EXHIBIT 10.2
SUBSCRIPTION AGREEMENT
WAVETECH INTERNATIONAL, INC.
THE SECURITIES WHICH ARE THE SUBJECT OF THIS SUBSCRIPTION AGREEMENT (AS IT MAY
BE AMENDED FROM TIME TO TIME, THE "AGREEMENT') HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE AND WILL BE OFFERED AND SOLD IN RELIANCE
ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THESE LAWS BY VIRTUE OF
WAVETECH INTERNATIONAL, INC.'S INTENDED COMPLIANCE WITH SECTIONS 3(b), 4(2) AND
4(6) OF THE SECURITIES ACT, THE PROVISIONS OF REGULATION D UNDER SUCH ACT AND
SIMILAR EXEMPTIONS UNDER STATE LAW. THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC"), ANY STATE
SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The undersigned purchaser (hereafter, the "Purchaser") hereby offers to
purchase certain Series A Convertible Preferred Stock (referred to herein as a
"Share" or collectively as "Shares") of Wavetech International, Inc. (the
"Company"), a publicly-held corporation formed under the laws of the State of
Nevada. This offer to purchase may, for any reason whatsoever, be revoked by the
Purchaser or rejected by the Company prior to acceptance of this offer by the
Company.
Section 1.1 PURCHASE AND SALE OF SHARES. Upon the following terms and
conditions, the Company shall issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company, the number of Shares indicated on the signature
page to this Agreement, which Shares shall have the rights, designations and
preferences set forth in SCHEDULE I hereto.
Section 1.2 PURCHASE PRICE. The purchase price for the Shares (the
"Purchase Price") shall be $1,000 per Share.
Section 1.3 THE CLOSING.
(a) The closing of the purchase and sale of the Shares (the "Closing"),
shall take place at the law offices of Fishman, Jones, Xxxxx & Xxxxx, P.C., 0000
Xxxxxxx 000 Xxxxx --Xxxxx 000, Xxxxxx, Xxxxx 00000 at 10:00 a.m., local time, on
the later of the following: (i) the date on which the last to be fulfilled or
waived of the conditions set forth in Section 4.1 and 4.2 hereof and applicable
to the Closing shall be fulfilled or waived in accordance herewith, or (ii) such
other time and place and/or on such other date as the Purchaser and the Company
may agree. The date on which the Closing occurs is referred to herein as the
"Closing Date."
(b) On the Closing Date, the Company shall deliver to the Purchaser a
certificate representing the Shares registered in the name of the Purchaser or
deposit such Shares into accounts designated by the Purchaser. The Purchaser
shall on the Closing Date deliver to the Company the Purchase Price for all the
Shares by cashier's check or wire transfer in immediately available funds to
such account as shall be designated in writing by the Company. In addition, each
party shall deliver all documents, instruments and writings required to be
delivered by such party pursuant to this Agreement at or prior to the Closing.
Section 1.4 COVENANT TO REGISTER.
(a) For purposes of this Section, the following definitions shall apply:
(i) The terms "register," "registered," and "registration" refer
to a registration under the Securities Act, effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration
statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the shares of the
Company's Common Stock, par value $.001 per share (the "Common Stock"), issuable
upon conversion of shares of the Shares or upon conversion of any other stock
issued in payment of dividends on the Shares or otherwise issuable pursuant to
this Agreement or the provisions of Schedule I hereto, and any securities of the
Company or securities of any successor corporation issued as, or issuable upon
the conversion or exercise of any warrant, right or other security that is
issued as a dividend or other distribution with respect to, or in exchange for,
or in replacement of, the Shares.
(iii) The term "holder of Registrable Securities" means the Purchaser
and any permitted assignee of registration rights pursuant to Section 1.4(h).
(b) (i) The Company shall as soon as possible file a registration
statement on Form SB-2 or Form S-3 covering at least 200% of the number of
Registrable Securities which would then be issuable upon conversion of the
Shares at the conversion price then in effect, and shall use its best efforts to
cause such registration statement to become effective on or before one hundred
and twenty (120) days after the Closing Date (the "Initial Registration"). In
the event such Initial Registration is not so declared effective or does not
include all Registrable Securities, a holder of Registrable Securities shall
have the right to require by notice in writing that the Company register all or
any part of the Registrable Securities held by such holder (a "Demand
Registration") and the Company shall thereupon effect such registration in
accordance herewith (which may include adding such shares to an existing shelf
registration). The parties agree that if the holder of Registrable Securities
demands registration of less than all of the Registrable Securities, the
Company, at its option, may nevertheless file a registration statement covering
all of the Registrable Securities. If the Initial Registration statement or a
Demand Registration statement is declared effective with respect to all
Registrable Securities and the Company is in compliance with its obligations
under Subsection (d) of this Section 1.4, the Demand Registration rights granted
pursuant to this Subsection (b)(i) shall cease. If such Initial Registration
statement is not declared effective with respect to all Registrable Securities
or if the Company is not in compliance with such obligations, the Demand
Registration rights described herein shall remain in effect.
(ii) The Company shall not be obligated to effect a Demand
Registration under Subsection (b)(i) above: (A) if all of the Registrable
Securities held by the holder of Registrable Securities which are demanded to be
covered by the Demand Registration are, at the time of such demand, included in
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an effective registration statement and the Company is in compliance with its
obligations under Subsection (d) of this Section 1.4; (B) if all of the
Registrable Securities may be sold under Rule 144(k) of the Securities Act and
the Company's transfer agent has accepted an instruction from the Company to
such effect; or (C) at any time after one (1) year from the Closing Date.
(iii) Subject to Subsection (iv)(B) hereof, the Company may suspend
the effectiveness of any such registration effected pursuant to this Subsection
(b) in the event and for such period of time as, such a suspension is required
by the rules and regulations of the Securities and Exchange Commission ("SEC").
The Company will use its best efforts to cause such suspension to terminate at
the earliest possible date.
(iv) (A) If the Company is advised by the SEC that a registration
statement filed hereunder is subject to a "no-review" and such registration
statement is not declared effective within five (5) business days thereafter (an
"Acceleration Date") or, irrespective of the SEC review, a registration
statement is not declared effective by the one hundred twenty first (121st) day
after the Closing Date (the "Target Date"), the Company shall pay Purchaser as
liquidated damages an amount equal to two percent (2%) of the total Purchase
Price of the Shares for each thirty (30) day period following the earlier of the
Acceleration Date or Target Date, as applicable, until such time as the
registration statement is declared effective; provided, however, that such
damages shall not be payable if the failure to meet the Acceleration Date or
Target Date, as applicable, is due to action or inaction by Purchaser with
respect to providing information for the registration statement or if the
Registrable Securities are freely transferable pursuant to Rule 144(k)
promulgated under the Securities Act or any successor rule. The payment set
forth above shall be pro-rated daily as to any period of less than thirty (30)
days. Such payment shall be made to the Purchaser by cashier's check or wire
transfer in immediately available funds to such account as shall be designated
in writing by the Purchaser. The foregoing amount shall be paid irrespective of
the amount of Registrable Securities then held by Purchaser.
(B) If, following effectiveness of a registration, either the
effectiveness of the registration statement is suspended or a current prospectus
meeting the requirements of Section 10 of the Securities Act is not available
for delivery by the Purchaser for any reason (either referred to herein as a
"suspension"), the Company shall thereupon pay to Purchaser as liquidated
damages an amount equal to two percent (2%) of the Purchase Price of the Shares
for each thirty (30) day period of the suspension. The payment set forth above
shall be pro-rated daily as to periods of less than thirty (30) days. Such
payment shall be made to the Purchaser by cashier's check or wire transfer in
immediately available funds to such account as shall be designated in writing by
the Purchaser, and shall be paid irrespective of the amount of Registrable
Securities held by Purchaser on or after the date following the suspension.
(C) Any amount payable pursuant to the foregoing provisions
of this Subsection (iv) shall be delivered on or before the fifth (5th) day
following the end of the calendar month in which such payment obligation arose.
The "Purchase Price" of Registrable Securities shall be (1) if derived from
conversion or substitution of Shares, the Purchase Price of the Shares, and (2)
if received in satisfaction of a Company obligation, the dollar amount of such
obligation.
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(D) This Subsection (b) is in addition to the provisions of
Section 7.2(a) hereof.
(c) If the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Purchaser)
any of its stock or other securities under the Securities Act in connection with
a public offering of such securities (other than a registration on Form X-0,
Xxxx X-0 or other limited purpose form) and all Registrable Securities have not
theretofore been included in a registration statement under Subsection (b) of
this Section 1.4 which remains effective, the Company shall, at such time,
promptly give all holders of Registrable Securities written notice of such
registration. Upon the written request of any holder of Registrable Securities
given within twenty (20) days after receipt of such notice by the holder of
Registrable Securities, the Company shall use its best efforts to cause to be
registered under the Securities Act all Registrable Securities that such holder
of Registrable Securities requests to be registered. However, the Company shall
have no obligation under this Subsection (c) if (i) the Registrable Securities
may be sold without registration under Rule 144(k) and the Company's transfer
agent has accepted an instruction from the Company to such effect, (ii) the
Registration Statement is filed more than two (2) years after the Closing Date,
or (iii) to the extent that, with respect to any underwritten offering initiated
by the Company later than one calendar year following the Closing, the managing
underwriter of such offering reasonably notifies such holder(s) in writing of
its determination that the Registrable Securities or a portion thereof shall be
excluded therefrom.
(d) Whenever required under this Section 1.4 to effect the registration of
any Registrable Securities including, without limitation, the Initial
Registration, the Company shall, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration to become effective as provided in Section 1.4(b)(i), and keep such
registration statement effective for so long as any holder of Registrable
Securities desires to dispose of the securities covered by such registration
statement; PROVIDED, HOWEVER, that in no event shall the Company be required to
keep the Registration Statement effective for a period greater than two (2)
years from the Closing Date;
(ii) Respond to comments made by the SEC with respect to a
registration statement filed pursuant to this Agreement promptly, but no later
than ten (10) days after the date of the comment letter, and prepare and file
with the SEC such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement
(provided, that the Company may not amend the registration statement for the
purpose of registering securities of selling shareholders other than holders of
Shares) and immediately notify the holders of the Shares of the filing and
effectiveness of such Registration Statement and any amendments or supplements;
(iii) Furnish to each holder of Registrable Securities such numbers
of copies of a current prospectus, including a preliminary prospectus,
conforming with the requirements of the Securities Act, copies of the
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registration statement any amendment or supplement to any thereof and any
documents incorporated by reference therein and such other documents, all free
of charge, as such holder of Registrable Securities may reasonably require in
order to facilitate the disposition of Registrable Securities owned by such
holder of Registrable Securities;
(iv) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or "Blue Sky"
laws of such jurisdictions as shall be reasonably requested by the holder of
Registrable Securities;
(v) Notify each holder of Registrable Securities immediately of the
happening of any event as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to promptly update and/or
correct such prospectus;
(vi) Furnish, at the request of any holder of Registrable Securities
in connection with any underwritten public offering, (A) an opinion of counsel
of the Company, dated the effective date of the registration statement, in form
and substance reasonably satisfactory to the holder and its counsel and
covering, without limitation, such matters as the due authorization and issuance
of the securities being registered and certain matters pertaining to disclosure
under and compliance with securities laws by the Company in connection with the
registration thereof and/or (B) a "comfort" letter or letters of the Company's
independent public accountants provided at the Company's expense in form and
substance reasonably satisfactory to the holder and its counsel;
(vii) Use its best efforts to list the Registrable Securities covered
by such registration statement with any national market or securities exchange
on which the Registrable Securities are then listed;
(viii) Make available for inspection by the holder of Registrable
Securities, upon request, all SEC Documents (as defined below) filed subsequent
to the Closing and require the Company's officers, directors and employees to
supply all information reasonably requested by any holder of Registrable
Securities in connection with such registration statement; and
(ix) Furnish to each holder of Registrable Securities prompt notice of
the commencement of any stop-order proceedings under the Securities Act,
together with copies of all documents in connection therewith, and use its best
efforts to obtain withdrawal of any such stop order as soon as possible.
(e) Upon request of the Company, each holder of Registrable Securities
will furnish to the Company in connection with any registration under this
Section such information regarding itself, the Registrable Securities and other
securities of the Company held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
the Registrable Securities held by such holder of Registrable Securities. The
intended method of disposition (Plan of Distribution) of such securities as so
provided by Purchaser shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
the prior written consent of the Purchaser.
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(f) (i) The Company shall indemnify, defend and hold harmless each holder
of Registrable Securities which are included in a registration statement
pursuant to the provisions of Subsections (b) or (c) hereof and each of its
officers, directors, employees, agents, partners or controlling persons (within
the meaning of the Securities Act) (each, an "indemnified party") from and
against, and shall reimburse such indemnified party with respect to, any and all
claims, suits, demands, causes of action, losses, damages, liabilities, costs or
expenses ("Liabilities") to which such indemnified party may become subject
under the Securities Act or otherwise, arising from or relating to (A) any
untrue statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any amendment
or supplement thereto, or (B) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such Liability arises out of or is based upon an
untrue statement or omission so made in strict conformity with information
furnished by such indemnified party in writing specifically for use in a
registration statement.
(ii) In the event of any registration under the Securities Act of
Registrable Securities pursuant to Subsections (b) or (c), each holder of such
Registrable Securities hereby severally agrees to indemnity, defend and hold
harmless the Company, and its officers, directors, employees, agents, partners,
or controlling persons (within the meaning of the Securities Act) (each, an
"indemnified party") from and against, and shall reimburse such indemnified
party with respect to, any and all Liabilities to which such indemnified party
may become subject under the Securities Act or otherwise, arising from or
relating to (A) any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or (B) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that (X) such holders will be liable in
any such case to the extent and only to the extent, that any such Liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, prospectus
or amendment or supplement thereto in reliance upon and in conformity with
written information furnished by such holder specifically for use in the
preparation thereof and (Y) the indemnification obligation of any holder shall
not exceed the purchase price of the Shares.
(iii) Promptly after receipt by any indemnified party of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against another party (the "indemnifying party")
hereunder, notify such party in writing thereof, but the omission so to notify
such party shall not relieve such party from any Liability which it may have to
the indemnified party other than under this Section and shall only relieve it
from any Liability which it may have to the indemnified party under this section
if and to the extent an indemnifying party is materially prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and such indemnified party shall notify an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
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with counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to the indemnified party of its election so
to assume and undertake the defense thereof, the indemnifying party shall not be
liable to the indemnified party under this section for any legal expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation and of liaison with counsel
so selected; PROVIDED, HOWEVER, that if the defendants in any such action
include both parties and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to them which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the reasonable expenses and fees
of one such separate counsel and other reasonable expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(g) (i) With respect to the inclusion of Registrable Securities in a
registration statement pursuant to Subsections (b) or (c), all fees, costs and
expenses of and incidental to such registration, inclusion and public offering
shall be borne by the Company; PROVIDED, HOWEVER, that any securityholders
participating in such registration shall bear their pro-rata share of the
underwriting discounts and commissions, if any, incurred by them in connection
with such registration.
(ii) The fees, costs and expenses of registration to be borne by the
Company as provided in this Subsection (g) shall include, without limitation,
all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or Blue Sky
laws of any jurisdiction or jurisdictions in which securities to be offered are
to be registered and qualified. Subject to appropriate agreements as to
confidentiality, the Company shall make available to the holders of Registrable
Securities and their counsel its documents and personnel for due diligence
purposes. Except as otherwise provided herein, fees and disbursements of counsel
and accountants for the selling security holders and discounts and commissions,
if any, payable in connection with any such sales shall be borne by the
respective selling security holders.
(h) The rights to cause the Company to register all or any portion of
Registrable Securities pursuant to this Section l.4 may be assigned by Purchaser
to a transferee or assignee. Within a reasonable time after such transfer, the
Purchaser shall notify the Company of the name and address of such transferee or
assignee, and the securities with respect to which such registration rights are
being assigned. Such assignment shall be effective only if, immediately
following such transfer, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act. Any transferee
asserting registration rights hereunder shall be bound by the applicable
provisions of this Agreement.
(i) The Company shall not agree to allow the holders of any securities of
the Company to include any of their securities in any registration statement
filed by the Company pursuant to Subsection (b) unless such inclusion will not
reduce the amount of the Registrable Securities included therein.
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Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
makes the following representations and warranties to the Company.
(a) ACCREDITED INVESTOR. The Purchaser is an "accredited investor" under
the definition set forth in Rule 501(a)(3) of Regulation D, promulgated under
the Securities Act.
(b) SPECULATIVE INVESTMENT. The Purchaser is aware that an investment in
the Shares is highly speculative and subject to substantial risks, including
such risks and uncertainties described in the SEC Documents. The Purchaser is
capable of bearing the high degree of economic risk and the burden of this
venture, including, but not limited to, the possibility of complete loss of the
Purchaser's investment in the Shares and underlying Common Stock which make
liquidation of this investment impossible for the indefinite future.
(c) DISPOSITION. The Purchaser understands that (i) except as provided for
in Section 1.4, the Shares and underlying Common Stock of the Company (the
"Securities"), have not been and are not being registered under the Securities
Act or any applicable state securities laws, and may not be transferred unless
(A) subsequently registered thereunder, or (B) the Securities may be sold or
transferred pursuant to an exemption from securities registration under the
Securities Act and any applicable state securities laws or (C) sold pursuant to
Rule 144, promulgated under the Securities Act (or any successor Rule), or (ii)
any sale of such Securities made in reliance on Rule 144 may be made only in
accordance with the terms of such Rule and further, if such Rule is not
applicable, any resale of such Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with another exemption under the Securities Act or the rules of the
SEC thereunder. Notwithstanding any provision to the contrary contained herein,
a holder may pledge such Securities as collateral for a revolving credit note
pursuant to a loan and security agreement with a lending institution.
(d) PRIVATELY OFFERED. The offer to acquire the Shares was directly
communicated to the Purchaser in such manner that the Purchaser was able to ask
questions of and receive answers concerning the terms and conditions of this
transaction. At no time was the Purchaser presented with or solicited by or
through any leaflet, public promotional meeting, television advertisement, or
any other form of general advertising.
(e) PURCHASE FOR INVESTMENT. The Securities are being acquired solely for
the Purchaser's own account, for investment, and are not being purchased with
view to the resale, distribution, subdivision or fractionalization thereof
without proper registration with applicable securities administrators
(f) ACCESS TO INFORMATION. Purchaser or Purchaser's professional advisor
has been granted the opportunity to ask questions or and receive answers from
representative of the Company, its officers, directors, employees and agents
concerning the terms and conditions of the offering of Shares, the Company, its
business and prospects, and to obtain any additional information which Purchaser
or Purchaser's professional advisor deems necessary to verify the accuracy and
completeness of the information received.
(g) RELIANCE ON OWN ADVISORS. Purchaser has relied completely on the advice
of, or has consulted with, Purchaser's own personal tax, investment, legal or
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other advisors and has not relied on the Company or any of it affiliates,
officers, directors, attorneys, accountants or any affiliates of any thereof and
each other person, if any, who controls any thereof, within the meaning of
Section 15 of the Securities Act for any tax or legal advice (other than
reliance on information in the SEC Documents). The foregoing, however, does not
limit or modify Purchaser's right to rely upon representations and warranties of
the Company in Section 2.2 of this Agreement.
(h) CAPABILITY TO EVALUATE. Purchaser has such knowledge and experience in
financial and business matters so as to enable such Purchaser to utilize the
information made available to it in connection with the offer of Shares in order
to evaluate the merits and risks of the prospective investment, which are
substantial, including without limitation those set forth in the SEC Documents
(as defined herein).
(i) DISCLOSURE DOCUMENTS. Purchaser, in making Purchaser's investment
decision to subscribe for the Shares hereunder, represents that Purchaser has
received and had an opportunity to review the SEC Documents.
(j) AUTHORITY. Purchaser, if executing this agreement in a representative
or fiduciary capacity, has full power and authority to execute and deliver this
Agreement and each other document included herein for which a signature is
required in suck capacity and on behalf of the subscribing individual,
partnership, trust, estate, corporation or other entity for whom or which
Purchaser is executing this Agreement.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
incorporated and existing in good standing under the laws of the State of Nevada
and has the requisite corporate power to own its properties and to carry on its
business as now being conducted. The Company does not have any subsidiaries
except as listed in EXHIBIT A, attached hereto and incorporated herein by
reference. The Company and each such subsidiary, if any, is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary other than those in which the failure so to qualify
would not have a Material Adverse Effect. "Material Adverse Effect", for
purposes of this Agreement, means any adverse effect on the business,
operations, properties, prospects, or financial condition of the entity with
respect to which such term is used and which is material to such entity and
other entities controlled by such entity taken as a whole.
(b) AUTHORIZATION; ENFORCEMENT.(i) The Company has the requisite corporate
power and authority to enter into and perform this Agreement and to issue the
Shares and Registrable Securities in accordance with the terms hereof, (ii) the
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors or stockholders is required, (iii) this
Agreement has been duly executed and delivered by the Company, (iv) this
Agreement constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
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liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application) and (v) prior to the Closing Date, any necessary amendment to the
Company's Articles of Incorporation authorizing Company to issue all of the
Shares and Registerable Securities, in accordance with Schedule I, will have
been filed with the Nevada Secretary of State and will be in full force and
effect, enforceable against the Company in accordance with the terms of such
amended Articles of Incorporation.
(c) AUTHORIZED CAPITAL; RIGHTS OR COMMITMENTS TO STOCK. The authorized
capital stock of the Company consists of 50 million shares of Common Stock and
10 million shares of Preferred Stock; there are 16,203,095 shares of Common
Stock and; there are no shares of such Preferred Stock issued and outstanding;
and, upon issuance of the Shares in accordance with the terms hereof, there will
be 16,203,095 shares of Common Stock and 600 shares of Series A Preferred Stock
issued and outstanding.
All of the outstanding shares of the Company's Common Stock have been
validly issued and are fully paid and non-assessable. Except as set forth in
EXHIBIT A hereto, no shares of Common Stock are entitled to registration rights
or preemptive rights, and there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company, or contracts, commitments, understandings, or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, or commitments to purchase or acquire, any shares, or securities or rights
convertible into shares, of capital stock of the Company. EXHIBIT A shall
specifically indicate registration rights associated with any such securities
and whether the Company intends to register such securities or capital stock
underlying such securities within one (1) year after the Closing Date. The
Company has furnished or made available to the Purchaser true and correct copies
of the Company's Articles of Incorporation as in effect on the date hereof (the
"Articles"), and the Company's By-Laws, as in effect on the date hereof (the
"By-Laws").
(d) ISSUANCE OF SHARES. The issuance of the Shares has been duly authorized
and, when paid for and issued in accordance with the terms hereof, the Shares
shall be validly issued, fully paid and non-assessable and entitled to the
rights and preferences set forth in Schedule I hereto. The Common Stock issuable
upon conversion of the Shares will be duly authorized and reserved for issuance
and, upon conversion, will be validly issued, FULLY paid and non-assessable and
the holders shall be entitled to all rights and preferences accorded to a holder
of Common Stock.
(e) NO CONFLICTS. The Company has furnished or made available to the
Purchaser true and correct copies of the Company's Articles of Incorporation as
in effect on the date hereof (the "Articles"), and the Company's By-Laws, as in
effect on the date hereof (the "By-Laws"). The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby do not and will not (i) result in a
violation of the Company's Articles or By-Laws or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
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instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or assets of the Company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect); provided that, for purposes of such
representation as to Federal, state, local or foreign law, rule or regulation,
no representation is made herein with respect to any of the same applicable
solely to the Purchaser and not to the Company. The business of the Company is
not being conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations which either singly or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required under Federal, state or local law, rule or regulation in the United
States to obtain any consent, authorization or order of, or make any filing
(other than any filing of a vote establishing a class or series of stock with
the Nevada Secretary of State) or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its obligations
under this Agreement or issue and sell the Shares in accordance with the terms
hereof (other than any SEC, NASD, NASDAQ SmallCap Market or state securities
filings which may be required to be made by the Company subsequent to the
Closing, and any registration statement which may be filed pursuant hereto);
provided that, for purposes of the representation made in this sentence, the
Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Purchaser herein.
(f) SEC DOCUMENTS, FINANCIAL STATEMENTS. The Common Stock of the Company
is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and, except as set forth in EXHIBIT A, the
Company has, during the two (2) year period immediately preceding the date
hereof, filed on a timely basis all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Exchange Act, including material filed pursuant to
Section 13(a) or 15(d), in addition to one or more registration statements and
amendments thereto heretofore filed by the Company with the SEC under the
Securities Act (all of the foregoing including filings incorporated by reference
therein being referred to herein as the "SEC Documents"). The Company directly
or through its agent has delivered to the Purchaser true and complete copies of
the SEC Documents except for the exhibits and incorporated documents. The
Company has not provided to the Purchaser any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by the
Company but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement.
Except as set forth in EXHIBIT A, as of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Securities Act or the Exchange Act as the case may be and the rules and
regulations of the SEC promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Except as set forth in EXHIBIT A, the financial statements
of the Company included in the SEC Documents comply as to form in all material
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respects with applicable accounting requirements and the published rules and
regulations of the SEC or other applicable rules and regulations with respect
thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(g) NO MATERIAL ADVERSE CHANGE. Since the date through which the most
recent quarterly report of the Company on Form 10-QSB has been prepared and
filed with the SEC, a copy of which is included in the SEC Documents, no
Material Adverse Effect has occurred or exists with respect to the Company or
any of its subsidiaries.
(h) NO UNDISCLOSED LIABILITIES. The Company and its subsidiaries have no
material liabilities or obligations not disclosed in the SEC Documents, other
than those incurred in the ordinary course of the Company's or any of its
subsidiaries' respective businesses since the date of the most recently filed
SEC Documents which, individually or in the aggregate, do not or would not have
a Material Adverse Effect on the Company or any of its subsidiaries.
(i) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or circumstance has
occurred or exists with respect to the Company or any of its subsidiaries or
their respective businesses, properties, prospects, operations or financial
condition which, under applicable law, rule or regulation, requires public
disclosure or announcement by the Company but which has not been so publicly
announced or disclosed.
(j) NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, or, to the best of its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) in connection with the offer
or sale of the Shares.
(k) NO INTEGRATED OFFERING. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any of the Company's securities or solicited any offers
to buy any of such securities, under circumstances that would require
registration of the Shares under the Securities Act.
Section 3.1 SECURITIES COMPLIANCE. The Company shall notify the SEC, NASD
and NASDAQ SmallCap Market, in accordance with their requirements, of the
transactions contemplated by this Agreement, and shall take all other necessary
action and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Shares, and the Common
Stock issuable upon conversion thereof, to the Purchaser.
Section 3.2 REGISTRATION AND LISTING. Until at least two (2) years after
all Shares have been converted into Registrable Securities, the Company will
cause its Common Stock to continue to be registered under Sections 12(b) or
12(g) of the Exchange Act, will comply in all respects with its reporting and
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filing obligations under such Exchange Act, will comply with all requirements
related to any registration statement filed pursuant to this Agreement and will
not take any action or file any document (whether or not permitted by the
Securities Act or the Exchange Act or the rules thereunder) to terminate or
suspend such registration or to terminate or suspend its reporting and filing
obligations under said Acts, except as permitted herein. Until at least two (2)
years after all Shares have been converted into Common Stock, the Company will
take all action within its power to continue the listing or trading of its
Common Stock on the NASDAQ Small Cap Market (or other principal market) and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and NASDAQ. The covenants set
forth in this Section 3.2 shall not be deemed to prohibit a merger, sale of all
assets or other corporate reorganization if the entity surviving or succeeding
to the Company is bound by this Agreement with respect to its securities issued
in exchange for or in replacement of the Shares or Common Stock or the
consideration received for or in replacement of the Shares or Common Stock is
cash.
Section 4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO SELL
THE SHARES. The obligation hereunder of the Company to issue and/or sell the
Shares to the Purchaser is subject to the satisfaction, at or before the
Closing, of each of the conditions set forth below. These conditions may be
waived by the Company at any time in its sole discretion.
(a) ACCURACY OF THE PURCHASER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) PERFORMANCE BY THE PURCHASER. The Purchaser shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Purchaser at or prior to the Closing.
(c) NO INJUNCTION. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
(d) LEGAL ACTION. No legal action, suit or proceeding shall be pending or
threatened which seeks to restrain or prohibit the transactions contemplated by
this Agreement.
(e) EXECUTION. The Purchaser shall have executed this Agreement, and
delivered such Agreement to the Company.
(f) PURCHASE PRICE. The Purchaser shall have delivered the Purchase Price
in accordance with Section 1.3(b) above.
Section 4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER TO
PURCHASE THE SHARES. The obligation hereunder of the Purchaser to acquire and
pay for the Shares is subject to the satisfaction, at or before the Closing, of
each of the conditions set forth below. These conditions may be waived by the
Purchaser at any time in its sole discretion.
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(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) PERFORMANCE BY THE COMPANY. The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company pursuant to this Agreement at or prior to the Closing, unless any
such agreement or condition is waived by the Purchaser in writing at or prior to
Closing.
(c) TRADING AND LISTING. From the date hereof to the Closing Date, trading
in the Company's Common Stock shall not have been suspended by the SEC or a
national securities exchange (currently the NASDAQ Small Cap Market) (except for
any suspension of trading of limited duration agreed to between the Company and
the principal exchange on which the Common Stock is traded solely to permit
dissemination of material information regarding the Company), and trading in
securities generally as reported by such exchange shall not have been suspended
or limited or minimum prices shall not have been established on securities whose
trades are reported by such exchange.
(d) NO INJUNCTION. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of any of the transactions contemplated by this Agreement.
(e) OPINION OF COUNSEL, ETC. The Purchaser shall have received before or
at the Closing an opinion of counsel to the Company (covering, without
limitation, such of the matters set forth in Section 2.2(a) through (e)), as are
in form and substance reasonably satisfactory to the Purchaser and its counsel,
and such other certificates and documents as the Purchaser or its counsel shall
reasonably require incident to the Closing.
(f) EXECUTION. The Company shall have executed this Agreement, and
delivered such Agreement to the Purchaser.
Section 5.1 LEGEND ON STOCK. Each certificate representing the Shares and,
if necessary, Common Stock issued upon conversion thereof, shall be stamped or
otherwise imprinted with a legend substantially in the following form:
THESE SECURITIES [AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE
CONVERSION HEREOF] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 , AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF
COUNSEL, REGISTRATION UNDER SUCH ACT OR APPLICABLE STATE SECURITIES LAW IS
NOT REQUIRED IN CONNECTION WITH SUCH SALE OR OFFER, AND SUCH OPINION IS
REASONABLY SATISFACTORY TO THE COMPANY.
The Company agrees to reissue certificates representing the Shares or, if
applicable, the Common Stock issued upon conversion thereof, without the legend
set forth above at such time as (a) the holder thereof is permitted to dispose
of such Shares (or securities issued upon conversion thereof) pursuant to Rule
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144(k) under the Securities Act, as determined by counsel to the Company (b) the
securities are sold to a purchaser or purchasers who (in the opinion of counsel
to such holders, in form and substance reasonably satisfactory to the Company
and its counsel) are able to dispose of such securities publicly without
registration under the Securities Act, or (iii) such securities are registered
under the Securities Act.
Section 6.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated
at any time prior to the Closing by the mutual written consent of the Company
and the Purchaser.
Section 6.2 OTHER TERMINATION. This Agreement may be terminated by action
of the respective Board of Directors or other governing body of the Purchaser or
the Company at any time if the Closing shall not have been consummated by the
fifth (5th) business day following the date of this Agreement, provided that the
party seeking to terminate the Agreement is not in breach of the Agreement.
Section 6.3 AUTOMATIC TERMINATION. This Agreement shall automatically
terminate without any further action of either party hereto if the Closing shall
not have occurred by the seventh (7th) business day following the date of this
Agreement, PROVIDED, HOWEVER, that any such termination shall not terminate the
liability of any party which is then in breach of the Agreement.
Section 7.1 FEES AND EXPENSES. Except as otherwise set forth in Section 1.4
hereof with respect to the registration of Registrable Securities, the Company
shall pay the fees, commissions and expenses of its advisers, brokers, finders,
counsel, accountants and other experts, if any, and all other expenses
associated therewith. The Company shall, on the Closing Date, reimburse
ProFutures Special Equities Fund, L.P. up to $5,000 for fees and expenses of its
counsel in connection with the preparation, negotiation and coordination of this
Agreement. The Company shall pay all stamp and other taxes and duties levied in
connection with the issuance of the Shares and Common Stock pursuant hereto.
Section 7.2 SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.
(a) The Company and the Purchaser acknowledge and agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) The Company and the Purchaser each (i) hereby irrevocably submits to
the jurisdiction of the United States District Court and other courts of the
United States sitting in the State of Texas for the purposes of any suit, action
or proceeding arising out of or relating to this Agreement and (ii) hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper. The Company and the
Purchaser each consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
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good and sufficient service of process and notice thereof. Nothing in this
paragraph shall affect or limit any right to serve process in any other manner
permitted by law.
Section 7.3 ENTIRE AGREEMENT: AMENDMENT. This Agreement contains the entire
understanding of the parties with respect to the matters covered hereby and,
except as specifically set forth herein, neither the Company nor the Purchaser
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be waived or amended other than by a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought.
Section 7.4 NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second (2nd) business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur.
The addresses for such communications shall be:
to the Company: Xxxxxx X. Xxxxx, President
Wavetech International, Inc.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
to the Purchaser: At the address set forth at the foot of this
Agreement or as specified in writing by Purchaser.
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days' written notice of such changed address to the other
party hereto.
Section 7.5 WAIVERS. No waiver by either party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
Section 7.6 HEADINGS. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
Section 7.7 GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the present state
of incorporation of the Company without regard to such state's principles of
conflict of laws.
Section 7.8 SURVIVAL. The representations and warranties of the Company and
the Purchaser contained in herein and the agreements and covenants set forth in
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Sections 1.1 through 1.4, 3.2 through 3.3 and 7.1 through 7.16 shall survive the
Closing for a period of two (2) years.
Section 7.9 PUBLICITY. The Company agrees that it will not disclose, and
will not include in any public announcement, the name of the Purchaser without
its consent, unless and until such disclosure is required by law or applicable
regulation, and then only to the extent of such requirement.
Section 7.10 NASDAQ. The term "NASDAQ" or "NASDAQ Small Cap Market" herein
refers to the principal market on which the Common Stock of the Company is
traded. If the Common Stock is listed on a securities exchange, or if another
market becomes the principal market on which the Common Stock is traded or
through which price quotations for the Common Stock are reported, the term
"NASDAQ" or "NASDAQ Small Cap Market" shall be deemed to refer to such exchange
or other principal market.
Section 7.11 ACCEPTANCE. Execution and delivery of this Agreement shall
constitute an offer to purchase the Shares, which offer, unless previously
revoked by the Purchaser, may be accepted or rejected by the Company, in its
sole discretion for any cause or for no cause and without liability to the
Purchaser. The Company shall indicate acceptance of this Agreement by signing as
indicated on the signature page hereof.
Section 7.12 BINDING AGREEMENT. Upon acceptance of this Agreement by the
Company, the Purchaser agrees that he may not cancel, terminate or revoke any
agreement of the Purchaser made hereunder, and that this Agreement shall survive
the death or disability of the Purchaser and shall be binding upon heirs,
successors, assigns, executors, administrators, guardians, conservators or
personal representatives of the Purchaser.
Section 7.13 INCORPORATION BY REFERENCE. All information set forth on the
signature page is incorporated as integral terms of this Agreement.
Section 7.14 COUNTERPARTS. This Agreement may be signed in multiple
counterparts, which counterparts shall constitute one and the same original
instrument.
Section 7.15 SEVERABILITY. If any portion of this Agreement shall be held
illegal, unenforceable, void or voidable by any court, each of the remaining
terms hereof shall nevertheless remain in full force and effect as a separate
contract.
Section 7.16 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
[This space has been left blank intentionally. The signature page follows.]
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IN WITNESS WHEREOF, the Purchaser has executed this Agreement on the date set
forth below.
For the purchase price of $1,000 per Share, the Purchaser tenders herewith the
full purchase price of:
$ 600,000
---------------------------------------
The exact name(s) (Including correct, legible spelling) and the information
under which title to the Shares will be taken is as follows (Please print or
type):
ProFutures Special Equities Fund, L.P.
---------------------------------------
Address of Purchaser:
0000 Xxxxxxx 000 Xxxxx - Xxxxx 000
---------------------------------------
Xxxxxx, Xxxxx 00000
---------------------------------------
Social Security or IRS Employer Identification Number(s):
00-0000000
---------------------------------------
SIGNATURE OF PURCHASER: Dated: April 22, 1998
----------------
IF PURCHASER IS AN INDIVIDUAL OR JOINT PURCHASE:
--------------------------------------------
(Signature)
--------------------------------------------
(Signature of Joint Owner, if any)
IF PURCHASER IS AN ENTITY:
Name of Entity: ProFutures Special Equities Fund, L.P.
--------------------------------------
By ProFutures Fund Management, Inc., a General Partner
By: /s/ Xxxx X. Xxxxxxx
---------------------------------------------------
(Signature)
Name: Xxxx X. Xxxxxxx
------------------------------------------------
Title: President
------------------------------------------------
ACCEPTED BY:
WAVETECH INTERNATIONAL, INC., a Nevada corporation
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------------------
(Signature)
Name: Xxxxxx X. Xxxxx
------------------------------------------------
Title: President & CEO
------------------------------------------------
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