UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
TELECOM WIRELESS CORPORATION
(Exact name of registrant as specified in its charter)
Utah 94-3172556
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
5299 DTC Boulevard, Suite 1120, Englewood, CO 80111
(Address of Principal Executive Offices, including Zip Code)
AMENDED AND RESTATED 1999 STOCK OPTION AND RESTRICTED STOCK PLAN
AND NON-QUALIFIED STOCK OPTION AGREEMENTS
(Full title of the plan)
Calvin D. Smiley
President
Telecom Wireless Corporation
5299 DTC Boulevard, Suite 1120
Englewood, CO 80111
(Name and address of agent for service)
(303) 416-4000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
maximum maximum
Title of each class Amount offering aggregate Amount of
of securities to be price offering registration
to be registered registered(1) per unit price fee
- ------------------ ------------- --------- ----- ---
<S> <C> <C> <C> <C>
Common Stock, $.001 par value per share,
underlying non-qualified stock option
agreements . . . . . . . . . . . . . . . 1,453,732 $8.73(2) $12,691,080 $3,350.45
Common Stock, $.001 par value per share,
underlying options issued under the Plan 175,668 $8.92(2) $ 1,566,959 $ 413.68
Common Stock, $.001 par value per share. 624,332 $5.06(3) $ 3,159,120 $ 834.00
--------- ----------- ---------
TOTAL. . . . . . . . . . . . . . . . . . 2,253,732 $17,417,159 $4,598.13
<FN>
(1) Pursuant to Rule 416, Telecom Wireless Corporation is also registering
such indeterminate number of shares of common stock that may be issuable upon
exercise of stock options by reason of stock splits, stock dividends or similar
transactions.
(2) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee on the basis of the weighted average exercise
price of (i) $8.92 per share for outstanding options to purchase a total of
175,668 shares of common stock granted pursuant to the Amended and Restated 1999
Stock Option and Restricted Stock Plan, and (ii) $8.73 per shares for
outstanding options to purchase a total of 1,453,732 shares of common stock
granted pursuant to Non-Qualified Stock Option Agreements.
(3) Estimated in accordance with Rule 457(h) solely for the purpose of
calculating the registration fee on the basis of $5.06 per share (the average of
the high and low prices of the Registrant's common stock as reported on the OTC
Bulletin Board of March 10, 2000) for the 624,332 additional shares reserved for
issuance under the Amended and Restated 1999 Stock Option and Restricted Stock
Plan.
</TABLE>
1
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in Part I of the
Registration Statement on Form S-8 will be sent or given to participants in the
Amended and Restated 1999 Stock Option and Restricted Stock Plan (the "Stock
Plan") and holders of the Non-Qualified Stock Option Agreements as specified
under Rule 428(b)(i) under the Securities Act of 1933, as amended (the
"Securities Act"). In accordance with Rule 428(a) under the Securities Act and
the requirements of Part I of Form S-8, such documents are not being filed with
the Securities and Exchange Commission (the "Commission") either as part of this
Registration Statement or as prospectuses or prospectus supplements pursuant to
Rule 424 under the Securities Act. The Registrant shall maintain a file of such
documents in accordance with the provisions of Rule 428(a) under the Securities
Act. Upon request, the Registrant shall furnish to the Commission or its staff
a copy or copies of all documents included in such file.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which have been filed by Telecom Wireless
Corporation with the Commission are incorporated by reference herein and shall
be deemed a part hereof.
(1) Registration Statement on Form SB-2 effective February 24, 2000 (File
No. 333-91717), filed pursuant to the Securities Act of 1933, as amended
("Securities Act").
(2) All reports filed pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") since February 24, 2000.
(3) The description of the Company's Common Stock, par value $.001 per
share, contained in its Registration Statement on Form SB-2 filed under the
Securities Act, including any amendment or report filed for the purpose of
updating such description
All other documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of
this Registration Statement and prior to the filing of a post-effective
amendment to this Registration Statement which indicates that all securities
offered have been sold or which de-registers all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents
(such documents, and the documents enumerated above, being hereinafter referred
to collectively as the "Incorporated Documents")
Any statement contained in an Incorporated Document shall be deemed to be
modified and superseded for the purposes of this Prospectus to the extent that a
statement contained therein or in any other subsequently filed Incorporated
Document modifies or supersedes such statement. Any such statements so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Not Applicable
2
<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article XI of the Company's Articles of Incorporation, as amended,
provides:
"The Corporation shall provide indemnification and/or exculpation to its
Directors, Officers, employees, agents and other entities which deal with it to
the maximum extent provided, and under the terms provided, by the laws and
decisions of the courts of the State of Utah and by any additional applicable
federal or state laws or court decisions.
Article XI of the Company's Bylaws provide that provisions with respect to
indemnification and exculpation shall be as set forth in the Articles of
Incorporation.
Section 16-10a-841 of the Utah Revised Business Corporation Act provides
generally that a corporation may eliminate or limit the liability of a director
to the corporation or to its shareholders for monetary damages for any action
taken or any failure to take action as a director, except liability for: (a) the
amount of financial benefit received by a director to which he is not entitled,
(b) an intentional infliction of harm on the corporation or the shareholders;
(c) unlawful distributions; (d) an intentional violation of criminal law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
The restricted securities not acquired under a registration statement filed
under the Securities Act which are to be reoffered or resold pursuant to this
registration statement were originally issued by the Company either to Selling
Shareholders, who, at the time of issuance were officers or employees of the
Company, pursuant to the exemption from registration provided by Rule 701 under
the Securities Act of 1933, or to Selling Shareholders, who at the time of
issuance were officers or key employees of the Company, pursuant to the
exemptions from registration provided by Section 4(2) and/or Rule 506 of
Regulation D under the Securities Act. Each of the latter group of Selling
Shareholders had access to adequate information prior to his or acquisition of
stock as a result of a business relationship with the Company. In addition, at
the time of purchase, each such Selling Shareholder represented that he or she
was acquiring such securities for his own account for investment, without any
present intention of selling or further distributing the same.
ITEM 8. EXHIBITS
Number Description of Document
4.1(1) Amended and Restated 1999 Stock Option and Restricted Stock Plan
4.2* Written Compensation Agreement between the Company and Paul Hart
4.3* Written Compensation Agreement between the Company and Jerry
"Michau" Yuen
4.4(2) Non-Qualified Stock Option Agreements
5.1* Opinion of Kruse, Landa & Maycock, L.L.C.
23.1* Consent of Kruse, Landa & Maycock, L.L.C. (included in Exhibit
5.1)
23.2* Consent of Ehrhardt Keefe Steiner & Hottman PC, Englewood,
Colorado
23.3* Consent of Gerstle, Rosen & Associates, P.A., Boca Raton, Florida
23.4* Consent of Girardin, Baldwin & Associates LLP, Naples, Florida
99.1* Reoffer Prospectus
______________________
* Filed herewith
(1) Incorporated by reference from Registrant's Registration Statement on
Form SB-2 (Exhibit 10.28) (Reg. No. 333-91717) as previously filed with the
Securities and Exchange Commission.
(2) Incorporated by reference from Registrant's Registration Statement on
Form SB-2 (Exhibits 10.7, 10.8 and 10.9) (Reg. No. 333-91717) as previously
filed with the Securities and Exchange Commission.
3
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the 1934 Act)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Englewood, State of Colorado, on March 14, 2000.
TELECOM WIRELESS CORPORATION
By: /s/ Calvin D. Smiley
Calvin D. Smiley, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints James C. Roberts, Calvin D. Smiley and
Kosta S. Kovachev, and each or any of them, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any registration statement filed pursuant to Rule 462(b)
under the Securities Act of 1933 and any and all amendments (including
post-effective amendments) to this registration statement and to any
registration statement filed pursuant to Rule 462(b), and to file same, with all
exhibits thereto and, other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ James C. Roberts
- --------------------- Chairman of the Board and Director March 14, 2000
James C. Roberts
/s/ Calvin D. Smiley
- --------------------- President, Principal Executive Officer March 14, 2000
Calvin D. Smiley and Director
/s/ Kosta S. Kovachev
- --------------------- Principal Financial Officer March 14, 2000
Kosta S. Kovachev and Director
/s/ C. Stephen Guyer
- --------------------- Vice President-Corporate Finance, March 14, 2000
C. Stephen Guyer Controller and Principal Accounting Officer
</TABLE>
5
<PAGE>
EXHIBIT INDEX
Number Description of Document
4.1(1) Amended and Restated 1999 Stock Option and Restricted Stock Plan
4.2* Written Compensation Agreement between the Company and Paul Hart
4.3* Written Compensation Agreement between the Company and Jerry
"Michau" Yuen
4.4(2) Non-Qualified Stock Option Agreements
5.1* Opinion of Kruse, Landa & Maycock, L.L.C.
23.1* Consent of Kruse, Landa & Maycock, L.L.C. (included in Exhibit
5.1)
23.2* Consent of Ehrhardt Keefe Steiner & Hottman PC, Englewood,
Colorado
23.3* Consent of Gerstle, Rosen & Associates, P.A., Boca Raton, Florida
23.4* Consent of Girardin, Baldwin & Associates LLP, Naples, Florida
99.1* Reoffer Prospectus
______________________
* Filed herewith
(1) Incorporated by reference from Registrant's Registration Statement on
Form SB-2 (Exhibit 10.28) (Reg. No. 333-91717) as previously filed with the
Securities and Exchange Commission.
(2) Incorporated by reference from Registrant's Registration Statement on
Form SB-2 (Exhibits 10.7, 10.8 and 10.9) (Reg. No. 333-91717) as previously
filed with the Securities and Exchange Commission.
6
<PAGE>
February 26, 2000
Paul Hart
6 Walt Whitman Trail
Morristown, NJ 07960
Dear Paul:
I am pleased to offer to you the position of Chief Executive Officer of a
subsidiary (the "Company") of Telecom Wireless Corporation ("TWC") to be formed
for the purpose of acquiring the stock or assets of Internet service providers
and competitive local exchange carriers and related businesses. If you become
employed by TWC or by different subsidiary of the Company, the term "Company"
shall refer to that entity. The terms of your employment will be as follows:
1. SERVICES. Your duties and responsibilities will be as assigned to
--------
you from time-to-time by the board of directors of the Company or TWC or a
member of senior management of TWC. You agree to provide these services to the
best of your ability in a prompt, efficient and professional manner. Unless
otherwise agreed in writing by the board of directors of TWC, you agree to
devote your full time, attention and energies to the business of the Company.
2. BASE SALARY AND BONUSES. Your annual base salary shall be $215,000,
-----------------------
subject to normal and customary deductions and withholdings, payable in
installments according to the Company's regular payroll schedule. Your job
performance will be evaluated by the Company's board of directors and reviewed
with you annually at about the end of each year and merit raises and/or bonuses
may be awarded in the sole discretion of the compensation committee of the board
of directors of TWC (the "Compensation Committee").
3. HIRE DATE. Your hire date shall be 2/26, 2000.
----------
4. STOCK OPTIONS AND STOCK BONUS. Subject to applicable legal
---------------------------------
requirements and the terms of TWC's 1999 Stock Option and Restricted Stock Plan,
TWC agrees to grant to you non-qualified options for the purchase of 750,000
shares of TWC's common stock, par value $.001 per share, which will vest and
become exercisable in equal installments on each of the first three annual
anniversary dates of your hire date by the Company. Additionally, upon
commencement of your employment, TWC agrees to grant to you 20,000 shares of its
common stock as a signing bonus. Unless registered, the shares of common stock
<PAGE>
February 26, 2000
Page 2
issuable upon exercise of the options and the bonus shares will be restricted
under federal and applicable state securities laws and subject to substantial
restrictions on transfer. You represent and warrant to TWC that you are a bona
fide resident of the state of New Jersey and that you are an accredited investor
as that term is defined in Rule 215 under the Securities Act of 1933 as
indicated in Exhibit A attached hereto and by this reference made a part hereof.
TWC agrees to use reasonable efforts to register the bonus shares and the shares
underlying your stock options for public sale on Form S-8 at the earliest
practicable time.
5. PERFORMANCE BONUS. You shall also be entitled to receive bonuses
------------------
based on performance upon such terms and in such amounts as shall be defined and
determined by the Compensation Committee based upon the net increase in
revenues, profitability and cash flow of businesses acquired by the Company and
approved by the mergers and acquisitions committee appointed by the board of
directors of TWC. Subject to satisfaction of the performance criteria, your
performance bonus shall not be less than the average bonus to which senior
management of the Company or TWC is currently entitled.
6. EMPLOYMENT AT WILL. Your employment by the Company pursuant to this
------------------
letter or otherwise is "at will" and is for no specific period of time.
Accordingly, either you or the Company may terminate your employment by the
Company for any reason and at any time on not less than ten days' written
notice. Upon termination of your employment by either of us, the Company may
immediately relieve you of all duties. In the event, however, your employment
should be terminated by the Company without cause at any time prior to the third
anniversary of your hire date, you shall be entitled to receive severance
compensation based on your base salary as of the termination date, but not to
exceed your base salary as of the termination date for the remainder of the
three-year period following your hire date, as follows:
Number of Months
Period Severance Compensation
------ ----------------------
Hire Date through First Anniversary Date 24 months
Thereafter through Second Anniversary Date 18 months
Thereafter through Third Anniversary Date 12 months
Termination "for cause" shall mean, but not be limited to, termination by the
Company of your employment by reason of (i) your gross negligence, dishonesty or
fraud with respect to the Company or others; (ii) your conviction for violation
of any laws other than misdemeanors such as minor traffic violations which do
not reflect upon your honesty, integrity or job performance; (iii) your breach
<PAGE>
February 26, 2000
Page 3
of any duty, neglect of any duty or failure to perform the services required of
you as provided herein; or (iv) your breach of any material provision of this
Agreement. The Company shall be deemed to have terminated your employment
without cause in the event of: (a) your transfer or relocation to an office
located elsewhere than Manhattan, New York City, New York; (b) the Company
requiring that you report to a person other than one or more members of senior
management of TWC; (c) a substantial diminution of your responsibilities without
cause; or (d) a reduction in your base salary, but only if you promptly give the
Company and TWC notice of the action deemed to be a termination of your
employment without cause and not less than 30 days in which to cure, and you
terminate your employment by the Company not less than five business days after
expiration of the cure period due solely to the Company's failure to cure.
7. VACATION. Following the first six months of employment, you shall
--------
be entitled to twenty (20) paid vacation days each year. Vacation time must be
used during the calendar year in which it accrues. Any accrued vacation time
existing upon termination of your employment shall be paid based upon your then
salary.
8. BENEFITS. While you are employed by the Company, you shall be
--------
entitled to participate in any plans and benefits generally available to
employees of the Company. Subject to the terms of the Company's medical and
dental plans, including any waiting period for pre-existing conditions, the
Company will pay all or a portion of the premiums for you and your family
members for medical and dental insurance. In the event your family members are
not eligible to be included in the Company's medical and dental plans at your
hire date due to the terms of such plans, the Company shall reimburse you for
COBRA medical insurance premiums paid by you until such time as your family
members become eligible to participate in such plans.
9. EMPLOYEE MANUAL AND COMPANY POLICIES. You agree to observe and abide
------------------------------------
by all provisions of the Company's employee manual when prepared and as
thereafter amended and all Company policies including the prohibition against
trading in the Company's common stock, or options or other rights to acquire
that stock, while in the possession of material non-public information relating
to the Company or other entities, and the prohibition against tipping others
about any such material non-public information.
10. CONFIDENTIALITY AGREEMENT. You agree, both during and after your
--------------------------
employment by the Company, not to reveal confidential or proprietary information
or trade secrets ("Confidential Information") owned, used by or in the
possession of the Company or any subsidiary or affiliate of the Company, to any
individual or entity. Should you reveal or threaten to reveal Confidential
Information, you agree that the Company shall be entitled, without notice to
you, to an injunction restraining you from disclosing Confidential Information
or from rendering services to any entity to which Confidential Information has
been or is threatened to be disclosed. This right to an injunction shall not be
<PAGE>
February 26, 2000
Page 4
the exclusive remedy of the Company which may also seek other remedies including
damages.
11. ARBITRATION. Except as specifically provided herein to the
-----------
contrary, in the event of any differences, claims or disputed matters relating
to or arising from your employment by the Company, we agree to submit such
matters to arbitration by the American Arbitration Association or its successor
in Denver, Colorado. Either party can invoke arbitration upon ten days' notice
to the other party. The determination of the arbitrator shall be final and
absolute. The arbitrator shall be governed by the duly promulgated rules and
regulations of the American Arbitration Association or its successor, and the
pertinent provisions of the internal laws of the State of Colorado, relating to
arbitration. The decision of the arbitrator may be entered in a judgment in any
court of the State of Colorado or elsewhere. The arbitrator shall have no power
to award exemplary or punitive damages.
5. MISCELLANEOUS. (i) This Agreement sets forth our mutual
-------------
understanding, supersedes all prior written or oral understandings and
agreements and may be modified only by a writing signed by both of us; (ii)
Employee shall not have the right to assign all or any portion of his rights,
duties or obligations under this Agreement to any other person. Subject to the
foregoing, all terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors, assigns, legal
representatives, heirs and estates of the parties hereto; (iii) This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of Colorado; (iv) The failure of either of us to insist in any one or more
instances upon performance of any terms or conditions of this Agreement shall
not be construed as a waiver of future performance of such or any other term,
covenant or condition; and (v) All notices required hereunder shall be deemed to
have been given when in writing upon the earlier of personal delivery or three
days following deposit in the United States mails by certified or registered
mail, postage prepaid, to the party at the addresses set forth above. Either
party hereto, by notice duly given, may change the address for the giving of
notice.
Sincerely,
/s/ Calvin D. Smiley
Calvin D. Smiley, CEO and President
Accepted and agreed to this 26th day of February, 2000.
<PAGE>
February 26, 2000
Page 5
/s/ Paul Hart
--------------------------------------------
Print Name: Paul Hart
<PAGE>
EXHIBIT A
Definition of Accredited Investor
------------------------------------
Yes No
- --- --
- --- -- (a) Any savings and loan association or other institution specified in
section 3(a)(5)(A) of the Securities Act of 1933 (the "Act") whether acting in
its individual or fiduciary capacity; any broker or dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; an employee
benefit plan within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is a savings and loan association,
or if the employee benefit plan has total assets in excess of $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons that are
accredited investors;
- --- -- (b) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
- --- -- (c) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
- --- -- (d) Any director, executive officer, or general partner of the issuer
of the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
- --- -- (e) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
- --- -- (f) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
- --- -- (g) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in '230.506(b)(2)(ii); and
- --- -- (h) Any entity in which all of the equity owners are accredited
investors.
Name, address and telephone number of accountant or attorney the Company may
contact to confirm accredited investor status: ----------------------------
- --------------------------------------------------------------------------------
February 27, 2000
Jerry "Michau" Yuen
2323 84th Street, 3rd Floor
Brooklyn, NY 11214
Dear Michau:
I am pleased to offer to you the position of Executive Vice
President-Business Development of a subsidiary (the "Company") of Telecom
Wireless Corporation ("TWC") to be formed for the purpose of acquiring the stock
or assets of Internet service providers and competitive local exchange carriers
and related businesses. If you become employed by TWC or by different subsidiary
of the Company, the term "Company" shall refer to that entity. The terms of your
employment will be as follows:
1. SERVICES. Your duties and responsibilities will be as assigned to
--------
you from time-to-time by the board of directors of the Company or TWC and/or
your immediate supervisor. You agree to provide these services to the best of
your ability in a prompt, efficient and professional manner. Unless otherwise
agreed in writing by the board of directors of TWC, you agree to devote your
full time, attention and energies to the business of the Company.
2. BASE SALARY AND BONUSES. Your annual base salary shall be $135,000,
-----------------------
subject to normal and customary deductions and withholdings, payable in
installments according to the Company's regular payroll schedule. Your job
performance will be evaluated by your supervisor and/or the Company's board of
directors and reviewed with you annually at about the end of each year and merit
raises and/or bonuses may be awarded in the sole discretion of the board of
directors of the Company.
3. HIRE DATE. Your hire date shall be February 26, 2000.
----------
4. STOCK OPTIONS AND STOCK BONUS. Subject to applicable legal
---------------------------------
requirements and the terms of TWC's 1999 Stock Option and Restricted Stock Plan,
TWC agrees to grant to you non-qualified options for the purchase of 450,000
shares of TWC's common stock, par value $.001 per share, which will vest and
become exercisable in equal installments on each of the first three annual
anniversary dates of your hire date by the Company. Additionally, upon
commencement of your employment, TWC agrees to grant to you 10,500 shares of its
common stock as a signing bonus. Unless registered, the shares of common stock
issuable upon exercise of the options and the bonus shares will be restricted
under federal and applicable state securities laws and subject to substantial
restrictions on transfer. You represent and warrant to TWC that you are a bona
fide resident of the state of New York and that you are an accredited investor
as that term is defined in Rule 215 under the Securities Act of 1933 as
indicated in Exhibit A attached hereto and by this reference made a part hereof.
<PAGE>
February 27, 2000
Page 2
TWC agrees to use reasonable efforts to register the bonus shares and the shares
underlying your stock options for public sale on Form S-8 at the earliest
practicable time.
5. PERFORMANCE BONUS. You shall also be entitled to receive bonuses
------------------
based on performance upon such terms and in such amounts as shall be defined and
determined by the board of directors of the Company based upon the net increase
in revenues, profitability and cash flow of businesses acquired by the Company
and approved by the mergers and acquisitions committee appointed by the board of
directors of TWC.
6. EMPLOYMENT AT WILL. Your employment by the Company pursuant to this
------------------
letter or otherwise is "at will" and is for no specific period of time.
Accordingly, either you or the Company may terminate your employment by the
Company for any reason and at any time on not less than ten days written notice.
Upon termination of your employment by either of us, the Company may immediately
relieve you of all duties. In the event, however, your employment should be
terminated by the Company without cause at any time prior to the third
anniversary of your hire date, you shall be entitled to receive severance
compensation based on your base salary as of the termination date, but not to
exceed your base salary as of the termination date for the remainder of the
three-year period following your hire date, as follows:
Number of Months
Period Severance Compensation
------ ----------------------
Hire Date through First Anniversary Date 24 months
Thereafter through Second Anniversary Date 18 months
Thereafter through Third Anniversary Date 12 months
Termination "for cause" shall mean, but not be limited to, termination by the
Company of your employment by reason of (i) your gross negligence, dishonesty or
fraud with respect to the Company or others; (ii) your conviction for violation
of any laws other than misdemeanors such as minor traffic violations which do
not reflect upon your honesty, integrity or job performance; (iii) your breach
of any duty, neglect of any duty or failure to perform the services required of
you as provided herein; or (iv) your breach of any material provision of this
Agreement. The Company shall be deemed to have terminated your employment
without cause in the event of: (a) your transfer or relocation to an office
located elsewhere than Manhattan, New York City, New York; (b) the Company
requiring that you report to a person other than the chief executive officer of
the Company; (c) a substantial diminution of your responsibilities without
cause; or (d) a reduction in your base salary, but only if you promptly give the
Company and TWC notice of the action deemed to be a termination of your
<PAGE>
February 27, 2000
Page 3
employment without cause and not less than 30 days in which to cure, and you
terminate your employment by the Company not less than five business days after
expiration of the cure period due solely to the Company's failure to cure.
7. VACATION. Following the first six months of employment, you shall
--------
be entitled to twenty (20) paid vacation days each year. Vacation time must be
used during the calendar year in which it accrues. Any accrued vacation time
existing upon termination of your employment shall be paid based upon your then
salary.
8. BENEFITS. While you are employed by the Company, you shall be
--------
entitled to participate in any plans and benefits generally available to
employees of the Company. Subject to the terms of the Company's medical and
dental plans, including any waiting period for pre-existing conditions, the
Company will pay all or a portion of the premiums for you and your family
members for medical and dental insurance. In the event your family members are
not eligible to be included in the Company's medical and dental plans at your
hire date due to the terms of such plans, the Company shall reimburse you for
COBRA medical insurance premiums paid by you until such time as your family
members become eligible to participate in such plans.
9. EMPLOYEE MANUAL AND COMPANY POLICIES. You agree to observe and abide
------------------------------------
by all provisions of the Company's employee manual when prepared and as
thereafter amended and all Company policies including the prohibition against
trading in the Company's common stock, or options or other rights to acquire
that stock, while in the possession of material non-public information relating
to the Company or other entities, and the prohibition against tipping others
about any such material non-public information.
10. CONFIDENTIALITY AGREEMENT. You agree, both during and after your
--------------------------
employment by the Company, not to reveal confidential or proprietary information
or trade secrets ("Confidential Information") owned, used by or in the
possession of the Company or any subsidiary or affiliate of the Company, to any
individual or entity. Should you reveal or threaten to reveal Confidential
Information, you agree that the Company shall be entitled, without notice to
you, to an injunction restraining you from disclosing Confidential Information
or from rendering services to any entity to which Confidential Information has
been or is threatened to be disclosed. This right to an injunction shall not be
the exclusive remedy of the Company which may also seek other remedies including
damages.
11. ARBITRATION. Except as specifically provided herein to the
-----------
contrary, in the event of any differences, claims or disputed matters relating
to or arising from your employment by the Company, we agree to submit such
matters to arbitration by the American Arbitration Association or its successor
in Denver, Colorado. Either party can invoke arbitration upon ten days' notice
<PAGE>
February 27, 2000
Page 4
to the other party. The determination of the arbitrator shall be final and
absolute. The arbitrator shall be governed by the duly promulgated rules and
regulations of the American Arbitration Association or its successor, and the
pertinent provisions of the internal laws of the State of Colorado, relating to
arbitration. The decision of the arbitrator may be entered in a judgment in any
court of the State of Colorado or elsewhere. The arbitrator shall have no power
to award exemplary or punitive damages.
5. MISCELLANEOUS. (i) This Agreement sets forth our mutual
-------------
understanding, supersedes all prior written or oral understandings and
agreements and may be modified only by a writing signed by both of us; (ii)
Employee shall not have the right to assign all or any portion of his rights,
duties or obligations under this Agreement to any other person. Subject to the
foregoing, all terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors, assigns, legal
representatives, heirs and estates of the parties hereto; (iii) This Agreement
shall be governed by and construed in accordance with the internal laws of the
State of Colorado; (iv) The failure of either of us to insist in any one or more
instances upon performance of any terms or conditions of this Agreement shall
not be construed as a waiver of future performance of such or any other term,
covenant or condition; and (v) All notices required hereunder shall be deemed to
have been given when in writing upon the earlier of personal delivery or three
days following deposit in the United States mails by certified or registered
mail, postage prepaid, to the party at the addresses set forth above. Either
party hereto, by notice duly given, may change the address for the giving of
notice.
Sincerely,
/s/ Calvin D. Smiley
Calvin D. Smiley, CEO and President
Accepted and agreed to this 29th day of February, 2000.
/s/ Jerry Michau Yuen
--------------------------------------------
Print Name: Jerry "Michau" Yuen
<PAGE>
EXHIBIT A
Definition of Accredited Investor
------------------------------------
Yes No
- --- --
- --- -- (a) Any savings and loan association or other institution specified in
section 3(a)(5)(A) of the Securities Act of 1933 (the "Act") whether acting in
its individual or fiduciary capacity; any broker or dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of $5,000,000; an employee
benefit plan within the meaning of Title I of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is a savings and loan association,
or if the employee benefit plan has total assets in excess of $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons that are
accredited investors;
- --- -- (b) Any private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940;
- --- -- (c) Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
- --- -- (d) Any director, executive officer, or general partner of the issuer
of the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;
- --- -- (e) Any natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his purchase exceeds $1,000,000;
- --- -- (f) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
- --- -- (g) Any trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in '230.506(b)(2)(ii); and
- --- -- (h) Any entity in which all of the equity owners are accredited
investors.
Name, address and telephone number of accountant or attorney the Company may
contact to confirm accredited investor status: ----------------------------
- --------------------------------------------------------------------------------
KRUSE, LANDA & MAYCOCK, L.L.C.
EIGHTH FLOOR, BANK ONE TOWER
50 WEST BROADWAY (300 SOUTH)
SALT LAKE CITY, UTAH 84101-2034
TELEPHONE: (801) 531-7090
ATTORNEYS AT LAW TELECOPY: (801) 531-7091
MAILING ADDRESS (801) 359-3954
Post Office Box 45561
Salt Lake City, Utah 84145-0561 www.klmlaw.com
March 10, 2000
Board of Directors
Telecom Wireless Corporation
5299 DTC Boulevard, Suite 1120
Englewood, CO 80111
Re: Telecom Wireless Corporation
Registration Statement on Form S-8
Gentlemen:
We have been engaged by Telecom Wireless Corporation (the "Company") to
render our opinion respecting the legality of certain securities to be offered
and sold pursuant to the registration statement on Form S-8 filed by the Company
with the Securities and Exchange Commission (the "Registration Statement").
Capitalized terms used but not defined herein have the same meanings as set
forth in the Registration Statement.
In connection with this engagement, we have examined the following:
1. Articles of incorporation of the Company, as amended as of the date
hereof;
2. Bylaws of the Company, as amended as of the date hereof;
3. The Registration Statement; and
4. Minutes of the Company's board of directors or written consents of
the Company's board of directors or stockholders in lieu thereof respecting
certain matters material to this opinion.
We have examined such other corporate records and documents and have made
such other examination as we deemed relevant. In rendering this opinion, we
have assumed (i) the genuineness of all signatures on all documents not executed
in our presence, (ii) the authenticity of all documents submitted to us as
originals, (iii) the conformity to authentic original documents of all documents
submitted to us as certified or conformed copies, and (iv) the corporate minute
books, stockholder records, and similar information furnished to us, and on
which we have relied, are true, correct, and complete. None of the factual
matters or assumptions on which our opinion is based are, to our knowledge,
false in any respect as they relate to the opinion below.
Based upon the above examination, we are of the opinion that the Common
Stock to be sold pursuant to the Registration Statement will be, when issued in
accordance with the terms of the Amended and Restated 1999 Stock Option and
Restricted Stock Plan and Non-Qualified Stock Option Agreements attached to or
<PAGE>
Kruse, Landa & Maycock, L.L.C.
March 10, 2000
Page 2
incorporated by reference into the Registration Statement, legally issued, fully
paid, and nonassessable under the Utah Revised Business Corporation Act.
This firm consents to being named in the Prospectus included in the
Registration Statement as having rendered the foregoing opinion.
This opinion is limited by and subject to the following:
(a) With respect to questions of fact material to the opinions
expressed above, we have relied, without independent investigation, on the
representations of officers of the Company.
(b) This opinion shall not constitute a representation, express or
implied, that we have made any independent investigation as to the accuracy or
completeness of any information included in the Registration Statement other
than that set forth under the caption "Legal Opinion," and we assume in
rendering the opinion set forth above that such information does not contain any
untrue statement of a material fact or omit a fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.
(c) The foregoing opinion is as of the date hereof, and we expressly
disclaim any undertaking or obligation to advise you of any changes which may
occur or be brought to our attention subsequent to such date.
This opinion is rendered to you for use solely in connection with the
Registration Statement and the consummation of the transactions contemplated
therein. This opinion may not be relied on by any other person or used for any
other purpose, without the express written consent of the undersigned.
Sincerely yours,
/s/ Kruse, Landa & Maycock, LLC
KRUSE, LANDA & MAYCOCK, L.L.C.
KL&M/JRK
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Telecom Wireless and Subsidiaries on Form S-8 of our report dated October 26,
1999 appearing in the prospectus on Form SB-2 of Telecom Wireless Corporation
and Subsidiaries. We also consent to the reference to us under the caption
"Experts" in the Reoffer Prospectus.
/s/ Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
March 14, 2000
Denver, Colorado
GERSTLE, ROSEN & ASSOCIATES, P.A.
Certified Public Accountants
================================================================================
MARK R. GERSTLE, C.P.A. ROBERT N. ROSEN, C.P.A.
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-8 of our report of
Telecom Wireless Corporation and Subsidiary dated September 22, 1998, appearing
in the Company's Registration Statement on Form SB-2 (SEC File No. 333-91717).
We also consent to the reference to us under the caption "Experts" in the
Reoffer Prospectus.
/s/ Gerstle, Rosen & Associates, P.A.
Gerstle, Rosen & Associates, P.A.
Aventura, Florida
March 14, 2000
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-8 of our report of
America's Web Station, Inc. dated July 30, 1999, appearing in the Company's
Registration Statement on Form SB-2 (SEC File No. 333-91717). We also consent to
the reference to us under the caption "Experts" in the Reoffer Prospectus.
/s/ Girardin Baldwin & Associates LLP
GIRARDIN BALDWIN & ASSOCIATES LLP
Certified Public Accountants
Naples, Florida
March 14, 2000
RESALE PROSPECTUS
TELECOM WIRELESS CORPORATION
UP TO 2,253,732
SHARES OF COMMON STOCK
WHICH THE SELLING SHAREHOLDERS MAY RESELL UNDER THIS PROSPECTUS
You should read this resale prospectus carefully before you invest. This
prospectus relates to 2,253,732 shares of common stock $.001 par value per share
(the "Common Stock") of Telecom Wireless Corporation (the "Company"). The
stockholders of the Company listed in the "Selling Stockholders" section of this
resale prospectus may offer and resell shares of Common Stock under this resale
prospectus for their own accounts. Telecom Wireless Corporation will not
receive any proceeds from the resale of these shares by the selling
stockholders.
These shares were issued or are issuable to the selling stockholders and
others as follows
(i) 800,000 shares issued and issuable under the Amended and Restated 1999
Stock Option and Restricted Stock Plan (the "Plan") pursuant to written
compensation agreements and otherwise; and
(ii) 1,453,732 shares issuable under Non-Qualified Stock Option Agreements.
The selling stockholders may offer their common stock through public or
private transactions, at prevailing market prices or at privately negotiated
prices. These future prices are not currently known.
Telecom Wireless Corporation stock is traded on the Nasdaq OTC Bulletin
Board under the symbol "NOYR". On March 9, 2000, the last reported sale price
for the common stock on the Nasdaq OTC Bulletin Board was $5.0625 per share.
See Risk Factors beginning on page 2 to read about factors you should
consider before buying shares of common stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION MADE TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is March 15, 2000
1
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before deciding
whether to invest in Telecom Wireless Corporation. If any of the contingencies
discussed in the following paragraphs or other materially adverse events
actually materialize, the business, financial condition and results of
operations of Telecom Wireless could be materially and adversely affected. In
such a case, the trading price of Telecom Wireless' common stock could decline,
and you could lose all or part of your investment.
TELECOM WIRELESS HAS EXPERIENCED DIFFICULTY IMPLEMENTING ITS BUSINESS PLAN
Telecom Wireless has an ambitious business plan that it has been attempting
to implement since April 1999. Since the company has experienced difficulty
obtaining financing from traditional sources, execution of most of its business
plan has been delayed. There can be no assurance that the business plan can be
implemented and successfully executed.
SUBSTANTIAL DOUBT EXISTS AS TO TELECOM WIRELESS' ABILITY TO CONTINUE AS A GOING
CONCERN
The independent auditor's report on the June 30, 1999, financial statements
of Telecom Wireless contains an explanatory paragraph that indicates there is
substantial doubt as to the company's ability to continue as a going concern.
Management projects that Telecom Wireless will continue to incur net losses and
experience negative cash flow for the foreseeable future. This will require
substantial amounts of capital. As of the date of this prospectus, management
does not have commitments for additional financing and cannot be sure that
Telecom Wireless will be able to obtain any such commitments at all or upon
reasonable terms and conditions.
FAILURE TO INTEGRATE ACQUISITIONS SUCCESSFULLY MAY ADVERSELY AFFECT TELECOM
WIRELESS' OPERATING RESULTS
The success of Telecom Wireless will depend to a great extent on its
ability to integrate the operations and management of the businesses that it
has acquired and businesses that it may acquire in the future. Consolidating
acquired businesses and integrating regional operations may take a significant
period of time, will place a significant strain on Telecom Wireless' resources
and could prove to be more expensive than expected. Telecom Wireless may
increase expenditures to accelerate the integration and consolidation of its
acquired operations, but it cannot guarantee this result nor can the company
assure investors that its resources will be sufficient to successfully implement
its expansion program.
MANAGEMENT'S PLANNED AGGRESSIVE GROWTH WILL STRAIN TELECOM WIRELESS' RESOURCES
Management intends to expand the operations of Telecom Wireless rapidly
through acquisitions by aggressively pursuing companies that provide or can
provide a national network system and infrastructure and then expand the
network through the acquisition and installation of necessary equipment,
extensive marketing efforts in new locations and the employment of qualified
technical, marketing and customer support personnel. This rapid growth will
place a significant strain on our managerial, operational and financial
resources.
To manage our growth, management must improve the operational systems,
procedures and controls of Telecom Wireless on a timely basis by centralizing
and standardizing Telecom Wireless' operations and upgrading and replacing
outdated infrastructure. If the demands placed on its network resources by a
growing subscriber base outpace its growth and operating plans, the quality and
reliability of our service may decline and relationships with customers may be
harmed as a result.
IF TELECOM WIRELESS IS UNABLE TO ESTABLISH SATISFACTORY PEERING RELATIONSHIPS,
COSTS MAY INCREASE
Management intends to establish and maintain "peering" relationships with
other ISPs and with CLECs so that Telecom Wireless can exchange traffic without
paying transit costs. If management is unable to establish adequate peering
relationships, our costs will increase and our revenues could decrease. This
would harm the business, financial condition and results of operations of
Telecom Wireless.
2
<PAGE>
IF SUPPLIERS FAIL TO PROVIDE TELECOM WIRELESS WITH THE EQUIPMENT IT NEEDS, WE
MAY LOSE CUSTOMERS
There are only a limited number of businesses that can supply Telecom
Wireless with the key components it will need for its planned network
infrastructure, including telecommunications services and networking equipment.
Management cannot be certain that suppliers and telecommunications carriers will
continue to sell or lease their products and services to Telecom Wireless at
commercially reasonable prices or at all. If there are delays in receiving this
equipment, Telecom Wireless may not be able to service its customers.
Difficulties in developing alternative sources of supply, if required, could
adversely affect its business, future financial condition or operating results.
Moreover, failure of telecommunications providers to provide the data
communications capacity required by Telecom Wireless for any reason could cause
interruptions in its ability to provide access services to its customers, which
may materially and adversely affect our business, financial condition and
operating results.
ACQUISITIONS OF ISP SUBSCRIBERS MAY RESULT IN SUBSCRIBER CANCELLATIONS DUE TO
BILLING PROBLEMS AND UNFAMILIARITY WITH TELECOM WIRELESS' SERVICE
As part of management's growth strategy, Telecom Wireless may acquire
businesses, products, technologies and other assets, including ISP subscriber
accounts, or enter into joint venture arrangements that complement our
businesses. In an acquisition of ISP subscribers, Telecom Wireless may
experience subscription cancellations in the short-term period following the
acquisition due to the lack of the acquired subscribers' familiarity with
Telecom Wireless as their ISP and billing issues that may arise due to poor
record keeping and billing administration by the selling company.
ACQUISITIONS OF COMPANIES MAY DISRUPT TELECOM WIRELESS' BUSINESS AND DISTRACT
MANAGEMENT DUE TO DIFFICULTIES IN ASSIMILATING PERSONNEL AND OPERATIONS
If Telecom Wireless acquires another company, Telecom Wireless could
encounter difficulties in assimilating the acquiree's personnel and operations.
This may disrupt our ongoing business and distract management, as well as result
in unanticipated costs and difficulty in maintaining standards, controls and
procedures. Telecom Wireless may be required to incur debt or issue equity
securities to pay for any future acquisitions or to fund any losses or
unanticipated costs of the combined companies.
TELECOM WIRELESS IS SUBJECT TO ALL RISKS FACED BY START-UP INTERNET COMPANIES
Telecom Wireless may encounter certain risks and difficulties in building
and operating a business in the rapidly evolving telecommunications sector,
especially given its limited operating history:
* Future revenues will depend heavily on management's ability to acquire
businesses, to attract and retain subscribers and business customers, and to
increase per subscriber revenues.
* The telecommunications services business, including the Internet services
sector, is extremely competitive and is changing rapidly. Competition could
result in loss of customers and reduction of revenues. Most of our competitors
have significantly greater market presence, brand recognition, and financial,
technical and personnel resources than Telecom Wireless has, and many have
extensive coast-to-coast Internet backbones and large customer bases.
* We expect increasing competition from Internet service providers using
alternative technologies including:
- telecommunications providers that bundle Internet access with basic
local and long distance telecommunications services, which could force
Telecom Wireless to price its services at a level that would have an
adverse effect on its business, financial condition and results of
operations;
- major cable companies such as AT&T as they begin to offer
Internet connectivity through their cable infrastructure, which is designed
to increase the connection speed to the Internet; and
3
<PAGE>
- other alternative service companies that are approaching the
Internet connectivity market with various wireless terrestrial and
satellite-based service technologies, which currently offer high-speed
Internet access to business customers.
* Management expects Telecom Wireless to encounter significant pricing
pressure as a result of competition and advances in technology.
* Telecom Wireless will rely on a combination of copyright, trademark and
trade secret laws to protect its proprietary rights. Management cannot be
certain that the steps we, or the companies we have acquired, have taken will be
adequate to prevent the misappropriation of Telecom Wireless' technology or that
third parties, including competitors, will not independently develop
technologies that are substantially equivalent or superior to Telecom Wireless'
proprietary technology.
MARKET OVERHANG AND SHARES AVAILABLE FOR FUTURE SALE
The market price of Telecom Wireless' common stock could drop if
substantial amounts of shares are sold in the public market or if the market
perceives that such sales could occur. A drop in the market price could
adversely affect holders of the stock and could also harm Telecom Wireless'
ability to raise additional capital by selling equity securities. Telecom
Wireless has registered for public sale in the registration statement of which
this prospectus is a part 800,000 shares of its common stock issuable under its
Amended and Restated 1999 Stock Option and Restricted Stock Plan (the "Plan")
(of which 246,514 shares have been issued or reserved for issuance upon exercise
of granted options) and 1,453,732 shares issuable under non-qualified stock
options granted otherwise than under the Plan. Telecom Wireless also has
registered for public sale 3,571,806 shares of its common stock in connection
with registration rights granted to security holders who are not officers,
directors or employees of the company, and expects to register additional shares
for public sale in the near future in amounts presently unknown. Based on a
market price of the common stock of $6-7/8 per share as of February 16, 2000,
and as of that date, Telecom Wireless had outstanding and had agreed to issue
options, warrants and convertible securities for the purchase of up to
approximately 9,936,134 shares of common stock (including those referred to
above) at an average price of $7.30 per share, representing approximately 35% of
the company's outstanding shares of common stock on a fully-diluted basis as of
that date. In addition, 13,725,000 shares issued by Telecom Wireless in
connection with its acquisition of Phoenix Communications, Inc., in a private
transaction will become eligible for sale in the public market under SEC Rule
144 in April 2000. 12,400,000 of these shares are held by current officers or
directors of Telecom Wireless. However, officers of the Company have entered
into stock sale restriction agreements and, in addition, are subject to the sale
limitations of SEC Rule 144(e) as described herein.
A NOTE ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains both historical and forward-looking statements.
All statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
The forward-looking statements in this prospectus are not based on historical
facts, but rather reflect the current expectations of the management of Telecom
Wireless Corporation concerning future results and events.
The forward-looking statements generally can be identified by the use of
terms such as "believe," "expect," "anticipate," "intend," "plan," "foresee,"
"likely," "will" or other similar words or phrases. Similarly, statements that
describe the objectives, plans or goals of Telecom Wireless are or may be
forward-looking statements.
Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of Telecom Wireless to be different from any future results, performance and
achievements expressed or implied by these statements. You should review
carefully all information, including the financial statements and the notes to
the financial statements included in this prospectus. In addition to the
factors discussed above under "Risk Factors," the following important factors
could affect future results, causing the results to differ materially from those
expressed in the forward-looking statements in this prospectus:
4
<PAGE>
* the timing, impact and other uncertainties related to pending and future
acquisitions by Telecom Wireless;
* the impact of new technologies;
* changes in laws or rules or regulations of a governmental agency,
including the Federal Communications Commission;
* changes in tax requirements, including tax rate changes, new tax laws and
revised tax law interpretations; and
* interest rate fluctuations and other capital market conditions.
These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in the
forward-looking statements in this prospectus. Other unknown or unpredictable
factors also could have material adverse effects on the future results of
Telecom Wireless. The forward-looking statements in this prospectus are made
only as of the date of this prospectus and Telecom Wireless does not have any
obligation to publicly update any forward-looking statements to reflect
subsequent events or circumstances. Telecom Wireless cannot assure you that
projected results will be achieved.
USE OF PROCEEDS
Because this prospectus is solely for the purpose of permitting the selling
stockholders to offer and sell shares, Telecom Wireless will not receive any
proceeds from the sale of the shares being offered. The selling stockholders
will receive all the proceeds. However, Telecom Wireless will receive the
proceeds from any exercise of stock options which will be used for general
corporate purposes.
DETERMINATION OF OFFERING PRICE
This offering is solely for the purpose of allowing selling stockholders to
sell shares. The selling stockholders may elect to sell some or all of their
shares when they choose, in the near future or at a later date, at the price at
which they choose to sell. As the market develops, the selling stockholders will
determine the price for their shares.
DILUTION
This offering is for sales of shares by selling stockholders. Such sales
will not result in any dilution to the net tangible book value per share of the
common stock of Telecom Wireless before and after the sales. Prospective
investors should be aware, however, that the market price of shares being sold
may not bear any rational relationship to net tangible book value per share. As
of December 31, 1999, the net tangible book value per outstanding share of the
common stock of Telecom Wireless was a negative $.21 per share. Thus, exercise
of the options will be non-dilutive.
SELLING STOCKHOLDERS
The selling stockholders acquired beneficial ownership of all the shares
offered for resale pursuant to this prospectus in compensatory transactions.
These transactions include stock bonuses for employees and certain newly-hired
officers and stock options issued or issuable under (i) the Amended and Restated
1999 Stock Option and Restricted Stock Plan pursuant to written compensation
agreements or otherwise, and (ii) non-qualified stock option agreements granted
pursuant to written compensation agreements with officers and key employees. A
shareholder is deemed to beneficially own shares held in his or her name and
certain shares he or she does not own but has the right to acquire upon option
exercise or otherwise within 60 days after the date of this prospectus.
The following table shows:
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* The name of each selling stockholder who is an officer and/or director of
Telecom Wireless or who beneficially owns more than 1,000 shares of its
restricted common stock;
* how many shares the selling stockholder beneficially owns as of March 9,
2000;
* how many shares the selling stockholder can resell under this prospectus;
and
* assuming a selling stockholder sells the maximum number of shares that may
be resold pursuant to this prospectus, how many shares the selling stockholder
will beneficially own after completion of the offering.
We may amend or supplement this prospectus from time to time in the future
to update or change this list of selling stockholders and shares that may be
resold.
<TABLE>
<CAPTION>
No. of
Shares Beneficially Owned
----------------------------
Option No. of
Shares No. of Shares
Included in Shares Owned
Name Total Total Offered After Sale
- ----- ------ ------ -------- ------------
<S> <C> <C> <C> <C>
Rachpal Brar. . . . . . . 2,600 0 2,600 0
Patrick Delaney . . . . . 1,972 0 1,772 200
Harry Elia(4) . . . . . . 4,431 0 4,431 0
Robert L. Fredrick(1, 2). 666,667 166,667 166,667 500,000
Beth Geerts . . . . . . . 1,772 0 1,772 0
Esper Gullatt, Jr.(1, 2). 228,278 66,667 66,667 161,611
Paul Hart(1). . . . . . . 20,000 0 20,000 0
Joseph Helfer . . . . . . 5,524 0 5,524 0
Don Kracke. . . . . . . . 3,545 0 3,545 0
Scott Lennartson(4) . . . 2,659 0 2,659 0
Rick Lowe . . . . . . . . 3,840 0 3,840 0
Thomas Newman . . . . . . 5,317 0 5,317 0
Shawn Richmond(4) . . . . 3,249 0 3,249 0
James C. Roberts(1, 2, 3) 11,616,634 700,000 700,000 10,949,967
Lynne K. Roberts(1, 2, 3) 10,982,901 33,333 33,333 10,949,967
Stuart Schoenfeld . . . . 1,772 0 1,772 0
Calvin D. Smiley(1, 2). . 228,278 66,667 66,667 161,611
Jerry "Michau" Yuen(1). . 10,500 0 10,500 0
_____________________
<FN>
(1) Executive officer and/or director of Telecom Wireless as follows:
James C. Roberts Chairman of the Board of Directors
Calvin D. Smiley President, Chief Executive Officer and Director
Robert L. Fredrick Senior Vice President
Lynne K. Roberts Vice President-Human Resources and Secretary
Paul Hart Chief Executive Officer of an operating subsidiary
to be formed
Esper Gullatt, Jr. President of an operating subsidiary to be formed
Jerry "Michau" Yuen Executive Vice President-Business Development of an
operating subsidiary to be formed
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<PAGE>
(2) Officers of Telecom Wireless have entered into stock sale restriction
agreements described elsewhere herein.
(3) Of the shares beneficially owned by Mr. Roberts, 10,616,333 are owned of
record by The Roberts Family Trust, of which Mr. Roberts and Lynne K. Roberts,
his spouse, are sole trustees, and 300,000 are owned of record by Mrs. Roberts.
Includes 666,667 shares and 33,333 shares issuable upon exercise of stock
options owned of record by Mr. Roberts and Mrs. Roberts, respectively, and which
become exercisable within 60 days after the date of this prospectus.
(4) The shares offered vest in equal amounts over a three-year period. If
the shares fail to vest, then they are required to be transferred to Shawn
Richmond.
</TABLE>
After the sales are complete, the selling stockholders beneficially owning
1% or more of the outstanding common stock will be James C. Roberts (60%), Lynne
K. Roberts (60%) and Robert L. Fredrick (3%), based on 18,278,355 shares issued
and outstanding as of February 16, 2000. All of the option shares identified in
the table above have an exercise price of $10.55 per share.
PLAN OF DISTRIBUTION
Telecom Wireless is registering this offering of shares on behalf of the
selling stockholders. Telecom Wireless will pay all costs, expenses and fees
related to the registration, including all registration and filing fees,
printing expenses, fees and disbursements of its counsel, blue sky fees and
expenses. The selling stockholders will pay any underwriting discounts and
selling commissions in connection with the sale of the shares.
The selling stockholders may sell the shares covered by this prospectus
from time to time in one or more transactions through the OTC Bulletin Board or
an interdealer quotation system, on one or more securities exchanges, in
alternative trading markets or otherwise, at prices and at terms then prevailing
or at prices related to the then current market price, or in negotiated
transactions. The selling stockholders will determine the prices at which they
sell their shares in these transactions. The selling stockholders may effect the
transactions by selling the shares to or through broker-dealers. In effecting
sales, broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in the resales. The shares may be sold by one or
more, or a combination, of the following:
* a block trade in which the broker-dealer attempts to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction,
* purchases by a broker-dealer as principal and resale by the broker-dealer
for its account,
* ordinary brokerage transactions and transactions in which the broker
solicits purchasers, and
* privately negotiated transactions.
The amount of securities to be offered or resold by means of this
prospectus by each selling stockholder, and any other person with whom he or she
is acting in concert for the purpose of selling securities of Telecom Wireless,
is limited by SEC Rule 144(e)(1) and (2). The number of shares resold may not
exceed, during any three-month period, the greater of:
* 1% of the shares of the class outstanding as shown by the most recent
report published by the issuer, or
* the average weekly reported volume of trading in such securities during
the four calendar weeks preceding the date of receipt of the order to execute
the transaction by the broker or the date of execution of the transaction
directly with a market maker.
For the purpose of determining the amount of securities sold during any
three-month period, the following provisions shall apply:
(i) Where both convertible securities and securities of the class into
which they are convertible are sold, the amount of convertible securities sold
shall be deemed to be the amount of securities of the class into which they are
convertible for the purpose of determining the aggregate amount of securities of
both classes sold;
(ii) The amount of securities sold for the account of a pledgee thereof, or
for the account of a purchaser of the pledged securities, during any period of
three months within one year after a default in the obligation secured by the
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<PAGE>
pledge, and the amount of securities sold during the same three-month period
for the account of the pledgor shall not exceed, in the aggregate, the amount
specified in paragraph SEC Rule 144(e)(1) or (2), whichever is applicable;
(iii) The amount of securities sold for the account of a donee thereof
during any period of three months within one year after the donation, and the
amount of securities sold during the same three-month period for the account of
the donor, shall not exceed, in the aggregate, the amount specified in
paragraph SEC Rule 144(e)(1) or (2), whichever is applicable;
(iv) Where securities were acquired by a trust from the settlor of the
trust, the amount of such securities sold for the account of the trust during
any period of three months within one year after the acquisition of the
securities by the trust, and the amount of securities sold during the same
three-month period for the account of the settlor, shall not exceed, in the
aggregate, the amount specified in paragraph SEC Rule 144(e)(1) or (2),
whichever is applicable.
(v) The amount of securities sold for the account of the estate of a
deceased person, or for the account of a beneficiary of such estate, during any
period of three months and the amount of securities sold during the same period
for the account of the deceased person prior to his death shall not exceed,
in the aggregate, the amount specified in SEC Rule 144(e) (1) or (2), whichever
is applicable; provided, that no limitation on amount shall apply if the estate
or beneficiary thereof is not an affiliate of the issuer;
(vi) When two or more affiliates or other persons agree to act in concert
for the purpose of selling securities of an issuer, all securities of the same
class sold for the account of all such persons during any period of three months
shall be aggregated for the purpose of determining the limitation on the amount
of securities sold;
(vii) The following sales of securities need not be included in determining
the amount of securities sold: securities sold pursuant to an effective
registration statement under the Securities Act; securities sold pursuant to an
exemption provided by Regulation A under the Securities Act; securities sold in
a transaction exempt pursuant to Section 4 of the Securities Act and not
involving any public offering; and securities sold offshore pursuant to
Regulation S under the Securities Act.
Officers of Telecom Wireless holding an aggregate of 12,466,333 shares of
its common stock and options and warrants for the purchase of an additional
2,923,222 shares of common stock have entered into stock sale restriction
agreements whereby they agreed, among other things, that the maximum amount each
will sell during any period of 30 consecutive calendar days will not exceed the
lesser of $25,000 in gross proceeds or 5,000 shares; that no share will be sold
for a price less than $4.25; and that they will not engage in any short sales of
the stock. The board of directors may waive any of the restrictions on an
individual basis and may terminate the agreement at any time.
The selling stockholders may enter into hedging transactions with
broker-dealers. In these transactions, broker-dealers may engage in short sales
of the common stock in the course of hedging the positions they assume with the
selling stockholders. The selling stockholders also may sell the common stock
short pursuant to this prospectus and redeliver the shares to close out these
short positions. The selling stockholders may enter into option or other
transactions with broker-dealers that require the delivery to the broker-dealer
of the shares covered by this prospectus. The broker-dealer may then resell or
otherwise transfer the shares pursuant to this prospectus. The selling
stockholders also may loan or pledge the shares to a broker-dealer. The
broker-dealer may then sell the loaned shares or, upon a default by the selling
stockholder, the broker-dealer may sell the pledged shares pursuant to this
prospectus.
The selling stockholders may engage in other financing transactions that
may include forward contract transactions or borrowings from financial
institutions in which the shares are pledged as security. In connection with any
of these forward contract transactions, the selling stockholders would pledge
shares to secure their obligations and the counterparty to these transactions
would sell the common stock short to hedge its transaction with the selling
stockholder. Upon a default by the selling stockholder under any of these
financings, including a forward contract transaction, the pledgee or its
transferee may sell the pledged shares pursuant to this prospectus. Any such
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<PAGE>
pledgee or its transferee will be identified in this prospectus by
post-effective amendment to the registration statement of which it is a part.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholder.
Broker-dealers or agents may also receive compensation from the purchasers of
the shares for whom they act as agents or to whom they sell as principals, or
both. Compensation to a particular broker-dealer may be in excess of customary
commissions and will be in amounts to be negotiated with a selling stockholder
in connection with the sale. Broker-dealers or agents, any other participating
broker-dealers and the selling stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act in connection with
sales of the shares. Accordingly, any commission, discount or concession
received by them and any profit on the resale of the shares purchased by them
may be deemed to be underwriting discounts or commissions under the Securities
Act. Because the selling stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling stockholders
will be subject to the prospectus delivery requirements of the Securities Act.
The selling stockholders will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the associated rules and regulations,
including Regulation M. These provisions may limit the timing of purchases and
sales of shares of the common stock of Telecom Wireless by the selling
stockholders. Telecom Wireless will make copies of this prospectus available to
the selling stockholders and has informed them of the need for delivery of
copies of this prospectus to purchasers at or before the time of any sale of the
shares.
LEGAL OPINION
Kruse, Landa & Maycock, L.L.C., Salt Lake City, Utah, has passed upon the
legality of the shares offered by this prospectus.
EXPERTS
Ehrhardt Keefe Steiner & Hottman, P.C., independent auditors, have audited
the consolidated equity and cash flows of Telecom Wireless Corporation as of the
year ended June 30, 1999 as set forth in the Form SB-2 Registration Statement
filed February 24, 2000, which is incorporated by reference in this prospectus
and elsewhere in the registration statement.
The consolidated statements of operations, stockholders' equity and cash
flows of Telecom Wireless Corporation and subsidiary for the year ended June 30,
1998 included in this prospectus have been included herein in reliance on the
report of Gerstle, Rosen & Associates, P.A., independent certified public
accountants, given on authority of that firm as experts in accounting and
auditing.
The balance sheets of America's Web Station as of December 31, 1997 and
1998 and the statements of operations, stockholders' equity and cash flows for
the period then ended included in this prospectus have been included herein in
reliance on the report of Girardin Baldwin & Associates LLP, independent
certified public accountants, given on authority of that firm as experts in
accounting and auditing.
With respect to the unaudited interim financial information included
herein, the independent certified public accountants have not audited or
reviewed the information and have not expressed an opinion or any other form of
assurance with respect to this information.
The pro forma combined statement of operations and cash flows for the year
ended June 30, 1999 have not been audited or reviewed by the independent
certified public accountants and they do not express an opinion or purport to
give any other form of assurance on them.
In May 1999, the board of directors of Telecom Wireless appointed Ehrhardt
Keefe Steiner & Hottman P.C. to serve as its principal independent accountant
for the fiscal year ending June 30, 1999. Gerstle, Rosen & Associates, P.A.,
reported on the financial statements of Telecom Wireless for the fiscal year
9
<PAGE>
ended June 30, 1998. Its report for that year noted that Telecom Wireless had
suffered recurring losses from operations that raised substantial doubt about
its ability to continue as a going concern. The same matter was emphasized in
the auditor's report for the fiscal year June 30, 1999. There were no
disagreements with the former accountants on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure.
HOW TO OBTAIN ADDITIONAL INFORMATION
Telecom Wireless Corporation has filed a registration statement with the
Securities and Exchange Commission relating to the securities offered by this
prospectus. The prospectus does not contain all of the information set forth in
the registration statement. For further information with respect to Telecom
Wireless and the securities offered by this prospectus, refer to the
registration statement. In addition, Telecom Wireless recently became a public
company required to file annual and quarterly reports with the Securities and
Exchange Commission. As of the date of this prospectus, no reports have been
required to be filed. You may read and copy the registration statement and any
materials Telecom Wireless files with the Securities and Exchange Commission at
the Securities and Exchange Commission's Public Reference Room at 450 Fifth
Street, N.W., Washington, DC 20549. The public may obtain information on the
operation of the Public Reference Room by calling the Securities and Exchange
Commission at 1-800-SEC-0330. The Securities and Exchange Commission also
maintains an Internet site at www.sec.gov where Telecom Wireless' Securities and
Exchange Commission filings can be viewed.
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