SHARE EXCHANGE AGREEMENT
BY AND AMONG
WAVETECH INTERNATIONAL, INC.,
INTERPRETEL (CANADA) INC.
AND
SOFTALK INC.
DATED AS OF
NOVEMBER 13, 1999
Share Exchange Agreement
by and among
Wavetech International, Inc.,
Interpretel (Canada) Inc.
and
Softalk Inc.
dated as of
November 13, 1999
TABLE OF CONTENTS
PAGE
----
1. Certain Definitions 1
2. Right to Exchange 2
3. Covenants and Representations 2
4. Restrictive Legend 7
5. Company Registration 8
6. Expenses of Registration 8
7. Indemnification 8
8. Further Obligations of the Company 11
9. Rule 144 Requirements 11
10. Amendment 12
11. Notices, etc. 12
12. Entire Agreement; Severability 13
13. Governing Law 13
14. Counterparts 13
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement ("Agreement") is entered into as of November 13,
1999 by and among WAVETECH INTERNATIONAL, INC., a Nevada corporation ("Wavetech"
or the "Company"), INTERPRETEL (CANADA) INC. ("Buyer"), an Ontario, Canada
corporation and a wholly-owned subsidiary of WAVETECH and SOFTALK INC., an
Ontario, Canada corporation ("Seller") with reference to certain shares of no
par value Class A Voting Preferred Stock of Buyer ("Buyer Preferred Stock") and
certain shares of Common Stock, par value $.001 per share (the "Common Stock")
of Wavetech.
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the United States Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
"EXCHANGE ACT" shall mean the United States Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect at the time and any successor thereto.
"HOLDER" shall mean Softalk Inc., an Ontario, Canada corporation.
"REGISTRABLE SHARES" shall mean the Shares; PROVIDED, HOWEVER, that
Shares shall be treated as Registrable Shares only if and so long as they have
not been (i) sold in a public distribution or a public securities transaction;
or (ii) sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act as a result of which all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all registration, qualification and
filing fees, fees and disbursements of counsel for Wavetech, accounting fees
incident to any such registration, state securities or blue sky fees and
expenses, transfer agent and registrar fees, reasonable fees and expenses of any
special experts retained by Wavetech in connection with any such registration,
any listing fees and any out-of-pocket expenses of the Holder incurred in
connection with the registration of Shares, including, without limitation, fees
and disbursements of counsel for the Holder if such counsel is not also counsel
for the Company, and printing expenses.
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"RESTRICTED SHARES" shall mean the shares of Wavetech required to bear
the legend set forth in paragraph (a) of Section 3 hereof.
"RULE 144" shall mean Rule 144 promulgated under the Securities Act,
as such Rule shall be in effect at the time, and any successor thereto.
"SECURITIES ACT" shall mean the United States Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
"SELLING AND DISTRIBUTING EXPENSES" shall mean all underwriting
discounts, selling commissions and stock transfer taxes attributable to the sale
of Shares by the Holder.
"SHARES" shall mean the 4,329,004 shares of Wavetech Common Stock
issuable on a one-for-one basis upon exchange for Buyer Preferred Stock pursuant
to the Purchase Agreement, and any shares of Common Stock in respect thereof in
connection with stock splits, stock dividends or distributions, or combinations
or similar recapitalizations, on or after the date hereof.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement dated as of
October 25, 1999 by and among the parties hereto.
2. RIGHT TO EXCHANGE. Each share of Buyer Preferred Stock may be exchanged
on a one-for-one basis into a share of Wavetech Common Stock at any time or
times subsequent to the date of this Agreement in the sole discretion of Seller
upon written notice to the Company. Upon receipt of such written notice the
Company shall exchange the number of shares of Buyer Preferred Stock so tendered
for Common Stock of the Company. Such shares of Common Stock of the Company
shall at all times be registered with the Securities and Exchange Commission and
Wavetech will at all times provide to Seller a current prospectus which shall at
all times meet the requirements of Section 10 of the Securities Act.
3. COVENANTS AND REPRESENTATIONS. As further consideration for the
acceptance by Seller of Buyer Preferred Stock in consideration for the assets
being sold by Seller under the Purchase Agreement, Buyer, Seller and Wavetech
each covenant with and warrant and represent to the others as follows:
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(a) Wavetech consents to an amendment to the Articles of Buyer to the
effect that the Buyer Preferred Stock to be delivered to Seller shall be
non-cumulative, voting shares (Class A Preferred Shares).
(b) Seller consents to the issuance by Buyer of additional Common
Shares to Wavetech, with the proviso that (i) at no time will the shares which
may be voted by the Holder of Buyer Preferred Stock at any shareholder meeting
on any issue be less than fifteen percent (15%) of the total shares eligible to
vote on such matter, and (ii) the Buyer Preferred Stock must at all times
represent not less than fifteen percent (15%) of the fair market value of the
total shares of Buyer issued and outstanding.
(c) Wavetech agrees that it (i) will not declare or pay dividends on
its Common Stock without the prior approval of the holders of the Buyer
Preferred Stock then outstanding, provided that such approval shall not be
required if Alexander ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ no longer directly or indirectly owns all
of the issued and outstanding voting shares of Seller, and (ii) will not
exercise its vote as a shareholder of Buyer to initiate the voluntary
liquidation, dissolution or winding up of Buyer nor take any action or omit to
take any action that is designed to result in the liquidation, dissolution or
winding up of Buyer.
(d) Wavetech agrees that it has irrevocably reserved for issuance and
will at all times keep available, out of its authorized and unissued capital
stock, such number of shares of Wavetech Common Stock (or other shares or
securities into which the Wavetech Common Stock may be reclassified or changed
to the extent permitted under this Agreement) equal to the sum of the number of
shares of Wavetech Common Stock which are now or may hereafter be required to
enable and permit Buyer and Wavetech to meet their obligations hereunder.
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(e) Buyer agrees to give Seller and Wavetech notice of each of the
following events at the time set forth:
(i) in the event of any determination by the Board of Directors
of Buyer to institute voluntary liquidation, dissolution or
winding up proceedings with respect to Buyer or to effect
any other distribution of the assets of Buyer among its
shareholders for the purpose of winding up its affairs, at
least thirty (30) days prior to the proposed effective date
of such liquidation, dissolution, winding up or other
distribution;
(ii) immediately, upon the earlier of receipt by Buyer of notice
of or the Buyer otherwise becoming aware of any threatened
instituted claim, suit, petition or other proceedings with
respect to the involuntary liquidation, dissolution or
winding up of Buyer or to effect any other distribution of
the assets of Buyer among its shareholders for the purpose
of winding up its affairs.
(f) Wavetech agrees that the number of shares of Wavetech Common Stock
to be delivered upon exchange for Buyer Preferred Stock will be adjusted to
reflect any reorganization of Wavetech or reclassification of its securities,
any consolidation or merger, stock dividend, stock split or subdivision, reverse
stock split or combination of the Common Stock of Wavetech.
(g) If a negotiated tender offer, share exchange offer, issuer bid,
takeover bid or similar transaction with respect to Wavetech Common Stock (an
"Offer") is proposed by Wavetech or is proposed to Wavetech or its shareholders
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and is recommended by the Board of Directors of Wavetech, or is otherwise
effected or to be effected with the consent or approval of the Board of
Directors of Wavetech, Wavetech will use its best efforts and good faith to take
all such actions and do all such things as are necessary or desirable to enable
and permit holders of Buyer Preferred Stock to participate in such Offer to the
same extent and on an economically equivalent basis as the holders of Wavetech
Common Stock, without discrimination. Without limiting the generality of the
foregoing, Wavetech may participate in all such offers without being required to
redeem Buyer Preferred Stock and without requiring that Buyer Preferred Stock be
exchanged for Wavetech Common Stock (or, if so required, to ensure that any such
redemption or exchange shall be effective only upon and shall be conditional
upon the closing of the Offer and to the extent necessary to tender or deposit
to the Offer).
(h) Wavetech agrees that if any shares of Wavetech Common Stock (or
other shares or securities into which the Wavetech Common Stock may be
reclassified or changed) to be issued and delivered hereunder require
registration or qualification with or approval of or the filing of any document,
or the taking of any proceeding with or the obtaining of any order, ruling, or
consent from, any governmental or regulatory authority under any Canadian or
United States federal, provincial or state laws or regulation or pursuant to the
rules and regulations of any regulatory authority or the fulfillment of any
other legal requirement (in addition to registration of the Wavetech Common
Stock with the United States Securities and Exchange Commission as contemplated
under Section 5 above) (collectively, the "Applicable Laws") before such shares
(or other shares or securities into which the Wavetech Common Stock may be
reclassified or changed) may be issued or delivered by Wavetech to the initial
holder thereof as contemplated hereunder or in order that such shares may be
freely traded thereafter Wavetech will use its best efforts in good faith to
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take all such actions and to do all such things as are reasonably necessary or
advisable to cause the Wavetech Common Stock (or other shares or securities into
which the Wavetech Common Stock may be reclassified or changed) to be and remain
so registered, qualified or approved. Wavetech represents and warrants that it
has in good faith taken all actions and done all things as are necessary as of
this date under the Applicable Laws as they exist on the date hereof to cause
the Wavetech Common Stock (or other shares or securities into which the Wavetech
Common Stock may be reclassified or changed) to be issued and deliverable
hereunder. Wavetech will, in good faith, use its best efforts to take all such
actions and do all such things as are reasonably necessary or advisable to cause
the Wavetech Common Stock (or other shares or securities into which the Wavetech
Common Stock may be reclassified or changed) to be issued and delivered
hereunder, including for greater certainty, pursuant to the provisions of
Section 2 and Section 5 of this Agreement, so as to be quoted or posted for
trading on all stock exchanges and quotation systems on which such shares are
listed, quoted or posted for trading at such time.
(i) Buyer and Wavetech agree that without the prior approval of the
holders of the Buyer Preferred Stock then outstanding (i) until such time as all
of the Buyer Preferred Stock has been exchanged for Wavetech Common Stock, Buyer
will not issue any additional shares of common stock of Buyer (other than to
Wavetech under subparagraph (b) above) or issue any additional shares of Buyer
Preferred Stock and (ii) Wavetech will not transfer, assign or encumber the
shares of Buyer which it now holds or may acquire.
(j) Nothing herein will otherwise restrict the ability of Wavetech to
issue additional shares of its Common Stock from time to time.
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(k) Seller warrants and represents to Buyer and Wavetech that as of
the date hereof, all of the issued and outstanding voting shares of Seller are
owned directly or indirectly by Alexander ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, who is the President
and a director of Seller.
4. RESTRICTIVE LEGEND.
(a) Each certificate representing Shares shall (unless otherwise
permitted by subsection (b) of this Section 3) be stamped with the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM REASONABLY
SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT.
(b) Each Holder consents to the Company's making a notation on its
records and giving instructions to any transfer agent of the Company in order to
implement the restrictions on transfer established in this Agreement. The legend
placed on any certificate pursuant to Section 3(a) and any notations or
instructions with respect to the Restricted Shares represented by such
certificate will be promptly removed, and the Company will promptly issue a
certificate without such legend to the Holder of such Restricted Shares (i) if
such Restricted Shares are registered under the Securities Act and a prospectus
meeting the requirements of Section 10 of the Securities Act is available or
(ii) if the Holder thereof satisfies the requirements of Rule 144 and, where
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reasonably determined necessary by the Company, provides the Company with an
opinion of counsel for the Holder of the shares, both such counsel and such
opinion being reasonably satisfactory to the Company, to the effect that (A) the
Holder meets the requirements of Rule 144 or (B) a public sale, transfer or
assignment of the Shares may be made without registration.
5. COMPANY REGISTRATION.
As soon as reasonably practicable after the date of this Agreement the
Company shall register on Form S-3 (or any appropriate successor form) all
shares of Company Common Stock issuable in exchange for the Buyer Preferred
Stock under the Purchase Agreement. The Company shall advise Holder when such
registration is effective and shall provide to Holder as required copies of a
prospectus meeting the requirements of Section 10 of the Securities Act and
shall extend to Holder full cooperation and assistance in the event Holder
wishes to sell any such Shares.
6. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration pursuant to Section 4 shall be borne by the
Company. All Selling and Distribution Expenses attributable to the Registrable
Shares registered on behalf of Holder shall be borne by Holder.
7. INDEMNIFICATION.
(a) The Company will indemnify the Holder, each of its officers,
directors, employees and agents and each person controlling such Holder within
the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, against all expenses, claims, losses, damages or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
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settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances in which they
were made, not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any other federal, state or
common law rule or regulation applicable to the Company in connection with any
such registration, qualification or compliance, and the Company will reimburse
the Holder, each of its officers, directors, employees and agents and each
person controlling the Holder for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with any written information furnished to the Company pursuant to an
instrument duly executed by the Holder or controlling person and stated to be
specifically for use therein.
(b) The Holder will indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
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therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company for any legal
or any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only if and to the extent, that such untrue statement (or alleged
untrue statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with any written information furnished to the Company pursuant to
an instrument duly executed by the Holder and stated to be specifically for use
therein.
(c) Each party entitled to indemnification under this Section 5 (the
"Indemnified Party") shall give written notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless, but only to the extent that, the
failure to give such notice is actually prejudicial to an Indemnifying Party's
ability to defend such action. No indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation.
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8. FURTHER OBLIGATIONS OF THE COMPANY. Whenever required under this
Agreement to effect the registration of any Registrable Shares, the Company
shall, as expeditiously as reasonably possible furnish to the Holder such
numbers of copies of the registration statement and all amendments thereto, any
prospectus included in such registration statement, including any preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request in order to facilitate the
disposition of Registrable Shares owned by them.
9. RULE 144 REQUIREMENTS. The Company agrees to:
(a) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act;
(b) furnish to any Holder upon request (i) a written statement by the
Company as to its compliance with the requirements of Rule 144(c), and the
reporting requirements of the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the Company, and (iii) such
other reports and documents of the Company as such Holder may reasonably request
to avail itself of any similar rule or regulation of the Commission allowing
itself to sell any such securities without registration; and
(c) cooperate with the Holder in such manner as the Holder may
reasonably request so as to enable sales made in compliance with the
requirements of Rule 144 to be made in compliance with the requirements of any
transfer agent, registrar or the broker through whom any sales are to be
executed.
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10. AMENDMENT. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by the written consent of the
Company and the Holder. Any amendment or waiver effected in accordance with this
Section 8 shall be binding upon the Holder then outstanding, each future holder
of any Shares who is a party to this Agreement, and the Company.
11. NOTICES, ETC.. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand, courier service, United States mail (return receipt
requested) or by facsimile, addressed as follows:
If to Seller or the Seller Stockholders, addressed to:
Ms. Rosnani Atani
Chief Executive Officer
Softalk Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ Righton
Barristers & Solicitors
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇.▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer or Wavetech, addressed to:
Wavetech International, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
12. ENTIRE AGREEMENT; SEVERABILITY. This Agreement and the Purchase
Agreement together with the Schedules and Exhibits thereto set forth all of the
provisions, covenants, agreements, conditions and undertakings among the parties
hereto with respect to the subject matter hereof. The provisions of this
Agreement are severable, and in the event that any one or more provisions are
deemed illegal or unenforceable, the remaining provisions shall remain in full
force and effect.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws (other than those with respect to choice law) of the
State of Nevada. Each of the parties hereto agree that all claims in any action
or proceeding arising out of or related to this Agreement shall be determined by
arbitration pursuant to Section 11.12 of the Purchase Agreement.
14. COUNTERPARTS. This Agreement may be executed simultaneously in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WAVETECH INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Its: President, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
INTERPRETEL (CANADA), INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Its: President, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
SOFTALK INC.
By: /s/ A. ▇▇▇▇▇ ▇▇▇▇
------------------------------------
Its: President, Alexander
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
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