five (5) years (the
"Initial Term").
B. Renewal Term Provided that the License is renewed by the FCC, Lessee
shall have the right to extend this Agreement on its then existing
terms and conditions for one (1) additional five (5) year term (the
"Renewal Term"). The Renewal Term shall automatically go into effect
upon the conclusion of the Initial Term unless Lessee notifies Lessor
at least one hundred eighty days (180) before the end of the Initial
Term that Lessee does not wish to extend this Agreement.
C. New Lease Agreement/Right of first Refusal.
(1) Providing that Lessor's FCC license remains in good standing
and/or Lessor seeks to renew such license, Lessee and Lessor shall
negotiate in good faith for a new excess capacity airtime lease
agreement (hereinafter referred to as "New Lease Agreement") no later
than one hundred eighty days (180) prior to the end of the latter of
(i) Initial Term or (ii) the Renewal Term if the Agreement is extended
for the Renewal Term.
<PAGE>
(6) If Lessor elects to not reasonably pursue a New Lease Agreement
with Lessee, then Lessor shall so notify Lessee in writing of such
intent no later than one hundred eighty (180) days prior to the end of
the Renewal Term.
(3) If Lessor and Lessee do not enter into a New Lease Agreement,
Lessor grants Lessee a right of first refusal on any competing
proposals for lease agreements or transfers or assignments of any part
of the ITFS Channels received by Lessor during the twelve (12) months
following the expiration of the latter of (i) the Initial Term or (ii)
the Renewal Term, if the Agreement is extended for the Renewal Term.
If any acceptable offer to lease or acquire the ITFS Channels is made
to Lessor, Lessor shall give written notice to Lessee describing the
person to whom the proposed lease or transfer is to be made, the fees,
charges, rental or other consideration to be received fro the lease or
transfer, the terms thereof and generally the relevant other terms and
conditions of the lease or transfer. Lessee shall have a period of
thirty (30) days after its receipt of such notice from Lessor in which
to elect, by giving written notice to Lessor, to lease or, if
eligible, obtain any or all of the ITFS Channels for the same fees,
charges, rental or other consideration for which Lessor proposed to
lease or transfer to the third person.
(i) The fees, charges, rental or consideration shall be paid by such
third person or Lessee in cash.
(x) If Lessor does not believe Lessee's stated offer is in an amount
fairly equivalent to the fair value of the consideration payable by
the third person and so notifies Lessee in writing within seven (7)
days after Lessor's receipt of Lessee's notice of election to so lease
or purchase, Lessee may within five (5) days after its receipt of such
notice from Lessor elect to refer such question for determination by
an impartial arbitrator and the right of first refusal of Lessee shall
then be held open until (5) days after Lessee is notified of such
determination. Such arbitrator shall be chosen either by agreement of
Lessee and Lessor at the time such question arises, or, at the option
of either party, by referring the question to the American Arbitration
Association with instructions that the American Arbitration
Association select a single arbitrator under a request from the
parties for expedited and accelerated determination. The determination
of the arbitrator chosen under either option contained in this
subparagraph shall be final and binding upon Lessee and Lessor. The
parties shall share equally in the costs and fees of the arbitration
(xi) In the event Lessee shall elect to exercise its right of first
refusal, the lease agreement or other transfer or assignment shall be
consummated within thirty (30) days of the latest of: (1) the day on
which Lessor received notice of Lessee's election to exercise the
right of first refusal; (2) the day upon which any question required
to be determined by the arbitrator hereunder has been determined; or
(3) the date of any FCC approval in the case of assignment or
transfer; or at such other time as may be mutually agreed. The right
of first refusal is terminated either by the lease or other transfer
to Lessee as provided herein or by notice to Lessee of the Lessor's
proposal to lease or otherwise transfer the ITFS Channels or any part
to a third person and Lessee's unwillingness or failure to meet and
accept such a bona fide offer pursuant to the times and procedures as
set forth above; provided that such proposed lease or transfer is
consummated at the same fees, charges, rental or other consideration
and upon the same terms as to which such right of first refusal
applied, within thirty (30) days after Lessee's right of first refusal
had expired or had been specifically waived by written notice given to
Lessor by Lessee, or within thirty (30) days following FCC approval in
the case of assignment or transfer.
C) Operation During End of Term. If Lessor and Lessee do not enter into
New Lease Agreement before the end of the Initial Term, Lessee shall
cease leasing the ITFS Channels on the last day of the Initial Term.
<PAGE>
D) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this
Agreement shall not give rise to any rights or remedies beyond the
expiration of any FCC license necessary for the continued operation of
the ITFS Channels. Provided, however, that while this Agreement is in
effect, Lessor shall obtain and maintain in force all licenses,
permits and authorizations required or desired in connection with the
use of the ITFS Channels. Lessor shall take all necessary steps to
renew the licenses for the ITFS Channels and shall not commit any act
or engage in any activity which could reasonably be expected to cause
the FCC to impair, restrict, revoke, cancel, suspend or refuse to
renew the ITFS licenses. Lessor shall take all reasonable steps to
comply with the Communications Act of 1934, as amended and the rules
and regulations of the FCC, and shall file all reports, schedules
and/or forms required by the FCC to be filed by Lessor. All expenses,
including attorneys fees and filing fees, incurred in preparing and
filing such reports, schedules and/or forms required by the FCC shall
be paid by the Lessee.
10. ALLOCATION OF AIRTIME.
A. Excess Capacity Airtime. To the extent allowed by the FCC rules and
regulations and any amendments thereof, Lessor agrees to lease to
Lessee the exclusive use of all excess capacity not utilized by Lessor
("Excess Capacity Airtime").
B. Lessor's Primary Airtime. During analog transmission over the ITFS
Channels, Lessor reserves for its exclusive use a minimum of twenty
(20) hours of airtime per-channel per-week to be used for its ITFS
scheduled programs. During digital transmission ovr the ITFS Channels,
Lessor shall have the exclusive use of 12.5% of the total capacity
available on the Lessor's ITFS Channels. This airtime shall be know as
"Lessor's Primary Airtime".
C. Schedule of Airtime. The schedule which depicts the agreement of the
parties as to use of Lessor's Channels shall be attached hereto and
made a part hereof as Exhibit A which is subject to change upon
agreement by both parties.
D. Lessee's use of its Excess Capacity Airtime. Lessee shall have the
right to utilize its Excess Capacity Airtime for any purpose allowed
or authorized by the FCC including but not limited to voice, video and
data transmission.
E. Alternate Use and Vertical Blanking Intervals. Lessor shall have the
right to use the second audio carrier ("SAP") and vertical blanking
intervals. ("VBI") on which Lessor's ITFS programming is being
transmitted. Lessee shall at all times have the right to use the VBI
and SAP not utilized by Lessor and 100% of the response frequencies
associated with the ITFS Channels. Lessor shall be responsible for any
equipment needed to utilize the VBI and/or SAP and such equipment
shall be compatible with Lessee's system.
F. Lessor's Use of ITFS Channels. Lessor agrees that its program services
and airtime use will not harm or interfere with Lessee's current or
future signal paths utilized within Lessee's System for program
encryption, pilot carrier signaling and other technical needs utilized
for the operation of and such services provided by Lessee's System.
Nor will Lessor, by its own action, or through a third party, utilize
any part of its licensed frequency spectrum to create or operate a
service that is in competition with current, planned or future
services provided by
<PAGE>
Lessee's System. Lessor agrees to use its Primary Airtime in
accordance with the FCC's rules and regulations. Lessor shall not take
or fail to take any action which may have a material adverse effect on
Lessee's right to utilize its Excess Capacity Airtime.
G. Expanded System Capacity. Lessee shall have the right at anytime to
require Lessor to file with the FCC any necessary application to
expand the channel capacity to Lessor's station to enable it to carry
more than one video signal per channel or digital data services;
provided however, before Lessee can exercise this right, it must
demonstrate to the Lessor's reasonable satisfaction that such
modification will not materially degrade the performance of the
station nor impair signal quality at the registered ITFS receive
sites. Once such modification has been constructed, the modified
facilities shall automatically be considered a part of this agreement
and subject to all terms and conditions hereof. It is understood that
Lessee shall have the full-time use of the Expanded Channels to the
extend permitted by FCC rules.
3. TRANSMISSION SITE AND FACILITIES.
I. Primary Transmission Site. Lessor's ITFS Channels are located at Key
West, FL, Lessee agrees to provide Lessor space at the Primary
Transmission site for Lessor's audio and video transmission equipment
which shall not exceed on rack. Such space shall be leased to Lessor
pursuant to Exhibit D hereto. This site shall hereinafter be described
as the "Primary Transmission Site". At Lessee's sole expense, Lessee
shall contract for a lease of space at the Transmission Site upon such
terms as the parties agree. The Transmission Site shall comply with
the standards, specifications and regulations of the FCC rules and
orders pertaining to Lessor's ITFS license.
J. Relocation of Transmission Site.
(i) Lessor acknowledges that the location of the
Primary Transmission Site for ITFS Channels is critical to the
Lessee's business and agrees that it will not relocate the
transmission facilities for ITFS Channels from the Primary
Transmission Site without Lessee's prior written consent.
(ii) Lessor further acknowledges that possibility
that, as a result of currently unforeseen events, the Primary
Transmission Site may not be the optimum site for the location
of the ITFS Channels or Lessee's business throughout the term
of this Lease Agreement. Lessor therefore agrees that if at
any time or from time to time Lessee requests in writing that
the transmission facilities for the ITFS Channels be
relocated, Lessor shall file with the FCC and any other
regulatory body having jurisdicition over the ITFS Channels
all applications, amendments, and requests for modification
that may be necessary to obtain any necessary consents to
permit such relocation to such location within or adjacent to
the Market as may be requested by Lessee; provided, however,
that Lessor shall not be obligated to submit or procecute any
application, amendment, or request for modification that
Lessor reasonably determines, upon advice of counsel contained
in a written opinion, would be in violation of the terms of
the License, any statute, rule, or regulations regarding the
operation of the ITFS Channels or the submission of materials
to the FCC, or any of its obligations as an ITFS licensee; and
provided, further, that any such relocation will not result in
loss of service to Lessor's registered receive sites served by
the transmission facilities in the event that the
authorization is obtained to relocate the ITFS Channels to the
location requested by Lessee, Lessor shall relocate such
channels to such new location as soon as reasonably
<PAGE>
possible after authorization is obtained. Lessee shall bear
reasonable costs associated with such relocation, including
engineering and construction, and all reasonable costs
associated with obtaining FCC or any other regulatory approval
therefore.
(iii) Lessor agrees to file modification applications
requested by Lessee. Such modifications may include but shall
not be limited to the following: power increase or decrease,
polarization, transmit antenna patterns, digital, two-way
(return path) use of the ITFS Channels, boosters, beam benders
or repeaters, cells, sectorization, channel swaps, channel
loading, channel shifting and application within five (5)
business days or receipt of the modification application from
Lessee or during any FCC designated filing window. Lessee will
use reasonable efforts to provide Lessor with the engineering
for the modification thirty (30) days prior to the request for
filing. If Lessor believes that such modification will have an
adverse effect on Lessor's ability to provide its services to
its receive sites, Lessor agrees to file the modification
application as presented by Lessee and within the time limit
requested by Lessee; however, Lessee agrees not to implement
construction and Lessor agrees not to withdraw the application
until the parties have adequately addressed and resolved the
potential material adverse effect or the matter has been
submitted to arbitration pursuant to Section 16 and a final
decision has been rendered by arbitrator. Although Lessee
intends to file such modification applications, it may elect
not to construct the Channels in that manner and may desire to
utilize the Channels as currently licensed. A copy of the
modification application, bearing the FCC's date stamp, shall
be mailed to Lessee by Lessor, within fourteen (14) days of
the filing of the modification application. Lessee shall be
solely responsible for all engineering and legal costs
associated with the preparation, review and filing of the
modification application. In the event that any license
modification requested by Lessee requires receive site
upgrades in order for Lessor's receive sites to continue to
receive Lessor's services, then Lessee agrees to pay for all
costs to complete such upgrade prior to implementing the
license modification.
C. System Construction. Lessee shall within a reasonable
period of time, but not later than six (6) months after the
FCC grant of digital authority for the ITFS Channels, purchase
equipment such as the antenna, waveguide or transmitters
specified on the authorization for the ITFS Channels. At
Lessee's expense, Lessee shall purchase and install such
transmitters, transmission line, modulators, antennas and
other equipment as required to operate the ITFS Channels in
accordance with the provision of such authorization. Any
equipment so used in such construction shall be leased to
lessor pursuant to Paragraph 5 hereof. Such equipment is
hereinafter referred to as the "Leased Equipment". Lessee
shall retain title to the Leased Equipment except as noted by
Paragraph 15 herein.
D. Maintenance of Transmission Equipment. At Lessee's expense
and subject to Lessor's right to supervise the maintenance of
this equipment, Lessee shall maintain and operate the Leased
Equipment during the terms of this Agreement for a nominal
fee. Lessee shall also pay all taxes and other charges
assessed against the Leased Equipment.
E. Transmission of Programming. At no cost or expense to
Lessor, Lessee shall provide the necessary labor and equipment
capabilities to transmit on the ITFS Channels programming
required to be carried pursuant to this Agreement such as
Lessor's ITFS programming and TBN. Lessee shall also comply
with Lessor's instructions regarding the transmission of such
programming such as the dates and times to transmit
programming.
F. Interference. Lessee shall operate the Leased Equipment so
that such operation does not create or increase interference
with electronic transmission of any other FCC
<PAGE>
licensees entitles to protection under FCC rules and
regulations. If Lessee's entitled to protection under FCC
rules and regulations. If Lessee's operation of the Lease
Equipment does so create or increase interference, Lessee
shall pay all of the reasonable engineering and legal fees
necessary to resolve the interference problem so created.
G. Alterations and Attachments. Lessee, at its own expense,
may make alterations of or attachments to the ITFS equipment
or the common equipment as defined in Exhibit C (including the
installation of encoding and/or addressing equipment) as may
be reasonably required from time to time by the nature of its
business; provided however, that such alterations or
attachments do not interfere with Lessor's signal or ongoing
operations or violate any FCC rules or regulations; and
provided further that FCC authorization, if required, is
obtained in advance of any such alteration or attachment at
the sole cost of Lessee. to the extent any FCC authorization
pertaining to the ITFS equipment is required, Lessor agrees to
use its best efforts to obtain such authorization.
H. Licensee Control and Liability. Nothing herein shall
derogate from such licensee control of operations of the ITFS
Channels that Lessor, as an FCC licensee, shall be required to
maintain and Lessee acknowledges the reservation by Lessor of
such control. Lessor shall at all times retain ultimate and
exclusive responsibility for the operation and control of the
ITFS Channels including policy decisions.
4. LESSOR'S RECEIVE SITES.
Attached hereto as Exhibit B is list of the registered receive sites
designated by Lessor to receive its ITFS programming and to be installed at the
expense of Lessee. Those receive sites so listed shall be installed with a
Standard Installation. If as the result of any relocation of the Primary
Transmit Site, the equipment at Lessor's existing registered receive sites must
be reoriented, Lessee shall pay the cost of same. As used herein for the
purposes of this Agreement, the phrase "Standard Installation" shall mean an
installation consisting of the placement of the ITFS/MMDS receiving antenna at
an elevation (not to exceed thirty [30] feet above the base mounting location)
which could normally receive the line-of-sight transmission from the
Transmission Site; the coupling thereto of a block-down converter; and a
sufficient amount of transmission line (coaxial cable) to connect the received
ITFS programming to the input of (i) one classroom designated by Lessor to
receive the ITFS programming or (ii) the receive site internal/external
distribution system. Also, if as the result of any relocation of the Transmit
Site, the equipment at Lessor's existing receive sites must be reoriented,
Lessee shall pay the cost of same. Lessee also agrees that for digital
transmission of the ITFS Channels Lessee will purchase and install at Lessee's
expense, one single-point modem to receive its ITFS programming.
5. LEASE OF EQUIPMENT.
A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall
lease from Lessee the Leased Equipment during the terms of this Agreement. A
list of this equipment is attached hereto as Exhibit C and incorporated by
reference herein. Lessor shall have no responsibility for the loss of or damage
to the Leased Equipment during the terms of this Agreement and Lessee shall bear
all such responsibility.
6. FEES.
A) Lessor's Service Fee. In consideration of the lease of the Leased
Equipment, and for its share of the projected costs to maintain the Transmission
Site and the Lease Equipment, Lessor shall pay Lessee an annual fee provided for
in Exhibit D.
B) Subscriber Royalty Fees or Percentage. Beginning on the Execution
Date of this Agreement and continuing thereafter during the Initial Term of this
Agreement, Lessee shall pay to
<PAGE>
Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum,
whichever is greater as set out in Exhibit D which is attached herewith and
incorporated by reference herein. If the Execution Date shall be a date other
than the first day of a calendar month, then the Subscriber Royalty Fee for the
partial month shall be paid on a proportionate basis. A late fee of 10% (ten
percent) will be assessed to past due accounts, and a finance charge of one and
one-half percent (1.5%) per month will be assessed in addition to the late fee
until paid.
C) Notice of Construction and Required Certificate. Within thirty (30)
days of completion of construction at the Transmission Site, Lessee shall notify
Lessor of such completion of construction in writing. Within thirty (30) days of
the end of each month in which Excess Capacity Airtime is leased hereunder,
Lessee shall provide Lessor with a certificate, certified as accurate and
correct by an authorized agent of Lessee, showing the number of subscribers
served during such month.
D) Right to Audit. Lessee shall for a period of three (3) years after
their creation, keep, maintain and preserve complete and accurate records and
accounts, including all invoices, correspondence, ledgers, financial and other
records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's
charges hereunder; and such records and corporate accounts shall be available
for inspection and audit at Lessee's corporate offices or at Lessee's offices in
the Market, as designated by Lessee, at any time or times during the term of
this Agreement or within ninety (90) days thereafter, during reasonable business
hours, by Lessor or its nominee. In the event that there is discovered an
underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above,
Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of
each such underpayment. All information obtained by Lessor during any audit
herein shall be maintained by Lessor in strict confidence.
7. PROGRAMMING.
A) Control Over Programming.
(i) Program Content. Lessee intends that only programming of a sort
which would not serve to place Lessor's reputation in the community in jeopardy
will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize
disputes, recognizing the difficulties inherent in specifying exact standards
herein, it is agreed that Lessee shall have the right to market the programming
provided by the networks and services listed on Exhibit E. If, however, the
programming content of any networks and services listed on Exhibit E materially
changes, Lessor shall have the right, upon ninety (90) days notice, to deny
Lessee the right to continue transmitting such programming if Lessor would have
the right to deny Lessee the right to transmit such programming under the
provisions of this paragraph in the first instance. If Lessee proposes to
transmit the programming of any new programming service, the Lessee shall notify
Lessor in writing specifying in detail the nature of the new programming service
and Lessor shall have the right, upon written served upon Lessee within thirty
(30) days after Lessor's receipt of any such notice from Lessee, to deny to
Lessee the right to transmit such service if such programming is obscene and/or
contradicting local, state and/or federal laws or otherwise violates any
federal, state or local laws or regulations. If no such denial notice is
received by Lessee within such thirty (30) days, lessee shall be authorized to
transmit all such services for which no denial notice is received. There shall
be no reduction in fees required under this Agreement for any such programming
not permitted to be transmitted.
B) Availability of Programming. It is understood by Lessee and Lessor
that there is expected to be no direct out-of-pocket annual costs for the
acquisition of the qualified ITFS educational programming for Lessor's use
during Lessor's Primary Airtime on the ITFS channels, based on current plans. In
the event that this ITFS educational programming either; (1) ceases to be
available, or, (2) becomes available only at a fee, then Lessor may incur direct
out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees
to provide its best efforts to assist Lessor in the acquisition of alternative
programming, if necessary. Additionally, Lessee agrees to make payment to Lessor
for the actual, direct programming costs incurred. If any; If Lessor, after
expending its best efforts, is unable to
<PAGE>
obtain suitable ITFS programming for a cost equal to the amount to be paid by
Lessee, Lessor and Lessee shall use their best efforts to reach agreement on
modifications to this Agreement to avoid any un-reimbursed ITFS programming
costs to Lessor. If no such agreement can be reached, Lessor may terminate this
agreement. In the case of such termination, Lessor shall use its best efforts
(with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior
approval) to transfer the license for the ITFS Channels to another qualified
educational entity, subject to FCC approval, with the intent of assigning this
Agreement from Lessor to the new educational entity.
C) Integration of Lessor's Programming. Lessee agrees to integrate
Lessor's programming into the overall communications service offered to
subscribers, without cost to Lessor. This integration shall include, but not be
limited to, listing Lessor's material in any program guides produced by Lessee
for subscribers.
D) Carriage of TBN. In the event that Lessor's ITFS Channels are used
for analog video transmission and TBN is not transmitted on a local VHF or UHF
station, with a market coverage equivalent to both area and signal quality of
our ITFS channels, and Lessee does not have local off-air insertion as part of
its standard installation, then, if so designated by Lessor, Lessee agrees to
transmit on one of the ITFS Channels the programming of Trinity Broadcasting
Network ("TBN") during those time periods such channel is not used for Lessor's
ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a
fee for carriage of TBN. In the event that Lessee is permitted to program the
hours previously occupied by TBN, then Lessee shall increase, in proportion to
the increase in Excess Capacity Airtime, the amount of minimum fees and
subscriber royalty fees payable under the provision 6 (B) of this agreement
during the remainder of the term(s) of the agreement. For purposes of
calculating any such proportionate increase, the parties acknowledge and agree
that the minimum fee and subscriber royalty fee agreed to herein are based on
Lessee's equivalent use of three full-time ITFS channels.
E) Station Identification. During Lessee's use of Lessor's excess
channel capacity, Lessee shall transmit Lessor's call sign for each respective
station as required by the FCC.
8. PROCECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES.
A) Best Efforts to Secure Approval of this Agreement. The parties
recognize that certain approvals will be required from the FCC in order to
effectuate this Agreement. Both parties shall use their best efforts to prepare,
file and prosecute before the FCC all petitions, waivers, applications and other
documents necessary to secure any FCC approval required to effectuate this
Agreement. Lessee shall assist in the preparation and prosecution of such
applications and as provided for herein, shall pay all filing fees, attorneys'
fees, engineering fees, and all other expenses in connection therewith. Lessor
also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDs and
MMDS operators to co-locate at the Transmission Site. Notwithstanding anything
in this Agreement to the contrary, it is understood that no filing shall be made
with the FCC with respect to this Agreement unless both parties have reviewed
such filing and consented in writing to its submission, such consent not be
unreasonably withheld.
B) Further Efforts. Throughout the Initial Term of this Agreement,
Lessor shall use its best efforts to obtain and maintain in force all licenses,
permits and authorizations required for Lessee and Lessor to use the ITFS
Channels as contemplated by this Agreement. Lessee shall be responsible for all
cash expenses incurred to obtain and maintain in force such licenses, permits
and authorizations. When mutually agreed by the parties and at Lessee's sole
expense, Lessor shall apply for, and use its best efforts to obtain those
reasonable license modifications which would assist Lessee in its business.
Lessor also shall consider filing, at Lessee's sole expense, such reasonable
protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or
OFS applications or amendments as may be requested by Lessee in the mutual best
interests of the parties and the public. Lessor and Lessee shall promptly notify
each other of any event of which it has knowledge that may affect any of the
licenses, permits or authorization affecting the ITFS Channels.
C) Attorneys' Fees. With respect to any legal work conducted pursuant
to Paragraph 8(A) and (B) above, Lessee shall be responsible for all attorneys'
fees in connection therewith and shall make payments directly to the attorney.
However, any attorney fees paid by Lessee shall be approved in advance by
Lessee.
9. REPRESENTATIONS AND WARRANTIES.
A) Representations and Warranties of Lessor. Lessor represents and
warrants to Lesse as follows:
(i) Organization. Lessor is a non-profit organization duly organized
and existing in good standing under the laws of the State of California, and it
has full power and authority to carry out all of the transactions contemplated
by this Agreement and all other agreement, certificates or instruments executed
and delivered in connection herewith.
(ii) No Violation. Neither the execution nor delivery of this agreement
or any other agreements, certificates or instruments executed and delivered
herewith, nor the performance of the transactions contemplated hereby constitute
or will constitute a violation of , be in conflict with, or a default under any
term or provision of the governing instruments or Lessor or any agreement or
commitment to which Lessor is bound, or any judgment, decree, order, regulation
or rule of any court or governmental authority, or consent of any federal, state
or local authority is required in connection with the execution and delivery of
this Agreement or any other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transaction contemplated
hereby.
B) Representations and Warranties of Lessee. Lessee represents and
warrants to Lessor as follows:
(ii) Organization. Lessee is duly organized, validly existing and in
good standing under the laws of the State of its incorporation and it has full
power and authority to own property and carry all of the transactions
contemplated by this Agreement, and all other agreements, certificates or
instruments executed and delivered by Lessee in connection herewith.
(ii) Corporation Action; Valid and Binding Agreements. Lessee has taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and all other agreements, certificates or instruments executed and
delivered in connection herewith. Upon execution and delivery, this Agreement
and all other agreements, certificates or instruments executed and delivered by
Lessee in connection herewith will constitute valid and binding agreements of
Lessee enforceable in accordance with their respective terms.
(iii) Litigation and Investigations. There is no action, suit,
proceeding or investigation pending or, to the best of Lessee's knowledge,
threatened against Lessee, its principals or related entities before any court,
administrative agency or other governmental body, and Lessee does not know nor
is aware of any reason for commencement of any such action, proceeding or
investigation.
(iv) Misrepresentation of Material Fact. To the best of Lessee's
knowledge, information and believe, no document or contract that was shown to
Lessor and which in any way affects any of the properties, assets or proposed
transactions of Lessee as such relates to this Agreement, no certificate or
statement furnished by or on behalf of Lessee in connection with this Agreement,
nor this Agreement itself contains any untrue statement of material fact or
omits to state a material fact which would make the statements contained herein
misleading.
<PAGE>
C) Survival or Representations and Warranties. The representations and
warranties contained in this Agreement shall be deemed to be continuing during
the Initial terms of this Agreement, and each Party shall have the duty promptly
to notify the notify the other of any event or circumstance which might
reasonably be deemed to constitute a breach of or lead to a breach of its
warranties or representations hereunder. The waiver by either Party of any
breach of any presentation or warranty under this Agreement shall not constitute
a waiver of any other representation or warranty or of any failure in the future
by the other Party to fulfill such representation or warranty.
10. TERMINATION.
A) Termination of FCC Authorization. Without further liability to
either Lessor or Lessee, this Agreement shall terminate in the event that for
any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii)
the FCC shall terminate or diminish Lessor's authority to lease the ITFS
Channels in accordance with the terms of this Agreement.
B) Termination by Reason of Default or Nonperformance. At the option of
the non-defaulting party, this Agreement may be terminated upon the material
breach or default by the defaulting party of its duties and obligations
hereunder is such breach or default is not cured by such defaulting party and is
breach or default shall continue for a period of thirty (30) consecutive days
after such defaulting party's receipt of notice thereof from the non-defaulting
party. It is understood and agreed that any failure on the part of Lessee to
make any payment required under Paragraph 6 hereof shall be a material breach of
default of its duties and obligations hereunder. It is also understood and
agreed that any consequences resulting from the loss of local participating
receive sites shall not be considered a material breach or default by Lessor of
its duties and obligations hereunder.
C) Remedies to Continue. In the event of termination of this Agreement
pursuant to Paragraph 10(B), such termination shall not affect or diminish the
rights or claims or remedies available in equity or at law to the non-defaulting
party arising by reason of a breach or default of this Agreement. However, no
liability shall arise on the part of Lessor or Lessee upon termination of this
Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license
occurs as a result of the default of either party.
11. TRANSFER OF RIGHTS AND OBLIGATIONS.
Lessee shall have the right to assign its rights under this lease as
collateral for any financing arrangements it makes. Lessee shall also have the
right to pledge the Leased Equipment as collateral security for any loans it
makes; provided, however, that any pledge of the Leased Equipment shall be made
subject to the provisions of this lease. Lessee shall further have the right to
subcontract any portion of its obligations under this Agreement to any
partnership, joint venture, corporation or entity which Lessee may choose,
provided that Lessee gives Lessor notice of any proposed subcontracting and,
provided further, that no such subcontracting shall release Lessee from
fulfilling all of its obligations under this Agreement. Lessee shall have the
right to assign or transfer its rights, benefits, duties and obligations under
this Agreement to a commonly-owned company without the prior consent of Lessor.
Apart from the foregoing, neither party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably witheld.
12. INDEMNIFICATION.
A) By Lessor. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, arising directly or indirectly out of (i) the
willful misconduct of Lessor, its agents or employees, in
<PAGE>
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessor during any of Lessor's Airtime.
B) By Lessee. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, which arise directly or indirectly out of (i) the
negligence or willful misconduct of Lessee, its agents or employees, in
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessee or any of its authorized agents or subcontractors with the
public, third parties and subscribers to the Lessee's programming service; or
(iv) any maintenance, installation or other work performed by Lessee or any
authorized agent or subcontractor under this Agreement.
C) Notice of Claim; Defense of Claim. Each party shall notify the other
of any such claim promptly upon receipt of same. Either party (hereinafter
referred to as appropriate the "Indemnitor" or Indemnitee") shall have the
option to defend, at its own expense, any claims arising under this Paragraph.
In Indemnitor assumes the defense of any such claim, Indemnitee shall delegate
complete and sole authority to the Indemnitor to defend or settle same and
Indemnitee shall cooperate with Indemnitor in the defense thereof.
13) INSURANCE.
A) Policies Required. At its expense, Lessee shall secure and maintain
with financially reputable insurers, one or more policies of insurance insuring
the Leased Equipment and Lessee's utilization of the ITFS Channels against
casualty and other losses of the kinds customarily insured against by firms of
established reputations engaged in the same or similar line of business, or such
types and in such amounts as are customarily carried under similar circumstances
by such firms, including, without limitation: (i) "All Risk" property insurance
covering the ITFS Equipment and the common Equipment to the extent of one
hundred percent (100%) of its full replacement value without deduction for
depreciation: (ii) comprehensive general public liability insurance covering
liability resulting from lessee's operation of the ITFS equipment on an
occurrence basis having minimum limits of liability in an amount of not less
than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or
death to any person or persons in any one occurrence, and not less than Two
Million Dollars ($2,000,000.00) in the aggregate for all such losses during each
policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with
respect to damage to property; (ii) all workers compensation, automobile
liability and similar insurance required by law.
B) Insurance Policy Forms. All policies of insurance required by this
Paragraph shall, whre appropriate, designate Lessor as either the insured party
or as a named additionally insured party, shall be written as primary policies,
not contributory with and not in excess of any coverage which Lessor shall
carry, and shall contain a provision that the issuer shall give to Lessor thirty
(30) days prior written notice of any cancellation or lapse of such insurance or
of any change in the coverage thereof.
C) Proof of Insurance. Executed copies of the policies of insurance
required under this section or certificates thereof shall be delivered to Lessor
not later than ten (10) after execution of this agreement. Lessee shall furnish
Lessor evidence of renewal of each such policy not later than thirty (30) days
prior to the expiration of the term thereof.
66. RELATIONSHIP OF PARTIES.
By the provisions of this Agreement, Lessor and Lessee intend to enter
an airtime lease relationship and not a joint venture. They will carry out this
Agreement to preserve that intent. Neither party shall represent itself as the
<PAGE>
other party, nor as having any relationship with one another, except as Lessor
and Lessee under the terms of this Agreement.
67. EQUIPMENT PURCHASE.
I) Lessor's Option to Purchase. In the event that this Agreement is
terminated, Lessor shall have the option to purchase the Leased
Equipment used exclusively for Lessor's ITFS license. Any equipment
which is used in a shared fashion (such as transmit antenna, decoders
and combiners) in providing signals other than Lessor's signals are
excluded from this option to purchase. The intent of the purchase
option provided for in Paragraphs 16(A) is to provide Lessor with the
capability to continue to perform on Lessor's ITFS license. The
purchase price shall be the market value of such equipment noted above
as determined by mutual agreement or by averaging the values obtained
from two (2) appraisals, with one appraiser each chosen by Lessor and
Lessee.
J) Lessee's Option to Purchase. If during the terms of this Agreement the
FCC modifies its rules so as to enable Lessee to be licensed to
operate the ITFS frequencies, Lessee shall have a right of first
refusal to acquire such licenses subject to the same terms and
conditions as the right provided for in Paragraph 1(B).
68. NON-DISCLOSURE
Lessor acknowledges that there may be made available to it pursuant to
this Agreement proprietary information of Lessee relating to the encoding and/or
decoding system associated with the ITFS channel equipment and its patented
processes including, but not limited to, improvements, innovations, adaptation,
inventions, results of experimentation, processes and methods, whether or not
deemed patentable, and certain business and marketing techniques (all herein
referred to as "Confidential Information"). Lessor acknowledges that this
Confidential Information has been developed by Lessee at considerable effort and
expense and represents special, unique and valuable proprietary assets of
Lessee, the value of which may be destroyed by unauthorized dissemination.
Accordingly, Lessor covenants and agrees that, except as may be required for the
performance of this Agreement or by law or court order, neither it nor any of
its agents or affiliates shall disclose such Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, such
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof.
69. NON-COMPETITION
During the term of this Agreement, Lessor agrees not to transmit
programming or to lease or sublease any channel capacity on its ITFS Facilities
for the transmission of programming that is competitive with the programming
transmitted by Lessee.
70. FORCE MAJEURE
If by reason of Force Majeure either party is unable in whole or in
part to perform its obligations hereunder, the party shall not be deemed in
violation of default during the period of such inability. As used herein, the
phrase "Force Majeure", shall mean the following: act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivisions, thereof which are not the result of a
breach of this Agreement, orders of any military authority insurrections, riots,
epidemics, fires, civil disturbances, explosions, or any other cause or event
not reasonably within control of the adversely affected party.
71. CONDITION PRECEDENT
This Agreement is conditional on the issuance of a Final Order by the
FCC granting Lessor a construction permit for the ITFS Channels in the Market
from the Transmission Site. By "Final Order" the parties mean an action or order
of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled
or suspended and with respect to which no timely-filed request for
administrative or judicial review is pending and as to which the time for filing
any such request, or for the FCC to set aside the action on its own motion, has
expired.
<PAGE>
72. NOTICE
Any notice required to be given to Lessor under any provision of this
Agreement shall be delivered personally or by certified mail to Lessor at the
address first written above. Any notice required to be given to Lessee under any
provision of this Agreement shall be delivered personally or by certified mail
to Lessee at the address first written above.
73. SEVERABILITY
Should any court or agency determine that any provision of this
Agreement is invalid, the remainder of the Agreement shall remain in effect.
74. WAIVER
A waiver by either Lessor or Lessee of a breach of any provision of
this Agreement shall not be deemed to constitute a waiver of any preceding or
subsequent breach of the same provision or of any other provision.
75. PAYMENT OF EXPENSES AND SIGNING FEES
A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall
pay all costs and expenses incident to fulfilling or modifying this Agreement,
such as, attorneys' fees or, if necessary, any travel expenses approved in
advance by Lessee, FCC filing fees, and engineering costs.
76. VENUE AND GOVERNING LAW
Venue for any cause of action brought by or between Lessor and/or
Lessee relating to this Agreement shall be in California and all provisions of
this Agreement shall be construed under the laws of the State of California and
County of Lessor.
77. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument, and shall become effective when each of the parties hereto
shall have delivered to it this Agreement duly executed by each of the other
parties hereto.
78. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral or written provisions of any kind. The parties further
agree that this Agreement may only be modified by written Agreement signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this day of July 1st, 1999.
SHEKINAH NETWORK
By: ______________________________
Name: Charles J. McKee
Title: President
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Name: Douglas P. Haffer
Title: President
<PAGE>
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Phone/Fax: (805) 438-3341
Attn: Charles McKee, President
Phone: (805) 438-3341
Fax: (805) 438-3341
Gardner, Carton & Douglas
Attn: Laura Mow
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
World Wide Wireless Communications, Inc.
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 981-7777
Fax: (415) 391 3199
<PAGE>
EXHIBIT A
Schedule of Airtime
<PAGE>
EXHIBIT B
Receive Sites
There shall be attached hereto and incorporated by reference a copy of
FCC Form 330 Section IV listing Lessor's receive sites.
<PAGE>
EXHIBIT C
Leased Equipment
Noted below is a list of equipment that Lessee is leasing to Lessor.
(9) Four (4) ITFS tansmitters and related hardware
(10) Lessor's ITFS receive site antennas and related hardware
*(3) Combining network, transmission line and antenna
*Common Equipment
<PAGE>
EXHIBIT D
Service and Royalty Fees
1. Lessor's Service Fee
Services Provided Annual Fee
----------------- ----------
(m) Lease of Leased Equipment [6(A)] $1.00
(n) Maintenance of Leased Equipment [3(D)] $1.00
(o) Lease of space at Primary Transmission Site [3A)] $1.00
2. Lessee's Subscriber Royalty Fee
Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's
Gross receipts or a monthly minimum payment of $500 per month whichever is
greater.
Payment shall be as follows: Commencing on the Execution (Effective) Date and as
defined in Paragraph 6)B, payments for each month shall be made by the twentieth
(20th) day of the following month.
<PAGE>
EXHIBIT E
Programming
In addition to digital data services, such as the Internet or Intranet, the
following is a list of video programming services Lessee may provide over
Lessee's System.
TLC - The Leaning Channel
TWC - The Weather Channel
Lifetime
ESPN - Sports
AMC - American Movie Classics
SCOLA
WHTN - World Harvest Television Network
ECO - Galavision
CNN - Cable News Network
CNN - Headline News
C-Span I
C-Span II
BET - Black Entertainment Network
CNBC - Consumer News & Business Channel
Nickelodeon
The Discovery Channel
A&E - Arts and Entertainment
The Family Channel
The Disney Channel
PBS - Public Broadcasting Service
TBN - Trinity Broadcasting Network
TNIN - The New Inspirational Network
ME/U - Mind Extension Network
The International Channel
BRAVO Network
The Travel Channel
Family Network
Keystone Inspirational Network
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
Pierre, South Dakota
ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT
THIS AGREEMENT is made this 1st day of August 1999 by Shekinah Network
(hereinafter referred to as "Lessor") having its principal place of business at
14875 Powerline Road, Atascadero, CA 93422 and World Wide Wireless
Communications, Inc. (hereinafter referred to as "Lessee") having its principal
place of business at One Post Street, Suite 2600 San Francisco, CA 94104.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users; and
WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-798
(the "License") for the Channel group C1-4 (the "ITFS Channels") in Pierre,
South Dakota ("The Market"); and
WHEREAS, Lessee is in the business of providing voice, video, data and
other services via microwave transmission in the Market Area and desires to
lease the excess ITFS capacity of the ITFS channels; and
WHEREAS, Lessor has determined that there will be excess airtime
capacity available on the ITFS Channels and desires to lease this excess airtime
capacity to Lessee.
NOW, THEREFORE, in consideration of the mutual promises, undertakings,
covenants and conditions set forth herein, the Lessor and Lessee do hereby agree
and warrant as follows:
11. TERM OF AGREEMENT
A. Initial Term. This Agreement shall be effective upon the date of its
execution and shall extend for an initial term of five (5) years (the
"Initial Term").
B. Renewal Term Provided that the License is renewed by the FCC, Lessee
shall have the right to extend this Agreement on its then existing
terms and conditions for one (1) additional five (5) year term (the
"Renewal Term"). The Renewal Term shall automatically go into effect
upon the conclusion of the Initial Term unless Lessee notifies Lessor
at least one hundred eighty days (180) before the end of the Initial
Term that Lessee does not wish to extend this Agreement.
C. New Lease Agreement/Right of first Refusal.
(1) Providing that Lessor's FCC license remains in good standing
and/or Lessor seeks to renew such license, Lessee and Lessor shall
negotiate in good faith for a new excess capacity airtime lease
agreement (hereinafter referred to as "New Lease Agreement") no later
than one hundred eighty days (180) prior to the end of the latter of
(i) Initial Term or (ii) the Renewal Term if the Agreement is extended
for the Renewal Term.
<PAGE>
(7) If Lessor elects to not reasonably pursue a New Lease Agreement
with Lessee, then Lessor shall so notify Lessee in writing of such
intent no later than one hundred eighty (180) days prior to the end of
the Renewal Term.
(3) If Lessor and Lessee do not enter into a New Lease Agreement,
Lessor grants Lessee a right of first refusal on any competing
proposals for lease agreements or transfers or assignments of any part
of the ITFS Channels received by Lessor during the twelve (12) months
following the expiration of the latter of (i) the Initial Term or (ii)
the Renewal Term, if the Agreement is extended for the Renewal Term.
If any acceptable offer to lease or acquire the ITFS Channels is made
to Lessor, Lessor shall give written notice to Lessee describing the
person to whom the proposed lease or transfer is to be made, the fees,
charges, rental or other consideration to be received fro the lease or
transfer, the terms thereof and generally the relevant other terms and
conditions of the lease or transfer. Lessee shall have a period of
thirty (30) days after its receipt of such notice from Lessor in which
to elect, by giving written notice to Lessor, to lease or, if
eligible, obtain any or all of the ITFS Channels for the same fees,
charges, rental or other consideration for which Lessor proposed to
lease or transfer to the third person.
(i) The fees, charges, rental or consideration shall be paid by such
third person or Lessee in cash.
(xii) If Lessor does not believe Lessee's stated offer is in an amount
fairly equivalent to the fair value of the consideration payable by
the third person and so notifies Lessee in writing within seven (7)
days after Lessor's receipt of Lessee's notice of election to so lease
or purchase, Lessee may within five (5) days after its receipt of such
notice from Lessor elect to refer such question for determination by
an impartial arbitrator and the right of first refusal of Lessee shall
then be held open until (5) days after Lessee is notified of such
determination. Such arbitrator shall be chosen either by agreement of
Lessee and Lessor at the time such question arises, or, at the option
of either party, by referring the question to the American Arbitration
Association with instructions that the American Arbitration
Association select a single arbitrator under a request from the
parties for expedited and accelerated determination. The determination
of the arbitrator chosen under either option contained in this
subparagraph shall be final and binding upon Lessee and Lessor. The
parties shall share equally in the costs and fees of the arbitration
(xiii) In the event Lessee shall elect to exercise its right of first
refusal, the lease agreement or other transfer or assignment shall be
consummated within thirty (30) days of the latest of: (1) the day on
which Lessor received notice of Lessee's election to exercise the
right of first refusal; (2) the day upon which any question required
to be determined by the arbitrator hereunder has been determined; or
(3) the date of any FCC approval in the case of assignment or
transfer; or at such other time as may be mutually agreed. The right
of first refusal is terminated either by the lease or other transfer
to Lessee as provided herein or by notice to Lessee of the Lessor's
proposal to lease or otherwise transfer the ITFS Channels or any part
to a third person and Lessee's unwillingness or failure to meet and
accept such a bona fide offer pursuant to the times and procedures as
set forth above; provided that such proposed lease or transfer is
consummated at the same fees, charges, rental or other consideration
and upon the same terms as to which such right of first refusal
applied, within thirty (30) days after Lessee's right of first refusal
had expired or had been specifically waived by written notice given to
Lessor by Lessee, or within thirty (30) days following FCC approval in
the case of assignment or transfer.
C) Operation During End of Term. If Lessor and Lessee do not enter into
New Lease Agreement before the end of the Initial Term, Lessee shall
cease leasing the ITFS Channels on the last day of the Initial Term.
<PAGE>
D) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this
Agreement shall not give rise to any rights or remedies beyond the
expiration of any FCC license necessary for the continued operation of
the ITFS Channels. Provided, however, that while this Agreement is in
effect, Lessor shall obtain and maintain in force all licenses,
permits and authorizations required or desired in connection with the
use of the ITFS Channels. Lessor shall take all necessary steps to
renew the licenses for the ITFS Channels and shall not commit any act
or engage in any activity which could reasonably be expected to cause
the FCC to impair, restrict, revoke, cancel, suspend or refuse to
renew the ITFS licenses. Lessor shall take all reasonable steps to
comply with the Communications Act of 1934, as amended and the rules
and regulations of the FCC, and shall file all reports, schedules
and/or forms required by the FCC to be filed by Lessor. All expenses,
including attorneys fees and filing fees, incurred in preparing and
filing such reports, schedules and/or forms required by the FCC shall
be paid by the Lessee.
12. ALLOCATION OF AIRTIME.
A. Excess Capacity Airtime. To the extent allowed by the FCC rules and
regulations and any amendments thereof, Lessor agrees to lease to
Lessee the exclusive use of all excess capacity not utilized by Lessor
("Excess Capacity Airtime").
B. Lessor's Primary Airtime. During analog transmission over the ITFS
Channels, Lessor reserves for its exclusive use a minimum of twenty
(20) hours of airtime per-channel per-week to be used for its ITFS
scheduled programs. During digital transmission ovr the ITFS Channels,
Lessor shall have the exclusive use of 12.5% of the total capacity
available on the Lessor's ITFS Channels. This airtime shall be know as
"Lessor's Primary Airtime".
C. Schedule of Airtime. The schedule which depicts the agreement of the
parties as to use of Lessor's Channels shall be attached hereto and
made a part hereof as Exhibit A which is subject to change upon
agreement by both parties.
D. Lessee's use of its Excess Capacity Airtime. Lessee shall have the
right to utilize its Excess Capacity Airtime for any purpose allowed
or authorized by the FCC including but not limited to voice, video and
data transmission.
E. Alternate Use and Vertical Blanking Intervals. Lessor shall have the
right to use the second audio carrier ("SAP") and vertical blanking
intervals. ("VBI") on which Lessor's ITFS programming is being
transmitted. Lessee shall at all times have the right to use the VBI
and SAP not utilized by Lessor and 100% of the response frequencies
associated with the ITFS Channels. Lessor shall be responsible for any
equipment needed to utilize the VBI and/or SAP and such equipment
shall be compatible with Lessee's system.
F. Lessor's Use of ITFS Channels. Lessor agrees that its program services
and airtime use will not harm or interfere with Lessee's current or
future signal paths utilized within Lessee's System for program
encryption, pilot carrier signaling and other technical needs utilized
for the operation of and such services provided by Lessee's System.
Nor will Lessor, by its own action, or through a third party, utilize
any part of its licensed frequency spectrum to create or operate a
service that is in competition with current, planned or future
services provided by
<PAGE>
Lessee's System. Lessor agrees to use its Primary Airtime in
accordance with the FCC's rules and regulations. Lessor shall not take
or fail to take any action which may have a material adverse effect on
Lessee's right to utilize its Excess Capacity Airtime.
G. Expanded System Capacity. Lessee shall have the right at anytime to
require Lessor to file with the FCC any necessary application to
expand the channel capacity to Lessor's station to enable it to carry
more than one video signal per channel or digital data services;
provided however, before Lessee can exercise this right, it must
demonstrate to the Lessor's reasonable satisfaction that such
modification will not materially degrade the performance of the
station nor impair signal quality at the registered ITFS receive
sites. Once such modification has been constructed, the modified
facilities shall automatically be considered a part of this agreement
and subject to all terms and conditions hereof. It is understood that
Lessee shall have the full-time use of the Expanded Channels to the
extend permitted by FCC rules.
3. TRANSMISSION SITE AND FACILITIES.
K. Primary Transmission Site. Lessor's ITFS Channels are located at Key
West, FL, Lessee agrees to provide Lessor space at the Primary
Transmission site for Lessor's audio and video transmission equipment
which shall not exceed on rack. Such space shall be leased to Lessor
pursuant to Exhibit D hereto. This site shall hereinafter be described
as the "Primary Transmission Site". At Lessee's sole expense, Lessee
shall contract for a lease of space at the Transmission Site upon such
terms as the parties agree. The Transmission Site shall comply with
the standards, specifications and regulations of the FCC rules and
orders pertaining to Lessor's ITFS license.
L. Relocation of Transmission Site.
(i) Lessor acknowledges that the location of the
Primary Transmission Site for ITFS Channels is critical to the
Lessee's business and agrees that it will not relocate the
transmission facilities for ITFS Channels from the Primary
Transmission Site without Lessee's prior written consent.
(ii) Lessor further acknowledges that possibility
that, as a result of currently unforeseen events, the Primary
Transmission Site may not be the optimum site for the location
of the ITFS Channels or Lessee's business throughout the term
of this Lease Agreement. Lessor therefore agrees that if at
any time or from time to time Lessee requests in writing that
the transmission facilities for the ITFS Channels be
relocated, Lessor shall file with the FCC and any other
regulatory body having jurisdicition over the ITFS Channels
all applications, amendments, and requests for modification
that may be necessary to obtain any necessary consents to
permit such relocation to such location within or adjacent to
the Market as may be requested by Lessee; provided, however,
that Lessor shall not be obligated to submit or procecute any
application, amendment, or request for modification that
Lessor reasonably determines, upon advice of counsel contained
in a written opinion, would be in violation of the terms of
the License, any statute, rule, or regulations regarding the
operation of the ITFS Channels or the submission of materials
to the FCC, or any of its obligations as an ITFS licensee; and
provided, further, that any such relocation will not result in
loss of service to Lessor's registered receive sites served by
the transmission facilities in the event that the
authorization is obtained to relocate the ITFS Channels to the
location requested by Lessee, Lessor shall relocate such
channels to such new location as soon as reasonably
<PAGE>
possible after authorization is obtained. Lessee shall bear
reasonable costs associated with such relocation, including
engineering and construction, and all reasonable costs
associated with obtaining FCC or any other regulatory approval
therefore.
(iii) Lessor agrees to file modification applications
requested by Lessee. Such modifications may include but shall
not be limited to the following: power increase or decrease,
polarization, transmit antenna patterns, digital, two-way
(return path) use of the ITFS Channels, boosters, beam benders
or repeaters, cells, sectorization, channel swaps, channel
loading, channel shifting and application within five (5)
business days or receipt of the modification application from
Lessee or during any FCC designated filing window. Lessee will
use reasonable efforts to provide Lessor with the engineering
for the modification thirty (30) days prior to the request for
filing. If Lessor believes that such modification will have an
adverse effect on Lessor's ability to provide its services to
its receive sites, Lessor agrees to file the modification
application as presented by Lessee and within the time limit
requested by Lessee; however, Lessee agrees not to implement
construction and Lessor agrees not to withdraw the application
until the parties have adequately addressed and resolved the
potential material adverse effect or the matter has been
submitted to arbitration pursuant to Section 16 and a final
decision has been rendered by arbitrator. Although Lessee
intends to file such modification applications, it may elect
not to construct the Channels in that manner and may desire to
utilize the Channels as currently licensed. A copy of the
modification application, bearing the FCC's date stamp, shall
be mailed to Lessee by Lessor, within fourteen (14) days of
the filing of the modification application. Lessee shall be
solely responsible for all engineering and legal costs
associated with the preparation, review and filing of the
modification application. In the event that any license
modification requested by Lessee requires receive site
upgrades in order for Lessor's receive sites to continue to
receive Lessor's services, then Lessee agrees to pay for all
costs to complete such upgrade prior to implementing the
license modification.
C. System Construction. Lessee shall within a reasonable
period of time, but not later than six (6) months after the
FCC grant of digital authority for the ITFS Channels, purchase
equipment such as the antenna, waveguide or transmitters
specified on the authorization for the ITFS Channels. At
Lessee's expense, Lessee shall purchase and install such
transmitters, transmission line, modulators, antennas and
other equipment as required to operate the ITFS Channels in
accordance with the provision of such authorization. Any
equipment so used in such construction shall be leased to
lessor pursuant to Paragraph 5 hereof. Such equipment is
hereinafter referred to as the "Leased Equipment". Lessee
shall retain title to the Leased Equipment except as noted by
Paragraph 15 herein.
D. Maintenance of Transmission Equipment. At Lessee's expense
and subject to Lessor's right to supervise the maintenance of
this equipment, Lessee shall maintain and operate the Leased
Equipment during the terms of this Agreement for a nominal
fee. Lessee shall also pay all taxes and other charges
assessed against the Leased Equipment.
E. Transmission of Programming. At no cost or expense to
Lessor, Lessee shall provide the necessary labor and equipment
capabilities to transmit on the ITFS Channels programming
required to be carried pursuant to this Agreement such as
Lessor's ITFS programming and TBN. Lessee shall also comply
with Lessor's instructions regarding the transmission of such
programming such as the dates and times to transmit
programming.
F. Interference. Lessee shall operate the Leased Equipment so
that such operation does not create or increase interference
with electronic transmission of any other FCC
<PAGE>
licensees entitles to protection under FCC rules and
regulations. If Lessee's entitled to protection under FCC
rules and regulations. If Lessee's operation of the Lease
Equipment does so create or increase interference, Lessee
shall pay all of the reasonable engineering and legal fees
necessary to resolve the interference problem so created.
G. Alterations and Attachments. Lessee, at its own expense,
may make alterations of or attachments to the ITFS equipment
or the common equipment as defined in Exhibit C (including the
installation of encoding and/or addressing equipment) as may
be reasonably required from time to time by the nature of its
business; provided however, that such alterations or
attachments do not interfere with Lessor's signal or ongoing
operations or violate any FCC rules or regulations; and
provided further that FCC authorization, if required, is
obtained in advance of any such alteration or attachment at
the sole cost of Lessee. to the extent any FCC authorization
pertaining to the ITFS equipment is required, Lessor agrees to
use its best efforts to obtain such authorization.
H. Licensee Control and Liability. Nothing herein shall
derogate from such licensee control of operations of the ITFS
Channels that Lessor, as an FCC licensee, shall be required to
maintain and Lessee acknowledges the reservation by Lessor of
such control. Lessor shall at all times retain ultimate and
exclusive responsibility for the operation and control of the
ITFS Channels including policy decisions.
4. LESSOR'S RECEIVE SITES.
Attached hereto as Exhibit B is list of the registered receive sites
designated by Lessor to receive its ITFS programming and to be installed at the
expense of Lessee. Those receive sites so listed shall be installed with a
Standard Installation. If as the result of any relocation of the Primary
Transmit Site, the equipment at Lessor's existing registered receive sites must
be reoriented, Lessee shall pay the cost of same. As used herein for the
purposes of this Agreement, the phrase "Standard Installation" shall mean an
installation consisting of the placement of the ITFS/MMDS receiving antenna at
an elevation (not to exceed thirty [30] feet above the base mounting location)
which could normally receive the line-of-sight transmission from the
Transmission Site; the coupling thereto of a block-down converter; and a
sufficient amount of transmission line (coaxial cable) to connect the received
ITFS programming to the input of (i) one classroom designated by Lessor to
receive the ITFS programming or (ii) the receive site internal/external
distribution system. Also, if as the result of any relocation of the Transmit
Site, the equipment at Lessor's existing receive sites must be reoriented,
Lessee shall pay the cost of same. Lessee also agrees that for digital
transmission of the ITFS Channels Lessee will purchase and install at Lessee's
expense, one single-point modem to receive its ITFS programming.
5. LEASE OF EQUIPMENT.
A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall
lease from Lessee the Leased Equipment during the terms of this Agreement. A
list of this equipment is attached hereto as Exhibit C and incorporated by
reference herein. Lessor shall have no responsibility for the loss of or damage
to the Leased Equipment during the terms of this Agreement and Lessee shall bear
all such responsibility.
6. FEES.
A) Lessor's Service Fee. In consideration of the lease of the Leased
Equipment, and for its share of the projected costs to maintain the Transmission
Site and the Lease Equipment, Lessor shall pay Lessee an annual fee provided for
in Exhibit D.
B) Subscriber Royalty Fees or Percentage. Beginning on the Execution
Date of this Agreement and continuing thereafter during the Initial Term of this
Agreement, Lessee shall pay to
<PAGE>
Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum,
whichever is greater as set out in Exhibit D which is attached herewith and
incorporated by reference herein. If the Execution Date shall be a date other
than the first day of a calendar month, then the Subscriber Royalty Fee for the
partial month shall be paid on a proportionate basis. A late fee of 10% (ten
percent) will be assessed to past due accounts, and a finance charge of one and
one-half percent (1.5%) per month will be assessed in addition to the late fee
until paid.
C) Notice of Construction and Required Certificate. Within thirty (30)
days of completion of construction at the Transmission Site, Lessee shall notify
Lessor of such completion of construction in writing. Within thirty (30) days of
the end of each month in which Excess Capacity Airtime is leased hereunder,
Lessee shall provide Lessor with a certificate, certified as accurate and
correct by an authorized agent of Lessee, showing the number of subscribers
served during such month.
D) Right to Audit. Lessee shall for a period of three (3) years after
their creation, keep, maintain and preserve complete and accurate records and
accounts, including all invoices, correspondence, ledgers, financial and other
records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's
charges hereunder; and such records and corporate accounts shall be available
for inspection and audit at Lessee's corporate offices or at Lessee's offices in
the Market, as designated by Lessee, at any time or times during the term of
this Agreement or within ninety (90) days thereafter, during reasonable business
hours, by Lessor or its nominee. In the event that there is discovered an
underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above,
Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of
each such underpayment. All information obtained by Lessor during any audit
herein shall be maintained by Lessor in strict confidence.
7. PROGRAMMING.
A) Control Over Programming.
(i) Program Content. Lessee intends that only programming of a sort
which would not serve to place Lessor's reputation in the community in jeopardy
will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize
disputes, recognizing the difficulties inherent in specifying exact standards
herein, it is agreed that Lessee shall have the right to market the programming
provided by the networks and services listed on Exhibit E. If, however, the
programming content of any networks and services listed on Exhibit E materially
changes, Lessor shall have the right, upon ninety (90) days notice, to deny
Lessee the right to continue transmitting such programming if Lessor would have
the right to deny Lessee the right to transmit such programming under the
provisions of this paragraph in the first instance. If Lessee proposes to
transmit the programming of any new programming service, the Lessee shall notify
Lessor in writing specifying in detail the nature of the new programming service
and Lessor shall have the right, upon written served upon Lessee within thirty
(30) days after Lessor's receipt of any such notice from Lessee, to deny to
Lessee the right to transmit such service if such programming is obscene and/or
contradicting local, state and/or federal laws or otherwise violates any
federal, state or local laws or regulations. If no such denial notice is
received by Lessee within such thirty (30) days, lessee shall be authorized to
transmit all such services for which no denial notice is received. There shall
be no reduction in fees required under this Agreement for any such programming
not permitted to be transmitted.
B) Availability of Programming. It is understood by Lessee and Lessor
that there is expected to be no direct out-of-pocket annual costs for the
acquisition of the qualified ITFS educational programming for Lessor's use
during Lessor's Primary Airtime on the ITFS channels, based on current plans. In
the event that this ITFS educational programming either; (1) ceases to be
available, or, (2) becomes available only at a fee, then Lessor may incur direct
out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees
to provide its best efforts to assist Lessor in the acquisition of alternative
programming, if necessary. Additionally, Lessee agrees to make payment to Lessor
for the actual, direct programming costs incurred. If any; If Lessor, after
expending its best efforts, is unable to
<PAGE>
obtain suitable ITFS programming for a cost equal to the amount to be paid by
Lessee, Lessor and Lessee shall use their best efforts to reach agreement on
modifications to this Agreement to avoid any un-reimbursed ITFS programming
costs to Lessor. If no such agreement can be reached, Lessor may terminate this
agreement. In the case of such termination, Lessor shall use its best efforts
(with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior
approval) to transfer the license for the ITFS Channels to another qualified
educational entity, subject to FCC approval, with the intent of assigning this
Agreement from Lessor to the new educational entity.
C) Integration of Lessor's Programming. Lessee agrees to integrate
Lessor's programming into the overall communications service offered to
subscribers, without cost to Lessor. This integration shall include, but not be
limited to, listing Lessor's material in any program guides produced by Lessee
for subscribers.
D) Carriage of TBN. In the event that Lessor's ITFS Channels are used
for analog video transmission and TBN is not transmitted on a local VHF or UHF
station, with a market coverage equivalent to both area and signal quality of
our ITFS channels, and Lessee does not have local off-air insertion as part of
its standard installation, then, if so designated by Lessor, Lessee agrees to
transmit on one of the ITFS Channels the programming of Trinity Broadcasting
Network ("TBN") during those time periods such channel is not used for Lessor's
ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a
fee for carriage of TBN. In the event that Lessee is permitted to program the
hours previously occupied by TBN, then Lessee shall increase, in proportion to
the increase in Excess Capacity Airtime, the amount of minimum fees and
subscriber royalty fees payable under the provision 6 (B) of this agreement
during the remainder of the term(s) of the agreement. For purposes of
calculating any such proportionate increase, the parties acknowledge and agree
that the minimum fee and subscriber royalty fee agreed to herein are based on
Lessee's equivalent use of three full-time ITFS channels.
E) Station Identification. During Lessee's use of Lessor's excess
channel capacity, Lessee shall transmit Lessor's call sign for each respective
station as required by the FCC.
8. PROCECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES.
A) Best Efforts to Secure Approval of this Agreement. The parties
recognize that certain approvals will be required from the FCC in order to
effectuate this Agreement. Both parties shall use their best efforts to prepare,
file and prosecute before the FCC all petitions, waivers, applications and other
documents necessary to secure any FCC approval required to effectuate this
Agreement. Lessee shall assist in the preparation and prosecution of such
applications and as provided for herein, shall pay all filing fees, attorneys'
fees, engineering fees, and all other expenses in connection therewith. Lessor
also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDs and
MMDS operators to co-locate at the Transmission Site. Notwithstanding anything
in this Agreement to the contrary, it is understood that no filing shall be made
with the FCC with respect to this Agreement unless both parties have reviewed
such filing and consented in writing to its submission, such consent not be
unreasonably withheld.
B) Further Efforts. Throughout the Initial Term of this Agreement,
Lessor shall use its best efforts to obtain and maintain in force all licenses,
permits and authorizations required for Lessee and Lessor to use the ITFS
Channels as contemplated by this Agreement. Lessee shall be responsible for all
cash expenses incurred to obtain and maintain in force such licenses, permits
and authorizations. When mutually agreed by the parties and at Lessee's sole
expense, Lessor shall apply for, and use its best efforts to obtain those
reasonable license modifications which would assist Lessee in its business.
Lessor also shall consider filing, at Lessee's sole expense, such reasonable
protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or
OFS applications or amendments as may be requested by Lessee in the mutual best
interests of the parties and the public. Lessor and Lessee shall promptly notify
each other of any event of which it has knowledge that may affect any of the
licenses, permits or authorization affecting the ITFS Channels.
<PAGE>
C) Attorneys' Fees. With respect to any legal work conducted pursuant
to Paragraph 8(A) and (B) above, Lessee shall be responsible for all attorneys'
fees in connection therewith and shall make payments directly to the attorney.
However, any attorney fees paid by Lessee shall be approved in advance by
Lessee.
9. REPRESENTATIONS AND WARRANTIES.
A) Representations and Warranties of Lessor. Lessor represents and
warrants to Lesse as follows:
(i) Organization. Lessor is a non-profit organization duly organized
and existing in good standing under the laws of the State of California, and it
has full power and authority to carry out all of the transactions contemplated
by this Agreement and all other agreement, certificates or instruments executed
and delivered in connection herewith.
(ii) No Violation. Neither the execution nor delivery of this agreement
or any other agreements, certificates or instruments executed and delivered
herewith, nor the performance of the transactions contemplated hereby constitute
or will constitute a violation of , be in conflict with, or a default under any
term or provision of the governing instruments or Lessor or any agreement or
commitment to which Lessor is bound, or any judgment, decree, order, regulation
or rule of any court or governmental authority, or consent of any federal, state
or local authority is required in connection with the execution and delivery of
this Agreement or any other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transaction contemplated
hereby.
B) Representations and Warranties of Lessee. Lessee represents and
warrants to Lessor as follows:
(ii) Organization. Lessee is duly organized, validly existing and in
good standing under the laws of the State of its incorporation and it has full
power and authority to own property and carry all of the transactions
contemplated by this Agreement, and all other agreements, certificates or
instruments executed and delivered by Lessee in connection herewith.
(ii) Corporation Action; Valid and Binding Agreements. Lessee has taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and all other agreements, certificates or instruments executed and
delivered in connection herewith. Upon execution and delivery, this Agreement
and all other agreements, certificates or instruments executed and delivered by
Lessee in connection herewith will constitute valid and binding agreements of
Lessee enforceable in accordance with their respective terms.
(iii) Litigation and Investigations. There is no action, suit,
proceeding or investigation pending or, to the best of Lessee's knowledge,
threatened against Lessee, its principals or related entities before any court,
administrative agency or other governmental body, and Lessee does not know nor
is aware of any reason for commencement of any such action, proceeding or
investigation.
(iv) Misrepresentation of Material Fact. To the best of Lessee's
knowledge, information and believe, no document or contract that was shown to
Lessor and which in any way affects any of the properties, assets or proposed
transactions of Lessee as such relates to this Agreement, no certificate or
statement furnished by or on behalf of Lessee in connection with this Agreement,
nor this Agreement itself contains any untrue statement of material fact or
omits to state a material fact which would make the statements contained herein
misleading.
<PAGE>
C) Survival or Representations and Warranties. The representations and
warranties contained in this Agreement shall be deemed to be continuing during
the Initial terms of this Agreement, and each Party shall have the duty promptly
to notify the notify the other of any event or circumstance which might
reasonably be deemed to constitute a breach of or lead to a breach of its
warranties or representations hereunder. The waiver by either Party of any
breach of any presentation or warranty under this Agreement shall not constitute
a waiver of any other representation or warranty or of any failure in the future
by the other Party to fulfill such representation or warranty.
10. TERMINATION.
A) Termination of FCC Authorization. Without further liability to
either Lessor or Lessee, this Agreement shall terminate in the event that for
any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii)
the FCC shall terminate or diminish Lessor's authority to lease the ITFS
Channels in accordance with the terms of this Agreement.
B) Termination by Reason of Default or Nonperformance. At the option of
the non-defaulting party, this Agreement may be terminated upon the material
breach or default by the defaulting party of its duties and obligations
hereunder is such breach or default is not cured by such defaulting party and is
breach or default shall continue for a period of thirty (30) consecutive days
after such defaulting party's receipt of notice thereof from the non-defaulting
party. It is understood and agreed that any failure on the part of Lessee to
make any payment required under Paragraph 6 hereof shall be a material breach of
default of its duties and obligations hereunder. It is also understood and
agreed that any consequences resulting from the loss of local participating
receive sites shall not be considered a material breach or default by Lessor of
its duties and obligations hereunder.
C) Remedies to Continue. In the event of termination of this Agreement
pursuant to Paragraph 10(B), such termination shall not affect or diminish the
rights or claims or remedies available in equity or at law to the non-defaulting
party arising by reason of a breach or default of this Agreement. However, no
liability shall arise on the part of Lessor or Lessee upon termination of this
Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license
occurs as a result of the default of either party.
11. TRANSFER OF RIGHTS AND OBLIGATIONS.
Lessee shall have the right to assign its rights under this lease as
collateral for any financing arrangements it makes. Lessee shall also have the
right to pledge the Leased Equipment as collateral security for any loans it
makes; provided, however, that any pledge of the Leased Equipment shall be made
subject to the provisions of this lease. Lessee shall further have the right to
subcontract any portion of its obligations under this Agreement to any
partnership, joint venture, corporation or entity which Lessee may choose,
provided that Lessee gives Lessor notice of any proposed subcontracting and,
provided further, that no such subcontracting shall release Lessee from
fulfilling all of its obligations under this Agreement. Lessee shall have the
right to assign or transfer its rights, benefits, duties and obligations under
this Agreement to a commonly-owned company without the prior consent of Lessor.
Apart from the foregoing, neither party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably witheld.
12. INDEMNIFICATION.
A) By Lessor. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, arising directly or indirectly out of (i) the
willful misconduct of Lessor, its agents or employees, in
<PAGE>
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessor during any of Lessor's Airtime.
B) By Lessee. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, which arise directly or indirectly out of (i) the
negligence or willful misconduct of Lessee, its agents or employees, in
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessee or any of its authorized agents or subcontractors with the
public, third parties and subscribers to the Lessee's programming service; or
(iv) any maintenance, installation or other work performed by Lessee or any
authorized agent or subcontractor under this Agreement.
C) Notice of Claim; Defense of Claim. Each party shall notify the other
of any such claim promptly upon receipt of same. Either party (hereinafter
referred to as appropriate the "Indemnitor" or Indemnitee") shall have the
option to defend, at its own expense, any claims arising under this Paragraph.
In Indemnitor assumes the defense of any such claim, Indemnitee shall delegate
complete and sole authority to the Indemnitor to defend or settle same and
Indemnitee shall cooperate with Indemnitor in the defense thereof.
13) INSURANCE.
A) Policies Required. At its expense, Lessee shall secure and maintain
with financially reputable insurers, one or more policies of insurance insuring
the Leased Equipment and Lessee's utilization of the ITFS Channels against
casualty and other losses of the kinds customarily insured against by firms of
established reputations engaged in the same or similar line of business, or such
types and in such amounts as are customarily carried under similar circumstances
by such firms, including, without limitation: (i) "All Risk" property insurance
covering the ITFS Equipment and the common Equipment to the extent of one
hundred percent (100%) of its full replacement value without deduction for
depreciation: (ii) comprehensive general public liability insurance covering
liability resulting from lessee's operation of the ITFS equipment on an
occurrence basis having minimum limits of liability in an amount of not less
than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or
death to any person or persons in any one occurrence, and not less than Two
Million Dollars ($2,000,000.00) in the aggregate for all such losses during each
policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with
respect to damage to property; (ii) all workers compensation, automobile
liability and similar insurance required by law.
B) Insurance Policy Forms. All policies of insurance required by this
Paragraph shall, whre appropriate, designate Lessor as either the insured party
or as a named additionally insured party, shall be written as primary policies,
not contributory with and not in excess of any coverage which Lessor shall
carry, and shall contain a provision that the issuer shall give to Lessor thirty
(30) days prior written notice of any cancellation or lapse of such insurance or
of any change in the coverage thereof.
C) Proof of Insurance. Executed copies of the policies of insurance
required under this section or certificates thereof shall be delivered to Lessor
not later than ten (10) after execution of this agreement. Lessee shall furnish
Lessor evidence of renewal of each such policy not later than thirty (30) days
prior to the expiration of the term thereof.
79. RELATIONSHIP OF PARTIES.
By the provisions of this Agreement, Lessor and Lessee intend to enter
an airtime lease relationship and not a joint venture. They will carry out this
Agreement to preserve that intent. Neither party shall represent itself as the
<PAGE>
other party, nor as having any relationship with one another, except as Lessor
and Lessee under the terms of this Agreement.
80. EQUIPMENT PURCHASE.
K) Lessor's Option to Purchase. In the event that this Agreement is
terminated, Lessor shall have the option to purchase the Leased
Equipment used exclusively for Lessor's ITFS license. Any equipment
which is used in a shared fashion (such as transmit antenna, decoders
and combiners) in providing signals other than Lessor's signals are
excluded from this option to purchase. The intent of the purchase
option provided for in Paragraphs 16(A) is to provide Lessor with the
capability to continue to perform on Lessor's ITFS license. The
purchase price shall be the market value of such equipment noted above
as determined by mutual agreement or by averaging the values obtained
from two (2) appraisals, with one appraiser each chosen by Lessor and
Lessee.
L) Lessee's Option to Purchase. If during the terms of this Agreement the
FCC modifies its rules so as to enable Lessee to be licensed to
operate the ITFS frequencies, Lessee shall have a right of first
refusal to acquire such licenses subject to the same terms and
conditions as the right provided for in Paragraph 1(B).
81. NON-DISCLOSURE
Lessor acknowledges that there may be made available to it pursuant to
this Agreement proprietary information of Lessee relating to the encoding and/or
decoding system associated with the ITFS channel equipment and its patented
processes including, but not limited to, improvements, innovations, adaptation,
inventions, results of experimentation, processes and methods, whether or not
deemed patentable, and certain business and marketing techniques (all herein
referred to as "Confidential Information"). Lessor acknowledges that this
Confidential Information has been developed by Lessee at considerable effort and
expense and represents special, unique and valuable proprietary assets of
Lessee, the value of which may be destroyed by unauthorized dissemination.
Accordingly, Lessor covenants and agrees that, except as may be required for the
performance of this Agreement or by law or court order, neither it nor any of
its agents or affiliates shall disclose such Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, such
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof.
82. NON-COMPETITION
During the term of this Agreement, Lessor agrees not to transmit
programming or to lease or sublease any channel capacity on its ITFS Facilities
for the transmission of programming that is competitive with the programming
transmitted by Lessee.
83. FORCE MAJEURE
If by reason of Force Majeure either party is unable in whole or in
part to perform its obligations hereunder, the party shall not be deemed in
violation of default during the period of such inability. As used herein, the
phrase "Force Majeure", shall mean the following: act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivisions, thereof which are not the result of a
breach of this Agreement, orders of any military authority insurrections, riots,
epidemics, fires, civil disturbances, explosions, or any other cause or event
not reasonably within control of the adversely affected party.
84. CONDITION PRECEDENT
This Agreement is conditional on the issuance of a Final Order by the
FCC granting Lessor a construction permit for the ITFS Channels in the Market
from the Transmission Site. By "Final Order" the parties mean an action or order
of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled
or suspended and with respect to which no timely-filed request for
administrative or judicial review is pending and as to which the time for filing
any such request, or for the FCC to set aside the action on its own motion, has
expired.
<PAGE>
85. NOTICE
Any notice required to be given to Lessor under any provision of this
Agreement shall be delivered personally or by certified mail to Lessor at the
address first written above. Any notice required to be given to Lessee under any
provision of this Agreement shall be delivered personally or by certified mail
to Lessee at the address first written above.
86. SEVERABILITY
Should any court or agency determine that any provision of this
Agreement is invalid, the remainder of the Agreement shall remain in effect.
87. WAIVER
A waiver by either Lessor or Lessee of a breach of any provision of
this Agreement shall not be deemed to constitute a waiver of any preceding or
subsequent breach of the same provision or of any other provision.
88. PAYMENT OF EXPENSES AND SIGNING FEES
A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall
pay all costs and expenses incident to fulfilling or modifying this Agreement,
such as, attorneys' fees or, if necessary, any travel expenses approved in
advance by Lessee, FCC filing fees, and engineering costs.
89. VENUE AND GOVERNING LAW
Venue for any cause of action brought by or between Lessor and/or
Lessee relating to this Agreement shall be in California and all provisions of
this Agreement shall be construed under the laws of the State of California and
County of Lessor.
90. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument, and shall become effective when each of the parties hereto
shall have delivered to it this Agreement duly executed by each of the other
parties hereto.
91. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral or written provisions of any kind. The parties further
agree that this Agreement may only be modified by written Agreement signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this day of July 1st, 1999.
SHEKINAH NETWORK
By: ______________________________
Name: Charles J. McKee
Title: President
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Name: Douglas P. Haffer
Title: President
<PAGE>
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Phone/Fax: (805) 438-3341
Attn: Charles McKee, President
Gardner, Carton & Douglas
Attn: Laura Mow
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
World Wide Wireless Communications, Inc.
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 981- 7777
Fax: (415) 391-3199
<PAGE>
EXHIBIT A
Schedule of Airtime
<PAGE>
EXHIBIT B
Receive Sites
There shall be attached hereto and incorporated by reference a copy of
FCC Form 330 Section IV listing Lessor" receive sites.
<PAGE>
EXHIBIT C
Leased Equipment
Noted below is a list of equipment that Lessee is leasing to Lessor:
(11) Four (4) ITFS tansmitters and related hardware
(12) Lessor's ITFS receive site antennas and related hardware
*(3) Combining network, transmission line and antenna
*Common Equipment
<PAGE>
EXHIBIT D
Service and Royalty Fees
1. Lessor's Service Fee
Services Provided Annual Fee
----------------- ----------
(p) Lease of Leased Equipment [6(A)] $1.00
(q) Maintenance of Leased Equipment [3(D)] $1.00
(r) Lease of space at Primary Transmission Site [3A)] $1.00
2. Lessee's Subscriber Royalty Fee
Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's
Gross receipts or a monthly minimum payment of $500 per month whichever is
greater.
Payment shall be as follows: Commencing on the Execution (Effective) Date and as
defined in Paragraph 6)B, payments for each month shall be made by the twentieth
(20th) day of the following month.
<PAGE>
EXHIBIT E
Programming
In addition to digital data services, such as the Internet or Intranet, the
following is a list of video programming services Lessee may provide over
Lessee's System.
TLC - The Leaning Channel
TWC - The Weather Channel
Lifetime
ESPN - Sports
AMC - American Movie Classics
SCOLA
WHTN - World Harvest Television Network
ECO - Galavision
CNN - Cable News Network
CNN - Headline News
C-Span I
C-Span II
BET - Black Entertainment Network
CNBC - Consumer News & Business Channel
Nickelodeon
The Discovery Channel
A&E - Arts and Entertainment
The Family Channel
The Disney Channel
PBS - Public Broadcasting Service
TBN - Trinity Broadcasting Network
TNIN - The New Inspirational Network
ME/U - Mind Extension Network
The International Channel
BRAVO Network
The Travel Channel
Family Network
Keystone Inspirational Network
LEASE AGREEMENT
BETWEEN
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
AND
SHEKINAH NETWORK
Ukiah, California
ITFS EXCESS CAPACITY AIRTIME LEASE AGREEMENT
THIS AGREEMENT is made this 1st day of August 1999 by Shekinah Network
(hereinafter referred to as "Lessor") having its principal place of business at
14875 Powerline Road, Atascadero, CA 93422 and World Wide Wireless
Communications, Inc. (hereinafter referred to as "Lessee") having its principal
place of business at One Post Street, Suite 2600 San Francisco, CA 94104.
WHEREAS, the Federal Communications Commission ("FCC") has authorized
licenses for Instructional Television Fixed Service ("ITFS") channels and has
authorized the licensee to lease excess capacity to non-ITFS users; and
WHEREAS, Lessor has been granted an FCC License for (call sign) WNC-798
(the "License") for the Channel group C1-4 (the "ITFS Channels") in Ukiah,
California ("The Market"); and
WHEREAS, Lessee is in the business of providing voice, video, data and
other services via microwave transmission in the Market Area and desires to
lease the excess ITFS capacity of the ITFS channels; and
WHEREAS, Lessor has determined that there will be excess airtime
capacity available on the ITFS Channels and desires to lease this excess airtime
capacity to Lessee.
NOW, THEREFORE, in consideration of the mutual promises, undertakings,
covenants and conditions set forth herein, the Lessor and Lessee do hereby agree
and warrant as follows:
13. TERM OF AGREEMENT
A. Initial Term. This Agreement shall be effective upon the date of its
execution and shall extend for an initial term of five (5) years (the
"Initial Term").
B. Renewal Term Provided that the License is renewed by the FCC, Lessee
shall have the right to extend this Agreement on its then existing
terms and conditions for one (1) additional five (5) year term (the
"Renewal Term"). The Renewal Term shall automatically go into effect
upon the conclusion of the Initial Term unless Lessee notifies Lessor
at least one hundred eighty days (180) before the end of the Initial
Term that Lessee does not wish to extend this Agreement.
C. New Lease Agreement/Right of first Refusal.
(1) Providing that Lessor's FCC license remains in good standing
and/or Lessor seeks to renew such license, Lessee and Lessor shall
negotiate in good faith for a new excess capacity airtime lease
agreement (hereinafter referred to as "New Lease Agreement") no later
than one hundred eighty days (180) prior to the end of the latter of
(i) Initial Term or (ii) the Renewal Term if the Agreement is extended
for the Renewal Term.
<PAGE>
(8) If Lessor elects to not reasonably pursue a New Lease Agreement
with Lessee, then Lessor shall so notify Lessee in writing of such
intent no later than one hundred eighty (180) days prior to the end of
the Renewal Term.
(3) If Lessor and Lessee do not enter into a New Lease Agreement,
Lessor grants Lessee a right of first refusal on any competing
proposals for lease agreements or transfers or assignments of any part
of the ITFS Channels received by Lessor during the twelve (12) months
following the expiration of the latter of (i) the Initial Term or (ii)
the Renewal Term, if the Agreement is extended for the Renewal Term.
If any acceptable offer to lease or acquire the ITFS Channels is made
to Lessor, Lessor shall give written notice to Lessee describing the
person to whom the proposed lease or transfer is to be made, the fees,
charges, rental or other consideration to be received fro the lease or
transfer, the terms thereof and generally the relevant other terms and
conditions of the lease or transfer. Lessee shall have a period of
thirty (30) days after its receipt of such notice from Lessor in which
to elect, by giving written notice to Lessor, to lease or, if
eligible, obtain any or all of the ITFS Channels for the same fees,
charges, rental or other consideration for which Lessor proposed to
lease or transfer to the third person.
(i) The fees, charges, rental or consideration shall be paid by such
third person or Lessee in cash.
(xiv) If Lessor does not believe Lessee's stated offer is in an amount
fairly equivalent to the fair value of the consideration payable by
the third person and so notifies Lessee in writing within seven (7)
days after Lessor's receipt of Lessee's notice of election to so lease
or purchase, Lessee may within five (5) days after its receipt of such
notice from Lessor elect to refer such question for determination by
an impartial arbitrator and the right of first refusal of Lessee shall
then be held open until (5) days after Lessee is notified of such
determination. Such arbitrator shall be chosen either by agreement of
Lessee and Lessor at the time such question arises, or, at the option
of either party, by referring the question to the American Arbitration
Association with instructions that the American Arbitration
Association select a single arbitrator under a request from the
parties for expedited and accelerated determination. The determination
of the arbitrator chosen under either option contained in this
subparagraph shall be final and binding upon Lessee and Lessor. The
parties shall share equally in the costs and fees of the arbitration
(xv) In the event Lessee shall elect to exercise its right of first
refusal, the lease agreement or other transfer or assignment shall be
consummated within thirty (30) days of the latest of: (1) the day on
which Lessor received notice of Lessee's election to exercise the
right of first refusal; (2) the day upon which any question required
to be determined by the arbitrator hereunder has been determined; or
(3) the date of any FCC approval in the case of assignment or
transfer; or at such other time as may be mutually agreed. The right
of first refusal is terminated either by the lease or other transfer
to Lessee as provided herein or by notice to Lessee of the Lessor's
proposal to lease or otherwise transfer the ITFS Channels or any part
to a third person and Lessee's unwillingness or failure to meet and
accept such a bona fide offer pursuant to the times and procedures as
set forth above; provided that such proposed lease or transfer is
consummated at the same fees, charges, rental or other consideration
and upon the same terms as to which such right of first refusal
applied, within thirty (30) days after Lessee's right of first refusal
had expired or had been specifically waived by written notice given to
Lessor by Lessee, or within thirty (30) days following FCC approval in
the case of assignment or transfer.
C) Operation During End of Term. If Lessor and Lessee do not enter into
New Lease Agreement before the end of the Initial Term, Lessee shall
cease leasing the ITFS Channels on the last day of the Initial Term.
<PAGE>
D) No Rights Beyond Term of Licenses. Lessor and Lessee agree that this
Agreement shall not give rise to any rights or remedies beyond the
expiration of any FCC license necessary for the continued operation of
the ITFS Channels. Provided, however, that while this Agreement is in
effect, Lessor shall obtain and maintain in force all licenses,
permits and authorizations required or desired in connection with the
use of the ITFS Channels. Lessor shall take all necessary steps to
renew the licenses for the ITFS Channels and shall not commit any act
or engage in any activity which could reasonably be expected to cause
the FCC to impair, restrict, revoke, cancel, suspend or refuse to
renew the ITFS licenses. Lessor shall take all reasonable steps to
comply with the Communications Act of 1934, as amended and the rules
and regulations of the FCC, and shall file all reports, schedules
and/or forms required by the FCC to be filed by Lessor. All expenses,
including attorneys fees and filing fees, incurred in preparing and
filing such reports, schedules and/or forms required by the FCC shall
be paid by the Lessee.
14. ALLOCATION OF AIRTIME.
A. Excess Capacity Airtime. To the extent allowed by the FCC rules and
regulations and any amendments thereof, Lessor agrees to lease to
Lessee the exclusive use of all excess capacity not utilized by Lessor
("Excess Capacity Airtime").
B. Lessor's Primary Airtime. During analog transmission over the ITFS
Channels, Lessor reserves for its exclusive use a minimum of twenty
(20) hours of airtime per-channel per-week to be used for its ITFS
scheduled programs. During digital transmission ovr the ITFS Channels,
Lessor shall have the exclusive use of 12.5% of the total capacity
available on the Lessor's ITFS Channels. This airtime shall be know as
"Lessor's Primary Airtime".
C. Schedule of Airtime. The schedule which depicts the agreement of the
parties as to use of Lessor's Channels shall be attached hereto and
made a part hereof as Exhibit A which is subject to change upon
agreement by both parties.
D. Lessee's use of its Excess Capacity Airtime. Lessee shall have the
right to utilize its Excess Capacity Airtime for any purpose allowed
or authorized by the FCC including but not limited to voice, video and
data transmission.
E. Alternate Use and Vertical Blanking Intervals. Lessor shall have the
right to use the second audio carrier ("SAP") and vertical blanking
intervals. ("VBI") on which Lessor's ITFS programming is being
transmitted. Lessee shall at all times have the right to use the VBI
and SAP not utilized by Lessor and 100% of the response frequencies
associated with the ITFS Channels. Lessor shall be responsible for any
equipment needed to utilize the VBI and/or SAP and such equipment
shall be compatible with Lessee's system.
F. Lessor's Use of ITFS Channels. Lessor agrees that its program services
and airtime use will not harm or interfere with Lessee's current or
future signal paths utilized within Lessee's System for program
encryption, pilot carrier signaling and other technical needs utilized
for the operation of and such services provided by Lessee's System.
Nor will Lessor, by its own action, or through a third party, utilize
any part of its licensed frequency spectrum to create or operate a
service that is in competition with current, planned or future
services provided by
<PAGE>
Lessee's System. Lessor agrees to use its Primary Airtime in
accordance with the FCC's rules and regulations. Lessor shall not take
or fail to take any action which may have a material adverse effect on
Lessee's right to utilize its Excess Capacity Airtime.
G. Expanded System Capacity. Lessee shall have the right at anytime to
require Lessor to file with the FCC any necessary application to
expand the channel capacity to Lessor's station to enable it to carry
more than one video signal per channel or digital data services;
provided however, before Lessee can exercise this right, it must
demonstrate to the Lessor's reasonable satisfaction that such
modification will not materially degrade the performance of the
station nor impair signal quality at the registered ITFS receive
sites. Once such modification has been constructed, the modified
facilities shall automatically be considered a part of this agreement
and subject to all terms and conditions hereof. It is understood that
Lessee shall have the full-time use of the Expanded Channels to the
extend permitted by FCC rules.
3. TRANSMISSION SITE AND FACILITIES.
M. Primary Transmission Site. Lessor's ITFS Channels are located at Key
West, FL, Lessee agrees to provide Lessor space at the Primary
Transmission site for Lessor's audio and video transmission equipment
which shall not exceed on rack. Such space shall be leased to Lessor
pursuant to Exhibit D hereto. This site shall hereinafter be described
as the "Primary Transmission Site". At Lessee's sole expense, Lessee
shall contract for a lease of space at the Transmission Site upon such
terms as the parties agree. The Transmission Site shall comply with
the standards, specifications and regulations of the FCC rules and
orders pertaining to Lessor's ITFS license.
N. Relocation of Transmission Site.
(i) Lessor acknowledges that the location of the
Primary Transmission Site for ITFS Channels is critical to the
Lessee's business and agrees that it will not relocate the
transmission facilities for ITFS Channels from the Primary
Transmission Site without Lessee's prior written consent.
(ii) Lessor further acknowledges that possibility
that, as a result of currently unforeseen events, the Primary
Transmission Site may not be the optimum site for the location
of the ITFS Channels or Lessee's business throughout the term
of this Lease Agreement. Lessor therefore agrees that if at
any time or from time to time Lessee requests in writing that
the transmission facilities for the ITFS Channels be
relocated, Lessor shall file with the FCC and any other
regulatory body having jurisdicition over the ITFS Channels
all applications, amendments, and requests for modification
that may be necessary to obtain any necessary consents to
permit such relocation to such location within or adjacent to
the Market as may be requested by Lessee; provided, however,
that Lessor shall not be obligated to submit or procecute any
application, amendment, or request for modification that
Lessor reasonably determines, upon advice of counsel contained
in a written opinion, would be in violation of the terms of
the License, any statute, rule, or regulations regarding the
operation of the ITFS Channels or the submission of materials
to the FCC, or any of its obligations as an ITFS licensee; and
provided, further, that any such relocation will not result in
loss of service to Lessor's registered receive sites served by
the transmission facilities in the event that the
authorization is obtained to relocate the ITFS Channels to the
location requested by Lessee, Lessor shall relocate such
channels to such new location as soon as reasonably
<PAGE>
possible after authorization is obtained. Lessee shall bear
reasonable costs associated with such relocation, including
engineering and construction, and all reasonable costs
associated with obtaining FCC or any other regulatory approval
therefore.
(iii) Lessor agrees to file modification applications
requested by Lessee. Such modifications may include but shall
not be limited to the following: power increase or decrease,
polarization, transmit antenna patterns, digital, two-way
(return path) use of the ITFS Channels, boosters, beam benders
or repeaters, cells, sectorization, channel swaps, channel
loading, channel shifting and application within five (5)
business days or receipt of the modification application from
Lessee or during any FCC designated filing window. Lessee will
use reasonable efforts to provide Lessor with the engineering
for the modification thirty (30) days prior to the request for
filing. If Lessor believes that such modification will have an
adverse effect on Lessor's ability to provide its services to
its receive sites, Lessor agrees to file the modification
application as presented by Lessee and within the time limit
requested by Lessee; however, Lessee agrees not to implement
construction and Lessor agrees not to withdraw the application
until the parties have adequately addressed and resolved the
potential material adverse effect or the matter has been
submitted to arbitration pursuant to Section 16 and a final
decision has been rendered by arbitrator. Although Lessee
intends to file such modification applications, it may elect
not to construct the Channels in that manner and may desire to
utilize the Channels as currently licensed. A copy of the
modification application, bearing the FCC's date stamp, shall
be mailed to Lessee by Lessor, within fourteen (14) days of
the filing of the modification application. Lessee shall be
solely responsible for all engineering and legal costs
associated with the preparation, review and filing of the
modification application. In the event that any license
modification requested by Lessee requires receive site
upgrades in order for Lessor's receive sites to continue to
receive Lessor's services, then Lessee agrees to pay for all
costs to complete such upgrade prior to implementing the
license modification.
C. System Construction. Lessee shall within a reasonable
period of time, but not later than six (6) months after the
FCC grant of digital authority for the ITFS Channels, purchase
equipment such as the antenna, waveguide or transmitters
specified on the authorization for the ITFS Channels. At
Lessee's expense, Lessee shall purchase and install such
transmitters, transmission line, modulators, antennas and
other equipment as required to operate the ITFS Channels in
accordance with the provision of such authorization. Any
equipment so used in such construction shall be leased to
lessor pursuant to Paragraph 5 hereof. Such equipment is
hereinafter referred to as the "Leased Equipment". Lessee
shall retain title to the Leased Equipment except as noted by
Paragraph 15 herein.
D. Maintenance of Transmission Equipment. At Lessee's expense
and subject to Lessor's right to supervise the maintenance of
this equipment, Lessee shall maintain and operate the Leased
Equipment during the terms of this Agreement for a nominal
fee. Lessee shall also pay all taxes and other charges
assessed against the Leased Equipment.
E. Transmission of Programming. At no cost or expense to
Lessor, Lessee shall provide the necessary labor and equipment
capabilities to transmit on the ITFS Channels programming
required to be carried pursuant to this Agreement such as
Lessor's ITFS programming and TBN. Lessee shall also comply
with Lessor's instructions regarding the transmission of such
programming such as the dates and times to transmit
programming.
F. Interference. Lessee shall operate the Leased Equipment so
that such operation does not create or increase interference
with electronic transmission of any other FCC
<PAGE>
licensees entitles to protection under FCC rules and
regulations. If Lessee's entitled to protection under FCC
rules and regulations. If Lessee's operation of the Lease
Equipment does so create or increase interference, Lessee
shall pay all of the reasonable engineering and legal fees
necessary to resolve the interference problem so created.
G. Alterations and Attachments. Lessee, at its own expense,
may make alterations of or attachments to the ITFS equipment
or the common equipment as defined in Exhibit C (including the
installation of encoding and/or addressing equipment) as may
be reasonably required from time to time by the nature of its
business; provided however, that such alterations or
attachments do not interfere with Lessor's signal or ongoing
operations or violate any FCC rules or regulations; and
provided further that FCC authorization, if required, is
obtained in advance of any such alteration or attachment at
the sole cost of Lessee. to the extent any FCC authorization
pertaining to the ITFS equipment is required, Lessor agrees to
use its best efforts to obtain such authorization.
H. Licensee Control and Liability. Nothing herein shall
derogate from such licensee control of operations of the ITFS
Channels that Lessor, as an FCC licensee, shall be required to
maintain and Lessee acknowledges the reservation by Lessor of
such control. Lessor shall at all times retain ultimate and
exclusive responsibility for the operation and control of the
ITFS Channels including policy decisions.
4. LESSOR'S RECEIVE SITES.
Attached hereto as Exhibit B is list of the registered receive sites
designated by Lessor to receive its ITFS programming and to be installed at the
expense of Lessee. Those receive sites so listed shall be installed with a
Standard Installation. If as the result of any relocation of the Primary
Transmit Site, the equipment at Lessor's existing registered receive sites must
be reoriented, Lessee shall pay the cost of same. As used herein for the
purposes of this Agreement, the phrase "Standard Installation" shall mean an
installation consisting of the placement of the ITFS/MMDS receiving antenna at
an elevation (not to exceed thirty [30] feet above the base mounting location)
which could normally receive the line-of-sight transmission from the
Transmission Site; the coupling thereto of a block-down converter; and a
sufficient amount of transmission line (coaxial cable) to connect the received
ITFS programming to the input of (i) one classroom designated by Lessor to
receive the ITFS programming or (ii) the receive site internal/external
distribution system. Also, if as the result of any relocation of the Transmit
Site, the equipment at Lessor's existing receive sites must be reoriented,
Lessee shall pay the cost of same. Lessee also agrees that for digital
transmission of the ITFS Channels Lessee will purchase and install at Lessee's
expense, one single-point modem to receive its ITFS programming.
5. LEASE OF EQUIPMENT.
A) Lessor's Lease of Leased Equipment. For a nominal fee, Lessor shall
lease from Lessee the Leased Equipment during the terms of this Agreement. A
list of this equipment is attached hereto as Exhibit C and incorporated by
reference herein. Lessor shall have no responsibility for the loss of or damage
to the Leased Equipment during the terms of this Agreement and Lessee shall bear
all such responsibility.
6. FEES.
A) Lessor's Service Fee. In consideration of the lease of the Leased
Equipment, and for its share of the projected costs to maintain the Transmission
Site and the Lease Equipment, Lessor shall pay Lessee an annual fee provided for
in Exhibit D.
B) Subscriber Royalty Fees or Percentage. Beginning on the Execution
Date of this Agreement and continuing thereafter during the Initial Term of this
Agreement, Lessee shall pay to
<PAGE>
Lessor the Subscriber Royalty Fee, System Percentage or monthly minimum,
whichever is greater as set out in Exhibit D which is attached herewith and
incorporated by reference herein. If the Execution Date shall be a date other
than the first day of a calendar month, then the Subscriber Royalty Fee for the
partial month shall be paid on a proportionate basis. A late fee of 10% (ten
percent) will be assessed to past due accounts, and a finance charge of one and
one-half percent (1.5%) per month will be assessed in addition to the late fee
until paid.
C) Notice of Construction and Required Certificate. Within thirty (30)
days of completion of construction at the Transmission Site, Lessee shall notify
Lessor of such completion of construction in writing. Within thirty (30) days of
the end of each month in which Excess Capacity Airtime is leased hereunder,
Lessee shall provide Lessor with a certificate, certified as accurate and
correct by an authorized agent of Lessee, showing the number of subscribers
served during such month.
D) Right to Audit. Lessee shall for a period of three (3) years after
their creation, keep, maintain and preserve complete and accurate records and
accounts, including all invoices, correspondence, ledgers, financial and other
records pertaining to Lessee's use of Excess Capacity Airtime and Lessor's
charges hereunder; and such records and corporate accounts shall be available
for inspection and audit at Lessee's corporate offices or at Lessee's offices in
the Market, as designated by Lessee, at any time or times during the term of
this Agreement or within ninety (90) days thereafter, during reasonable business
hours, by Lessor or its nominee. In the event that there is discovered an
underpayment of the Subscriber Royalty Fee as defined in Paragraph 6 (B) above,
Lessee shall pay to Lessor a penalty equal to ten percent (10%) of the amount of
each such underpayment. All information obtained by Lessor during any audit
herein shall be maintained by Lessor in strict confidence.
7. PROGRAMMING.
A) Control Over Programming.
(i) Program Content. Lessee intends that only programming of a sort
which would not serve to place Lessor's reputation in the community in jeopardy
will be transmitted by Lessee on the ITFS Channels. In an attempt to minimize
disputes, recognizing the difficulties inherent in specifying exact standards
herein, it is agreed that Lessee shall have the right to market the programming
provided by the networks and services listed on Exhibit E. If, however, the
programming content of any networks and services listed on Exhibit E materially
changes, Lessor shall have the right, upon ninety (90) days notice, to deny
Lessee the right to continue transmitting such programming if Lessor would have
the right to deny Lessee the right to transmit such programming under the
provisions of this paragraph in the first instance. If Lessee proposes to
transmit the programming of any new programming service, the Lessee shall notify
Lessor in writing specifying in detail the nature of the new programming service
and Lessor shall have the right, upon written served upon Lessee within thirty
(30) days after Lessor's receipt of any such notice from Lessee, to deny to
Lessee the right to transmit such service if such programming is obscene and/or
contradicting local, state and/or federal laws or otherwise violates any
federal, state or local laws or regulations. If no such denial notice is
received by Lessee within such thirty (30) days, lessee shall be authorized to
transmit all such services for which no denial notice is received. There shall
be no reduction in fees required under this Agreement for any such programming
not permitted to be transmitted.
B) Availability of Programming. It is understood by Lessee and Lessor
that there is expected to be no direct out-of-pocket annual costs for the
acquisition of the qualified ITFS educational programming for Lessor's use
during Lessor's Primary Airtime on the ITFS channels, based on current plans. In
the event that this ITFS educational programming either; (1) ceases to be
available, or, (2) becomes available only at a fee, then Lessor may incur direct
out-of-pocket costs in Lessor's acquisition of ITFS programming. Lessee agrees
to provide its best efforts to assist Lessor in the acquisition of alternative
programming, if necessary. Additionally, Lessee agrees to make payment to Lessor
for the actual, direct programming costs incurred. If any; If Lessor, after
expending its best efforts, is unable to
<PAGE>
obtain suitable ITFS programming for a cost equal to the amount to be paid by
Lessee, Lessor and Lessee shall use their best efforts to reach agreement on
modifications to this Agreement to avoid any un-reimbursed ITFS programming
costs to Lessor. If no such agreement can be reached, Lessor may terminate this
agreement. In the case of such termination, Lessor shall use its best efforts
(with out-of-pocket costs of Lessor to be paid by Lessee, with Lessee's prior
approval) to transfer the license for the ITFS Channels to another qualified
educational entity, subject to FCC approval, with the intent of assigning this
Agreement from Lessor to the new educational entity.
C) Integration of Lessor's Programming. Lessee agrees to integrate
Lessor's programming into the overall communications service offered to
subscribers, without cost to Lessor. This integration shall include, but not be
limited to, listing Lessor's material in any program guides produced by Lessee
for subscribers.
D) Carriage of TBN. In the event that Lessor's ITFS Channels are used
for analog video transmission and TBN is not transmitted on a local VHF or UHF
station, with a market coverage equivalent to both area and signal quality of
our ITFS channels, and Lessee does not have local off-air insertion as part of
its standard installation, then, if so designated by Lessor, Lessee agrees to
transmit on one of the ITFS Channels the programming of Trinity Broadcasting
Network ("TBN") during those time periods such channel is not used for Lessor's
ITFS programming ("TBN Airtime") provided that Lessee is not required to pay a
fee for carriage of TBN. In the event that Lessee is permitted to program the
hours previously occupied by TBN, then Lessee shall increase, in proportion to
the increase in Excess Capacity Airtime, the amount of minimum fees and
subscriber royalty fees payable under the provision 6 (B) of this agreement
during the remainder of the term(s) of the agreement. For purposes of
calculating any such proportionate increase, the parties acknowledge and agree
that the minimum fee and subscriber royalty fee agreed to herein are based on
Lessee's equivalent use of three full-time ITFS channels.
E) Station Identification. During Lessee's use of Lessor's excess
channel capacity, Lessee shall transmit Lessor's call sign for each respective
station as required by the FCC.
8. PROCECUTION OF PETITIONS, AUTHORIZATIONS AND LICENSES.
A) Best Efforts to Secure Approval of this Agreement. The parties
recognize that certain approvals will be required from the FCC in order to
effectuate this Agreement. Both parties shall use their best efforts to prepare,
file and prosecute before the FCC all petitions, waivers, applications and other
documents necessary to secure any FCC approval required to effectuate this
Agreement. Lessee shall assist in the preparation and prosecution of such
applications and as provided for herein, shall pay all filing fees, attorneys'
fees, engineering fees, and all other expenses in connection therewith. Lessor
also agrees to cooperate with Lessee's efforts to cause other ITFS, OFS, MDs and
MMDS operators to co-locate at the Transmission Site. Notwithstanding anything
in this Agreement to the contrary, it is understood that no filing shall be made
with the FCC with respect to this Agreement unless both parties have reviewed
such filing and consented in writing to its submission, such consent not be
unreasonably withheld.
B) Further Efforts. Throughout the Initial Term of this Agreement,
Lessor shall use its best efforts to obtain and maintain in force all licenses,
permits and authorizations required for Lessee and Lessor to use the ITFS
Channels as contemplated by this Agreement. Lessee shall be responsible for all
cash expenses incurred to obtain and maintain in force such licenses, permits
and authorizations. When mutually agreed by the parties and at Lessee's sole
expense, Lessor shall apply for, and use its best efforts to obtain those
reasonable license modifications which would assist Lessee in its business.
Lessor also shall consider filing, at Lessee's sole expense, such reasonable
protests, comments or other petitions to deny any other ITFS, MMDS, MDS and/or
OFS applications or amendments as may be requested by Lessee in the mutual best
interests of the parties and the public. Lessor and Lessee shall promptly notify
each other of any event of which it has knowledge that may affect any of the
licenses, permits or authorization affecting the ITFS Channels.
<PAGE>
C) Attorneys' Fees. With respect to any legal work conducted pursuant
to Paragraph 8(A) and (B) above, Lessee shall be responsible for all attorneys'
fees in connection therewith and shall make payments directly to the attorney.
However, any attorney fees paid by Lessee shall be approved in advance by
Lessee.
9. REPRESENTATIONS AND WARRANTIES.
A) Representations and Warranties of Lessor. Lessor represents and
warrants to Lesse as follows:
(i) Organization. Lessor is a non-profit organization duly organized
and existing in good standing under the laws of the State of California, and it
has full power and authority to carry out all of the transactions contemplated
by this Agreement and all other agreement, certificates or instruments executed
and delivered in connection herewith.
(ii) No Violation. Neither the execution nor delivery of this agreement
or any other agreements, certificates or instruments executed and delivered
herewith, nor the performance of the transactions contemplated hereby constitute
or will constitute a violation of , be in conflict with, or a default under any
term or provision of the governing instruments or Lessor or any agreement or
commitment to which Lessor is bound, or any judgment, decree, order, regulation
or rule of any court or governmental authority, or consent of any federal, state
or local authority is required in connection with the execution and delivery of
this Agreement or any other agreements, certificates or instruments executed and
delivered herewith or with the performance of the transaction contemplated
hereby.
B) Representations and Warranties of Lessee. Lessee represents and
warrants to Lessor as follows:
(ii) Organization. Lessee is duly organized, validly existing and in
good standing under the laws of the State of its incorporation and it has full
power and authority to own property and carry all of the transactions
contemplated by this Agreement, and all other agreements, certificates or
instruments executed and delivered by Lessee in connection herewith.
(ii) Corporation Action; Valid and Binding Agreements. Lessee has taken
all corporate action necessary to authorize the execution and delivery of this
Agreement and all other agreements, certificates or instruments executed and
delivered in connection herewith. Upon execution and delivery, this Agreement
and all other agreements, certificates or instruments executed and delivered by
Lessee in connection herewith will constitute valid and binding agreements of
Lessee enforceable in accordance with their respective terms.
(iii) Litigation and Investigations. There is no action, suit,
proceeding or investigation pending or, to the best of Lessee's knowledge,
threatened against Lessee, its principals or related entities before any court,
administrative agency or other governmental body, and Lessee does not know nor
is aware of any reason for commencement of any such action, proceeding or
investigation.
(iv) Misrepresentation of Material Fact. To the best of Lessee's
knowledge, information and believe, no document or contract that was shown to
Lessor and which in any way affects any of the properties, assets or proposed
transactions of Lessee as such relates to this Agreement, no certificate or
statement furnished by or on behalf of Lessee in connection with this Agreement,
nor this Agreement itself contains any untrue statement of material fact or
omits to state a material fact which would make the statements contained herein
misleading.
<PAGE>
C) Survival or Representations and Warranties. The representations and
warranties contained in this Agreement shall be deemed to be continuing during
the Initial terms of this Agreement, and each Party shall have the duty promptly
to notify the notify the other of any event or circumstance which might
reasonably be deemed to constitute a breach of or lead to a breach of its
warranties or representations hereunder. The waiver by either Party of any
breach of any presentation or warranty under this Agreement shall not constitute
a waiver of any other representation or warranty or of any failure in the future
by the other Party to fulfill such representation or warranty.
10. TERMINATION.
A) Termination of FCC Authorization. Without further liability to
either Lessor or Lessee, this Agreement shall terminate in the event that for
any reason (i) Lessor shall not be licensed on the leased ITFS Channels, or (ii)
the FCC shall terminate or diminish Lessor's authority to lease the ITFS
Channels in accordance with the terms of this Agreement.
B) Termination by Reason of Default or Nonperformance. At the option of
the non-defaulting party, this Agreement may be terminated upon the material
breach or default by the defaulting party of its duties and obligations
hereunder is such breach or default is not cured by such defaulting party and is
breach or default shall continue for a period of thirty (30) consecutive days
after such defaulting party's receipt of notice thereof from the non-defaulting
party. It is understood and agreed that any failure on the part of Lessee to
make any payment required under Paragraph 6 hereof shall be a material breach of
default of its duties and obligations hereunder. It is also understood and
agreed that any consequences resulting from the loss of local participating
receive sites shall not be considered a material breach or default by Lessor of
its duties and obligations hereunder.
C) Remedies to Continue. In the event of termination of this Agreement
pursuant to Paragraph 10(B), such termination shall not affect or diminish the
rights or claims or remedies available in equity or at law to the non-defaulting
party arising by reason of a breach or default of this Agreement. However, no
liability shall arise on the part of Lessor or Lessee upon termination of this
Agreement pursuant to Paragraph 10(A) except where the loss of the FCC license
occurs as a result of the default of either party.
11. TRANSFER OF RIGHTS AND OBLIGATIONS.
Lessee shall have the right to assign its rights under this lease as
collateral for any financing arrangements it makes. Lessee shall also have the
right to pledge the Leased Equipment as collateral security for any loans it
makes; provided, however, that any pledge of the Leased Equipment shall be made
subject to the provisions of this lease. Lessee shall further have the right to
subcontract any portion of its obligations under this Agreement to any
partnership, joint venture, corporation or entity which Lessee may choose,
provided that Lessee gives Lessor notice of any proposed subcontracting and,
provided further, that no such subcontracting shall release Lessee from
fulfilling all of its obligations under this Agreement. Lessee shall have the
right to assign or transfer its rights, benefits, duties and obligations under
this Agreement to a commonly-owned company without the prior consent of Lessor.
Apart from the foregoing, neither party may assign or transfer its rights,
benefits, duties or obligations under this Agreement without the prior written
consent of the other, which consent shall not be unreasonably witheld.
12. INDEMNIFICATION.
A) By Lessor. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, arising directly or indirectly out of (i) the
willful misconduct of Lessor, its agents or employees, in
<PAGE>
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessor during any of Lessor's Airtime.
B) By Lessee. To the extent permitted by state and federal law and its
charter or by-laws, Lessor shall forever protect, save and keep Lessee and its
permitted successors and assigns harmless and indemnify Lessor against and from
any and all claims, demands, losses, costs, damages, suits, judgments,
penalties, expenses and liabilities or any kind or nature whatsoever, including
reasonable attorneys' fees, which arise directly or indirectly out of (i) the
negligence or willful misconduct of Lessee, its agents or employees, in
connection with the performance of this Agreement; (ii) any programming
transmitted by Lessee or any of its authorized agents or subcontractors with the
public, third parties and subscribers to the Lessee's programming service; or
(iv) any maintenance, installation or other work performed by Lessee or any
authorized agent or subcontractor under this Agreement.
C) Notice of Claim; Defense of Claim. Each party shall notify the other
of any such claim promptly upon receipt of same. Either party (hereinafter
referred to as appropriate the "Indemnitor" or Indemnitee") shall have the
option to defend, at its own expense, any claims arising under this Paragraph.
In Indemnitor assumes the defense of any such claim, Indemnitee shall delegate
complete and sole authority to the Indemnitor to defend or settle same and
Indemnitee shall cooperate with Indemnitor in the defense thereof.
13) INSURANCE.
A) Policies Required. At its expense, Lessee shall secure and maintain
with financially reputable insurers, one or more policies of insurance insuring
the Leased Equipment and Lessee's utilization of the ITFS Channels against
casualty and other losses of the kinds customarily insured against by firms of
established reputations engaged in the same or similar line of business, or such
types and in such amounts as are customarily carried under similar circumstances
by such firms, including, without limitation: (i) "All Risk" property insurance
covering the ITFS Equipment and the common Equipment to the extent of one
hundred percent (100%) of its full replacement value without deduction for
depreciation: (ii) comprehensive general public liability insurance covering
liability resulting from lessee's operation of the ITFS equipment on an
occurrence basis having minimum limits of liability in an amount of not less
than One Million Dollars ($1,000,000.00) for bodily injury, personal injury or
death to any person or persons in any one occurrence, and not less than Two
Million Dollars ($2,000,000.00) in the aggregate for all such losses during each
policy year, and not less than Three Hundred Thousand Dollars ($300,000.00) with
respect to damage to property; (ii) all workers compensation, automobile
liability and similar insurance required by law.
B) Insurance Policy Forms. All policies of insurance required by this
Paragraph shall, whre appropriate, designate Lessor as either the insured party
or as a named additionally insured party, shall be written as primary policies,
not contributory with and not in excess of any coverage which Lessor shall
carry, and shall contain a provision that the issuer shall give to Lessor thirty
(30) days prior written notice of any cancellation or lapse of such insurance or
of any change in the coverage thereof.
C) Proof of Insurance. Executed copies of the policies of insurance
required under this section or certificates thereof shall be delivered to Lessor
not later than ten (10) after execution of this agreement. Lessee shall furnish
Lessor evidence of renewal of each such policy not later than thirty (30) days
prior to the expiration of the term thereof.
92. RELATIONSHIP OF PARTIES.
By the provisions of this Agreement, Lessor and Lessee intend to enter
an airtime lease relationship and not a joint venture. They will carry out this
Agreement to preserve that intent. Neither party shall represent itself as the
<PAGE>
other party, nor as having any relationship with one another, except as Lessor
and Lessee under the terms of this Agreement.
93. EQUIPMENT PURCHASE.
M) Lessor's Option to Purchase. In the event that this Agreement is
terminated, Lessor shall have the option to purchase the Leased
Equipment used exclusively for Lessor's ITFS license. Any equipment
which is used in a shared fashion (such as transmit antenna, decoders
and combiners) in providing signals other than Lessor's signals are
excluded from this option to purchase. The intent of the purchase
option provided for in Paragraphs 16(A) is to provide Lessor with the
capability to continue to perform on Lessor's ITFS license. The
purchase price shall be the market value of such equipment noted above
as determined by mutual agreement or by averaging the values obtained
from two (2) appraisals, with one appraiser each chosen by Lessor and
Lessee.
N) Lessee's Option to Purchase. If during the terms of this Agreement the
FCC modifies its rules so as to enable Lessee to be licensed to
operate the ITFS frequencies, Lessee shall have a right of first
refusal to acquire such licenses subject to the same terms and
conditions as the right provided for in Paragraph 1(B).
94. NON-DISCLOSURE
Lessor acknowledges that there may be made available to it pursuant to
this Agreement proprietary information of Lessee relating to the encoding and/or
decoding system associated with the ITFS channel equipment and its patented
processes including, but not limited to, improvements, innovations, adaptation,
inventions, results of experimentation, processes and methods, whether or not
deemed patentable, and certain business and marketing techniques (all herein
referred to as "Confidential Information"). Lessor acknowledges that this
Confidential Information has been developed by Lessee at considerable effort and
expense and represents special, unique and valuable proprietary assets of
Lessee, the value of which may be destroyed by unauthorized dissemination.
Accordingly, Lessor covenants and agrees that, except as may be required for the
performance of this Agreement or by law or court order, neither it nor any of
its agents or affiliates shall disclose such Confidential Information to any
third person, firm, corporation or other entity for any reason whatsoever, such
undertaking to be enforceable by injunctive or other equitable relief to prevent
any violation or threatened violation thereof.
95. NON-COMPETITION
During the term of this Agreement, Lessor agrees not to transmit
programming or to lease or sublease any channel capacity on its ITFS Facilities
for the transmission of programming that is competitive with the programming
transmitted by Lessee.
96. FORCE MAJEURE
If by reason of Force Majeure either party is unable in whole or in
part to perform its obligations hereunder, the party shall not be deemed in
violation of default during the period of such inability. As used herein, the
phrase "Force Majeure", shall mean the following: act of God, acts of public
enemies, orders of any branch of the government of the United States of America,
any state or any political subdivisions, thereof which are not the result of a
breach of this Agreement, orders of any military authority insurrections, riots,
epidemics, fires, civil disturbances, explosions, or any other cause or event
not reasonably within control of the adversely affected party.
97. CONDITION PRECEDENT
This Agreement is conditional on the issuance of a Final Order by the
FCC granting Lessor a construction permit for the ITFS Channels in the Market
from the Transmission Site. By "Final Order" the parties mean an action or order
of the FCC which is not reversed, stayed, enjoined, vacated, set aside, annulled
or suspended and with respect to which no timely-filed request for
administrative or judicial review is pending and as to which the time for filing
any such request, or for the FCC to set aside the action on its own motion, has
expired.
<PAGE>
98. NOTICE
Any notice required to be given to Lessor under any provision of this
Agreement shall be delivered personally or by certified mail to Lessor at the
address first written above. Any notice required to be given to Lessee under any
provision of this Agreement shall be delivered personally or by certified mail
to Lessee at the address first written above.
99. SEVERABILITY
Should any court or agency determine that any provision of this
Agreement is invalid, the remainder of the Agreement shall remain in effect.
100. WAIVER
A waiver by either Lessor or Lessee of a breach of any provision of
this Agreement shall not be deemed to constitute a waiver of any preceding or
subsequent breach of the same provision or of any other provision.
101. PAYMENT OF EXPENSES AND SIGNING FEES
A signing fee of One Dollar ($1) shall be paid to Lessor. Lessee shall
pay all costs and expenses incident to fulfilling or modifying this Agreement,
such as, attorneys' fees or, if necessary, any travel expenses approved in
advance by Lessee, FCC filing fees, and engineering costs.
102. VENUE AND GOVERNING LAW
Venue for any cause of action brought by or between Lessor and/or
Lessee relating to this Agreement shall be in California and all provisions of
this Agreement shall be construed under the laws of the State of California and
County of Lessor.
103. COUNTERPARTS
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument, and shall become effective when each of the parties hereto
shall have delivered to it this Agreement duly executed by each of the other
parties hereto.
104. ENTIRE AGREEMENT
This Agreement constitutes the entire Agreement between the parties and
supersedes all prior oral or written provisions of any kind. The parties further
agree that this Agreement may only be modified by written Agreement signed by
both parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
this day of July 1st, 1999.
SHEKINAH NETWORK
By: ______________________________
Name: Charles J. McKee
Title: President
WORLD WIDE WIRELESS COMMUNICATIONS, INC.
By: ______________________________
Name: Douglas P. Haffer
Title: President
<PAGE>
Address for Notices:
Shekinah Network
14875 Powerline road
Atascadero, CA 93422
Phone/Fax: (805) 438-3341
Attn: Charles McKee, President
Gardner, Carton & Douglas
Attn: Laura Mow
1301 K Street, N.W., Suite 900
Washington, D.C. 20005
Phone: (202) 408-7100
Fax: (202) 289-1504
World Wide Wireless Communications, Inc.
One Post Street Suite 2600
San Francisco, CA 94104
Phone: (415) 981- 7777
Fax: (415) 391-3199
<PAGE>
EXHIBIT A
Schedule of Airtime
<PAGE>
EXHIBIT B
Receive Sites
There shall be attached hereto and incorporated by reference a copy of
FCC Form 330 Section IV listing Lessor" receive sites.
<PAGE>
EXHIBIT C
Leased Equipment
Noted below is a list of equipment that Lessee is leasing to Lessor:
(13) Four (4) ITFS tansmitters and related hardware
(14) Lessor's ITFS receive site antennas and related hardware
*(3) Combining network, transmission line and antenna
*Common Equipment
<PAGE>
EXHIBIT D
Service and Royalty Fees
1. Lessor's Service Fee
Services Provided Annual Fee
----------------- ----------
(s) Lease of Leased Equipment [6(A)] $1.00
(t) Maintenance of Leased Equipment [3(D)] $1.00
(u) Lease of space at Primary Transmission Site [3A)] $1.00
2. Lessee's Subscriber Royalty Fee
Lessee shall pay Lessor a minimum monthly Transmission Fee 5% of the system's
Gross receipts or a monthly minimum payment of $500 per month whichever is
greater.
Payment shall be as follows: Commencing on the Execution (Effective) Date and as
defined in Paragraph 6)B, payments for each month shall be made by the twentieth
(20th) day of the following month.
<PAGE>
EXHIBIT E
Programming
In addition to digital data services, such as the Internet or Intranet, the
following is a list of video programming services Lessee may provide over
Lessee's System.
TLC - The Leaning Channel
TWC - The Weather Channel
Lifetime
ESPN - Sports
AMC - American Movie Classics
SCOLA
WHTN - World Harvest Television Network
ECO - Galavision
CNN - Cable News Network
CNN - Headline News
C-Span I
C-Span II
BET - Black Entertainment Network
CNBC - Consumer News & Business Channel
Nickelodeon
The Discovery Channel
A&E - Arts and Entertainment
The Family Channel
The Disney Channel
PBS - Public Broadcasting Service
TBN - Trinity Broadcasting Network
TNIN - The New Inspirational Network
ME/U - Mind Extension Network
The International Channel
BRAVO Network
The Travel Channel
Family Network
Keystone Inspirational Network
Evers &
Hendrickson, LLP
Lawyers and Counselors At Law
- ------------------------------------
March 21, 2000
Mr. Douglas P. Haffer, President
World Wide Wireless Communications, Inc.
520 Third Street, Suite 101
Oakland, California 94607
Dear Mr. Haffer:
This law firm consents to the incorporation of its name and its opinion
letter regarding the legality of the securities being cleared for registration
with the Securities and Exchange Commission pursuant to filing of the Form SB-2
Registration Statement (Post-Effective Amendment No. 2) on March 23, 2000.
Very truly yours,
EVERS & HENDRICKSON, LLP
/s/ William D. Evers
-----------------------------
By: William D. Evers, Partner
<TABLE>
<CAPTION>
<S> <C> <C>
REUBEN E. PRICE & CO.
REUBEN E. PRICE, C.P.A. (1904-1986) PUBLIC ACCOUNTANCY CORPORATION MEMBERS
________ FOUNDED 1942 AMERICAN INSTITUTE OF
RICHARD A. PRICE CERTIFIED PUBLIC ACCOUNTANTS
703 MARKET STREET _______
SAN FRANCISCO, CA 94103 SECURITIES AND EXCHANGE
________ COMMISSION PRACTICE SECTION
(415) 982-3556 OF THE AMERICAN INSTITUTE OF
FAX (415) 957-1178 CERTIFIED PUBLIC ACCOUNTANTS
_______
CALIFORNA SOCIETY OF
CERTIFIED PUBLIC ACCOUNTANTS
</TABLE>
April 25, 2000
Mr. Douglas P. Haffer, President
World Wide Wireless Communications, Inc.
520 Third Street, Suite 101
Oakland, California 94607
Dear Mr. Haffer:
Please accept this letter as our consent to include in your disclosure document
on Form SB-2 our reports on World Wide Wireless Communications, Inc.'s Balance
Sheet dated September 30, 1999 and the related statements of operations,
statements of cash flows, and statements of stockholders' equity for the years
September 30, 1999 and 1998, and from inception on September 1, 1994 through
September 30, 1999.
Sincerely,
RUEBEN E. PRICE & CO.
