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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ___)*
US WATS, INC.
(Name of Issuer)
Common Stock, par value $.001 per share
(Title of Class of Securities)
90337P10
(CUSIP Number)
Carter Strong, Esq. (202) 857-6252
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, NW
Washington, D.C. 20036-5339
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
November 26, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
<CLIENT PLEASE PROVIDE MISSING DATA FOR THE FOLLOWING FORM>
SCHEDULE 13D
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CUSIP No. 90337P10 Page 2 of 4 Pages
- ----------------------------- -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gold & Appel Transfer, S.A.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
1,909,500
NUMBER OF ----------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 0
WITH
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,909,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.86%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
<CLIENT PLEASE PROVIDE MISSING DATA FOR THE FOLLOWING FORM>
SCHEDULE 13D
- ----------------------------- -------------------------------
CUSIP No. 90337P10 Page 3 of 4 Pages
- ----------------------------- -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Walt Anderson
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH ----------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 1,909,500
WITH
----------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,909,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.86%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
- ----------------------------- ------------------------------
CUSIP No. 90337P10 Page 4 of 4 Pages
- ----------------------------- ------------------------------
ITEM 1. SECURITY AND ISSUER
This Statement relates to the common stock, par value $.001 per share
(the "Common Shares"), of US WATS, Inc., a New York corporation (the "Issuer").
The Issuer's principal executive offices are located at 111 Presidential
Boulevard, Bala Cynwyd, Pennsylvania 19004.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Gold & Appel Transfer, S.A., a British
Virgin islands corporation ("Gold & Appel"), and Walt Anderson, a natural person
and a U.S. citizen ("Mr. Anderson"), as joint filers.
Gold & Appel, which is wholly-owned by Iceberg Transport, S.A., a
Panama corporation ("Iceberg"), has its principal place of business in the Omar
Hodge Building, Wickhams Cay, Road Town, Tortula, British Virgin Islands. Gold &
Appel's principal business is making capital venture investments. Iceberg's
principal place of business is located at 53rd Street (Calle 53), Urbanizacion,
Obarrio, Torre Swiss Bank, Panama City, Republic of Panama. Iceberg's principal
business is research, from a financial investment basis, of international
development projects, and its ownership of Gold & Appel. Gold & Appel's
directors and executive officers are as follows:
<TABLE>
<CAPTION>
Name Position with Business Address Principal Occupation
- ---- Gold & Appel ---------------- --------------------
-------------
<S> <C>
Servco Limited Sole Director* Omar Hodge Building Corporate Management
Wickhams Cay Road Town, and Consulting
Tortula, British Virgin Islands
Rose Restrepo Authorized Signatory Omar Hodge Building Corporate Management
for Servco Limited Wickhams Cay Road Town, and Consulting
Tortula, British Virgin Islands
Walt Anderson Secretary* 3050 K Street, NW Suite 250 Chairman and Chief
Washington, DC 20007 Executive Officer of Esprit
Telecom Group plc
</TABLE>
* Mr. Anderson is also attorney-in-fact for Gold & Appel, which has no president
or treasurer (such duties are filled by Servco Limited, as Gold & Appel's sole
director).
<PAGE>
Iceberg's directors and executive officers are as follows:
<TABLE>
<CAPTION>
Name Position with Business Address Principal Citizenship
- ---- Iceberg ---------------- Occupation -----------
------- ----------
<S> <C>
Pablo Javier Espina Director and 53 Street (Calle 53) Attorney, Republic of Panama
President Urbanizacion, Obarrio Morgan & Morgan
Torre Swiss Bank
Panama City
Republic of Panama
Adelina M. Director and 53 Street (Calle 53) Attorney, Republic of Panama
De Estribi Secretary Urbanizacion, Obarrio Morgan & Morgan
Torre Swiss Bank
Panama City
Republic of Panama
Aida May Biggs Director and 53 Street (Calle 53) Attorney, Republic of Panama
Treasurer Urbanizacion, Obarrio Morgan & Morgan
Torre Swiss Bank
Panama City
Republic of Panama
</TABLE>
Mr. Anderson's business address is at 3050 K Street, NW, Suite 250,
Washington, DC 20007. Mr. Anderson's principal occupation is Chairman and Chief
Executive Officer of Esprit Telecom Group plc ("Esprit"), a communications
carrier formed as a public limited company under the laws of England and Wales,
the business address of which is Minerva House, Valpy Street, Reading, United
Kingdom. Mr. Anderson also is the Secretary of Gold & Appel, for which he is
attorney-in-fact.
Neither Gold & Appel nor Mr. Anderson, nor Iceberg nor any director or
executive officer of either Gold & Appel or Iceberg named above, has been,
during the past five years, convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or a party to any civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result
of which he was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Mr. Anderson, on behalf and in the name of Gold & Appel, purchased a
total of 1,909,500 Common Shares between November 11, 1997 and December 1, 1997,
of which 319,500 were purchased on the NASDAQ SmallCap Market in
over-the-counter transactions and 1,590,000 were purchased directly from the
Issuer in a private transaction on November 26, 1997 pursuant to that certain
Stock Acquisition Agreement dated November 26, 1997 between the Issuer and Gold
& Appel, a copy of which is included as Exhibit 7.2 to this Statement, as
follows:
<PAGE>
Date Number of Shares Price per Common Share
---- ---------------- ----------------------
11/11/97 33,000 1.5625000
11/11/97 21,000 1.6250000
11/11/97 3,000 1.6562500
11/11/97 22,500 1.6875000
11/11/97 30,500 1.7500000
11/12/97 2,500 1.7500000
11/14/97 5,000 1.6250000
11/14/97 40,000 1.7500000
11/14/97 5,000 1.7343750
11/17/97 37,000 1.7500000
11/18/97 9,000 1.7343570
11/18/97 35,000 1.7500000
11/24/97 2,500 1.6250000
11/25/97 16,000 1.6875000
11/26/97 1,590,000 1.5000000
11/28/97 7,500 1.8750000
12/01/97 50,000 1.9062500
TOTAL 1,909,500
All of the funds used to purchase the above 1,909,500 Common Shares acquired by
Gold & Appel came from Gold & Appel's general corporate funds.
ITEM 4. PURPOSE OF TRANSACTION.
Mr. Anderson acquired the above-mentioned Common Shares in the name of
and on behalf of Gold & Appel for investment purposes. Mr. Anderson, on behalf
of Gold & Appel, may determine to purchase additional securities of the Issuer
or to sell some or all of any of the Common Shares Gold & Appel owns at any time
in private or market transactions depending on market conditions, their
evaluation of the Issuer's business, prospects and financial condition, the
<PAGE>
market for the Common Shares, other opportunities available to Gold & Appel,
general economic conditions, money and stock market conditions, and other
further developments.
Except as described herein, Mr. Anderson, on behalf of Gold & Appel,
has no plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Issuer or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Issuer or of any of its subsidiaries;
(d) Any change in the Issuer's present board of directors or
management, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the Issuer's board of directors;
(e) Any material change in the present capitalization or dividend
policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter or bylaws or other actions
which may impede the acquisition of control of the Issuer by
any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934, as amended; or
(j) Any action similar to any of those enumerated above.
Mr. Anderson, on behalf of Gold & Appel, may, at any time and from time
to time review or reconsider the position of Gold & Appel and formulate plans or
proposals with respect to the Issuer and its securities, but has no current
intention of doing so.
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Gold & Appel beneficially owns 1,909,500 Common Shares,
representing approximately 10.86% of the outstanding Common
Shares, based on the outstanding shares as of November 26,
1997 pursuant to information provided to Gold & Appel by the
Issuer.
By virtue of the power-of-attorney dated January 6, 1995,
executed by Gold & Appel and appointing thereunder Mr.
Anderson as Gold & Appel's attorney-in-fact (the "Power of
Attorney"), Mr. Anderson has the authority and power, among
other things, to buy, sell and trade the Common Shares, and
therefore may also be deemed the beneficial owner of such
1,909,500 Common Shares. Mr. Anderson, however, disclaims
beneficial ownership of the Common Shares held by Gold &
Appel. In addition, Mr. Anderson is the President and a
Director of the Foundation for the International
Non-Governmental Development of Space, a non-profit
organization ("FINDS"), which owns 78,000 Common Shares. Mr.
Anderson does not have a controlling interest in FINDS and
thus disclaims beneficial ownership of the Common Shares held
by FINDS.
(b) Gold & Appel has the sole power to vote 1,909,500 Common
Shares. Mr. Anderson has the power, on behalf of Gold & Appel,
to dispose of the 1,909,500 Common Shares beneficially owned
by Gold & Appel under the Power-of-Attorney.
(c) Since the filing of a certain Amendment No. 3 to Schedule 13D
of Gold & Appel and Mr. Anderson as joint filers on November
14, 1997, (i) Gold & Appel purchased an aggregate 1,909,500
purchased Common Shares as reported in item 3 above, and (ii)
FINDS purchased 78,000 Common Shares in the NASDAQ SmallCap
Market between November 19, 1997 and November 21, 1997, as
follows:
Date Number of Shares Price per Common Share
---- ---------------- ----------------------
11/19/97 20,000 1.7500000
11/20/97 3,000 1.7187000
11/20/97 14,000 1.7343000
11/20/97 21,000 1.7500000
11/21/97 20,000 1.6781000
TOTAL 78,000
<PAGE>
(d) No other person is known by Gold & Appel nor by Mr. Anderson
to have the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of,
the Common Shares beneficially owned by Gold & Appel or Mr.
Anderson.
(e) Not applicable.
ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Except for the Power-of-Attorney and the Agreements attached to this
Statement as Exhibits 7. 1, 7.2 and 7.3 and described in item 7 below, neither
Gold & Appel nor Mr. Anderson has any contract, arrangement, understanding or
relationship (legal or otherwise) with any person with respect to any securities
of the Issuer, including but not limited to the transfer of any of the Common
Shares, beneficially owned by Gold & Appel or Mr. Anderson, finder's fees, joint
ventures, guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS.
Exhibit 7.1 Agreement with respect to the joint filing of this
Statement.
Exhibit 7.2 Stock Acquisition Agreement dated November 26, 1997,
between US WATS, Inc. and Gold & Appel Transfer, S.A.
Exhibit 7.3 Registration Rights Agreement dated November 26, 1997
between US WATS, Inc. and Gold & Appel Transfer, S.A.
<PAGE>
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: December 2, 1997
Gold & Appel Transfer, S.A., a British Virgin
Islands corporation
By /s/ Walt Anderson
___________________________________
Walt Anderson, Attorney-in-Fact for
Gold & Appel Transfer, S.A.
/s/ Walt Anderson
_________________________________________
Walt Anderson
Exhibit 7.1
Joint Filing Agreement
The undersigned hereby agree that the Statement on Schedule 13D to
which this Joint Filing Agreement is attached as Exhibit 7.1 is filed on behalf
of each of us.
Date: December 2, 1997
Gold & Appel Transfer, S.A., a British Virgin
Islands corporation
By /s/ Walt Anderson
__________________________________
Walt Anderson, Attorney-in-Fact for
Gold & Appel Transfer, S.A.
/s/ Walt Anderson
_________________________________________
Walt Anderson
Exhibit 7.2
<PAGE>
EXECUTION COPY
STOCK ACQUISITION AGREEMENT
This STOCK ACQUISITION AGREEMENT (this "Agreement"), entered
into as of November 26, 1997, is between US Wats, Inc., a New York corporation
(the "Corporation"), and Gold & Appel Transfer, S.A., a British Virgin Islands
corporation (the "Purchaser").
RECITALS
WHEREAS, the Corporation desires to issue shares of US Wats,
Inc. Common Stock, par value $.001 per share, (the "Stock") to the Purchaser,
and the Purchaser desires to purchase shares of the Stock from the Corporation
pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and
representations contained herein, the Purchaser and the Corporation hereby agree
as follows:
1. Issuance of Stock.
(a) Subject to the terms and conditions of this Agreement, the
Corporation agrees to issue to the Purchaser, and the Purchaser agrees to
purchase from the Corporation 1,590,000 shares of Stock (the "Shares") for
$2,385,000, or $1.50 per share ("Stock Consideration").
(b) The Corporation shall deliver to the Purchaser a
certificate evidencing the Shares, registered in the name of the Purchaser,
concurrently with full payment of the Stock Consideration in immediately
available funds (the "Closing"). The date on which the Closing occurs is
referred to herein as the "Closing Date."
2. Representations of Purchaser. As of the date hereof and the
Closing Date, the Purchaser represents and warrants to and covenants with the
Corporation as follows:
(a) The Purchaser is a corporation validly existing and in
good standing under the laws of the British Virgin Islands.
(b) The Purchaser has the requisite corporate power and
authority to execute and deliver this Agreement.
(c) This Agreement has been duly authorized by all necessary
corporate action on the part of the Purchaser. This Agreement constitutes the
legal, valid and binding obligations of the Purchaser, enforceable in accordance
with the terms hereof, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting the enforcement of
<PAGE>
EXECUTION COPY
creditors' rights generally.
(d) Neither the execution or delivery of this Agreement, nor
fulfillment of or compliance with the terms and provisions hereof and thereof,
will conflict with, or result in a breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of, the Articles
of Incorporation or By-laws of the Purchaser, any award of any arbitrator or any
agreement (including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule of regulation to which the Purchaser is
subject.
(e) The Purchaser has obtained all consents, approvals and
authorizations, and made all necessary declarations and filings, and provided
all notices, required to consummate the transactions contemplated by this
Agreement in the manner contemplated hereby.
(f) The Purchaser is purchasing the Shares solely for
investment purposes, with no present intention of distributing or reselling any
of the Shares or any interest therein. The Purchaser acknowledges that the
Shares have not been registered under the Securities Act of 1933, as amended,
and the rules and regulations thereunder (collectively, the "Securities Act").
(g) The Purchaser is aware of the applicable limitations under
the Securities Act relating to a subsequent sale, transfer, pledge, mortgage,
hypothecation, gift, assignment or other encumbrance of the Shares. The
Purchaser further acknowledges that the Shares must be held indefinitely unless
subsequently registered under the Securities Act and applicable state se
curities laws or an exemption from such registration is available.
(h) The Purchaser has received from the Corporation adequate
access to financial and other information concerning the Corporation and the
Stock, and the Purchaser has had the opportunity to ask questions of and receive
answers from the Corporation concerning the Stock and to obtain therefrom any
additional information necessary to make an informed decision regarding the
acquisition of the Shares.
(i) The Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the acquisition of the Shares. The investment in the Shares is suitable
for the Purchaser upon the basis of the facts regarding the Purchaser's other
security holdings, financial situation and needs.
(j) The Purchaser realizes that the Buyer is relying on the
validity of its representations and agreements contained herein in issuing the
Shares to him without registration under the Securities Act.
2
<PAGE>
EXECUTION COPY
3. Representations of the Corporation. As of the date hereof
and as of the Closing Date, the Corporation hereby represents and warrants to
and covenants with the Purchaser as follows:
(a) The Corporation and each of its Significant Subsidiaries
(as defined in Regulation S-X under the Securities Exchange Act of 1934, as
amended) is a corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite power to own its respective property and to carry on its respective
business as now conducted. The Corporation and each of its Significant
Subsidiaries is duly qualified to do business and is in good standing in each
jurisdiction in which the character or location of the properties owned or
leased by the Corporation or such Significant Subsidiary, as the case may be, or
the nature of the business conducted by the Corporation or such Significant
Subsidiary, as the case may be, makes such qualification necessary, except where
the failure to be so qualified would not, individually or in the aggregate, have
a material adverse effect on the business, financial condition or results of
operations (a "Material Adverse Effect") of the Corporation and its
subsidiaries, taken as a whole.
(b) (i) The Corporation has all requisite power and authority,
corporate and otherwise, to execute, deliver and to perform its obligations
under this Agreement and under the Registration Rights Agreement dated as of the
date hereof between the Corporation and the Purchaser (the "Registration
Agreement"), including the consummation of the transactions contemplated hereby
and by the Registration Agreement (collectively, the "Transactions"), (ii) the
execution and delivery of this Agreement and the Registration Agreement
(collectively, the "Agreements") and the consummation of the Transactions have
been duly and validly authorized and approved by the Corporation's board of
directors and by all other required corporate action of the Corporation, and
(iii) the Agreements have been duly and validly executed and delivered by the
Corporation and constitute the Corporation's valid and binding obligation,
enforceable in accordance with their terms, except as the enforceability thereof
may be limited by applicable bankruptcy, insolvency, or similar laws affecting
the enforcement of creditors' rights generally.
(c) The Corporation's execution and delivery of the Agreements
does not, and the Corporation's performance of the Agreements shall not, require
any consent, approval, authorization or permit, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the "Exchange
Act") as have been complied with and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, have a Material Adverse Effect on
the
3
<PAGE>
EXECUTION COPY
Corporation and its subsidiaries, taken as a whole, or a material adverse effect
on the ability of the Corporation to perform its obligations hereunder and under
the Registration Agreement.
(d) (i) The Corporation has furnished the Purchaser with a
correct and complete copy of each report, schedule, registration statement and
definitive proxy statement heretofore filed by the Corporation with the
Securities and Exchange Commission (the "SEC") since December 31, 1996 (the "SEC
Documents"), which are all the documents (other than preliminary material) that
the Corporation was required to file with the SEC since December 31, 1996. As of
their respective dates, none of the SEC Documents (including all exhibits and
schedules thereto and documents incorporated by reference therein) contained any
untrue statements of a material fact or omissions of a material fact necessary
so as not to render the statements therein misleading and in the case of
documents other than a registration statement, in light of the circumstances
under which they were made, and the SEC Documents complied when filed in all
material respects with the then applicable requirements of the Securities Act or
the Exchange Act, as the case may be. The Corporation's financial statements
included in the SEC Documents complied in all material respects with the then
applicable accounting requirements and the published SEC rules and regulations
with respect thereto, were prepared in accordance with generally accepted
accounting principles during the periods involved (except as may have been
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q promulgated by the SEC) and fairly present (subject, in
the case of the unaudited statements, to normal, recurring audit adjustments)
the consolidated financial position of the Corporation and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. The consolidated balance
sheet of the Corporation and its consolidated subsidiaries as at September 30 ,
1997 (the "Balance Sheet Date") is referred to herein as the "Balance Sheet."
(ii) Except as disclosed in the SEC Filings, since
the Balance Sheet Date, no event has occurred which has had or is reasonably
likely to have a Material Adverse Effect on the Corporation and its
subsidiaries, taken as a whole.
(iii) The Corporation has not provided the Purchaser
with any material nonpublic information regarding the Corporation.
(e) (i) On the date hereof, the Corporation has an authorized
capitalization consisting of 30,000,000 shares of Common Stock, par value $.001
per share , and 1,000,000 shares of Preferred Stock, par value $.01 per share,
of which 15,989,100 shares of Common Stock and 30,000 shares of Preferred Stock
are issued and outstanding. All of such shares have been duly authorized and
validly issued and are fully paid and nonassessable, and are not subject to any
preemptive rights of other stockholders. The Stock to be issued to the Purchaser
pursuant to this Agreement, when issued and delivered and paid for in accordance
with the terms hereof, will be validly issued, fully paid and nonassessable and
not subject to any preemptive rights of other stockholders, and the Purchaser
will not be subject to personal liability by reason of being a holder of such
shares. All other capital stock of
4
<PAGE>
EXECUTION COPY
the Corporation to be outstanding on the Closing Date shall have been duly
authorized and validly issued and shall be fully paid and nonassessable, and
shall not have been subject to any preemptive rights of other stockholders. The
Stock is currently traded on the SmallCap Segment of The Nasdaq Stock Market.
(ii) There are no outstanding options, warrants,
rights, calls, commitments, conversion rights, rights of exchange, plans or
other agreements of any character providing for the purchase, issuance or sale
of the capital stock of the Corporation, except as contemplated by this
Agreement, or as disclosed in Schedule 3(e) hereto.
(f) Neither the execution and delivery by the Corporation of
the Agreements nor the performance by the Corporation of the Transactions will
(i) violate or contravene any provision of the Certificate of Incorporation or
By-Laws of the Corporation or any of its subsidiaries, (ii) violate or
contravene any statute, rule, regulation, order or decree of any public body or
authority by which the Corporation or any of its subsidiaries or any of their
respective properties may be bound, (iii) result in a violation or breach of,
conflict with, constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any liens, pledges,
encumbrances, mortgages, charges, rights of others, claims, options, puts,
calls, transfer, restrictions, or security interests or other restrictions of
any kind or character (collectively, "Liens") upon any of the assets of the
Corporation or any of its subsidiaries pursuant to the terms of, any note, bond,
mortgage, indenture, license, franchise, permit, agreement or any other
instrument or obligation to which the Corporation or any of its subsidiaries is
a party or by which it or any of their respective properties may be bound.
(g) Neither the Corporation nor any of its subsidiaries is (i)
in violation or noncompliance with any statute, law, ordinance, regulation, rule
or order of any foreign, federal, state or local government or any other
governmental department or agency, or any judgment, decree or other decision of
any court, applicable to its respective business or operations or (ii) in
violation, breach or default (with or without due notice or lapse of time or
both) under any of the terms, conditions or provisions of any agreement to which
it is a party, or by which any of its respective properties are bound, except
where any such violations or failures to comply or breaches or defaults would
not be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect on the Corporation and its subsidiaries, taken as a whole, or a
material adverse effect on the ability of the Corporation to perform its
obligations under the Agreements, or on the consummation of the Transactions.
The Corporation and its subsidiaries have all permits, licenses and franchises
from governmental agencies required to conduct their respective businesses as
now being conducted, except for such permits, licenses and franchises the
absence of which would not be reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect on the Corporation and its
subsidiaries, taken as a whole.
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(h) The Corporation and each of its Significant Subsidiaries
has valid title and right to use all its material properties and assets (real
and personal, tangible and intangible), including all properties and assets
reflected on the Balance Sheet.
(i) Except as disclosed in the SEC Documents or as disclosed
on Schedule 3(i) hereto, there is no action, suit or proceeding at law or in
equity by any person or entity or any arbitration or any administrative or other
proceeding by or before any governmental or other instrumentality or agency
pending or, to the knowledge of the Corporation, threatened against the
Corporation or any of its subsidiaries which is reasonably likely to have a
Material Adverse Effect on the Corporation and its subsidiaries, taken as a
whole, or a material adverse effect on the ability of the Corporation to perform
its obligations under the Agreements or the consummation of the Transactions
contemplated hereby.
(j) No agent, broker, person or firm acting on behalf of the
Corporation is or will be entitled to any commission or broker's or finder's
fees from any of the parties hereto, or from any person or entity controlling,
controlled by or under common control with any of the parties hereto, in
connection with any of the Transactions.
(k) Neither the Corporation nor any of its affiliates have
engaged in any form of general solicitation or general advertising in connection
with the purchase and sale of Corporation securities hereunder, nor made any
other sales or solicited any other entities or persons to buy Company securities
that would require registration under the Securities Act of the Stock
contemplated to be sold and purchased hereunder.
(l) Upon consummation of the Closing, the Purchaser shall have
received from the Corporation good and marketable title to all of the Shares,
free and clear of all Liens.
(m) Prior to the Closing Date, the Corporation shall have made
all notice and other filings required by The Nasdaq Stock Market with regard to
the issuance of the Shares.
4. Termination.
(a) This Agreement may be terminated at any time prior to the
Closing (a) by mutual consent of the Corporation and the Purchaser; (b) if
Closing has not occurred by 5:00 p.m., New York City time, on December 12, 1997,
by either the Corporation or the Purchaser by notice to the other party;
provided that such right to terminate shall not be available to any party whose
breach of a representation or warranty or failure to fulfill any obligation
hereunder shall have been the cause of, or resulted in the failure of, the
Closing to occur; (c) by the Purchaser, if there has been a material violation
or breach by the Corporation of any of the covenants, representations or
warranties contained in this Agreement to be complied with or performed by the
Corporation at or prior to such date of termination, or which has prevented the
satisfaction of any condition to the obligations of the Purchaser
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at the Closing Date, or (d) by the Corporation, if there has been a material
violation or breach by the Purchaser of any of the covenants, representations or
warranties contained in this Agreement to be complied with or performed by the
Purchaser at or prior to such date of termination, or which has prevented the
satisfaction of any condition to the obligations of the Corporation at the
Closing Date.
(b) If this Agreement is terminated pursuant to Section 4(a),
no party shall have liability or further obligations to the other party
hereunder; provided, that such termination shall not relieve any party of any
liability for any breach hereunder.
(c) In the event of a breach by any party of its obligations
hereunder, the other party shall have the right, in addition to any other
remedies which may be available, to obtain specific performance of the terms of
this Agreement, and the breaching party hereby waives the defense that there may
be an adequate remedy at law. Should any party default in its performance, or
other remedy, the prevailing party shall be entitled to its reasonable
attorneys' fees.
5. Restrictive Legend
(a) The Shares issued to the Purchaser pursuant hereto shall
bear the following legends:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE SECURITIES LAW
AND MAY NOT BE TRANSFERRED EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION
OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO IT THAT SUCH TRANSFER WILL NOT
VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW."
(b) Upon receipt of an opinion of legal counsel to the
corporation that the stock evidenced by this certificate no longer constitutes
"restricted securities" under Rule 144 of the Securities Act of 1933, as
amended, the above-provided legend is no longer required under applicable
securities laws, or the Stock is otherwise freely tradable without registration
under the Securities Act of 1933, as amended, the Corporation shall, upon the
request of the holder of this certificate and the submission of this
certificate, issue a substitute certificate without any restrictive legend
thereon.
6. Covenants
(a) Until the second anniversary of the Closing Date, the
Corporation shall use reasonable efforts to continue the listing for trading of
the Stock on The Nasdaq Stock Market or, in the Corporation's discretion, on
such other national securities exchange, and to comply with all applicable rules
of The Nasdaq Stock Market or, as the case may be, of such national securities
exchange.
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(b) Until the second anniversary of the Closing Date, the
Corporation covenants (a) to file timely (or obtain valid extensions in respect
thereof) all reports required to be filed by the Corporation after the date
hereof pursuant to Section 13(a) or 15(d) of the Exchange Act and (b) if the
Corporation is not at the time required to file reports pursuant to such
sections, to prepare and furnish to each such Purchaser annual and quarterly
financial statements, together with a discussion and analysis of such financial
statements in form and substance substantially similar to those that would
otherwise be required to be included in reports required by Section 13(a) or
15(d) of the Exchange Act in the time period that such filings would have been
required to have been made under the Exchange Act.
(c) Notwithstanding anything herein to the contrary, unless
required by applicable law or as a result of a change in the status of the
Purchaser, the Corporation will not instruct its transfer agent to place a
restrictive legend on the certificate (or certificates) representing the Stock
sold and purchased hereunder indicating that the Purchaser is a "control person"
or "affiliate" of the Corporation.
(d) The Corporation and the Purchaser shall pay all costs and
expenses incurred by it or on its behalf in connection with this Agreement and
the transactions contemplated hereby, including fees and expenses of its own
financial consultants, accountants and counsel.
7. Indemnification.
(a) The Corporation agrees to indemnify, defend and hold
harmless the Purchaser (collectively, including the Corporation as provided in
Section 7(b), the "Indemnified Parties") from and against any and all losses,
claims, damages or liabilities (or actions in respect thereof), including costs
of defense other than costs of counsel referred to in Section 7(c)
(collectively, "Liabilities") of the Indemnified Parties (as incurred) as a
result of (i) any breach or nonperformance of any of the representations,
warranties, covenants or agreements made by the Corporation in this Agreement,
or (ii) any pending or threatened action brought by the Corporation's
stockholders or creditors other than the Indemnified Parties or their officers,
employees, agents, advisors, directors, affiliates and creditors, arising out of
or in connection with the transactions contemplated by this Agreement; provided,
however, that the Corporation shall not be obligated to indemnify, defend or
hold harmless hereunder any of the Indemnified Parties for any claims based on
actions taken by any of the Indemnified Parties or their officers, employees,
agents, advisors, directors or affiliates, other than the performance of the
covenants and agreements to be undertaken by Purchasers pursuant to this
Agreement and any other action authorized in writing by the Corporation,
provided, further, that, if and to the extent such indemnification is
unenforceable for any reason, the Corporation shall make the maximum
contribution to the payment and satisfaction of such indemnified liability that
shall be permissible under applicable laws. In connection with the obligation of
the Corporation to indemnify for Liabilities as set forth above, the Corporation
further agrees to reimburse each Purchaser for all such expenses (including
reasonable fees, disbursements and other charges of counsel) as they are
incurred by the Purchaser.
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(b) The Purchaser agrees to indemnify, defend and hold
harmless the Corporation from and against any and all Liabilities as a result of
any breach or nonperformance of any of the representations, warranties,
covenants or agreements made by such Purchaser in this Agreement; provided,
however, that each Purchaser shall not be liable under this Section 7(b) to the
extent that it is finally judicially determined that such Liabilities resulted
primarily from a breach by the Corporation of any representation, warranty,
covenant or agreement of the Corporation contained in this Agreement; provided,
further, that, if and to the extent that such indemnification is unenforceable
for any reason, the Purchaser shall make the maximum contribution to the payment
and satisfaction of such indemnified liability that shall be permissible under
applicable laws. In connection with the obligation of the Purchaser to indemnify
for Liabilities as set forth above, the Purchaser further agrees to reimburse
the Corporation for all such expenses (including reasonable fees, disbursements
and other charges of counsel) as they are incurred by the Corporation.
(c) If any claim, demand or liability is asserted by any third
party against any Indemnified Party, the indemnifying party ("Indemnifying
Party") shall have the right, unless otherwise precluded by applicable law, to
conduct and control the defense, compromise or settlement of any action or
threatened action brought against the Indemnified Party in respect of matters
embraced by the indemnity set forth in this Section 7 using counsel subject to
the approval of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed. The Indemnified Party shall have the right to employ
counsel separate from counsel employed by the indemnifying party hereunder
("Indemnifying Party") in connection with any such action or threatened action
and to participate in the defense thereof, but the fees and expenses of such
counsel employed by the Indemnified Party shall be at the sole expense of such
Indemnified Party unless (i) the Indemnifying Party shall have elected not, or,
after reasonable written notice of any such action or threatened action, shall
have failed, to assume or participate in the defense thereof, (ii) the
employment thereof has been specifically authorized by the Indemnifying Party in
writing, or (iii) the parties to any such action or threatened action (including
any impleaded parties) include both the Indemnifying Party and the Indemnified
Party and the Indemnified Party shall in good faith determine that there may be
one or more defenses available to the Indemnified Party that are not available
to the Indemnifying Party or legal conflicts of interest pursuant to applicable
rules of professional conduct between the Indemnifying Party and the Indemnified
Party (in any which case, the Indemnified Party shall not have the right to
assume the defense of such action on behalf of the Indemnified Party), in either
of which events referred to in clauses (i), (ii) and (iii) the reasonable fees
and expenses of such counsel employed by the Indemnified Party shall be at the
expense of the Indemnifying Party (as incurred). The Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or compromise
any such action or threatened action or consent to the entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party a release from all liability
in respect of such action or threatened action. Unless the Indemnifying Party
shall have elected not, or shall have after reasonable written notice of any
such action or threatened action failed, to assume or participate in the defense
thereof, the Indemnified Party may not settle or compromise any action or
threatened action without the written consent of the Indemnifying Party, which
shall not be unreasonably withheld or delayed. If, after reasonable written
notice of any such action or threatened action, the Indemnifying Party neglects
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to defend the Indemnified Party, a recovery against the latter suffered by it in
good faith, is conclusive in its favor against the Indemnifying Party; provided,
however, that no such conclusive presumption shall be made if the Indemnified
Party has not received reasonable written notice of the action against the
Indemnified Party. All of any Indemnifying Party's obligations and all of the
rights and benefits of the Indemnified Parties set forth in this Section 5 shall
survive the Closing and termination of this Agreement and, but for then pending
claims, shall terminate and cease to be of further force and effect as of the
second anniversary of the Closing Date.
8. General Provisions.
(a) Assignment. The Purchaser shall not, prior to the Closing,
transfer, assign or encumber any of its rights, privileges, duties or
obligations under this Agreement without the prior written consent of the
Corporation, and any attempt to so transfer, assign or encumber shall be void.
(b) Notices. All notices and other communications which are
required or permitted to be given pursuant to the terms of this Agreement shall
be in writing and shall either be personally delivered or mailed first class,
postage prepaid, registered or certified mail (return receipt requested), to the
person for whom they are intended at the address shown on the signature page of
this Agreement for such party. Each notice or other communication shall for all
purposes of this Agreement be treated as being effective or having been given
when delivered, if delivered personally, or, if sent by mail, at the earlier of
actual receipt or five (5) days after the same has been deposited in the United
States mail, addressed and postage paid as aforesaid. The addresses, for the
purposes of this Section, may be changed by giving written notice to all parties
of such change in the manner provided herein for giving notice. Unless and until
such written notice is received, the addresses as provided herein shall be
deemed to continue in effect for all purposes hereunder.
(c) Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
(d) Severability. The parties hereto agree that the terms and
provisions in this Agreement are reasonable and shall be binding and enforceable
in accordance with the terms hereof and, in any event, that the terms and
provisions of this Agreement shall be enforced to the fullest extent permissible
under law. In the event that any term or provision of this Agreement shall for
any reason be adjudged to be unenforceable or invalid, then such unenforceable
or invalid term or provision shall not affect the enforceability or validity of
the remaining terms and provisions of this Agreement, and the parties hereto
hereby agree to replace such unenforceable or invalid term or provision with an
enforceable and valid arrangement which, in its economic effect, shall be as
close as possible to the unenforceable or invalid term or provision.
(e) Successors. All references in this Agreement to the
Corporation shall include any and all successors in interest to the Corporation
whether by merger, consolidation, sale of all or substantially all assets or
otherwise, and this Agreement shall inure to the benefit of the successors and
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assigns of the Corporation and, subject to the terms herein set forth, shall be
binding upon the Purchaser, its heirs, executors, administrators, successors and
permitted assigns.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by different parties in separate counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
(g) Modification, Amendment and Waiver. No modification,
amendment or waiver of any provision of this Agreement shall be effective
against the Purchaser or the Corporation unless the same shall be in a written
instrument signed by the Purchaser and an officer of the Corporation on its
behalf. The failure at any time to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of either party thereafter to enforce each and every
provision hereof in accordance with its terms.
(h) Further Assurances. The parties agree to execute such
further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement, and the Purchaser
specifically agrees to cooperate affirmatively with the Corporation, to the
extent reasonably requested by the Corporation, to enforce the rights of the
Corporation and its assignees hereunder.
(i) Headings. The headings of the Sections and paragraphs of
this Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
(j) Entire Agreement. The terms of this Agreement are intended
by the parties to be the final expression of their agreement with respect to the
purchase of the Shares by the Purchaser and may not be contradicted by evidence
of any prior or contemporaneous agreement. The parties further intend that this
Agreement shall constitute the complete and exclusive statement of its terms and
that no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
(k) Survival Periods. All representations and warranties
contained in this Agreement shall survive until the second anniversary of the
Closing Date, and shall thereupon terminate and cease to be of further force and
effect, except with respect to any representation or warranty as to which notice
of a breach giving rise to a right of indemnification under Section 6 has been
given prior to such right of indemnification but which has not been finally
resolved. The covenants and agreements contained in this Agreement, other than
those which by their terms only apply until the Closing Date, shall survive the
Closing in accordance with their terms.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Address: GOLD & APPEL TRANSFER, S.A.
Omar Hodges Bldg.
Road Town, Tortula
British Virgin Islands By: /s/
Attention: Walt Anderson _________________________________
Walt Anderson as Attorney-in-Fact
Address: US WATS, INC.
111 Presidential Blvd.
Suite 114
Bala Cynwyd, PA 19004 By: /s/
_________________________________
Name:
Attention: Aaron Brown Title:
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Exhibit 7.3
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REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of the 26th day of November, 1997 by and
between US WATS, Inc., a New York corporation (the "Company"), and the
undersigned securityholder of the Company (the "Stockholder").
BACKGROUND
The Stockholder owns 1,590,000 shares of common stock, par value $0.001
per share ("Common Stock"), of the Company (the "Shares"). As a condition
precedent to the closing of the transactions set forth in that certain Stock
Acquisition Agreement (the "Purchase Agreement") dated as of the date hereof by
and between the Company and the Stockholder, the Company has agreed to provide
the registration rights provided for in this Agreement to the Stockholder. Any
terms used and not otherwise defined herein shall have the meanings ascribed to
such terms in the Purchase Agreement.
WITNESSETH:
The parties hereto, each intending to be legally bound and in exchange
for the mutual covenants herein, agree as follows:
1. Demand Registration.
(a) Requests for Registration. At any time after the 150th day from the
date hereof and during the term of this Agreement, the Stockholder may demand
registration (the "Demand Registration") under the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder (collectively, the
"1933 Act"), of all or any portion of the Shares owned by the Stockholder. In
order to accomplish such demand, the Stockholder shall send written notice of
the demand to the Company, which notice shall specify the number of Shares
sought to be registered. The Stockholder shall have the right to one Demand
Registration.
(b) Expenses. In a Demand Registration, the Company will pay the
Registration Expenses (defined below), but the Underwriting Commissions (defined
below) will be paid by the Stockholder.
(c) Cutback of Shares Included in Demand Registration. If a Demand
Registration is underwritten and the managing underwriters advise the Company in
writing that in their opinion the number of Shares requested to be included
exceeds the number that can be sold in such offering, at a price reasonably
related to fair value, the Company will include only such number in such Demand
Registration. A Demand Registration shall not be considered to be the one Demand
Registration under Section 1(a) if (i) as a result of the foregoing allocation,
the Stockholder of the Shares are not able to register and sell in the Demand
Registration at least 75% of the Shares sought to be included
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by such Stockholder in the Demand Registration, or (ii) the registration
statement does not become effective for any reason.
(d) Selection of Underwriters. If any Demand Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
jointly by the Company and the Stockholder.
(e) Restrictions on Demand Registrations. Notwithstanding any provision
to the contrary in this Section 1, the Company will not be obligated to effect
any Demand Registration if, at the time of such demand, the filing of such a
registration statement would, as determined by the board of directors of the
Company, adversely affect a material Company financing project or a material
proposed or pending acquisition, merger or other similar corporate transaction
to which the Company is or reasonably expects to be a party, provided, however,
that the Company shall only be entitled to delay effecting any such Registration
pursuant to this clause on only one occasion and for a period not to exceed 90
days.
2. Piggyback Registrations.
(a) If, at any time during the term of this Agreement, the Company
proposes to register any shares of its Common Stock under the 1933 Act for sale
for cash (otherwise than in connection with the registration of securities
issuable pursuant to an employee stock option, stock purchase or similar plan or
pursuant to a merger, exchange offer or a transaction of the type specified in
Rule 145(a) under the 1933 Act), the Company shall give the Stockholder notice
of such proposed registration at least 20 days prior to the filing of a
registration statement. At the written request of the Stockholder delivered to
the Company within 10 business days after the receipt of any such notice from
the Company, stating the number of Shares that the Stockholder desires to sell
or distribute publicly under the registration statement proposed to be filed by
the Company, the Company shall use its best efforts to register under the 1933
Act the sale of such Shares (a "Piggyback Registration").
(b) Piggyback Expenses. In all Piggyback Registrations, the Company
will pay the Registration Expenses (defined below), but the Underwriting
Commissions (defined below) will be paid by the Stockholder.
(c) Priority on Primary Registrations. If a Piggyback Registration is
an underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing that in their opinion the inclusion
of the number of securities requested to be included by the Stockholder in such
registration would have an adverse effect on such offering, the Company will
allocate the securities to be included as follows: first, the securities the
Company proposes to sell on its own behalf; and second, Shares requested to be
included in such registration by the Stockholder, and third, securities
registered to be included in such registration by other stockholders of the
Company.
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(d) Priority on Secondary Registrations. If a Piggyback Registration is
initiated as an underwritten secondary registration on behalf of holders of the
Company's securities (other than a Demand Registration pursuant to Section 1),
and the managing underwriters advise the Company in writing that in their
opinion the inclusion of the number of securities requested to be included by
the Stockholder in such registration is not desirable for such offering, the
Company will allocate the securities to be included as follows: first, the
securities requested to be included by the holders initiating such registration;
and second, Shares requested to be included in such registration by the
Stockholder.
(e) Selection of Underwriters. If any Piggyback Registration is
underwritten, the selection of investment banker(s) and manager(s) and the other
decisions regarding the underwriting arrangements for the offering will be made
by the Company, if the registration is under Section 2(c), or by the Company and
the holders initiating such registration, if the registration is under Section
2(d).
3. Registration Procedures.
Whenever the Stockholder has requested that any Shares be registered
pursuant to this Agreement, the Company will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to the resale of such Shares and use its
best efforts to cause such registration statement to become effective (provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish the Stockholder with copies of all
such documents proposed to be filed);
(b) prepare and file with the Securities and Exchange Commission such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 270 days;
(c) furnish to the Stockholder such number of copies of such
registration statement, each amendment and supplement thereto and the prospectus
included in such registration statement (including each preliminary prospectus),
and such other documents as the Stockholder may reasonably request in order to
facilitate the disposition of the Shares owned by the Stockholder;
(d) use its best efforts to register or qualify such Shares under such
other securities or blue sky laws of such jurisdictions as the managing holders
of the Shares included in the registration may reasonably request;
(e) notify the Stockholder at any time when a prospectus relating
thereto is required to be delivered under the 1933 Act within the period that
the Company is required to keep the registration statement effective of the
happening of any event as a result of which the prospectus
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included in such registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not
misleading, and, at the request of any such seller, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) cause all such Shares to be listed or included on securities
exchanges or eligible for quotation on any trading system on which similar
securities issued by the Company are then listed or included;
(g) provide a transfer agent and registrar for all such Shares not
later than the effective date of such registration statement;
(h) enter into such customary agreements (including an underwriting
agreement in customary form) and take such other customary actions as may be
reasonably necessary to expedite or facilitate the disposition of such Shares;
and
(i) make available for inspection by the Stockholder, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by the Stockholder or an
underwriter, all financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by the Stockholder,
underwriter, attorney, accountant or agent in connection with such registration
statement.
4. Indemnification.
(a) The Company hereby indemnifies, to the extent permitted by law, the
Stockholder, its officers and directors, and each person who controls the
Stockholder (within the meaning of the 1933 Act), against all losses, claims,
damages, liabilities and expenses arising out of or resulting from any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading except insofar as the
same are caused by or contained in any information furnished in writing to the
Company by the Stockholder expressly for use therein or by the Stockholder's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished the
Stockholder with a sufficient number of copies of the same. In connection with
an underwritten offering, the Company will indemnify the underwriters, their
officers and directors, and each person who controls such underwriters (within
the meaning of the 1933 Act) to the same extent as provided above with respect
to the indemnification of the Stockholder.
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(b) In connection with any registration statement in which the
Stockholder is participating, the Stockholder will furnish to the Company in
writing such information as is reasonably requested by the Company for use in
any such registration statement or prospectus and will indemnify, to the extent
permitted by law, the Company, its directors and officers and each person who
controls the Company (within the meaning of the 1933 Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact or any omission or alleged omission of a
material fact required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in information so furnished by the
Stockholder specifically for use in preparing the registration statement.
Notwithstanding the foregoing, the liability of the Stockholder under this
Section 3(b) shall be limited to an amount equal to the net proceeds actually
received by the Stockholder from the sale of Shares covered by the registration
statement.
(c) Any person entitled to indemnification hereunder will (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). An indemnifying party who is
not entitled, or elects not, to assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim.
5. Participation in Underwritten Registrations. The Stockholder may not
participate in any underwritten registration hereunder unless the Stockholder
(a) agrees to sell its securities on the basis provided in any underwriting
arrangements approved by the Company, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
6. Transfer of Registration Rights. The Stockholder may transfer, from time to
time, all or any portion of its rights under this Agreement to any transferee of
an amount of Shares equal to or exceeding 1% of the outstanding Common Stock at
the time of transfer (each transferee that re ceives such minimum number of such
Shares, an "Eligible Transferee"). The Eligible Transferees, through a
stockholder representative designated by the Eligible Transferees and acting on
behalf of all Eligible Transferees as a group (the "Stockholder
Representative"), shall as a group be treated as the Stockholder for all
purposes under this Agreement. In no event, however, shall the Company be
obligated under this Agreement to effect more than one Demand Registration set
forth in Section 1 on behalf of all Eligible Transferees in the aggregate. Any
transfer of registra-
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tion rights pursuant to this Section 6 shall be effective upon receipt by the
Company of (a) written notice from the Stockholder stating the name and address
of the Eligible Transferee, identifying the amount of Shares with respect to
which the rights under this Agreement are being transferred and (b) a writing
from such Eligible Transferee agreeing to the appointment and authority of the
Stockholder Representative to act on his/her behalf and agreeing to be bound by
the terms of this Agreement. The rights hereunder and the distribution of the
number of Shares that are registered pursuant hereto shall be determined by
agreement among the Eligible Transferees, and the Company will be under no
obligation to treat any Eligible Transferee individually as the Stockholder,
other than when acting in concert through the Stockholder Representative.
7. Rule 144. So long as the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act of 1934, as amended, the Company shall
take all actions reasonably necessary to enable the Stockholder to sell the
Shares without registration under the 1933 Act within the limitation of the
exemptions provided by Rule 144 under the 1933 Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
SEC, including filing on a timely basis all reports required to be filed by the
Securities Exchange Act of 1934, as amended. Upon the request of the
Stockholder, the Company shall deliver to the Stockholder a written statement as
to whether it has complied with such requirements.
8. Definitions.
(a) The term "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with this Agreement, including all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, expenses and
fees for listing the securities to be registered on exchanges on which similar
securities issued by the Company are then listed, and fees and disbursements of
counsel for the Company, and of all independent certified public accountants,
underwriters (other than Underwriting Commissions and the fees and disbursements
of underwriters' counsel) and other persons retained by the Company.
(b) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company, but
excludes any expenses reimbursed to underwriters.
9. Miscellaneous.
(a) Notices. All notices that are required or permitted hereunder shall
be in writing and shall be sufficient if personally delivered or sent by mail,
facsimile message or Federal Express or other overnight delivery service. Any
notices shall be deemed given upon the earlier of the date when received at, or
the third day after the date when sent by registered or certified mail or the
day after the date when sent by Federal Express to, the address or fax number
set forth below, unless such address or fax number is changed by notice to the
other party hereto.
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(b) Amendments and Waivers. The provisions of this Agreement may be
amended or terminated and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, if approved in
writing by the Stockholder.
(c) Binding Effect. This Agreement will bind and inure to the benefit
of the respective successors (including any successor resulting from a merger or
similar reorganization), assigns, heirs, Eligible Transferees and personal
representatives of the parties hereto. Without limiting the generality of the
foregoing, if the Stockholder transfers shares to an Eligible Transferee,
liquidates or reorganizes such that its assets are transferred to its own
stockholders or partners or to another entity, the Stockholder, partners or
entity shall succeed to all of the rights of the Stockholder hereunder.
(d) Prior Agreements. This Agreement is the only agreement between the
Company and the Stockholder with respect to the subject matter hereof, and any
prior agreements between the Company and the Stockholder relating to the subject
matter of this Agreement are terminated as of the date hereof and shall have no
further force and effect.
(e) Governing Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the internal law, not
the law of conflicts, of the Commonwealth of Pennsylvania.
(f) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered to be an original instrument and
to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement clearly
requires otherwise, (i) references to the plural include the singular, the
singular the plural, the part the whole, (ii) references to one gender include
all genders, (iii) "or" has the inclusive meaning frequently identified with the
phrase "and/or" and (iv) "including" has the inclusive meaning frequently
identified with the phrase "but not limited to." The section and other headings
contained in this Agreement are for reference purposes only and shall not
control or affect the construction of this Agreement or the interpretation
thereof in any respect.
(h) Term. Except as specifically otherwise provided herein, the
provisions of this Agreement shall terminate upon the earlier of (i) such time
as all Shares have ceased to be restricted securities, as that terms is defined
1933 Act Rule 144 and (ii) the third anniversary of the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
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GOLD & APPEL TRANSFER, S.A.
/s/
______________________________
Name:
Title:
US WATS, INC.
/s/
______________________________
Name:
Title:
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