SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
WAVETECH INTERNATIONAL, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box): [X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
--------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
5) Total fee paid:
--------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------
3) Filing Party:
----------------------------------------------------
4) Date Filed:
------------------------------------------------------
<PAGE>
WAVETECH INTERNATIONAL, INC.
5210 E. WILLIAMS CIRCLE, SUITE 200
TUCSON, ARIZONA 85711
--------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 27, 2000
--------------------------------------------------------------------------------
To Our Shareholders:
The 2000 Annual Meeting of Shareholders of Wavetech International, Inc., a
Nevada corporation (the "Company"), will be held at the Marriott Courtyard,
Williams Center, 201 South Williams Boulevard, Tucson, Arizona, on September 27,
2000, at 10:00 a.m., Mountain Standard Time, for the following purposes:
1. To elect five (5) directors to serve for a one year term;
2. To amend the Company's Articles of Incorporation to change its name
from Wavetech International, Inc. to Best Net Communications Corp.;
3. To approve a 2000 Incentive Stock Plan under which 5,000,000 shares of
the Company's Common Stock would be reserved for grants of stock
options and stock awards to employees, non-employee directors and
independent contractors;
4. To ratify the selection of Ernst & Young, LLP, as independent auditors
for the Company;
5. To transact such other business as may properly come before the
meeting or any postponement(s) or adjournment(s) thereof. Management
is presently aware of no other business to come before the meeting.
The Board of Directors has fixed the close of business on August 7, 2000,
as the record date (the "Record Date") for the determination of shareholders
entitled to notice of and to vote at the meeting or any postponement or
adjournment thereof. Shares of Common Stock may be voted at the meeting only if
the holder is present at the meeting in person or by valid proxy. A copy of the
Company's 1999 Annual Report, which includes audited financial statements, was
mailed with this Notice and Proxy Statement to all shareholders of record on the
Record Date.
Management of the Company cordially invites you to attend the Annual
Meeting. Your attention is directed to the attached Proxy Statement for a
discussion of the foregoing proposals and the reasons why the Board of Directors
encourages you to vote for approval of such proposals.
By Order of the Board of Directors
/s/ Gerald I. Quinn
President & CEO
Tucson, Arizona
August 18, 2000
------------------------------
IMPORTANT: IT IS IMPORTANT THAT YOUR SHAREHOLDINGS BE REPRESENTED AT THIS
MEETING. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY CARD
IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
------------------------------
<PAGE>
WAVETECH INTERNATIONAL, INC.
5210 E. WILLIAMS CIRCLE, SUITE 200
TUCSON, ARIZONA 85711
------------------------------------------
PROXY STATEMENT
------------------------------------------
This Proxy Statement is being furnished to shareholders of Wavetech
International, Inc., a Nevada corporation (the "Company"), in connection with
the solicitation of proxies by the Board of Directors for use at the 2000 Annual
Meeting of Shareholders of the Company to be held on September 27, 2000, at
10:00 a.m., Mountain Standard Time, at the Marriott Courtyard, Williams Center,
201 South Williams Boulevard, Tucson, Arizona, and any adjournment or
postponement thereof (the "Annual Meeting"). A copy of the Notice of the Meeting
accompanies this Proxy Statement. This Proxy Statement and the accompanying form
of Proxy Card are being mailed on or about August 18, 2000.
SOLICITATION AND VOTING OF PROXIES
Only shareholders of record at the close of business on August 7, 2000 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting or
any adjournment or postponement thereof. On the Record Date, 3,385,127 shares
of Common Stock, par value $.001 per share (the "Common Stock"), were issued and
outstanding.
Each shareholder present at the Annual Meeting, either in person or by
proxy, will be entitled to one vote for each share of Common Stock held of
record on the Record Date on each matter of business to be considered at the
Annual Meeting. The five (5) nominees receiving a plurality of votes by shares
represented and entitled to vote at the Annual Meeting, if a quorum is present,
will be elected as directors of the Company.
All valid proxies received before the Annual Meeting and not revoked will
be exercised. All shares represented by proxy will be voted, and where a
shareholder specifies by means of his or her proxy a choice with respect to any
matter to be acted upon, the shares will be voted in accordance with the
specifications so made. If no specification is indicated and authority to vote
is not specifically withheld, the shares will be voted: (i) "for" the election
of the persons named in the proxy to serve as Directors; (ii) "for" the
amendment of the Company's Articles of Incorporation to change its name to Best
Net Communications Corp.; (iii) "for" the Company's 2000 Incentive Stock Plan;
and (iv) "for" the ratification of Ernst & Young, LLP, as the independent
auditors of the Company. Abstentions and broker non-votes will be included in
the determination of the number of shares represented for a quorum and have the
same effect as "no" votes in determining whether the proposals are approved.
Proxies may be revoked at any time prior to the time they are voted by: (a)
delivering to the Secretary of the Company a written instrument of revocation
bearing a date later than the date of the proxy; or (b) duly executing and
delivering to the Secretary a subsequent proxy relating to the same shares; or
(c) attending the meeting and voting in person, provided that the shareholder
notifies the Secretary of the meeting of his or her intention to vote in person
at any time prior to the voting of the proxy. In order to vote their shares in
person at the meeting, shareholders who own their shares in "street name" must
obtain a special proxy card from their broker.
<PAGE>
The cost of soliciting proxies, including the cost of preparing and mailing
the Notice and Proxy Statement, will be paid by the Company. Solicitation will
be primarily by mailing this Proxy Statement to all shareholders entitled to
vote at the meeting. Proxies may be solicited by officers and directors of the
Company personally or by telephone or facsimile, without additional
compensation. The Company may reimburse brokers, banks and others holding shares
in their names for others for the cost of forwarding proxy materials and
obtaining proxies from beneficial owners.
The Board of Directors does not know of any matter other than the election
of directors, amendment to the Articles of Incorporation, approval of the
Company's 2000 Incentive Stock Plan, and the ratification of independent
auditors that is expected to be presented for consideration at the Annual
Meeting. However, if other matters properly come before the meeting, the persons
named in the accompanying proxy intend to vote thereon in accordance with their
judgment.
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
GENERAL INFORMATION
The present terms of the Company's current directors, Gerald I. Quinn,
Richard P. Freeman, John P. Clements, Alexander Christopher Lang and Rosnani
Atan, expire upon the election and qualification of their successors at the
Company's 2000 Annual Meeting of Shareholders. John P. Clements has submitted
his resignation from the Board effective August 1, 2000. Richard Freeman and
Rosnani Atan have declined to stand for re-election. The Board of Directors has
nominated Gerald I. Quinn, Alexander Christopher Lang, Kelvin C. Wilbore, Kevin
England and Myron Goins as directors in the election to be held at the Annual
Meeting.
The Board of Directors intends to vote its proxies for the election of its
nominees, for a term to expire at the Company's 2001 Annual Meeting. The five
nominees receiving the highest number of votes cast at the Annual Meeting will
be elected.
If any nominee should become unavailable for any reason, which the Board of
Directors does not anticipate, the proxy will be voted for any substitute
nominee or nominees who may be selected by the Board of Directors prior to or at
the Annual Meeting, or, if no substitute is selected by the Board of Directors
prior to or at the Annual Meeting, for a motion to reduce the present membership
of the Board to the number of nominees available. The information concerning the
nominees and their share holdings in the Company has been furnished by them to
the Company.
2
<PAGE>
INFORMATION CONCERNING DIRECTORS, NOMINEES AND OFFICERS
The following table sets forth information regarding the officers and
directors of the Company, including biographical data for at least the last five
years.
NAME AGE POSITION
---- --- --------
Gerald I. Quinn 57 President, Chief Executive Officer
and Director
Richard P. Freeman 43 Vice President, Product Development
and Director
John P. Clements 50 Director
Alexander Christopher Lang 47 Director
Rosnani Atan 34 Director
Kelvin C. Wilbore 45 Nominee for Director
Kevin England 48 Nominee for Director
Myron Goins 40 Nominee for Director
GERALD I. QUINN has served as the President of Interpretel (Canada), a
subsidiary of the Company, since 1995. In May 1996, Mr. Quinn became the
President, Chief Executive Officer and a Director of the Company. From 1986 to
1994, Mr. Quinn was Vice President of University Affairs and Development at the
University of Guelph, which is one of Canada's leading teaching and research
universities. While at the University of Guelph, Mr. Quinn's responsibilities
included marketing, image development, constituent relations and media
relations, including systems development, telemarketing and the development of
affinity programs. From 1975 until 1986, Mr. Quinn held many senior
administrative positions with Canada's largest college of applied arts and
technology, including positions relating to the development and
commercialization of technology and multimedia-based interactive learning
programs. Since 1984, Mr. Quinn has served as a consultant to Cableshare
Interactive Technology, Inc., a Canadian TSE listed public company operating in
the interactive television industry ("Cableshare"). Mr. Quinn has been a
director of Cableshare since 1993 and has chaired its board committee on mergers
and acquisitions. In 1997, Mr. Quinn negotiated a merger of Cableshare with
Source Media, Inc. (NASDAQ:SRCM) culminating in Source Media, Inc. owning 100%
of Cableshare. Mr. Quinn is active in numerous civic and professional
organizations and has been recognized for his work in marketing, sales,
promotion and public relations by various trade organizations. Mr. Quinn has two
arts degrees with majors in English, Economics and Political Science.
RICHARD P. FREEMAN is a co-founder of Interpretel and has served as
Interpretel's Vice President since 1993 and as a Director of the Company since
March 1995. Prior to joining Interpretel, Mr. Freeman was a principal in several
entrepreneurial companies in Arizona primarily involved in the tourism and
travel industries. Those companies included Desert Divers, a scuba retail and
boat charter company, and Vacation, Etc., a tour and travel company focusing on
corporate, leisure and adventure travel, wholesale tour operations and escorted
senior travel. Mr. Freeman has also served as a consultant to several
travel-related organizations, including the Business Radio Network, a national
network. Mr. Freeman holds a Bachelor of Arts degree from the University of
Arizona and is active in various civic and community organizations. Mr. Freeman
has declined to stand for re-election to the Board of Directors.
JOHN P. CLEMENTS has been a Director of the Company since February 1998.
Mr. Clements is currently CEO of Clements & Peck Insurance, LLC, a Tucson,
Arizona based insurance brokerage firm, and has served in such capacity since
March 2000. Prior to the formation of Clements & Peck, Mr. Clements was a Vice
President of another large regional insurance broker. As a licensed real estate
sales person, Mr. Clements was active in the real estate industry between 1986
and 1989 as Chief Operating Officer for Ashland Equities Company in Tucson.
3
<PAGE>
While at Ashland, Mr. Clements directed development of shopping centers and
formed land investment partnerships. Mr. Clements, a Certified Public
Accountant, worked for Coopers & Lybrand (now named PriceWaterhouseCoopers, LLP)
from 1972 to 1986. Mr. Clements received a B.B.A. in Accountancy from the
University of Notre Dame in 1972. He relocated to Tucson in 1976 to open a new
office for C&L, where he was admitted to the Partnership of C&L and became the
General Practice Partner in charge of the Audit Practice for the Tucson Office.
Mr. Clements has submitted his resignation from the Board of Directors effective
August 1, 2000.
ALEXANDER CHRISTOPHER LANG was appointed to the Company's Board of
Directors in July 1999. Mr. Lang is president, principal shareholder and a
member of the Board of Directors of Softalk, Inc. in Toronto, Ontario. Mr. Lang
has been in the telecommunications business for 22 years, holding various
technical positions related to marketing and product design. From 1993 to the
present, Mr. Lang has served as President of Softalk, a private
telecommunications & web-based software development company, where he introduced
products with a worldwide reach through the use of the Internet, for control and
management. From 1988 to 1993, Mr. Lang provided consulting services to the
telecom industry. He launched a long distance reselling company, participated in
the development of the Novell Certification Program, and strategic partnerships
program for voice recognition. From 1985 to 1988, he worked for Rolm/IBM in the
development of telecommunication systems which included a posting at the
strategic presentation center in Santa Clara, CA. From 1981 to 1985, he was a
marketing manager with Rockwell International Switching Division. From 1978 to
1981, Mr. Lang worked for Bell Canada in various technical capacities. Mr. Lang
received his BA in Economics in 1977.
ROSNANI ATAN was appointed to the Company's Board of Directors in July
1999. Ms. Atan is the Chief Executive Officer and a member of the Board of
Directors of Softalk. Ms. Atan has been with Softalk since January 1999. From
January 1995 to November 1998, Ms. Atan served as Telecom Analyst, Global
Telecom Services with Arthur Andersen World-wide S.C., Asia Pacific Office,
Singapore. Her responsibilities included data and voice telecommunications
activities for Arthur Andersen and Andersen Consulting in Asia Pacific, Europe,
the Middle East, Africa and India. She was responsible for all project
management related to telecommunications as well as sourcing new communication
systems for global rollout by Arthur Andersen. Ms. Atan provided advice to IT
Directors worldwide and participated in the implementation of communication
systems and technologies. From 1991 to 1995, Ms. Atan served as Electronic Data
Processing Officer with Keppel Corporation Limited. Ms. Atan was responsible for
data networking for Keppel and its 11 subsidiaries. She set company-wide
standards for Office Automation Tools, implemented a document imaging project
and redesigned the company's LAN/WAN and converted the networks OS from 3COM to
Netware. From 1989 to 1991, she worked with Nikko Electronics Toy Pty Ltd. as an
EDP Officer designing, developing and maintaining in-house applications
including a Domestic Sales System and a Warehouse Inventory System. She managed
the day-to-day activities of the EDP department including the coordination of
programmers. Ms. Atan has a Bachelor of Science degree in Information Technology
from Monash University in Melbourne, Australia and a Bachelor of Engineering
(Electrical and Electronics) from Nanyang Technical University, Singapore. Ms.
Atan programs in four languages and has won awards for her programming skills.
She is fluent in English, Malay, Bahasa Indonesia, Japanese and Mandarin. Ms.
Atan has declined to stand for re-election to the Board of Directors.
KELVIN C. WILBORE began working with the Company as a project manager in
January 2000. Mr. Wilbore is in charge of product commercialization. He has 20
years experience in business requirements specification, application
development, project management, customer relationship management and management
consulting. Mr. Wilbore previously served as a Senior Manager in the telecom
sector at Arthur Andersen LLP from 1998 to 2000. From April 1997 to July 1998 he
4
<PAGE>
was in charge of call center analysis for the Canadian subsidiary of Technology
Solutions Company (TSC). From 1994 to 1997, he worked for NCR Corporation in
Toronto as an implementation analyst for NCR self serving banking systems. From
1987 to 1994, Mr. Wilbore worked in the financial sector, serving as Vice
President, Business Solutions at Amalgamated Banks of South Africa (ABSA), the
largest banking group in Africa. Mr. Wilbore holds a Bachelor of Science degree
in Mathematics and Mathematical Statistics from Rhodes University and a Master
of Business Administration degree from the University of Cape Town.
KEVIN ENGLAND is president and owner of The England Group, a real estate
acquisition and management company in Vancouver, Canada, which he started in
1987. Mr. England has been active in real estate acquisition, development,
securitization and management for over 18 years. He is also president of England
Securities Ltd. and holds a Partner and Director's License from the British
Columbia Securities Commission. Since founding The England Group, Mr. England
has acquired a U.S. and Canadian revenue property portfolio valued in excess of
$350,000,000 which generates gross annual income in excess of $47,000,000.
Previous to The England Group, from 1981 to 1986, Mr. England held senior
management positions with two major western Canadian development and syndication
firms. From 1977 to 1981, Mr. England was with IBM Canada and worked in product
development, marketing and management. Mr. England graduated from Carlton
University in 1977 with a Bachelors of Arts degree.
MYRON GOINS is a co-founder and partner at the private equity firm of Texas
Technology Partners, LLC of Dallas, Texas. Since 1996, Mr. Goins has been a
partner of Seruus Ventures, LLC, a private equity manager focused on
telecommunication companies. Previously, Mr. Goins served as Chief Financial
Officer for National Telemanagement Corporation, a Dallas-based wireless
services technology company from 1995 to 1996. From 1994 to 1995, Mr. Goins
served as vice president of Corporate Development for Corporate Telemanagement
Group, Inc. ("CTG"), a facilities-based long distance carrier, and its merger
with LCI International, Inc., now Qwest, Inc. At CTG, Mr. Goins was responsible
for mergers and acquisitions and international operating agreements with foreign
telephone companies. Prior to joining CTG, Mr. Goins was employed by Sprint
Corporation ("Sprint"). At Sprint, he served in various financial management
capacities in corporate finance, including mergers and acquisitions,
administrative analysis and internal audit. Mr. Goins began his career in public
accounting and was a Certified Public Accountant in the State of Tennessee. Mr.
Goins received his B.B.A. from the University of Memphis and an M.B.A. from
Vanderbilt University's Owen Graduate School of Management.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL.
BOARD AND COMMITTEE MEETINGS
During the 1999 fiscal year, there were twelve (12) meetings of the Board
of Directors. No director attended less than 75% of the Board meetings while
serving as such director or less than 75% of all committee meetings on which he
served as a committee member.
The audit and compensation committees are the standing committees of the
Board of Directors.
The Company has an audit committee which in fiscal 1999 consisted of Gerald
I. Quinn, John P. Clements and Rosnani Atan. The principal functions of the
audit committee include recommending independent auditors, reviewing with the
independent auditors the scope and results of the audit engagement, establishing
and monitoring the Company's financial policies and control procedures, and
reviewing and monitoring the provision of non-audit services by the Company's
auditors. The audit committee did not meet during fiscal 1999.
5
<PAGE>
The compensation committee is comprised of Gerald I. Quinn, Alexander
Christopher Lang and Rosnani Atan. Mr. Quinn serves as President and CEO of the
Company and Mr. Lang and Ms. Atan are on the Board of Directors. The
Compensation Committee held two (2) meetings during the 1999 fiscal year. The
Compensation Committee oversees the design and implementation of all executive
compensation, stock options, bonus plans, retirement plans and other
compensation related issues which the Board of Directors deems appropriate for
consideration.
It is anticipated that the following members will be nominated for both the
Audit Committee and the Compensation Committee at a meeting to be held following
the Annual Meeting of Shareholders: Gerald I. Quinn, Kevin England, Myron Goins.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company receive no additional
compensation for serving as directors. All Directors are reimbursed for their
reasonable out-of-pocket expenses incurred in connection with attendance of
Board meetings.
In addition, the Company's 1997 Stock Incentive Plan (the "Plan") provided
that each Director receive options to purchase 1,667 shares of Common Stock upon
election to the Board and automatic annual grants of 1,667 options for each year
of service thereafter. In 1998, the Board amended the Plan (the "Restated Plan")
to provide more flexibility in the methods by which the Board may provide
incentives and rewards. Under the Restated Plan, members of the Company's Board
of Directors who are not employees of the Company or its subsidiaries will
receive an option to purchase 5,000 shares of the Company's Common Stock upon
their initial election to the Board and receive thereafter an annual grant of an
additional 5,000 options. Board members serving on the Audit Committee receive
an additional option to purchase 3,333 shares of Common Stock upon their initial
designation to the Audit Committee. The options vest one year from the date of
grant and terminate upon the earlier of 10 years from the date of grant or 24
months after the Director ceases to be a member of the Board.
COMPENSATION COMMITTEE INTERLOCKS
During fiscal 1999, the Compensation Committee consisted of Gerald I.
Quinn, Alexander Chris Lang and Rosnani Atan. Mr. Quinn held the position of
President and CEO with the Company during his service. Mr. Lang and Ms. Atan are
shareholders of Interpretel (Canada), a wholly owned subsidiary of the Company,
principals, directors and executive officers of Softalk, Inc. ("Softalk"), an
Ontario-based company and hold warrants to purchase shares of the Company's
Common Stock. See "Certain Relationships and Related Transactions." During
fiscal 1999, Mr. Quinn served as a director of Softalk.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, as well as persons beneficially
owning more than 10% of the Company's outstanding Common Stock, to file certain
reports of ownership with the Commission. Such officers, directors and
shareholders are also required by Commission rules and regulations to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of such forms received by it, or written
representations from certain reporting persons, the Company believes that during
the fiscal year ended August 31, 1999, its officers, directors and greater than
10% shareholders complied with the reporting requirements of Section 16(a).
6
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the
beneficial ownership of the Company's Common Stock as of June 30, 2000, by: (i)
each director of the Company, (ii) the Chief Executive Officer of the Company,
and certain other executive officers of the Company (collectively, the "Named
Executive Officers"), (iii) each person who is known by the Company to be the
beneficial owner of more than five percent (5%) of the outstanding Common Stock,
and (iv) all executive officers and directors as a group.
In certain instances, the number of shares listed includes, in addition to
shares owned directly, shares held by the spouse or children of the person, or
by a trust or estate of which the person is a trustee or an executor or in which
the person may have a beneficial interest. The table that follows is based upon
information supplied by executive officers, directors and principal stockholders
and Schedules 13D and 13G filed with the Commission.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2)(3) OF CLASS(%)(3)
------------------- -------------------------- --------------
Gerald I. Quinn(4) 722,872 18.14
Richard P. Freeman (5) 520,426 14.13
John P. Clements (6) 241,699 6.73
Alexander C. Lang (7) 250,000 6.94
Rosnani Atan (8) 250,000 6.94
Softalk, Inc. (9) 5,320,087 61.36
All directors and officers as
a group (5 persons) (10) 1,984,997 38.98
----------
(1) Unless otherwise noted, the address of each holder is 5210 East Williams
Circle, Suite 200, Tucson, Arizona 85711.
(2) The number of shares beneficially owned by each director or executive
officer is determined under rules of the Securities and Exchange Commission
(the "Commission"), and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has the sole or
shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days of June 30, 2000,
through the exercise of any stock option or other right. Such shares of
Common Stock subject to options or rights that are currently exercisable or
exercisable within 60 days of June 30, 2000, are deemed outstanding for
purposes of computing the percentage of the person holding such options or
rights, but are not deemed outstanding for computing the percentage of any
other person.
(3) The amounts and percentages in the table are based upon 3,350,549 shares of
Common Stock outstanding as of June 30, 2000.
(4) Includes 633,333 shares of stock subject to options granted pursuant to the
Company's Plan which are currently exercisable or become exercisable (at
per share exercise prices of $1.00 to $3.96) within 60 days of June 30,
2000.
(5) Includes 333,333 shares subject to options granted pursuant to the
Company's Plan which are currently exercisable or become exercisable (at
per share exercise prices of $1.00 to $4.86) within 60 days of June 30,
2000.
7
<PAGE>
(6) Includes 241,666 shares subject to options granted pursuant to the
Company's Plan which are currently exercisable or become exercisable (at
per share exercise prices of $1.00 to $4.86) within 60 days of June 30,
2000.
(7) Includes 250,000 shares subject to options granted pursuant to the
Company's Plan which are currently exercisable or become exercisable (at a
per share exercise price of $1.00) within 60 days after June 30, 2000.
(8) Includes 250,000 shares subject to options granted pursuant to the
Company's Plan which are currently exercisable or become exercisable (at a
per share exercise price of $1.00) within 60 days after June 30, 2000.
(9) Includes five-year warrants to purchase the Company's Common Stock, granted
on October 25, 1999 as follows: 3,246,753 at an exercise price of $3.25 per
share; 1,000,000 at an exercise price of $5.00 per share; 1,000,000 at an
exercise price of $10.00 per share. This holder's address is 415 Yonge
Street, Suite 1701, Toronto, Ontario, Canada M5B 2E7. One of the Company's
directors, Alexander Christopher Lang, has a controlling interest in
Softalk.
(10) Includes 1,984,997 shares subject to options granted pursuant to the
Company's Plan which are currently exercisable or become exercisable within
60 days of June 30, 2000.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding annual and
long-term compensation for services in all capacities to the Company during the
fiscal years ended August 31, 1999, 1998 and 1997, by the Company's Chief
Executive Officer. None of the Company's other executive officers received in
excess of $100,000 in compensation during the last completed fiscal year.
SUMMARY COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ----------
-------------------------------------- SECURITIES
NAME AND PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY($) BONUS COMPENSATION($) OPTIONS(#) COMPENSATION
-------- ---- --------- ----- --------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gerald I. Quinn 1999 85,000 -- -- 500,000 --
President and 1998 85,000(2) -- -- -- --
Chief Executive 1997 85,000(1) -- -- 133,333 --
Officer
</TABLE>
----------
(1) Includes the aggregate fair market value of 14,809 shares of Common Stock
($34,163) for which Gerald I. Quinn elected to receive shares of Common
Stock pursuant to the Company's 1997 Stock Incentive Plan in lieu of a
portion of his annual base salary for services rendered.
(2) Includes the aggregate fair market value of 3,316 shares of Common Stock
($8,734) for which Gerald I. Quinn elected to receive shares pursuant to
the Company's 1997 Stock Incentive Plan in lieu of a portion of his annual
base salary for services rendered.
8
<PAGE>
OPTION GRANTS
The following table lists the grants of stock options during the 1999
fiscal year to the Named Executive Officer.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE VALUE
SECURITIES OPTIONS/SARS AT ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE APPRECIATION
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION FOR OPTION TERM (3)
NAME GRANTED(#)(1) IN FISCAL 1999 ($/SHARE) DATE 5% 10%
---- ------------- -------------- --------- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Gerald I. Quinn(2) 500,000 26.4% 1.00 7-19-2009 314,447 796,871
</TABLE>
----------
(1) Consists entirely of stock options.
(2) Mr. Quinn's options were granted on July 19, 1999 and fully vest on July
19, 2000.
(3) Potential realizable values shown above represent the potential gains based
upon annual compound stock price appreciation of 5% and 10% from August 31,
1999 through the full option term. The actual value realized, if any, on
stock option exercises will be dependent upon overall market conditions and
the future performance of the Company and its Common Stock. There is no
assurance that the actual value realized will approximate the amounts
reflected in this table.
OPTION EXERCISES
The following table sets forth the number of shares covered by both
exercisable and unexercisable stock options by the Named Executive Officer
during the 1999 fiscal year and the value of stock options held by such officer,
as of the end of fiscal year 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN
NUMBER OF UNEXERCISED THE MONEY OPTIONS ON
OPTIONS ON AUGUST 31, 1999 AUGUST 31, 1999 ($)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gerald I. Quinn 0 0 133,333(1) 500,000(2) 0 1,000,000
</TABLE>
----------
(1) All of these options are immediately exercisable at any time prior to
January 2007 at a price of $3.96 per share.
(2) These options fully vest on July 19, 2000 at a price of $1.00 per share and
will then be exercisable at any time prior to July 19, 2009.
AMENDMENT OR REPRICING OF OPTIONS
During the 1999 fiscal year, the Company did not amend or reprice any of
its stock options held by executive officers of the Company.
9
<PAGE>
EMPLOYMENT CONTRACTS
In May 1996, the Board of Directors approved a two-year Employment
Agreement with Gerald I. Quinn for services as President and Chief Executive
Officer. The Agreement requires Mr. Quinn to devote his full time to the Company
and provides for an annual base salary of $85,000. Mr. Quinn is also entitled to
receive any fringe benefits generally extended to the employees of the Company,
including medical, disability and life insurance. Mr. Quinn also has the right
to receive certain sales commissions from the Company under his Agreement. In
May 1998, May 1999, and May 2000, Mr. Quinn's Agreement was renewed for an
additional one-year terms.
In June 1996, the Board of Directors approved a one-year Agreement with
Richard P. Freeman for services as Vice President. The Agreement provides for an
annual base salary of $72,000. The Agreement requires Mr. Freeman to devote his
full time to the Company. In May 1998 and again in May 1999, Mr. Freeman's
contract was renewed for an additional one-year term. In April 2000, Mr.
Freeman's contract was changed to $20,000 per year for services for Wavetech, as
Mr. Freeman became employed by both Wavetech and Softalk.
After their initial terms (and any extensions thereof), each of the
above-described Agreements continue at will, terminable with/on ninety days
written notice by either party to the other. The Agreements terminate upon the
occurrence of any of the following events: (i) if the employee voluntarily
terminates; (ii) if the employee dies; (iii) if the employee is unable to
properly discharge his obligations under his Agreement due to illness,
disability or accident for three consecutive months or for a period aggregating
six months in any continuous twelve months; (iv) if the employee is convicted of
a crime of moral turpitude by a court of competent jurisdiction; (v) if the
employee is convicted of a felony, except to the extent that the charge arises
from an act taken at the board's direction; or (vi) if the employee is grossly
negligent or guilty of willful misconduct in connection with the performance of
these duties, which negligence or misconduct, if curable, is not cured within
fifteen days of a notice of cure by the Board or the Chairman of the Board. Each
of the above-described Agreements provides that the employee shall not compete
with the Company during the term of the Agreement and for a period of one year
thereafter.
In the event of any Corporate Transaction or Change of Control of the
Company (each as defined in the Employment Agreements), the Common Stock at the
time subject to each outstanding option, but not otherwise vested, shall
automatically vest in full, so that each such option shall, immediately prior to
the effective date of such corporate transaction of change of control, become
fully exercisable for all of the Common Shares at the time subject to the
option, and may be exercised for all or any portion of those shares as fully
vested Common Stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company has developed and implemented compensation policies and
programs which seek to improve the Company's overall financial performance and
thus improve shareholder value by aligning the interests of senior management
with those of its shareholders. The Company's Compensation Committee, which is
comprised entirely of interested members of the Company's Board of Directors
(see "Certain Relationships and Related Transactions"), has furnished the
following report on executive compensation.
OVERVIEW AND PHILOSOPHY
The Company's philosophy is to structure overall compensation for
executives at levels that enable the Company to attract, motivate and retain
highly qualified executives. The Company's compensation program for executive
officers is primarily comprised of base salary and long-term incentives in the
form of stock option grants.
10
<PAGE>
In determining compensation for its officers, the Company emphasizes
incentive-based compensation, particularly stock option grants. Stock option
grants are intended to result in no reward if the stock price does not
appreciate, but may provide substantial rewards to executives as shareholders
benefit from stock price appreciation. The Company periodically reviews the
compensation levels of other companies in its industry to ensure that the
Company's executive compensation is appropriate in light of industry practices.
BASE SALARY AND BONUSES
Each Company executive receives a base salary, which when aggregated with
their other incentive-based compensation, is intended to be competitive with
similarly situated executives in the Company's industry. The Company typically
targets base pay at the minimum level necessary to attract highly qualified
executives, which in some cases may be less than market rates. In determining
salaries, the Company takes into account individual experience and performance
and specific needs particular to the Company. The Company did not pay any cash
bonuses in fiscal 1999.
OPTIONS
Because the long-term financial success of the Company depends to a
significant degree on its management team, the Company believes that it is
crucial for its management team to have an equity stake in the Company. Thus,
the Company makes option grants to key executives from time to time. In making
option awards, the Company reviews the level of awards granted to executives at
companies in the Company's industry, the awards granted to other executives
within the Company and the individual officer's specific role at the Company.
Although the Company, in some cases, pays base salaries to executives that are
less than market rates, the Company believes that its option awards enable it to
attract and retain highly qualified executives.
In 1999, the Board approved a stock option grant to its Chief Executive
Officer, Gerald I. Quinn. These options were granted at the fair market value of
the Company's Common Stock on the date of grant, vest one year from the date of
grant and expire ten years after the grant date.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Quinn has served as the Company's Chief Executive Officer since 1996.
Mr. Quinn's base salary is $85,000, subject to adjustment by the Board from time
to time. Mr. Quinn was granted an option to purchase 500,000 shares of Common
Stock, as referred above. The Compensation Committee believes that Mr. Quinn's
compensation is at or below the compensation levels of chief executive officers
of comparable publicly held companies.
COMPENSATION COMMITTEE
Gerald I. Quinn
Alexander Christopher Lang
Rosnani Atan
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective November 13, 1999, the Company acquired through its wholly owned
subsidiary, Interpretel (Canada), the existing and future contractual rights of
Softalk with customers, distributors and suppliers, together with a
right-of-first-refusal with respect to the sale of Softalk or any of its
intellectual property, software and patents (the "Acquisition"). Two of the
Company's directors, Alexander Christopher Lang and Rosnani Atan have a
controlling ownership interest, are shareholders, executive officers and
directors of Softalk. Mr. Lang and Ms. Atan, CEO of Softalk, joined the
Company's board of directors effective July 21, 1999.
The Acquisition was consummated in accordance with the terms of a Purchase
Agreement between the Company, Interpretel (Canada), and Softalk, dated as of
October 25, 1999. The aggregate consideration paid by the Company in connection
with the Acquisition was U.S. $10,000,000, consisting of 4,329,004 shares of
non-voting Class A Preferred Stock of Interpretel (Canada) (the "Interpretel
Preferred Shares"). Each Interpretel Preferred Share is exchangeable, at the
option of Softalk, for one share of Wavetech Common Stock at any time. As of the
date of this Proxy Statement, such Interpretel Preferred Shares are exchangeable
for approximately 58% of the issued and outstanding shares of Wavetech Common
Stock.
In a separate transaction, the Company and Softalk agreed to amend their
existing Amended and Restated License Agreement, effective October 25, 1999, to
grant the Company and its subsidiaries a worldwide exclusive license to
distribute, market, service, sell and sublicense any and all of Softalk's
services and products (whether then existing or thereafter developed or acquired
by Softalk) to commercial accounts, and a worldwide nonexclusive license to
distribute, market, service, sale and sublicense any and all of Softalk's
services and products (whether then existing or thereafter developed or acquired
by Softalk) to individual customer accounts. In consideration of such Amendment,
the Company issued to Softalk five-year warrants to purchase an aggregate of
5,246,753 shares of Common Stock, 3,246,753 of which have a per share exercise
price of $3.25, 1,000,000 have a per share exercise price of $5.00 and the
remaining 1,000,000 have a per share exercise price of $10.00. Under the terms
of the Restated License Agreement, the Company is required to reimburse Softalk
for actual direct expenses incurred in connection with the sale, license and
delivery of Softalk products. The Company also is required to pay Softalk a
monthly fee equal to five percent (5%) of the monthly wholesale long distance
costs.
On August 6, 1999 the Company established a loan facility in favor of
Softalk. Under this facility, the Company has agreed to loan Softalk up to $2
million. Such amounts bear interest at the prime rate (as announced by Citibank
in New York, New York) plus one percent. As of May 31, 2000, the outstanding
principal balance on this credit facility was $1,384,000. Softalk may, at its
option and at any time, convert any amount of outstanding principal plus
interest accrued thereon into shares of Softalk capital stock in lieu of and in
full satisfaction of repayment of the principal and interest owed to the
Company. The number of shares of Softalk capital stock which may be issued to
the Company in repayment of the $2 million loan would be equal to ten percent
(10%) of the value of Softalk at the time of repayment.
On March 1, 2000, the Company executed an unsecured promissory note for
$32,000 with Rosnani Atan, a director, officer and shareholder of Softalk, and a
contract employee and a member of the Board of Directors of the Company. The
unsecured note bears interest at the rate of 7.75% per annum and is due on March
1, 2002. Four payments of $4,356.55 are due on June 1, September 1, December 1
and March 1 of each year.
12
<PAGE>
AMENDMENT TO THE ARTICLES OF INCORPORATION
(PROPOSAL NO. 2)
The Board of Directors has deemed it advisable and recommends that the
stockholders approve an Amendment to the Company's Articles of Incorporation to
change the Company's name from Wavetech International, Inc. to Best Net
Communications Corp. Upon approval of the above Amendment by the Company's
stockholders, the Company intends to file an Amendment to the Articles of
Incorporation with the Secretary of State of Nevada setting forth such name
change.
The proposed name change of the Company will not affect stockholders'
rights, will not necessitate any exchange of outstanding stock certificates and
will not affect the Company's ticker symbol, which is "ITEL."
Approval of the Amendment to the Articles of Incorporation requires that
affirmative vote of a majority of shares of Common Stock eligible to vote at the
Annual Meeting in person or by proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL.
ADOPTION OF 2000 INCENTIVE STOCK PLAN
(PROPOSAL NO. 3)
On July 5, 2000, the Board of Directors adopted the 2000 Incentive Stock
Plan (the "Plan"), subject to shareholder approval. The Board believes that in
order to attract and retain officers and employees of the highest caliber,
provide increased incentive for such persons and to continue to promote the well
being of the Company, it is in the best interest of the Company and its
shareholders to provide officers, employees, non-employee directors, and
independent contractors through the granting of stock options, the opportunity
to participate in the appreciation in value of the Company's Common Stock.
SUMMARY OF THE PLAN
The following summary of the Plan does not purport to be complete, and is
subject to and qualified in its entirety to the test of the Plan, which is
attached hereto as Appendix A.
ADMINISTRATION. The Plan shall be administered by the Company's Board of
Directors, or such other committee designated by the Board ("the Committee").
The Committee has full authority, subject to the provisions of the Plan, to
award incentive stock options and non-statutory stock options (collectively, the
"Options") or restricted stock awards ("Stock Awards") (hereinafter,
collectively referred to as "Awards").
Subject to the provisions of the Plan, the Committee determines in its
discretion, among other things, the persons to whom from time to time Awards may
be granted ("Participants"), the number of shares subject to each Option,
exercise prices under the Options, any restrictions or limitations on Awards
including any vesting, exchange, deferral, surrender, cancellation,
acceleration, termination, or forfeiture provisions related to such Awards. The
interpretation and construction by the Committee of any provisions of, or the
determination of any questions arising under, the Plan or any rule or
regulations established by the Committee pursuant to the Plan, shall be final,
conclusive and binding on all persons interested in the Plan.
SHARES SUBJECT TO THE PLAN. The Plan authorized the granting of Awards
which would allow up to a maximum of 5,000,000 shares of the Common Stock to be
acquired by the Participants of said Awards. In order to prevent the dilution or
enlargement of the rights of the Participants under the Plan, the number of
shares of Common Stock authorized by the Plan is subject to adjustment in the
13
<PAGE>
event of any increase or decrease in the number of shares of outstanding Common
Stock resulting from a stock dividend, stock split, combination of shares,
merger, reorganization, consolidation, recapitalization or other change in the
corporate structure affecting the Company's capital stock. If any Award granted
under the Plan is forfeited or terminated, the shares of Common Stock that were
underlying such Award shall again be available for distribution in connection
with Awards subsequently granted under the Plan.
ELIGIBILITY. Subject to the provisions of the Plan, Awards may be granted
to key employees of the Company or its subsidiaries who hold a position of
responsibility in a managerial, administrative or professional capacity. Awards
may also be granted to independent contractors under the Plan.
AUTOMATIC STOCK OPTION GRANTS. The Plan provides for the non-discretionary
grant of options to non-employee directors of the Company. Each non-employee
director shall receive an automatic grant of options to purchase 20,000 shares
of Common Stock when appointed to the Board of Directors.
Additionally, each non-employee director in general and each non-employee
director serving on the Audit Committee of the Company shall receive an annual
grant of options to purchase 10,000 and 5,000 shares, respectively, of Common
Stock upon the end of the fifth business day after announcement of the Company's
annual operating results for the immediately preceding fiscal year, subject to
certain meeting attendance requirements.
EFFECTIVE DATE AND TERM OF PLAN. If approved by the Company's shareholders,
the Plan will be deemed effective on July 5, 2000, the date on which it was
adopted by the Board of Directors. The Plan will terminate ten (10) years after
the effective date of the Plan, subject to earlier termination by the Board. No
Option may be granted under the Plan after the termination date, but Options
previously granted may extend beyond such date.
NATURE OF AWARDS. The Plan provides for incentive stock options as defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
non-statutory stock options or restricted stock awards, any of which may be
granted with any other option or stock based award not subject to the Plan. The
Committee determines when Awards are to be granted and when they may be
exercised.
OPTION PRICE. The exercise price of each Option will be determined by the
Committee but under the Code the exercise price of incentive stock options may
not be less than 100% of the fair market value of the Common Stock on the date
the option is granted (or in the case of an incentive stock option granted to a
person possessing more than 10% of the total combined voting power of all
classes of stock of the Company, not less than 110% of such fair market value).
PERIOD OF OPTION. The term of an Option will not exceed ten (10) years
(five (5) years in the case of an Option granted to a 10% shareholder) from the
date the Option was granted.
EXERCISE OF OPTIONS. Subject to any limitations or conditions the Committee
may impose, Options may be exercised, in whole or in part, at any time during
the term of the Option by giving written notice of exercise to the Company
specifying the number of shares of Common Stock to be purchased. Such notice
must be accompanied by payment in full of the purchase price. Full payment for
shares purchased pursuant to an exercise of an Option will be made in cash or
such other form of consideration as the Committee may approve, including without
14
<PAGE>
limitation, the delivery of shares of Common Stock. Options granted under the
Plan may not be transferred other than by will or by the laws of descent and
distribution. The Committee shall adopt policies determining the entitlement of
Participants who cease to be employed by the Company or its Subsidiaries.
STOCK AWARD RESTRICTIONS. The Committee shall place such conditions,
restrictions or limitations as it deems appropriate on the Stock Awards. The
Committee may modify, or accelerate the termination of, the restrictions
applicable to a Stock Award as it deems appropriate.
PARTICIPANT RIGHTS AS SHAREHOLDERS. The Committee may, in its discretion,
grant to the Participant to whom such Stock Awards have been awarded all or any
of the rights of a shareholder with respect to such shares.
EVIDENCE OF AWARDS. Options granted under the Plan will be evidenced by
agreements consistent with the Plan in such form as the Committee may prescribe.
Stock Awards in any such manner as the Committee deems appropriate. Neither the
Plan nor agreements there under confer any right to continued employment upon
any Participant.
AMENDMENTS TO THE PLAN. The Board may at any time, and from time to time,
amend, modify or terminate any of the provisions of the Plan, but no amendment,
modification or termination shall be made which would impair the rights of a
Participant under any agreement theretofore entered into pursuant to an Award
grant, without the Participant's consent.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion of the federal income tax consequences of
participation in the Plan is only a summary of the general rules applicable to
the grant and exercise of incentive stock options and does not purport to give
specific details of every variable and does not cover, among other things,
state, local and foreign tax treatment of participation in the Plan. The
information is based upon present law and regulations, which are subject to
being changed prospectively or retroactively.
Options granted under the Plan may be nonstatutory stock options ("NSOs"),
which do not qualify as "incentive stock options" under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or incentive stock
options ("ISOs").
TAX TREATMENT OF AN NSO.
A Participant does not realize any compensation income upon the grant of an
NSO. Additionally, the Company may not take a tax deduction at the time of the
grant. Upon exercise of an NSO, a Participant realizes and must report as
compensation income an amount equal to the difference between the fair market
value of the Common Stock on the date of exercise and the exercise price. The
Company is entitled to take a deduction at the same time and in the same amount
as the Participant reports as compensation income, provided the Company
withholds federal income tax in accordance with the Code and applicable Treasury
regulations.
15
<PAGE>
When a Participant disposes of shares of Common Stock received upon
exercise of an NSO, he or she will realize capital gain income if the amount
realized on the sale exceeds the Participant's basis in the shares. If the
Participant's basis in the shares exceeds the amount realized on the sale, the
Participant will realize a capital loss. There is no tax impact to the Company
upon the sale of shares by a Participant.
Special rules apply with respect to shares of Common Stock transferred
directly to or acquired upon exercise of an NSO by an individual (officers,
directors of 10% shareholders of the Company) who is subject to the "short-swing
profits" provisions of the Securities Act of 1934, as amended.
TAX TREATMENT OF AN ISO.
The Participant will also recognize no taxable income and the Company will
not qualify for any deduction upon the grant or exercise of ISOs. Upon a
disposition of the shares underlying ISOs after the later of two years from the
date of grant or one year after the issuance of the shares to the Participant,
the Participant will recognize the difference, if any between the amount
realized and the exercise price as long-term capital gain or long-term capital
loss (as the case may be) if the shares are capital assets. The excess, if any,
of the fair market value of the shares on the date of exercise of ISOs over the
exercise price will be treated as an item of adjustment in computing the
alternative minimum tax for a Participant's taxable year in which the exercise
occurs and may result in an alternative minimum tax liability for the
Participant.
If Common Stock acquired upon the exercise of an Award is disposed of prior
to two years from the date of grant of the ISOs or in the same taxable year as
the exercise of the ISOs, (i) the Participant will recognize ordinary
compensation income in the taxable year of disposition in an amount equal to the
excess, if any, of the lesser of the fair market value of the shares on the date
of exercise, or the amount realized on the disposition of the shares, over the
exercise price paid for such shares; and (ii) the Company will qualify for a
deduction equal to the amount recognized by the Participant as compensation
income, subject to the limitation that the compensation be reasonable. The
Participant will recognize the excess, if any, of the amount realized over the
fair market value of the shares on the date of exercise, if the shares are
capital assets, as short-term or long-term capital gains, depending on the
length of time that the Participant held the shares, and the Company will not
qualify for a deduction with respect to such excess. In the case of a
disposition of shares in the same taxable year as the exercise of ISOs, where
the amount realized on the disposition is less than the fair market value of the
shares on the date of exercise, there will be no adjustment since the amount
treated as an item of adjustment, for alternative minimum tax purposes, is
limited to the excess of the amount realized on such disposition over the
exercise price, which is the same amount included in regular taxable income.
16
<PAGE>
The foregoing is a general discussion of certain federal income tax
consequences and does not purport to be complete.
Adoption of the Plan requires the affirmative vote of the holders of a
majority of the combined voting power of all the issued and outstanding Common
Stock present at the Annual Meeting in person or through proxy.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS
PROPOSAL.
RATIFICATION OF APPOINTMENT OF AUDITORS
(PROPOSAL NO. 4)
The Board of Directors has selected Ernst & Young, LLP ("E&Y") as the
independent public accountants for the Company for fiscal 2000, and recommends
that the shareholders vote for ratification of such appointment. Shareholder
ratification of the selection of E&Y as the Company's independent auditors is
not required by the Company's Bylaws or otherwise. However, the Board is
submitting the selection of E&Y for shareholder ratification as a matter of good
corporate practice. On August 16, 1999, the Company engaged E&Y to serve as the
Company's principal accountants. Notwithstanding the selection, the Board in its
discretion, may direct the appointment of a new independent accounting firm at
any time during the year if the Board feels that such a change would be in the
best interests of the Company and its shareholders. A representative of E&Y is
expected to be present at the Annual Meeting with the opportunity to make a
statement if he or she so desires and to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THIS PROPOSAL.
OTHER MATTERS
INDEPENDENT AUDITORS
On August 12, 1999, the Company filed a Form 8-K in which the Company
reported the declination for reelection notice from their independent auditors,
Addison, Roberts & Ludwig, P.C. ("AR&L"). AR&L declined to stand for reelection
on August 6, 1999, as the Company's independent auditors for the year ending
August 31, 2000, due to AR&L's cessation of audit and accounting services and
the withdrawal of all the AR&L's partners. There were no disagreements with AR&L
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.
The Company has authorized AR&L, and AR&L has agreed, to respond to any
inquiries or requests for information made by the Company's new auditors.
On August 16, 1999, the Company filed a Form 8-K in which the Company
reported the appointment of Ernst & Young, LLP as their independent auditors,
replacing Addison, Roberts & Ludwig.
17
<PAGE>
ANNUAL REPORT
The 1999 Annual Report of the Company, which was mailed to stockholders
with this Proxy, contains financial and other information about the activities
of the Company, but is not incorporated into this Proxy Statement and is not to
be considered part of these proxy soliciting materials.
The Company will provide upon written request, without charge to each
shareholder of record as of the Record Date, a copy of the Company's annual
report on Form 10-K for the year ended August 31, 1999 as filed with the
Commission. Any Exhibits listed in the Form 10-K also will be furnished upon
request at the Company's expense. Any such request should be directed to the
Company's Secretary at the Company's executive offices at 5210 E. Williams
Circle, Suite 200, Tucson, Arizona 85711.
VOTING BY PROXY
In order to ensure that your shares will be represented at the Annual
Meeting, please sign and return the enclosed Proxy in the envelope provided for
that purpose, whether or not you expect to attend. Any shareholder may, without
affecting any vote previously taken, revoke a written proxy by giving notice of
revocation to the Company in writing or by executing and delivering to the
Company a later dated proxy.
SHAREHOLDER PROPOSALS FOR ACTION AT THE COMPANY'S NEXT ANNUAL MEETING
A shareholder proposal for shareholder action at the next Annual Meeting of
Shareholders to be held in 2001, must be received by the Company's Secretary at
the Company's offices no later than May 21, 2001 in order to be included in the
Company's proxy statement and form of proxy for that meeting. Such proposals
should be addressed to the Corporate Secretary, 5210 E. Williams Circle, Suite
200, Tucson, Arizona 85711. If a shareholder proposal is introduced at the 2001
Annual Meeting of Shareholders without any discussion of the proposal in the
Company's proxy statement, and the shareholder does not notify the Company on or
before July 4, 2001, as required by Rule 14(a)-4(c)(1) of the Securities
Exchange Act of 1934, of the intent to raise such proposal at the Annual Meeting
of Shareholders, then proxies received by the Company for the 2001 Annual
Meeting will be voted by the persons named as such proxies in their discretion
with respect to such proposal. Notice of such proposal is to be sent to the
above address.
BY ORDER OF THE BOARD OF DIRECTORS
Gerald. I. Quinn, President & CEO
Tucson, Arizona
August 18, 2000
18
<PAGE>
APPENDIX A
WAVETECH INTERNATIONAL, INC.
2000 INCENTIVE STOCK PLAN
1. IN GENERAL
1.1 PURPOSE. The purpose of this 2000 Incentive Stock Plan (the "Plan")
is to attract, retain and motivate employees, directors and
independent contractors by providing them with the opportunity to
acquire a proprietary interest in Wavetech International, Inc., a
Nevada corporation (the "Company"), and to link their interests and
efforts to the long-term interests of the Company's stockholders.
1.2 BACKGROUND. On July 5, 2000, the Board of Directors of the
Corporation adopted the 2000 Incentive Stock Plan, subject to
shareholder approval.
1.3 EFFECTIVE DATE. Subject to the approval of the shareholders of the
Company at the Company's 2000 Annual Meeting of Shareholders, the
Plan shall become effective as of July 5, 2000, the date on which it
was adopted by the Board of Directors (the "Effective Date");
provided, however, that awards granted under the Plan prior to its
approval by the shareholders shall be contingent on approval of the
Plan by the shareholders of the Company at such annual meeting.
2. PLAN ADMINISTRATION
2.1 IN GENERAL. The Plan shall be administered by the Company's Board of
Directors (the "Board"). Except for the power to amend the Plan as
provided in SECTION 12, the Board, in its sole discretion, may
delegate all or any portion of its authority and duties under the
Plan to a committee appointed by the Board, under such conditions
and limitations as the Board may from time to time establish. The
Board and/or any committee that has been delegated the authority to
administer the Plan shall be referred to as the "Plan
Administrator." Except as otherwise explicitly set forth in the
Plan, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to awards under the
Plan, including the selection of the individuals to be granted
awards, the type of awards, the number of shares of the Company's
common stock ("Common Stock") subject to an award, vesting
conditions, and any and all other terms, conditions, restrictions
and limitations, if any, of an award. All decisions made by the Plan
Administrator pursuant to the Plan and related orders and
resolutions shall be final and conclusive.
2.2 RULE 16b-3 AND CODE SECTION 162(m). Notwithstanding any provision of
this Plan to the contrary, only the Board or a committee composed of
two or more "Non-Employee Directors" may make determinations
regarding grants of awards to officers, directors and 10%
stockholders of the Company. (The term "Non-Employee Directors"
shall have the meaning set forth in Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "1934 Act")). The
Plan Administrator shall have the authority and discretion to
determine the extent to which awards will conform to the
requirements of Section 162(m) Internal Revenue Code of 1986, as
amended (the "Code"), and to take such action, establish such
procedures, and impose such restrictions as the Plan Administrator
determines to be necessary or appropriate to conform to such
requirements.
A-1
<PAGE>
2.3 OTHER PLANS. The Plan Administrator shall also have authority to
grant awards as an alternative to or as the form of payment for
grants or rights earned or due under other compensation plans or
arrangements of the Company, including the plan of any entity
acquired by the Company.
3. ELIGIBILITY. Any employee of the Company shall be eligible to receive any
award under the Plan. Directors who are not employees, proposed directors,
proposed employees and independent contractors shall be eligible to
receive awards other than Incentive Stock Options (as defined in SECTION
5.2). For purposes of this SECTION 3, the "Company," with respect to all
awards under the Plan other than Incentive Stock Options, includes any
entity that is directly or indirectly controlled by the Company or any
entity in which the Company has a significant equity interest, as
determined by the Plan Administrator. With respect to Incentive Stock
Options, the "Company" includes any parent or subsidiary of the Company as
defined in Section 424 of the Code.
4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER AND SOURCE. The shares offered under the Plan shall be shares
of Common Stock and may be unissued shares or shares now held or
subsequently acquired by the Company as treasury shares, as the Plan
Administrator may from time to time determine. Subject to adjustment
as provided in SECTION 4.3, the aggregate number of shares that may
be issued under the Plan shall not exceed 5,000,000 shares. The
aggregate number of shares that may be covered by awards granted to
any one individual in any year shall not exceed 50% of the total
number of shares that may be issued under the Plan.
4.2 SHARES AVAILABLE. Any shares subject to an award granted under the
Plan that is forfeited, terminated or canceled, or any shares that
do not vest, shall again be available for the granting of awards
under the Plan. If the exercise price of any award granted under the
Plan is satisfied by tendering shares of Common Stock to the Company
(by actual delivery or by attestation), only the number of shares
issued net of the shares tendered shall be delivered for purposes of
determining the maximum number of shares available for delivery
under the Plan. If a stock appreciation right is settled in cash,
the shares covered by such award shall remain available for the
granting of other awards. The payment of cash dividends and dividend
equivalents paid in cash in conjunction with outstanding awards
shall not be counted against the shares available for issuance.
4.3 ADJUSTMENT OF SHARES AVAILABLE. The aggregate number and type of
shares available for awards under the Plan, the maximum number and
type of shares that may be subject to awards to any individual under
the Plan, the number and type of shares covered by each outstanding
award, and the exercise price per share (but not the total price)
for stock options, stock appreciation rights or similar awards
outstanding under the Plan shall all be proportionately adjusted for
any increase or decrease in the number of issued shares of Common
Stock resulting from any split-up, combination or exchange of
shares, consolidation, spin-off or recapitalization of shares or any
like capital adjustment or the payment of any stock dividend.
5. AWARDS
5.1 TYPES OF AWARDS. Subject to the Plan, the Plan Administrator shall
have the authority, in its sole discretion, to determine the type or
types of awards to be granted to employees, directors, and
independent contractors under the Plan. Such awards may include, but
are not limited to, Incentive Stock Options, Nonqualified Stock
A-2
<PAGE>
Options (as defined in SECTION 5.2) or restricted stock awards. Such
awards may be granted either alone, in addition to or in tandem with
any other type of award granted under the Plan.
5.2 STOCK OPTIONS. The Plan Administrator may grant stock options,
designated as "Incentive Stock Options," which comply with the
provisions of Section 422 of the Code or any successor statutory
provision, or "Nonqualified Stock Options." The price for which
shares may be purchased upon exercise of a particular option shall
be determined by the Plan Administrator; provided, however, that (a)
the exercise price of an Incentive Stock Option shall not be less
than 100% of the Fair Market Value (as determined under SECTION 5.6)
of the shares subject to such option on the date such option is
granted (110% if the option is intended to be an Incentive Stock
Option and is granted to a stockholder who at the time the option is
granted owns or is deemed to own stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company) and (b) the
exercise price of a Nonqualified Stock Option shall not be less than
100% of the Fair Market Value of the shares subject to such option
on the date such option is granted; provided, however, that if the
Nonqualified Stock Option is granted in connection with the
recipients hiring, promotion or similar event, the option exercise
price may not be less than the Fair Market Value of the shares
subject to the option on the date on which the recipient was hired
or promoted (or similar event), if the grant of the Nonqualified
Stock Option occurs not more than 90 days after the date of such
hiring, promotion or other event. To the extent the aggregate Fair
Market Value (determined as of the date the option is granted) of
Common Stock with respect to which Incentive Stock Options granted
to a particular individual become exercisable for the first time
during any calendar year (under the Plan and all other stock option
plans of the Company) exceeds $100,000 (or such corresponding amount
as may be set by the Code) such options shall be treated as
Nonqualified Stock Options. An option holder and the Plan
Administrator can agree at any time to convert an Incentive Stock
Option to a Nonqualified Stock Option.
5.3 RESTRICTED STOCK AWARDS. The Plan Administrator may grant restricted
stock awards under the Plan in Common Stock or denominated in units
of Common Stock. The Plan Administrator, in its discretion, may make
such awards subject to conditions and restrictions, as set forth in
the instrument evidencing the award, which may be based on
continuous service with the Company or the attainment of certain
performance goals related to profits, profit growth, profit-related
return ratios, cash flow or shareholder returns, where such goals
may be stated in absolute terms or relative to comparison companies
or indices to be achieved during a period of time. The Plan
Administrator may choose, at the time of granting an award or at any
time thereafter up to the time of payment of the award, to include
as part of such award an entitlement to receive dividends or
dividend equivalents, subject to such terms as the Plan
administrator may establish. All dividends or dividend equivalents
that are not paid currently may, in the Plan Administrator's sole
discretion, accrue interest and be paid to the participant if, when
and to the extent such award is paid.
5.4 PAYMENT DEFERRAL. Awards granted under the Plan may be settled
through cash payments, the delivery of Common Stock (valued at Fair
Market Value) or the granting of awards or combinations thereof as
the Plan Administrator shall determine. Any award settlement,
including payment deferrals, may be subject to such conditions,
restrictions and contingencies as the Plan Administrator shall
determine. The Plan Administrator may permit or require the deferral
A-3
<PAGE>
of any award payment, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such
credits to deferred stock unit equivalents.
5.5 INDIVIDUAL AWARD AGREEMENTS. Stock Options shall and other awards
may be evidenced by agreements between the Company and the recipient
in such form and content as the Plan Administrator from time to time
approves, which agreements shall substantially comply with and be
subject to the terms of the Plan. Such individual agreements may
contain such provisions or conditions as the Plan Administrator
deems necessary or appropriate to effectuate the sense and purpose
of the Plan and may be amended from time to time in accordance with
the terms thereof.
5.6 DETERMINATION OF FAIR MARKET VALUE OF COMMON STOCK. The "Fair Market
Value" of a share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the
over-the-counter market, the Fair Market Value shall be the
mean between the highest bid and lowest asked prices (or, if
such information is available, the closing selling price) per
share of Common Stock on the date in question on the
over-the-counter market, as such prices are reported by the
National Association of Securities Dealers through its Nasdaq
system or any successor system. If there are no reported bid
and asked prices (or closing selling price) for the Common
Stock on the date in question, then the mean between the
highest bid price and the lowest asked price (or the closing
selling price) on the last preceding date for which such
quotations exist shall be determinative of the Fair Market
Value.
(b) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the Fair Market Value
shall be the closing selling price per share of Common Stock
for the date in question on the stock exchange determined by
the Board to be the primary market for the Common Stock, as
such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of
Stock on such exchange on the date in question, then the Fair
Market Value shall be the closing selling price on the
exchange on the last preceding day.
(c) If the Common Stock at the time is neither listed nor admitted
to trading on any stock exchange nor traded on the
over-the-counter market, then the Fair Market Value shall be
determined by the Plan Administrator after taking into account
such factors as the Plan Administrator shall deem appropriate,
including, at the discretion of the Plan Administrator, one or
more independent professional appraisals.
5.7 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control
occurs, all outstanding Options (Incentive and Nonqualified) and
stock awards that may be exercised shall become fully exercisable
and all restrictions on such outstanding Options and stock awards
shall lapse. "Change of Control" means and includes each of the
following: (1) A change of control of the Company of a nature that
would be required to be reported in response to Item 6(e) of
Schedule 14A of the 1934 Act regardless of whether the Company is
subject to such reporting requirement; (2) A change of control of
the Company through a transaction or series of transactions, such
that any person (as that term is used in Section 13 and 14(d)(2) of
A-4
<PAGE>
the 1934 Act), excluding affiliates of the Company as of the
Effective Date, is or becomes the beneficial owner (as that term is
used in Section 13(d) of the 1934 Act) directly or indirectly, of
securities of the Company representing 20% or more of the combined
voting power of the Company's then outstanding securities; (3) Any
consolidation or liquidation of the Company in which the Company is
not the continuing or surviving corporation or pursuant to which
Shares will be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the
Shares immediately before the merger have the same proportionate
ownership of Common Stock of the surviving corporation immediately
after the merger; (4) The shareholders of the Company approve any
plan or proposal for the liquidation or dissolution of the Company;
or (5) Substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a "controlled
group of corporations" (as defined in Section 1563 of the Code) in
which the Company is a member.
6. AWARD EXERCISE.
6.1 PRECONDITION TO STOCK ISSUANCE. No shares shall be delivered
pursuant to the exercise of any stock option, in whole or in part,
until qualified for delivery under such securities laws and
regulations as may be deemed by the Plan Administrator to be
applicable thereto and until, in the case of the exercise of an
option, payment in full of the option price thereof (in cash or
stock as provided in SECTION 6.3) is received by the Company. No
holder of an option, or any legal representative, legatee or
distributee shall be or be deemed to be a holder of any shares
subject to such option unless and until such shares are issued.
6.2 NO FRACTIONAL SHARES. No stock options may at any time be exercised
with respect to a fractional share.
6.3 FORM OF PAYMENT. An optionee may exercise a stock option using as
the form of payment (a) cash or cash equivalent, (b) stock-for-stock
payment (as described below), (c) any combination of the above, or
(d) such other means as the Plan Administrator may approve. Any
optionee who owns Common Stock may use such shares as a form of
payment to exercise stock options granted under the Plan. The Plan
Administrator, in its discretion, may restrict or rescind this right
by notice to optionees. A stock option may be exercised in such
manner only by tendering (actually or by attestation) to the Company
whole shares of Common Stock having a Fair Market Value equal to or
less than the exercise price. The Plan Administrator may permit an
optionee to pay the option exercise price upon exercise of an option
by irrevocably authorizing a third party to sell the shares of
Common Stock (or a sufficient portion of such shares) acquired upon
exercise of such option and remit to the Company a sufficient
portion of the sale proceeds to pay the entire exercise price and
any tax withholding resulting from such exercise. If an option is
exercised by surrender of shares having a Fair Market Value less
than the exercise price, the option holder must pay the difference
in cash.
7. AUTOMATIC GRANT PROGRAM
7.1 AMOUNT AND DATE OF GRANT. . During the term of the Plan, the Company
shall make automatic grants of options ("Automatic Options") in the
form of Nonqualified Stock Options to each Board member ("Eligible
A-5
<PAGE>
Director") who is not employed by the Company, whether or not such
person is a Non-Employee Director as referred to in SECTION 2.2 as
follows:
7.1.1 ANNUAL GRANTS. . Each year on the Annual Grant Date, an
Automatic Option to acquire 10,000 shares of Common Stock
shall be granted to each Eligible Director for so long as
shares of Common Stock are available under SECTION 4.1 hereof.
The "Annual Grant Date" shall be the fifth day after the
Company publicly announces its annual operating results for
the immediately preceding fiscal year. Any Eligible Director
that was granted an Automatic Option under SECTION 7.1.2
within 90 days of an Annual Grant Date shall be ineligible to
receive an Automatic Option pursuant to this SECTION 7.1.1 on
such Annual Grant Date.
7.1.2 INITIAL NEW DIRECTOR GRANTS. On the Initial Grant Date, every
new member of the Board, who is an Eligible Director and has
not previously received an Automatic Option under this SECTION
7.1.2 shall be granted an Automatic Option to acquire 20,000
shares of Common Stock for so long as shares of Common Stock
are available under SECTION 4.1 hereof. The "Initial Grant
Date" shall be the date that an Eligible Director is first
appointed or elected to the Board.
7.1.3 AUDIT COMMITTEE GRANTS. On the Annual Grant Date, every
non-employee director serving on the Audit Committee of the
Company shall receive options to acquire 5,000 shares of
Company Common Stock.
7.2 EXERCISE PRICE. The exercise price per share of Common Stock subject
to each Automatic Option granted under SECTION 7.1.1, SECTION 7.1.2
or SECTION 7.1.3 shall be equal to 100% of the Fair Market Value per
share of the Common Stock on the date such Automatic Option was
granted as determined in accordance with the valuation provisions of
SECTION 5.6.
7.3 VESTING. Each Automatic Option granted pursuant to SECTION 7.1.1 and
SECTION 7.1.3 shall vest and become exercisable 12 months after the
date of grant. Each Automatic Option granted pursuant to SECTION
7.1.2 shall vest and become exercisable in a series of three equal
and successive installments with the first installment vested on the
date of grant and the next two installments 12 months and 24 months
after the date of grant. Each Automatic Option shall vest and become
exercisable only if the optionholder has not ceased serving as a
Board member or for purposes of SECTION 7.1.3, serving on the Audit
Committee, as of such vesting date.
7.4 TERM OF AUTOMATIC OPTIONS. Each Automatic Option shall expire on the
tenth anniversary (the "Expiration Date") of the date on which such
Automatic Option was granted. Except as determined by the Plan
Administrator, should an Eligible Director's service as a Board
member cease prior to the Expiration Date for any reason while an
Automatic Option remains outstanding and unexercised, the Automatic
Option term shall immediately be modified and the Automatic Option
shall terminate and cease to be outstanding in accordance with the
following provisions:
7.4.1 The Automatic Option shall immediately terminate and cease to
be outstanding with respect to any shares that were not vested
at the time of the optionholder's cessation of Board service.
A-6
<PAGE>
7.4.2 Should an optionholder cease, for any reason other than death,
to serve as a member of the Board, then the optionholder shall
have 90 days measured from the date of such cessation of Board
service in which to exercise his or her Automatic Options that
vested prior to the time of such cessation of Board service.
In no event, however, may any Automatic Option be exercised
after the Expiration Date of such Automatic Option.
7.4.3 Should an optionholder die while serving as a Board member or
within 90 days after cessation of Board service, then the
personal representative of the optionholder's estate (or the
person or persons to whom the Automatic Option is transferred
pursuant to the optionholder's will or in accordance with the
laws of the descent and distribution) shall have a 90-day
period measured from the date of the optionholder's cessation
of Board service in which to exercise the Automatic Options
that vested prior to the time of such cessation of Board
service. In no event, however, may any Automatic Option be
exercised after the Expiration Date of such Automatic Option.
7.5 OTHER TERMS. Except as expressly provided otherwise in this SECTION
7, an Automatic Option shall be subject to all of the terms and
conditions of the Plan. Eligible Directors shall be entitled to
receive other awards under the Plan or other plans of the Company in
accordance with the terms and conditions thereof.
8. TRANSFERABILITY. Any Incentive Stock Option granted under the Plan shall,
during the recipient's lifetime, be exercisable only by such recipient,
and shall not be assignable or transferable by such recipient other than
by will or the laws of descent and distribution. Except as specifically
allowed by the Plan Administrator, any other award under the Plan and any
of the rights and privileges conferred thereby shall not be assignable or
transferable by the recipient other than by will or the laws of descent
and distribution and such award shall be exercisable during the
recipient's lifetime only by the recipient.
The Plan Administrator may, in its sole discretion and at any time, as a
condition to the receipt of an award or the issuance of Common Stock
subject to an award, require an award recipient to enter into an agreement
under which the Company (or its assigns) has the right to reacquire shares
of Common Stock acquired pursuant to an award. Any repurchase right of the
Company shall be exercisable by the Company (or its assignees) upon such
terms and conditions as the Plan Administrator may specify in the
agreement evidencing such right.
9. WITHHOLDING TAXES; OTHER DEDUCTIONS. The Company shall have the right to
deduct from any settlement of an award granted under the Plan, including
the delivery or vesting of shares, (a) an amount sufficient to cover
withholding as required by law for any federal, state or local taxes, and
(b) any amounts due from the recipient of such award to the Company or to
any parent or subsidiary of the Company or to take such other action as
may be necessary to satisfy any such withholding or other obligations,
including withholding from any other cash amounts due or to become due
from the Company to such recipient an amount equal to such taxes or
obligations. The Plan Administrator may, in its sole and unrestricted
discretion, permit an award recipient to satisfy his or her tax liability
with respect to an award by tendering (actually or by attestation) to the
Company whole shares of Common Stock having a Fair Market Value equal to
all or any portion of the applicable tax liability.
A-7
<PAGE>
10. TERMINATION OF SERVICES. The terms and conditions under which an award may
be exercised following termination of a recipient's employment,
directorship or independent contractor relationship with the Company shall
be determined by the Plan Administrator; provided, however, that Incentive
Stock Options shall not be exercisable at any time after the earliest of
the date that is (a) three months after termination of employment, unless
due to death or Disability (as defined in Section 22(e)(3) of the Code);
(b) one year after termination of employment due to Disability; or (c) ten
years after the date of grant (five years if granted to a stockholder who
at the time the option is granted owns or is deemed to own stock
possessing more than 10% of the total combined voting power of all classes
of stock of the Company or of any parent or subsidiary of the Company).
11. TERM OF THE PLAN. The Plan shall become effective as of July 5, 2000, the
date of adoption by the Board, and shall remain in full force and effect
through the date that is ten years thereafter, unless sooner terminated by
the Board. After the Plan is terminated, no future awards may be granted,
but awards previously granted shall remain outstanding in accordance with
their applicable terms and conditions and the Plan's terms and conditions.
12. PLAN AMENDMENT. The Board may amend, suspend or terminate the Plan at any
time; provided that no such amendment shall be made without the approval
of the Company's stockholders (a) that would increase the number of shares
available for issuance under the Plan (other than in accordance with
SECTION 4.3), or (b) if such approval is required (i) to comply with
Section 422 of the Code with respect to Incentive Stock Options, or (ii)
for purposes of Section 162(m) of the Code.
13. PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive means by
which the Company may issue awards to acquire its Common Stock.
14. BIFURCATION OF THE PLAN. Notwithstanding any provision of this Plan to the
contrary, the Board, in its sole discretion, may bifurcate the Plan so as
to restrict, limit, or condition the use of any provision of the Plan to
participants who are officers or directors subject to Section 16 of the
1934 Act without so restricting, limiting or conditioning the Plan with
respect to other participants.
A-8
<PAGE>
WAVETECH INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF WAVETECH
INTERNATIONAL, INC. FOR THE ANNUAL MEETING OF SHAREHOLDERS
The undersigned shareholder of Wavetech International, Inc., a Nevada
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders, dated August 18, 2000, and hereby appoints Gerald I.
Quinn or Richard Freeman and each of them, proxies and attorneys-in-fact, with
full power of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Shareholders of Wavetech
International, Inc. to be held at the Marriott Courtyard, Williams Center, 201
South Williams Boulevard, Tucson, Arizona on September 27, 2000 at 10:00 a.m.,
Mountain Standard Time, and at any adjournment(s) or postponement(s) thereof,
and to vote all shares of Common Stock that the undersigned would be entitled to
vote if then and there personally present, on the matters set forth below.
1. ELECTION OF DIRECTORS [ ] FOR all nominees listed below (except as
marked to the contrary below):
Gerald I. Quinn Kelvin C. Wilbore Alexander Christopher Lang
Kevin England Myron Goins
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below:
--------------------------------------------------------------------------------
The undersigned agrees that the proxy holder is authorized to cumulate
votes in the election of directors and to vote for less than all of the
nominees.
2. AMEND CERTIFICATE OF INCORPORATION
[ ] FOR the amendment to the Articles of Incorporation of the Company to
change its name from Wavetech International, Inc. to Best Net
Communications Corp.
3. APPROVE WAVETECH INTERNATIONAL, INC. 2000 INCENTIVE STOCK PLAN
[ ] FOR the adoption of the stock plan.
4. RATIFICATION OF AUDITORS
[ ] FOR the nominee listed below
Ernst & Young, LLP
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE NOMINEES NAMED ABOVE AND AS SAID PROXIES DEEM ADVISABLE
ON SUCH MATTERS AS MAY COME BEFORE THE MEETING.
Dated: __________, 2000
Please sign exactly as your name appears
above. When shares are held by joint
tenants, both should sign. When signing
as an attorney, executor, administrator,
trustee or guardian, please give full
title as such. If a corporation, sign in
full corporate name by President or
other authorized officer. If a
partnership, please sign in partnership
name by an authorized person.
SIGNATURES:
----------------------------------------
----------------------------------------
Please return in the enclosed, postage-paid envelope.
I Will ____ Will not ____ attend the Meeting.
