SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 10)1
US WATS, INC.
(Name of Issuer)
COMMON STOCK -- PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
90337P10
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(CUSIP Number)
Sean P. McGuinness, Esq.
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W., Suite 300, Washington, D.C. 20007
202-424-7500
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 18, 1998
(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(e), 13d-1(f) or 13d-1(g), check the
following box [ ].
Note. Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 6 Pages)
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1 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 be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 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).
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SCHEDULE 13D/A
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CUSIP No. 90337P10 Page 2 of 6
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1. NAMES OF REPORTING PERSONS: Gold & Appel Transfer, S.A.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS WC
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands
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NUMBER OF 7. SOLE VOTING POWER 11,019,934
SHARES -------------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER 0
OWNED BY -----------------------------------------------------
EACH 9. SOLE DISPOSITIVE POWER 0
REPORTING -------------------------------------------------------
PERSON WITH: 10. SHARED DISPOSITIVE POWER 0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,019,934
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 58.12%
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14. TYPE OF REPORTING PERSON CO
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<PAGE> SCHEDULE 13D/A
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CUSIP No. 90337P10 Page 3 of 6
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1. NAMES OF REPORTING PERSONS: Walt Anderson
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION United States of America
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NUMBER 7. SOLE VOTING POWER 0
OF SHARES ----------------------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER 0
OWNED BY ----------------------------------------------------
EACH 9. SOLE DISPOSITIVE POWER 11,019,934
REPORTING ----------------------------------------------------
PERSON WITH 10. SHARED DISPOSITIVE POWER 0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 11,019,934
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 58.12%
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14. TYPE OF REPORTING PERSON IN
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This Amendment No. 10 ("Amendment No. 10") to Schedule 13D 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, with respect to the common stock, par value $.001 per share (the
"Common Shares"), of US WATS, Inc., a New York corporation (the "Issuer"),
amends and/or supplements, as indicated, Items 3, 5, 6 and 7 of the Schedule
13D filed by Gold & Appel and Mr. Anderson as joint filers on December 5, 1997
(the "Statement"), as amended by Amendment No. 1, Amendment No. 2 ,
Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6, Amendment
No. 7, Amendment No. 8 and Amendment No. 9 thereto filed by Gold & Appel and
Mr. Anderson as joint filers on December 17, 1997, January 6, 1998, February
25, 1998, March 17, 1998, March 30, 1998, April 6, 1998, April 10, 1998, April
21, 1998 and October 23, 1998 respectively ("Amendment No.1," "Amendment No.
2," "Amendment No. 3," "Amendment No. 4," "Amendment No. 5", "Amendment No.
6", "Amendment No. 7", "Amendment No. 8" and Amendment No. 9, respectively).
All capitalized terms used and not defined herein shall have the meanings
ascribed to them in the Statement, as amended by Amendment No. 1, Amendment
No. 2, Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6,
Amendment No. 7, Amendment No. 8 and Amendment No. 9.<PAGE>
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is supplemented as follows:
Under a Stock Purchase Agreement dated as of March 18, 1999 between the
Issuer and Gold & Appel (the "Agreement"), a copy of which is filed herewith
as Exhibit 7.2, Gold & Appel purchased 900,000 Common Shares for
$1,530,000.00, representing a purchase price of $1.70 per Common Share.
All of the funds used to purchase the above-mentioned 900,000 Common
Shares acquired by Gold & Appel from Issuer came from Gold & Appel's general
corporate funds.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
Item 5 is amended as follows:
(a) Gold & Appel beneficially owns 11,019,934 Common Shares,
representing approximately 58.12% of the outstanding Common Shares, based on
the number of Common Shares outstanding as of March 18, 1999, pursuant to the
Issuer's representation in the Agreement.
By virtue of the power-of-attorney dated January 19, 1998 and remaining
in full force and until January 15, 2001, 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 in the name of
and on behalf of Gold & Appel to, among other things, buy, sell and trade the
Common Shares held by Gold & Appel. A copy of the Power-of-Attorney is filed
as Exhibit 7.2 to the Statement on Schedule 13D filed with the SEC by Gold &
Appel and Mr. Anderson, as joint filers, with respect to the securities of
Esprit Telecom Group plc, on January 27, 1998, and which is incorporated
Page 4 of 6<PAGE>
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herein by this reference. Under the Power-of-Attorney, Mr. Anderson may be
deemed the beneficial owner of the Common Shares held by Gold & Appel. 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 870,000 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 11,019,934 Common
Shares. Mr. Anderson has the power, on behalf of Gold & Appel, to dispose of
the 11,019,934 Common Shares beneficially owned by Gold & Appel under the
Power-of-Attorney.
(c) Since the filing of Amendment No. 9, Gold & Appel purchased an
aggregate of 900,000 Common Shares pursuant to the Agreement, as reported in
Item 3 above.
Page 5 of 6<PAGE>
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(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. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Item 6 is amended as follows:
Except as stated in the Statement, as amended by Amendment No. 1, Amendment
No. 2, Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6,
Amendment No. 7, Amendment No. 8 and Amendment No. 9, and for the Joint Filing
Agreement attached to this Amendment No. 10 as Exhibit 7.1 and the Stock
Purchase Agreement attached to this Amendment as Exhibit 7.2, 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 Joint Filing Agreement with respect to the joint filing of
this Amendment No. 10 to Schedule 13D.
Exhibit 7.2 Stock Purchase Agreement between Gold & Appel Transfer
S.A. and US Wats, Inc.
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Amendment No. 10 to Schedule 13D is
true, complete and correct.
Date: March 24, 1999
Gold & Appel Transfer, S.A.,
a British Virgin Islands corporation
By: /s/ Walt Anderson
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Walt Anderson, Attorney-in-Fact for
Gold & Appel Transfer, S.A.
/s/ Walt Anderson
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Walt Anderson
Page 6 of 6
EXHIBIT 7.1
JOINT FILING AGREEMENT
The undersigned hereby agree that the Amendment No. 10 to Schedule 13D to
which this Joint Filing Agreement is attached as Exhibit 7.1, is filed on
behalf of each of us.
Date: March 24, 1999
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
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), entered into as of
March 18, 1999, is between US Wats, Inc., a New York corporation (the
"Company"), and Gold & Appel Transfer, S.A., a British Virgin Islands
corporation (the "Purchaser").
RECITALS
WHEREAS, the Company desires to issue shares of the Company's common
stock, par value $.001 per share ("Common Stock"), to the Purchaser, and the
Purchaser desires to purchase shares of Common Stock from the Company 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 Company hereby agree
as follows:
1. Issuance of Stock.
(a) On the date hereof, subject to the terms and conditions of
this Agreement, the Company agrees to issue to the Purchaser, and the
Purchaser agrees to purchase from the Company 900,000 shares (the "Shares") of
Common Stock for an aggregate purchase price of $1,530,000 (the "Purchase
Price"), or $1.70 per share.
(b) On the date hereof, the Company shall deliver to the
Purchaser a certificate evidencing the Shares, registered in the name of the
Purchaser, concurrently with full payment of the Purchase Price in immediately
available funds (the "Closing").
2. Representations of Purchaser. The Purchaser represents and
warrants to, and covenants with, the Company 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 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 or regulation to which
the Purchaser is subject.
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(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 (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
securities laws or an exemption from such registration is available.
(h) The Purchaser is an accredited investor as defined in Rule 501
(a) of Regulation D adopted under the Securities Act.
(i) The Purchaser has received from the Company adequate access to
financial and other information concerning the Company and the Common Stock,
and the Purchaser has had the opportunity to ask questions of and receive
answers from the Company concerning the Common Stock and to obtain therefrom
any additional information necessary to make an informed decision regarding
the acquisition of the Shares.
(j) 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.
(k) The Purchaser realizes that the Company is relying on the
validity of the Purchaser's representations and agreements contained herein in
issuing the Shares to the Purchaser without registration under the Securities
Act.
3. Representations of the Company. The Company hereby represents and
warrants to, and covenants with, the Purchaser as follows:
(a) The Company 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<PAGE>
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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 Company 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 Company or such
Significant Subsidiary, as the case may be, or the nature of the business
conducted by the Company 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 of the
Company and its subsidiaries, taken as a whole (a "Material Adverse Effect").
(b) The Company has all requisite power and authority, corporate
and otherwise, to executive, deliver and to perform its obligations under this
Agreement and under the Registration Rights Agreement, to be dated as of the
Date hereof, between the Company and the Purchaser (the "Registration
Agreement"), including the consummation of the transactions contemplated
hereby and by the Registration Agreement (collectively, the "Transactions").
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 Company's board of
directors and by all other required corporate action of the Company. The
Agreements have been duly and validly executed and delivered by the Company
and constitute the Company'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 Company's execution and delivery of the Agreements does
not, and the Company'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 (the "Exchange Act"), (ii) the listing of the Shares on the Nasdaq
SmallCap Market (the "SmallCap"), (iii) filings and notices with, and
approvals from, the Federal Communication Commission and certain state public
utility commissions and (iv) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
have a Material Adverse Effect or a material adverse effect on the ability of
the Company to perform its obligations hereunder and under the Registration
Agreement.
(d) (i) The Company has furnished the Purchaser with a correct
and complete copy of each report, schedule and definitive proxy statement
heretofore filed by the Company with the Securities and Exchange Commission
(the "SEC") under the Exchange Act since December 31, 1997 (the "SEC
Documents"), which are all the documents (other than preliminary material)
that the Company was required by rules and regulations of the SEC to file with
the SEC under the Exchange Act since December 31, 1997. 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 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 Exchange Act.
The Company's financial statements included in the SEC Documents complied in
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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 I O-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 Company 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 Company and its consolidated
subsidiaries as of September 30, 1998 (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.
(iii) Other than through Mr. Walter Anderson, in his
capacity as the Chairman and a director of the Company, the Company has not
provided the Purchaser with any material nonpublic information regarding the
Company.
(e) On the date hereof, the Company has an authorized
capitalization consisting of 30,000,000 shares of Common Stock, and 1,000,000
shares of preferred stock, par value $.01 per share ("Preferred Stock"), of
which 18,959,894 shares of Common Stock (not including 1, 119,000 treasury
shares, 900,000 of which are being reissued to the Purchaser hereunder) 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 Shares 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 the Company to be outstanding on the date hereof 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 Common Stock is currently traded on the SmallCap.
(f) Neither the execution and delivery by the Company of the
Agreements nor the performance by the Company of the Transactions will (i)
violate or contravene any provision of the Certificate of Incorporation or
By-Laws of the Company 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 Company 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
Company 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 Company or any of its subsidiaries is a
party or by which it or any of their respective properties may be bound.
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(g) Neither the Company 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 to have a Material Adverse Effect or a material
adverse effect on the ability of the Company to perform its obligations under
the Agreements or on the consummation of the Transactions. The Company 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 to have a Material Adverse Effect.
(h) The Company 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, 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 Company, threatened against the Company or any of its subsidiaries
which would be reasonably likely to have a Material Adverse Effect or a
material adverse effect on the ability of the Company 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
Company 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 Company nor any of its affiliates have engaged in
any form of general solicitation or general advertising in connection with the
purchase and sale of Company 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 Shares contemplated to be
sold and purchased hereunder.
(l) Upon consummation of the Closing, the Purchaser shall have
received from the Company good and marketable title to all of the Shares, free
and clear of all Liens.
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4. Restrictive Legend.
(a) The Shares issued to the Purchaser pursuant hereto shall bear
the following legend:
"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 COMPANY
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 Company
that either (i) the shares no longer constitute "restricted securities" under
Rule 144 of the Securities Act, (ii) the above-provided legend is no longer
required under applicable securities laws or (iii) the Shares are otherwise
freely tradable without registration under the Securities Act, the Company
shall, upon the request of the holder of the Shares and the submission of the
certificate evidencing such Shares, issue a substitute certificate without any
restrictive legend thereon.
5. Covenants.
(a) Until the second anniversary of the date hereof, the Company
shall use reasonable efforts to continue the listing for trading of the Common
Stock on the SmallCap or, in the Company's discretion, on such other national
securities market or exchange, and to comply with all applicable rules of the
SmallCap or, as the case may be, of such other national securities market or
exchange.
(b) Until the second anniversary of the date hereof, the Company
covenants (a) to file timely (or obtain valid extensions in respect thereof)
all reports required to be filed by the Company after the date hereof pursuant
to Section 13(a) or 15(d) of the Exchange Act and (b) if the Company 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 Company will not instruct its transfer agent to place a
restrictive legend on the certificate (or certificates) representing the
Shares sold and purchased hereunder indicating that the Purchaser is a
"control person" or "affiliate" of the Company.
(d) The Company and the Purchaser shall pay all costs and
expenses incurred by it or on its behalf, respectively, in connection with
this Agreement and the transactions contemplated hereby, including fees and
expenses of its own financial consultants, accounts and counsel.
6. Indemnification.
(a) The Company agrees to indemnify, defend and hold harmless the
Purchaser (collectively, including the Company as provided in Section 6(b)
hereof, the "Indemnified Parties") from and against any and all losses,<PAGE>
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claims, damages or liabilities (or actions in respect thereof), including
costs of defense other than costs of counsel referred to in Section 6(c)
hereof (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 Company in this Agreement, or
(ii) any pending or threatened action brought by the Company'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 Company 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 Company, provided,
further, that, if and to the extent such indemnification is unenforceable for
any reason, the Company 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 Company to
indemnify for Liabilities as set forth above, the Company 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.
(b) The Purchaser agrees to indemnify, defend and hold harmless
the Company 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 6(b) to the extent that
it is finally judicially determined that such Liabilities resulted primarily
from a breach by the Company of any representation, warranty, covenant or
agreement of the Company 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 Company for all such expenses (including reasonable fees,
disbursements and other charges of counsel) as they are incurred by the
Company.
(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 6 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
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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 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 6
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 date hereof.
7. 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
Company, and any attempt to so transfer. assign or encumber shall be void.
(b) Notices. All notices, requests and other communications
required or permitted to be given under this Agreement shall be in writing and
shall be delivered (i) in person, (ii) by certified mail, return receipt
requested, (iii) by recognized overnight delivery service providing positive
tracking of items (for example, Federal Express), or (iv) by confirmed
telecopier, in each case addressed as follows:
If to the Company. addressed to:
US Wats, Inc.
2 Greenwood Square
Suite 275
3331 Street Road
Bensalem, PA 19020
Attn: Mr. David Hurwitz
Fax No. (215) 633-9467
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with a copy in each instance to:
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103
Attn: Michael H. Friedman, Esquire
Fax No. (215) 981-4750
If to the Purchaser, addressed to:
P.O. Box 985
Omar Hodges Building
Wickhams Cay, Road Town
Tortola British Virgin Islands
with a copy in each instance to:
Walt Anderson
Entree International
3050 K Street, NW, Suite 250
Washington D.C. 20007
Fax No. (202) 736-5065
or to such other address or addresses and to the attention of such other
person or persons as any of the parties may notify the other in accordance
with the provisions of this Agreement. All such notices, requests and other
communications shall be deemed to have been sufficiently given for all
purposes hereof only if given pursuant to the foregoing requirements as to
both manner and address, and only upon receipt (or refusal to accept delivery)
by the party to whom such notice is sent. Notices by the parties may be given
on their behalf by their respective attorneys.
(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 Company
shall include any and all successors in interest to the Company 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 assigns of
the Company and, subject to the terms herein set forth, shall be binding upon
the Purchaser, its heirs, executors, administrators, successors and permitted
assigns.
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(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 Company unless the same shall be in a written
instrument signed by the Purchaser and an officer of the Company 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 Company, to the extent
reasonably requested by the Company, to enforce the rights of the Company 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
date hereof, 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 date hereof, 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.
GOLD & APPEL TRANSFER, S.A.
By: /s/ Walt Anderson
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Walt Anderson as Attorney-in-Fact
US WATS, INC.
By: /s/ David Hurwitz
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Name: David Hurwitz
Title: President
