Document:

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                                                                   EXHIBIT 10.20

                           LOAN MODIFICATION AGREEMENT

         This Loan Modification Agreement is entered into as of October 11,
2000, by and between T/R Systems, Inc. (the "Borrower") and Silicon Valley Bank
a California chartered bank doing business in Massachusetts as Silicon Valley
East ("Bank").

DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Bank, Borrower is indebted to Bank pursuant to, among other
documents, a Promissory Note and Loan and Security Agreement dated October 17,
1997, as amended (collectively, the "Loan Agreement"). The Loan Agreement
provided for, among other things, a Committed Revolving Line in the original
principal amount of One Million Dollars ($1,000,000). The Loan Agreement was
modified, pursuant to, among other documents, a Fourth Loan Modification
Agreement pursuant to which, among other things, the Committed Revolving Line
was increased to Three Million Dollars ($3,000,000). Defined terms used but not
otherwise defined herein shall have the same meanings as in the Loan Agreement.

Hereinafter, all indebtedness owing by Borrower to Bank shall be referred to as
the "Indebtedness."

2.       DESCRIPTION OF COLLATERAL. Repayment of the Indebtedness is secured by
the Collateral as described in the Loan Agreement.

Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".

3.       DESCRIPTION OF CHANGE IN TERMS.

         A.       Modification(s) to Loan Agreement.

                  1.       The following term under Section 1.1 entitled
                           "Definitions" is hereby amended to read as follows:

                           "Committed Revolving Maturity Date" is October 14,
                           2001.

                           Sub-section (3) of the defined term "Eligible Foreign
                           Accounts" set forth in Section 1.1 entitled
                           "Definitions" is hereby amended in part to provide
                           for Accounts owing from Minolta Co., LTD., Ricoh
                           Company, LTD. and Hitachi Koki Imaging Systems, Ikon
                           Office Solutions Inc., Toshiba America Business
                           Solutions, Inc., and the subsidiaries of each
                           company, and other accounts approved by Bank on a
                           case by case basis.

                  2.       Subsection (a) of Section 2.3 entitled "Interest
                           Rates, Payments, and Calculations" is hereby amended
                           as follows:

                           Interest Rate. Except as set forth in Section 2.3(b),
                           any Credit Extensions shall bear interest, on the
                           average daily balance thereof, at a per annum rate
                           equal to .25 of one percentage point above the Prime
                           Rate.

                  3.            Sub-sections (a), (b), and (g) of Section 6.3
                           entitled "Financial Statements, Reports,
                           Certificates" is hereby amended to read as follows:

                           (a)      as soon as available, but in any event
                           within 45 days after the end of each quarter, a
                           company prepared consolidated balance sheet and
                           income statement covering Borrower's consolidated
                           operations during such period, in a form and
                           certified by an officer of Borrower reasonably
                           acceptable to Bank.

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                           (b)      as soon as available, but in any event with
                           90 days after the end of Borrower's fiscal year,
                           audited consolidated financial statements of Borrower
                           prepared in accordance with GAAP consistently
                           applied, together with an unqualified opinion on such
                           financial statements of an independent certified
                           public accounting firm reasonably acceptable to Bank.

                           (g)      within 45 days after the last day of each
                           quarter, with the quarterly financial statements, a
                           Compliance Certificate signed by a Responsible
                           Officer.

                  3.            Sub-section (ii) of Section 6.3 entitled
                           "Financial Statements, Reports, Certificates" is
                           hereby amended to read as follows:

                           At such times as Credit Extensions are outstanding or
                           prior to a Credit Extension if no Credit Extensions
                           are outstanding, Bank shall have the right from time
                           to time to audit Borrower's Accounts at Borrower's
                           expense, provided that such audits will be conducted
                           no more often than every 12 months unless an Event of
                           Default has occurred or is continuing.

                  4.            Section 6.8 entitled "Quick Ratio" is hereby
                           amended to read as follows:

                           Borrower shall maintain, as of the last day of each
                           calendar quarter, a ratio of Quick Assets to Current
                           Liabilities less deferred revenues of at least 2.00
                           to 1.00.

                  5.            Section 6.9 entitled "Tangible Net Worth" is
                           hereby amended to read as follows:

                           Borrower shall maintain as of the last day of each
                           calendar quarter, a Tangible Net Worth of not less
                           than $15,000,000.

4.       CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.

5.       PAYMENT OF LOAN FEE. Borrower shall pay Bank a fee in the amount of
Three Thousand Seven Hundred and Fifty Dollars ($3,750.00) ("Loan Fee"). Upon
Borrower requesting a Credit Extension in excess of $1,500,000, Borrower shall
pay Bank an additional fee in the amount of Three Thousand Seven Hundred and
Fifty Dollars ($3,750.00) (the "Increase Fee").

6.       NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that, as of the date hereof, it has no defenses against
the obligations to pay any amounts under the Indebtedness.

7.       CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing
below) understands and agrees that in modifying the existing Indebtedness, Bank
is relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Bank's agreement to modifications
to the existing Indebtedness pursuant to this Loan Modification Agreement in no
way shall obligate Bank to make any future modifications to the Indebtedness.
Nothing in this Loan Modification Agreement shall constitute a satisfaction of
the Indebtedness. It is the intention of Bank and Borrower to retain as liable
parties all makers and endorsers of Existing Loan Documents, unless the party is
expressly released by Bank in writing. No maker, endorser, or guarantor will be
released by virtue of this Loan Modification Agreement. The terms of this
paragraph apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.

8.       CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon payment of the Loan Fee.

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         This Loan Modification Agreement is executed as of the date first
written above.

BANK:                                      BORROWER:

SILICON VALLEY BANK                        T/R SYSTEMS, INC.

By:  /s/ Tom Vertin                        By:  /s/ Lyle W. Newkirk
   ----------------------------------         ---------------------------------
Name:    Tom Vertin                        Name:    Lyle W. Newkirk
     --------------------------------           -------------------------------
Title:   Executive Vice President          Title: Senior Vice President and CFO
      -------------------------------             -----------------------------Exhibit 10.1

                            PRODUCT CUSTOMIZATION AND
                              MAINTENANCE AGREEMENT

     THIS  AGREEMENT  is made by and between  WAVETECH  INTERNATIONAL,  INC.,  a
Nevada  corporation having its principal place of business at 5210 East Williams
Circle,  Suite 200, Tucson,  Arizona 85711  ("Wavetech")  and SOFTALK,  INC., an
Ontario  corporation  having its principal  place of business at 370 Queens Quay
West, Suite 301, Toronto, Ontario ("Softalk").  Softalk and Wavetech are jointly
referred to herein as "the Parties."

                                WITNESSETH THAT:

     WHEREAS,  Wavetech desires to further develop and enhance its "BestNetCall"
web-enabled long distance service; and

     WHEREAS,  Softalk is in the process of  developing  software for use in the
transmission of voice,  data and fax services using Voice over Internet Protocol
and Voice over Frame technology and was the primary  developer of the technology
related to the BestNetCall service; and

     WHEREAS,  Wavetech  desires to engage  Softalk to CUSTOMIZE the software it
develops,  to enhance the  performance  and features of  Wavetech's  BestNetCall
service and to provide  installation  and  maintenance  of certain  hardware and
software related to the BestNetCall service; and

     WHEREAS,  Wavetech  and  Softalk are  parties to that  certain  Amended and
Restated License  Agreement dated as of July 30, 1999 (as amended,  supplemented
or otherwise modified from time to time, the "License Agreement"); and

     WHEREAS, the parties desire to set forth the terms and conditions attendant
to such engagement and the rights and obligations of the parties.

     NOW  THEREFORE,   in  consideration  of  the  foregoing  premises  and  the
covenants,  mutual  promises and  agreements  contained in this  Agreement,  the
parties hereby memorialize their prior understandings and agree as follows:

1. DEFINITIONS.

     For purposes of this Agreement, the following terms shall have the meanings
ascribed to them as indicated below:

     "BESTNETCALL  SERVICE" means any service by which voice transmissions,  fax
transmissions, or live video transmissions are transmitted via the Internet, and
include voice-over-frame technology.

     "COMPLETED"  means final  delivery of the Products in a form which has been
tested by  Wavetech  and  approved  by  Wavetech  based on  acceptance  criteria
mutually  agreed upon by Wavetech and Softalk which criteria are attached to the
design specification criteria related to each Product.

     "CONFIDENTIAL INFORMATION" means any and all information, regardless of the
form in which it is  disclosed,  relating to the business of a party  (including
but not limited to Products,  the Source Code and Object Code of  Products,  and
Improvements and concepts for Products and Improvements,  marketing  information
and test data) which is  provided  or made  available  to the  receiving  party.
Confidential Information shall not include any information that:
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     (i)  was  provided  to a  party  (without  restriction  as to  its  use  or
          disclosure) by a third party legally  entitled to possess and disclose
          it;

     (ii) is or becomes public  knowledge  other than as a result of a breach by
          the disclosing party of this Agreement;

    (iii) was in the  possession  of or was known to  disclosing  party prior to
          its receipt of  Confidential  Information as can be shown by documents
          predating this Agreement; or

     (iv) if it is  reasonably  necessary  for  Wavetech to disclose in order to
          promote the Products in the marketplace.

     Confidential  Information  may be disclosed by the  receiving  party if the
receiving party is required to publicly disclose the Confidential Information by
any  applicable  law or order  of any  governmental  entity,  or to  obtain  any
necessary or desirable  government  approval,  provided  that,  if the receiving
party is required to so publicly disclose any part of Confidential  Information,
the receiving  party agrees that it will (i) inform the other party of that fact
and the Confidential  Information required to be disclosed as soon as reasonably
practicable and in any event, to the extent possible,  before the information is
actually  publicly  disclosed;  and (ii)  publicly  disclose only the minimum of
Confidential  Information  required to comply with the  applicable law or order;
and (iii) the party whose  information  is to be disclosed,  at its option,  may
then inform the receiving party that it wishes to contest the receiving  party's
requirement  to disclose  and the  receiving  party must,  upon  receiving  such
notice,  take such action as it may reasonably be instructed to take in order to
contest the  requirement,  provided that it is  indemnified  for  contesting the
requirement to disclose.

     "CUSTOMIZE" OR "CUSTOMIZING" means the creation or modification of software
for use in the BestNetCall service.

     "DELIVERABLES"  means the  Products  referred  to in Schedule 1, as well as
clean,  reproducible  copies of all documents and written reports  identified in
this Agreement and all attachments hereto and, to the extent that information is
obtained or available in electronic format, one copy of each document and report
in  electronic  format.  Deliverables  include,  but are not limited  to,  those
reports referred to in Schedule 1 and any and all other information developed as
a result of the undertakings of the Project but do not include any Source Code.

     "EFFECTIVE  DATE" means the date on which Softalk  first began  customizing
the software defined in this Agreement.

     "IMPROVEMENTS"  means any  findings,  discoveries,  inventions,  additions,
modifications,  formulations  or changes made during the term of this  Agreement
which directly relate to the Products.

     "INTELLECTUAL  PROPERTY  RIGHTS" means any rights in an invention,  design,
process, know-how,  discovery, trade secret, concept or idea related to internet
telephony software and hardware;  and any right under the laws of any country to
apply  for  the  grant  or  registration  of  a  patent,  or  any  corresponding
intellectual property right therein, and includes know-how, technology, patents,
patent applications and Confidential Information.

     "MODULE" means each software product specified as a Module in Schedule 1.

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     "OBJECT  CODE"  means  (i)  machine-executable   programming  instructions,
substantially  or entirely  in binary  form,  which are  intended to be directly
executable  by an operating  system after  suitable  processing  and linking but
without  the  intervening  steps of  compilation  or  assembly,  and (ii)  other
executable  code  (e.g.,  programming  instructions  written  in  procedural  or
interpretive languages).

     "POST-PRODUCTS  DEVELOPMENT ACTIVITIES" means activities to be performed by
Softalk after the Products Development Activities.

     "PRODUCTS"  means any  software  customized  to enhance  the  features  and
performance of the BestNetCall  Products including any software customized under
this Agreement or derived therefrom.

     "PRODUCTS CUSTOMIZATION  ACTIVITIES" means those activities to be performed
by Softalk  that are set forth in  Schedule 1 and any other  related  activities
agreed to by the Parties to customize Products.

     "PROJECT  INTELLECTUAL  PROPERTY  RIGHTS"  means  any and all  Intellectual
Property which are conceived, whether or not reduced to practice or made, during
the course of this engagement,  and which relate thereto,  by Softalk or jointly
by Softalk and Wavetech,  related to Internet Protocol-based  telecommunications
software,  and  includes  know-how,  technology,  information,  patents,  patent
applications,  Object Code and Confidential Information, but excludes any Source
Code related to the Products.

     "PROJECT"  means the  activities  set forth in  Schedule  1 and  Schedule 2
attached to this Agreement.

     "SOFTALK INTELLECTUAL  PROPERTY" means all technology and know-how relating
to the  Products  or the  Project,  including  Intellectual  Property  Rights of
Softalk therein  existing prior to the Effective Date and owned or controlled by
Softalk prior to the Effective Date.

     "SOURCE CODE" means the human-readable  form of the Object Code,  including
comments,  logic manuals, flow charts,  principles of operation,  and procedural
language and materials for  understanding,  implementing,  and  maintaining  the
Object Code and source code.

     "WAVETECH INTELLECTUAL PROPERTY" means all technology and know-how relating
to the  Products  or the  Project,  including  Intellectual  Property  Rights of
Wavetech  existing  prior to the  Effective  Date and  owned  or  controlled  by
Wavetech prior to the Effective Date.

2. INTERPRETATION.

     (a) In this Agreement  headings are for convenience  only and do not affect
its interpretation.

     (b) No provision of this Agreement  will be construed  adversely to a party
solely on the ground that the party was  responsible for the preparation of this
Agreement or that provision.

3. SCOPE OF ENGAGEMENT.

     3.1  Wavetech  hereby  engages  Softalk to carry out the Project  including
related  activities as agreed to by the Parties and to provide the Deliverables,
in accordance  with the terms and conditions  contained in this  Agreement,  and
Softalk hereby accepts such engagement.

     3.2 Wavetech hereby engages Softalk to install,  configure and maintain the
hardware and software  identified in Schedule 2, and Softalk hereby accepts such
engagement.  Such engagement shall include all services necessary to ensure that
BestNetCall  system operates  reliably and on a continuous  basis throughout the

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<PAGE>
term of this Agreement,  including,  without limitation,  performing reliability
and  performance  tests on the software and hardware,  developing  any necessary
software "patches" to correct any errors and any such other actions necessary to
continue the BestNetCall system's operation.

     3.3 Unless this Agreement is terminated in accordance  with Article 12, the
term of this  Agreement  shall be for a period  of one year  from the  Effective
Date.

     3.4 Except as Softalk may expressly be permitted  under the terms contained
in  Articles  6.5 and 8 of this  Agreement,  Softalk  agrees  that it shall  not
transfer,  assign or  otherwise  provide to any party  other than  Wavetech  any
information,  technology  and/or  know-how  developed  or  obtained  under  this
Agreement,   including  Project  Intellectual  Property  Rights  therein  and/or
Wavetech's  Confidential  Information and/or Wavetech Intellectual Property, but
excluding any Source Code  developed in connection  with the  development of the
Products.

     3.5 The  activities  contemplated  under this  Agreement  include  both the
activities  related to  customization of Products or Improvements and activities
that  occur  after  the   customization   of  Products  or   Improvements.   The
customization of Products shall result in the Products identified in Schedule 1,
and such Products shall be completed prior to June 14, 2001.

     3.6 Wavetech may request Softalk to undertake additional  activities beyond
those set forth in Schedule 1 and Schedule 2, in  furtherance  of the Project or
other  activities  related to the development of Products.  Prior to undertaking
such  additional  activities,  Softalk shall provide to Wavetech a cost estimate
for such activities, and if Wavetech agrees to the cost estimate, Wavetech shall
so notify Softalk and Softalk shall  proceed.  Wavetech or Softalk may require a
written  agreement  covering  any such  additional  activity,  and  Wavetech may
require  that Softalk  provide a budget for any  additional  activities.  In the
event that any additional  activities  require the engagement of a subcontractor
by Softalk,  Wavetech shall  reimburse  Softalk at the rate of its invoiced cost
plus a service fee of ten percent  (10%) of the invoiced  cost, or other service
fee to be mutually agreed upon in writing by the parties. Prior to engagement of
any  subcontractor,  Softalk  shall  notify  Wavetech  of the  identity  of such
subcontractor.  Each  subcontractor  must continue to be acceptable to Wavetech,
and must agree in writing to (a)  maintain  the  confidentiality  of  Wavetech's
information and the nature,  purpose and existence of the additional  activities
in accordance with the provisions in this  Agreement,  and (b) assign any rights
it may have in any invention,  technology  and devices  developed as a result of
the  additional  activities  of Wavetech.  Wavetech in its sole  discretion  may
terminate any and all such  additional  activity at any time upon written notice
to Softalk;  provided,  however,  that Wavetech  shall be obligated to reimburse
Softalk for costs associated with the use of  subcontractors  at the rate of its
invoice cost up to the date of the written termination notice.

4. BEST EFFORTS.

     Softalk  will use its best  efforts to carry out the  Project in a diligent
and professional manner commensurate with industry standards and practices.

5. CONSIDERATION.

     In  consideration  for the  activities  entered into by Softalk  under this
Agreement,  the  covenants set forth in Article 3.4 and the  Deliverables  to be
provided,  Wavetech agrees to pay Softalk,  subject to Article 12.3,  US$500,000
upon  execution of this  Agreement (the  "Retainer").  In addition,  if the work
performed on the Project exceeds the Retainer,  as calculated  based on the rate
of US$ 70 per person per hour,  then Wavetech  shall  compensate  Softalk at the
rate of US$85  per person per hour for work  performed on the Project beyond the
amount covered by the retainer.

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<PAGE>
     In consideration of Softalk undertaking any additional  activities pursuant
to Section 3.6,  Softalk shall be  compensated  at the rate of US$100 per person
per hour for work  performed  relating to such  additional  activities.  Softalk
shall provide invoices on a monthly basis.  Upon completion of or termination by
the parties of any additional  activities related to the Project,  Softalk shall
provide a final  invoice to Wavetech  within  thirty (30) days of  completion or
termination of the additional activities. Wavetech shall pay all invoices within
thirty (30) days of receipt thereof.  All payments made by Wavetech  pursuant to
this Article 5 are  non-refundable. Wavetech  also shall  reimburse  Softalk for
reasonable  travel expenses  incurred by Softalk employees when traveling at the
request  of  Wavetech.   Such   expenses   must  be  provided  to  Wavetech  for
reimbursement  in writing and within  thirty (30) days after such  expenses  are
incurred.

     Any and all taxes paid or to be paid by  Softalk  on  account  or  directly
related to the fees payable to Softalk  under this  Agreement  shall be the sole
and exclusive  responsibility of Softalk. All taxes assessed or imposed against,
or  required to be withheld  from any fees due  Softalk  shall be deducted  from
amounts payable hereunder and Wavetech shall promptly pay the appropriate fiscal
or tax  authorities  on behalf of  Softalk.  Tax  receipts  received  by Softalk
evidencing payment of such taxes shall be forwarded promptly to Wavetech.

6. INTELLECTUAL PROPERTY.

     6.1. SOFTALK INTELLECTUAL PROPERTY.

          The parties agree that all right, title and interest in and to Softalk
Intellectual Property shall remain in Softalk.

     6.2. WAVETECH INTELLECTUAL PROPERTY.

          The  parties  agree  that all  right,  title  and  interest  in and to
Wavetech Intellectual Property shall remain in Wavetech.

     6.3. OWNERSHIP OF PROJECT INTELLECTUAL PROPERTY RIGHTS.

          Except as otherwise  provided in Articles  6.1,  6.2,  6.4, 6.5 and 8,
Wavetech  and  Softalk  agree that all right,  title and  interest in and to the
Project Intellectual  Property Rights shall be in Wavetech.  Softalk shall cause
its employees, officers, directors, and subcontractors and/or consultants to (a)
execute,  at no expense to Wavetech,  any documents  Wavetech deems necessary to
record  ownership  of the Project  Intellectual  Property in  Wavetech,  and (b)
assist  Wavetech,  at no expense to  Wavetech,  in securing  protection  for any
Project  Intellectual   Property  Rights,  such  protection  including  patents,
trademarks   and/or   copyrights.   Any  rights  of  ownership  in  any  Project
Intellectual Property Rights by either Party are subject to the other provisions
of this Agreement, notably Article 6.5.

     6.4. RIGHTS IN THE DELIVERABLES.

          All right,  title and interest to the Deliverables,  including but not
limited to, any written  reports,  records  and copies  thereof,  in any form or
format,  provided in  furtherance  of the Project,  and all factual  information
contained therein, shall be the exclusive, absolute and unencumbered property of
Wavetech, subject to the rights of Softalk under the License Agreement. Wavetech
shall be entitled to use any documents,  reports and other records  delivered in
connection  with the Project  for the  purposes  of this  Agreement,  and to the
extent  necessary to promote the Products in marketing  thereof or for any other
purposes that Wavetech in its sole discretion deems desirable or necessary.

                                       5
<PAGE>
     6.5. LICENSES AND LICENSE AGREEMENT.

          All Products delivered to Wavetech pursuant to this Agreement shall be
considered "Softalk Products" as defined in the License Agreement.  In the event
of a conflict  between  any of the terms  contained  herein and any of the terms
contained in the License  Agreement,  the terms of the License  Agreement  shall
govern.

     6.6. MARKETING AND SALES PROMOTIONAL MATERIAL.

          The parties  agree and  acknowledge  that  Wavetech  shall at its sole
expense and discretion  develop  marketing,  promotional  and sales material and
information,  and that all right, title and interest in and to such material and
information shall remain in Wavetech.

7. REPORTING.

     Softalk will supply  Wavetech with a detailed  written report  including in
detail  the  results of the  Project in  accordance  with  Schedule  1. Prior to
completion of the Project,  Softalk will supply  Wavetech with written  progress
reports on at least a monthly basis.

     In addition,  upon the delivery of a completed Module,  Softalk will send a
receipt to  Wavetech,  which after  Wavetech  has  completed  any tests or other
examinations of the Module and determined that the Module is Completed, Wavetech
shall execute and return to Softalk.

8. CONFIDENTIAL INFORMATION.

          (a)  Each  party  acknowledges  and  agrees  that  the  other  party's
Confidential  Information  is secret and  confidential  and is  provided or made
available only for purposes connected with carrying out the Project,  and/or for
Wavetech to promote,  use, sell, offer for sale, market and distribute  Products
or Improvements.

          (b) Except as provided  under the terms of this  Agreement  each party
agrees not to disclose the other party's  Confidential  Information to any third
party and each party  agrees to ensure,  through  the use of written  agreements
and,  if  necessary,  enforcement  of the  agreements,  that its  employees  and
officers  do  not  disclose  or  permit  the  disclosure  of the  other  party's
Confidential Information to any third party.

          (c) The  foregoing  to the  contrary  notwithstanding,  each party may
disclose the other party's  Confidential  Information  to a third party provided
that (a) the owner of the  Confidential  Information has consented in writing to
the  disclosure,  (b) such third party has a specific need to have access to the
other party's Confidential  Information for purposes connected with the carrying
out of the Project  and/or for the  purposes  set forth in Articles 3 and 6; and
has been made  aware of the terms  upon  which  the other  party's  Confidential
Information  has been  disclosed and that the  information  is disclosed to such
third party on the same basis, and (c) such third party has agreed in writing to
comply  with  the  terms  of this  Article  8 in a  manner  consistent  with the
definition of Confidential Information contained in Article 1.

          (d) In the event of disclosure of  Confidential  Information,  damages
may be  inadequate to  compensate  the harmed  party,  and therefore the parties
agree  that the  harmed  party  shall  have the  right to have any  unauthorized
disclosure or disclosure not permitted herein  restrained by injunctive  relief,
or such other relief as may be appropriate.  Such injunctive  relief shall be in
addition to any other legal or equitable remedy available to the harmed party.

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<PAGE>
          (e) In the event of the  disclosure of  Confidential  Information by a
third party,  the party that  disclosed  such  Confidential  Information to said
third party shall have the obligation to take reasonable steps to compensate the
other party for any loss resulting from the disclosure.  These  reasonable steps
may include and, if requested by the other party,  shall include  bringing legal
action,  for which the party that disclosed the Confidential  Information  shall
bear all costs including the other party's reasonable attorneys' fees and travel
expenses  related to the action,  against said third party to obtain  injunctive
relief and damages.

          (f)  Each  party  shall  not  use  the  other   party's   Confidential
Information except in furtherance of the Project and its purpose as set forth in
Article 3.

9. PATENT INFRINGEMENT.

     9.1. In the event of any alleged act of patent  infringement  of any patent
right obtained  pursuant to this Agreement and owned by Wavetech in any country,
Wavetech  shall,  subject to any exceptions  pursuant to Article 6: (a) have the
sole option and right to determine whether said act constitutes  infringement of
any patent  subject to this Agreement and to bring a lawsuit or other action for
injunction  and/or  damages,  (b) bear all  investigation  and litigation  costs
related  to the  alleged  infringement,  (c)  receive  any  awards  of  damages,
statutory damages and awards of attorney's fees,  expenses and/or costs obtained
during  the  course  of any  litigation,  and  (d) pay any  awards  of  damages,
statutory  damages and awards of attorney's fees,  expenses and/or costs related
to any counterclaims,  and shall indemnify Softalk with respect thereto. Softalk
shall  fully  cooperate  with  Wavetech in any  dispute  (lawsuit or  otherwise)
brought pursuant to this Article 9.1 and Wavetech will reimburse Softalk for any
travel expenses or reasonable attorney fees related thereto.

     9.2. In the event of any alleged act of patent  infringement  of any patent
right  obtained  pursuant to this  Agreement and owned by Softalk in any country
pursuant to this Agreement, Softalk shall, subject to any exceptions pursuant to
Article 6: (a) have the sole  option  and right to  determine  whether  said act
constitutes  infringement of any patent subject to this Agreement and to bring a
lawsuit  or  other  action  for  injunction   and/or   damages,   (b)  bear  all
investigation  and  litigation  costs related to the alleged  infringement,  (c)
receive any awards of damages,  statutory damages and awards of attorney's fees,
expenses and/or costs obtained during the course of any litigation,  (d) pay any
awards of damages,  statutory  damages and awards of attorney's  fees,  expenses
and/or costs related to any  counterclaims,  and shall  indemnify  Wavetech with
respect  thereto.  Wavetech  shall fully  cooperate  with Softalk in any dispute
(lawsuit or  otherwise)  brought  pursuant to this  Article 9.2 and Softalk will
reimburse  Wavetech for any travel expenses or reasonable  attorney fees related
thereto.

10. ACCUSATIONS OF INFRINGEMENT.

     10.1.  In the  event  that  any  third  party  alleges  that  any  Product,
Improvement  or act by Wavetech  related to the  development,  testing,  sale or
promotion  of  Products  or  Improvements,  occurring  in any  country  in which
Wavetech owns the right, title and interest to, or has an exclusive license from
Softalk to practice,  the Project Intellectual  Property Rights pursuant to this
Agreement,  infringes  any  intellectual  property  rights of said third  party,
Wavetech shall be solely responsible for defending against such allegations, and
shall pay any  damages and receive all  recoverables  related  thereto.  Softalk
shall  fully  cooperate  with  Wavetech in any  dispute  (lawsuit or  otherwise)
covered  within the  provisions of this Article 10.1 and Wavetech will reimburse
Softalk for any travel expenses or reasonable attorney fees related thereto.

                                       7
<PAGE>
     10.2.  In the event that any third party  alleges  that any Products or any
act by Softalk,  occurring  within any country in which  Softalk owns the right,
title and interest to, or has an  exclusive  license from  Wavetech to practice,
the Project  Intellectual  Property Rights pursuant to this Agreement  infringes
any  intellectual  property rights of said third party,  Softalk shall be solely
responsible for defending  against such  allegations,  and shall pay any damages
and receive all  recoverables  related  thereto.  Wavetech shall fully cooperate
with Softalk in any dispute (lawsuit or otherwise) covered within the provisions
of this  Article  10.2 and  Softalk  shall  reimburse  Wavetech  for any  travel
expenses or reasonable attorney fees related thereto.

11. WARRANTIES AND REPRESENTATIONS.

     Wavetech and Softalk  each  warrant and  represent to the other that it has
the right to enter into and fully perform the terms of this  Agreement.  Softalk
warrants and represents to Wavetech that Softalk is the sole and exclusive owner
of the  Softalk  Intellectual  Property  and other  than the  rights  granted to
Wavetech  under this  Agreement with respect to the Products and the Project and
the License Agreement, no other person or entity has or shall have any claims of
ownership  and other  rights  with  respect  to, or  licenses to use the Softalk
Intellectual  Property as contemplated  under this Agreement with respect to the
Products  and  the  Project.  To  the  best  knowledge  of  Softalk,   Softalk's
Intellectual  Property  does not infringe the  intellectual  property  rights of
others.  In addition,  Softalk  warrants  that the  Products  shall be free from
defects in  workmanship  or material,  shall not damage or otherwise  impair the
BestNetCall  system and shall  conform in all  material  respects to the Modules
requested on Schedule 1 at the time the Modules are Completed.

12. TERMINATION.

     12.1.  This Agreement is terminable by either party,  in the event that the
other party  materially  breaches  any  provision of this  Agreement,  by giving
notice in writing to the breaching  party.  The breaching party shall have sixty
(60) days from receipt of the notice  within which to cure the breach,  provided
that either  party can request an  extension of this sixty (60) day period for a
mutually  agreeable  period of time,  and granting of such request  shall not be
unreasonably  withheld by the other  party.  In the event that the breach is not
cured within the periods set forth above,  including any extension periods, this
Agreement may be terminated by the non-breaching  party giving notice in writing
of termination and such termination shall be without prejudice to the rights and
remedies of the parties otherwise having arisen under this Agreement.

     12.2.  Either party may terminate this  Agreement  immediately in the event
that:

          (1)  an  application  or an order is made  for the  winding  up of the
               other party; or

          (2)  an  administrator,  receiver or receiver  and  manager,  or other
               entity is appointed to manage the property or assets of the other
               party; or

          (3)  a  liquidator  or a  provisional  liquidator  is appointed to the
               other party,  except for the purposes of solvent  amalgamation or
               reconstruction or corporate reorganization; or

          (4)  the  other  party  enters  into or  resolves  to  enter  into any
               arrangement,  composition  or compromise  with, or assignment for
               the  benefit  of,  its  creditors  generally  or any class of its
               creditors  or  proceedings  are  commenced  to sanction  any such
               arrangement,  composition or  compromise,  otherwise than for the
               purposes of solvent reconstruction.

                                       8
<PAGE>
     12.3.  Wavetech  may in its sole  discretion  elect to not proceed with the
Project  at any time.  In the event  Wavetech  elects  not to  proceed  with the
Project,  (i)  Wavetech  shall pay to Softalk a fee equal to 10% of all  amounts
paid and all amounts  then due and owing under this  Agreement  and (ii) Softalk
shall pay to Wavetech an amount equal to the positive excess, if any, of (A) the
amount of the Retainer paid by Wavetech to Softalk as of such date, minus (B) an
amount  equal to US$ 85  multiplied  by each hour of work  performed  by Softalk
employees in connection with the Project.

     12.4.  Either  Wavetech or Softalk may terminate this Agreement in the sole
discretion of such party,  upon  providing  three (3) months notice to the other
party of its intention to terminate.

     12.5. Early termination of this Agreement shall be without prejudice to the
rights and remedies of the parties otherwise having arisen under this Agreement.

13. CONSEQUENCES OF TERMINATION/EXPIRATION.

     13.1. RIGHTS IN THE DELIVERABLES AND PROJECT INTELLECTUAL PROPERTY.

     (a) Upon  termination of this Agreement for any reason by either party, all
right,  title and interest in and to (i) the Deliverables in existence as of the
date of termination,  and (ii) all Project  Intellectual  Property Rights, shall
remain solely and  exclusively  in Wavetech,  and Softalk shall have no right to
use (or provide to any party other than Wavetech) the  Deliverables,  Wavetech's
Confidential  Information,  the Project  Intellectual  Property  Rights,  or any
information, technology or know-how provided to Softalk by Wavetech or developed
by the  parties  under  this  Agreement  provided,  however,  that  if  Wavetech
terminates  without cause,  Softalk may use such  information  upon  reimbursing
Wavetech  for all costs and  expenses  incurred  by  Wavetech  with the  written
consent of Wavetech which shall not be unreasonably withheld.  Upon termination,
Softalk shall promptly deliver to Wavetech all Deliverables in existence and any
notes,  writings,  documentation  or  records  relating  to the  development  of
Products.

     (b) Upon termination and thereafter,  Softalk shall not use, permit another
party to use, or disclose  or provide to any party other than  Wavetech  (i) any
information,  technology or know-how developed under this Agreement, or (ii) any
of Wavetech's  Confidential  Information.  Softalk  expressly  acknowledges  and
agrees  that any such  unauthorized  use would  constitute  an  infringement  of
Wavetech's  Intellectual  Property  Rights,  and/or would constitute a breach of
Softalk's  obligations to preserve the confidentiality of Wavetech  Confidential
Information.

     (c) Upon termination and thereafter, Wavetech shall not disclose or provide
to any  party  other  than  Softalk  any  information,  technology  or  know-how
developed  under  this  Agreement  with  respect  to the  Products  using any of
Softalk's Confidential  Information.  Wavetech expressly acknowledges and agrees
that any such  unauthorized  use would  constitute an  infringement of Softalk's
Intellectual  Property  Rights,  and/or would  constitute a breach of Wavetech's
obligations   to  preserve  the   confidentiality   of  Softalk's   Confidential
Information.

     13.2. WAVETECH'S OBLIGATIONS.

     Upon termination of this Agreement by either party, Wavetech shall promptly
pay to Softalk any moneys due and owing as of the termination date, as set forth
in  Article  12.3,  except  that in the event of  termination  due to a material
breach of this  Agreement by Softalk,  Wavetech shall have no obligation to make
any payments to Softalk for work after the event of the material breach. Subject
to the  provisions of Article 6.5 and the License  Agreement,  all of Wavetech's
rights to Softalk's  Intellectual Property shall immediately  terminate,  unless
patented and owned by Wavetech.

                                       9
<PAGE>
     13.3. SOFTALK'S OBLIGATIONS.

     Upon  termination  of this  Agreement  by either  party at any time for any
reason,  Softalk shall  promptly  deliver up or return,  as the case may be, any
property  of  Wavetech,  including  documents,  reports and  records,  including
Deliverables  in  whole  or in part to  Wavetech.  All of  Softalk's  rights  to
Wavetech's  Intellectual Property shall immediately  terminate,  unless patented
and owned by Softalk.

14. INDEMNIFICATION.

     Softalk agrees to indemnify and hold Wavetech harmless against any claim or
liability asserted by any third party,  including Softalk's  sublicensees,  with
respect to any  information,  technology  or  know-how  supplied  to Wavetech or
developed by Softalk under this Agreement,  unless such liability arose from the
negligence or willful  misconduct of Wavetech.  Wavetech agrees to indemnify and
hold  Softalk  harmless  against  any claim or  liability  asserted by any third
party,  including  Wavetech's  sublicensees,  with  respect to any  information,
technology or know-how  supplied to Softalk or developed by Wavetech  under this
Agreement, unless such liability arose from the negligence or willful misconduct
of Softalk.

15. SEVERABILITY.

     If any  Article  or any part of any  Article of this  Agreement  is held or
deemed void, illegal or unenforceable for any reason,  then such Article or part
of Article will be deemed to be deleted from this  Agreement  and the  Agreement
will otherwise remain in full force and effect.

16. NOTICES.

     Any notice,  report,  payment or other  communication  provided for in this
Agreement,  shall be in English, shall be signed by a duly authorized officer or
other  representative of the party, and shall be sent by certified or registered
mail or reputable  express  courier  addressed to the party for whom intended at
the  address  given  below or at such  changed  address as the party  shall have
specified by written notice.

             If to Wavetech:

             Address:            Wavetech International, Inc.
                                 5210 East Williams Circle, Suite 200
                                 Tucson, Arizona 85711
                                 USA
                                 Attention: Gerald I. Quinn

             With a copy to:     Squire, Sanders & Dempsey L.L.P.
                                 Two Renaissance Square
                                 40 North Central Avenue, Suite 2700
                                 Phoenix, Arizona 85004
                                 Attention: Gregory R. Hall, Esq.
                                 Facsimile: (602) 253-8129

                                       10
<PAGE>
             If to Softalk:

             Address:            Softalk, Inc.
                                 370 Queens Quay West, Suite 301
                                 Toronto, Ontario
                                 Canada M5V 3J3
                                 Attention: Rosnani Atan
                                 Facsimile: 416-597-2785

             With a copy to:     Gowling, Strathy & Henderson
                                 Suite 4900 Commerce CT W
                                 Toronto, Ontario
                                 Canada M5L IJ3
                                 Attention: Karyn Bradley
                                 Facsimile: 416-862-7661

17. CHOICE OF LAW, ARBITRATION.

     This  Agreement  is made under,  and shall be governed by and  construed in
accordance  with the  internal  laws of Ontario,  Canada,  without  reference to
principles of conflicts of law. Any disputes  arising under this Agreement shall
be settled by binding  arbitration  conducted in Toronto in accordance  with the
Rules of Procedure for the Conduct of  Arbitration  and  Mediation  Antitrust of
Ontario, Inc.

18. ENTIRE AGREEMENT.

     The parties agree that there are no  conditions,  warranties or other terms
affecting  the Agreement  between the parties other than those  embodied in this
Agreement and the documents  referred to in this  Agreement.  This Agreement and
the documents  referred to in this Agreement  contain the whole of the Agreement
between the parties with respect to the subject  matter  hereof.  This Agreement
may be changed or amended only by an instrument in writing duly executed by both
parties.

19. WAIVER.

     Failure by a party to insist upon the performance of any one or more of the
conditions  of this  Agreement  shall not be deemed to be a waiver of any rights
and remedies that the relevant party may have and will not be deemed a waiver of
any subsequent breach or default.  No provision of this Agreement will be deemed
to have been waived by a party unless such waiver is in writing and signed by an
officer of that party.

20. RELATIONSHIP.

     Softalk is an  independent  contractor  of Wavetech  and is not an agent or
employee of Wavetech.  Neither  party has any  authority to bind or contract the
other party in any manner whatsoever.  Neither party has authority to enter into
or incur any commitments, expenses, liabilities, or obligations of any nature on
behalf of the other party,  or will at any time hold itself out to third parties
as having such authority.

21. FURTHER ASSURANCES.

     Each party  agrees to do all  things  and  execute  all  further  documents
necessary to give full effect to this Agreement.

                                       11
<PAGE>
22. ARBITRATION.

     22.1. Any controversy, dispute or claim arising out of, in connection with,
or in  relation to the  interpretation,  performance  or alleged  breach of this
Agreement,  which has not been resolved by good faith  negotiations  between the
Parties  for a period of sixty (60) days  following a notice  given  pursuant to
Article 16, shall be submitted  to binding  arbitration  conducted in Toronto in
accordance  with the Rules of  Procedure  for the  Conduct  of  Arbitration  and
Mediation Antitrust of Ontario Inc.

     22.2.  Either Party may initiate the  arbitration by sending written notice
of such submission by registered or certified mail to the other Party and to the
Ontario Arbitration Association, describing the dispute, the amount involved and
the remedy  sought.  The  arbitrator  will schedule a pre-hearing  conference to
reach agreement on procedural matters and discovery, arrange for the exchange of
information,  obtain  stipulations,  and  attempt  to  narrow  the  issues.  The
arbitrators  decision shall comply with applicable rules of law. The decision of
the  arbitrator  will be final  and may be  entered  in any  court of  competent
jurisdiction.

     22.3. The arbitration shall be conducted in Toronto,  Canada unless another
location is mutually agreed to by the parties and will be solely governed by and
solely  interpreted  in  accordance  with the laws of the  Province  of Ontario,
without giving effect to any conflicts of laws provisions thereof.

     22.4.  Under no  circumstances  may the arbitrator  amend the terms of this
Agreement, make any award of punitive or consequential damages, or otherwise act
in derogation of the clear intent of the Parties as expressed herein.

     22.5.  The prevailing  Party in any such  arbitration  proceeding  shall be
entitled  to an award  of all  costs of the  arbitration  as well as  reasonable
attorney's  fees as shall be set by the  arbitrator  and  incorporated  into the
arbitration award such that it is confirmed as part of the judgment.

23. SURVIVAL.

     The provisions of Articles 3.4, 6, 8, 9, 10, 11, 13, 14, 16, 17, 21, 22 and
23 of this Agreement shall survive termination or expiration of this Agreement.

                                       12
<PAGE>
     IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be duly
executed and delivered as of the day and year first above written.

                                     WAVETECH INTERNATIONAL, INC.

                                     By:
                                         ---------------------------------------
                                         Name: Gerald I. Quinn
                                         Title: President & CEO

                                     SOFTALK, INC.

                                     By:
                                         ---------------------------------------
                                         Name: A. Christopher Lang
                                         Title: President

                                       13
<PAGE>
                                   SCHEDULE 1

                              PRODUCTS AND REPORTS

1. Softalk agrees to provide the following Modules to Wavetech prior to June 14,
2001:

Module 1: A software  that provides the  BestNetCall  system with the ability to
initiate conference calls upon a user's request.

Module 2: A software  that provides the  BestNetCall  system with the ability to
initiate schedule conference calls upon a user's request.

Module 3: A version of the  BestNetCall  software suite that is designed for (i)
networked  office users which do not have a dedicated  Internet  connection  and
(ii) users with Internet  connections that provide a download  transmission rate
of less than 56 kbps and an upload transmission rate of less than 56 kbps.

Module 4: A  software  product  that  allows  users of the Palm  Pilot  Personal
Digital Assistants to use a handheld device with wireless  transmission  ability
to launch BestNetCall telephone calls or conference calls at any time.

Module 5:  Software  that will enable the  BestNetCall  system to use  Signaling
System 7 for call switching.

Module 6: Distribution/Agent software.

Module 7: Operator Intercept software.

Module 8:  Software  which  incorporates  a table  into the  BestNetCall  system
allowing users to search for area code information by city.

Module 9: Marketing Database software.

Module 10: Customer Database software.

Module 11:  Software  which will alert system  administrators  via telephone and
e-mail if the BestNetCall switching system is not operational.

Module 12: Software which demonstrates the features of the BestNetCall system.

Module 13: The development of Best Net Communications website.

Module 14: The development of Bestnetravel website.

                                       14
<PAGE>
2. In connection  with the  development  of each Module,  Softalk shall take the
following actions:

     (a) Test each Module to ensure reliable operation on the BestNetCall system
and interoperability with the BestNetCall system;

     (b)  After  development  of an  initial  version  of each  Module,  provide
Wavetech with the ability to examine and review the features of each Module (the
"Initial Review");

     (c) Take any  action  requested  by  Wavetech  to alter  the  Module  after
Wavetech's Initial Review;

     (d) After  completion  of each Module,  install  such Module on  Wavetech's
BestNetCall system and test the BestNetCall system to ensure  compatibility with
the BestNetCall system (the "Initial Test"); and

     (e) Take any actions to resolve any issues  which arise  during the Initial
Test,  until such Module operates in a reliable  fashion that is compatible with
the BestNetCall system.

3. In  connection  with the delivery of each Module,  Softalk  shall include the
following reports:

     (a) Operating information regarding the installation,  setup and use of the
Module; and

     (b) A  description  of the  testing  done  on each  Module  to  ensure  its
reliability and compatibility with the BestNetCall system.

                                       2
<PAGE>
                                   SCHEDULE 2

                   INSTALLATION, CONFIGURATION AND MAINTENANCE

1.   Softalk agrees to provide the following  services to Wavetech prior to June
     14, 2001:

     (a)  Install  and  configure  a port  switching  matrix with the ability to
expand to 10,000 ports at each of Wavetech's  locations at 60 Hudson Street, New
York,  New York and 1 Wilshire  Boulevard,  Los  Angeles,  California.  The port
switching  matrix shall be similar to the current one  developed by Wavetech and
Softalk in Toronto, Canada.

     (b) Install  Signaling System 7 hardware on the BestNetCall  system at each
port switching matrix location;

     (c) Provide technical support and maintenance for all software developed or
otherwise  modified by Softalk which is operated by Wavetech in connection  with
its  BestNetCall  system  which  support and  maintenance  shall be performed by
qualified personnel of Softalk

     (d)  Provide  installation,  technical  support  and  maintenance  for  all
software and hardware  related to the operations of the Harris  switches at each
of the 3 locations namely 151 Front Street,  Toronto,  ON; 60 Hudson Street, New
York, NY; and 1 Wilshire Boulevard, Los Angeles, CA.

     (e)  Provide  technical  and  administrative  support  for the web  hosting
facilities of  Bestnetcall.com,  BestNet  Communications  Inc. and Bestnetravel,
including  but not limited to being the  technical  contact with UUNet,  the web
host provider of all the three (3) websites.

                                       3

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