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Exhibit 10.23
FORM OF
Non-Statutory Stock Option Agreement
This Non-Statutory Stock Option Agreement ("Option Agreement") entered
into as of April 1, 1996, by and between Global TeleSystems Group, Inc., a
Delaware corporation (the "Company"), and ________________, an employee of the
Company ("Optionee").
1. Option Agreement Pursuant to Plan. This Option Agreement is
entered into pursuant to the 1992 Stock Option Plan of the Company, as amended
November 15, 1994 (the "Plan"), is subject to and incorporates herein the
provisions of the Plan and pursuant to the GTS 1996 Top Talent Retention Program
(the "Retention Program"). The provisions of this Option Agreement are
qualified in their entirety by reference to the Plan and in the event of a
conflict between the provisions of this Agreement and the provisions of the
Plan, the provisions of the Plan shall control. Capitalized terms used in this
Option Agreement shall have the same meanings given to them in the Plan, unless
otherwise indicated in this Agreement.
2. Grant of Option. The Company hereby grants to Optionee the
right and option ("Option") to purchase all or any part of an aggregate of _____
shares of the common stock of the Company on the terms and conditions set forth
herein ("Optioned Shares"). The Option is not, and is not intended to meet the
requirements for an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code (the "Code"). For purposes of Section 4 of this
Agreement, _______________ Optioned Shares shall be referred to as "Performance
Shares" and _______________ Optioned Shares shall be referred to as
"Nonperformance Shares".
3. Exercise Price and Consideration for Exercise.
(a) Exercise Price. The exercise price for the purchase of the
Optioned Shares purchasable upon exercise of the Option shall be fifteen
dollars and forty cents ($15.40) for each of the Optioned Shares, for a total
exercise price of ____________________ for _____________________ Optioned
Shares.
(b) Consideration. The consideration to be paid for the Shares to
be issued upon exercise of an Option shall be payment in cash or by check or
with Shares of the Company's Common Stock as provided below.
4. Term and Vesting of Option.
(a) Term. The term of the Option shall commence on April 1, 1996
(the "Grant Date") and terminate on March 30, 2006 or on such earlier date as
provided hereinafter. In no event shall the term of the Option be longer than
ten (10) years and one (1) day from the Grant Date. The vested portion of the
Option shall be exercisable as to any part or all of the aggregate number of
Optioned Shares as provided below.
(b) Vesting. The Nonperformance Shares shall become exercisable as
follows: (i) one-fourth (1/4) of the Nonperformance Shares as of the date of
the first anniversary of the Grant Date, (ii) an additional one-fourth (1/4) of
the Nonperformance Shares as of the second anniversary of the Grant Date, (iii)
an additional one-fourth (1/4) of the Nonperformance Shares as of the third
anniversary of the Grant Date, and (iv) an additional one-fourth (1/4) of the
Nonperformance Shares as of the fourth anniversary of the Grant Date, subject
to the Optionee's Continuous Employment during such time. The Option may not be
exercised for fractional shares or for less than ten (10) Shares.
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(c) The Performance Shares shall become fully exercisable upon the
fifth anniversary of the Date of Grant. The Performance Shares shall, however,
contain accelerated vesting performance events which shall be based upon the
achievement of the corporate performance goals (the "Goals") associated with the
Retention Program as approved by the Compensation Committee (the "Committee") of
the Board of Directors of the Company (and as may be amended by the Committee
from time to time). Upon the achievement of each of the Goals, the Performance
Shares may be exercised to purchase up to 25% of the Performance Shares relating
to the Performance Option. The Goals are set forth in Appendix A to this
Agreement.
(d) The right to purchase Shares as provided in Sections 4(b) and
4(c) may be exercised in a cumulative fashion, such that any right to purchase
Shares which becomes exercisable on a given date shall remain exercisable until
the date stated in any applicable provision of Section 5.
5. Time and Method for Exercising the Option.
(a) Time. Optionee may exercise the Option in one or more
installments and from time to time with respect to the vested portion of the
Option.
(b) Termination; Disability; Retirement; Death.
(1) Termination of Status as Employee. If Optionee shall cease to
be an Employee for any reason other than permanent and total disability (within
the meaning of Section 22(e)(3) of the Code as determined in the sole discretion
of the Board of Directors of the Company), retirement or death, the Option shall
automatically terminate thirty (30) days following the date he ceases to be an
Employee. Prior to such termination of the Option, the Optionee may exercise
the Option to the extent that Optionee was entitled to exercise on the
termination date, subject to the condition that no Option shall be exercised
after the expiration of the Option period.
(2) Disability of Optionee. In the event of the permanent and
total disability (within the meaning of Section 22(e)(3) of the Code as
determined in the sole discretion of the Board of Directors of the Company)
during the Option period of Optionee who is at the time of commencement of such
disability, or was within the 90-day period prior thereto, an Employee and who
was in continuous Employment as such from the date of the grant of the Option
until the date of disability or termination, the Option may be exercised at any
time within one (1) year following the date of disability, but only to the
extent that the Optionee was entitled to exercise the Option at the time of the
termination or disability, whichever comes first, subject to the condition that
no Option shall be exercised after the expiration of the Option period.
(3) Retirement of Optionee. In the event of the retirement during
the Option period of Optionee who is at the time of such retirement, or was
within the 90-day period prior thereto, an Employee and who was in Continuous
Employment as such from the date of the grant of the Option until the date of
the retirement, then the Option may be exercised by the Optionee at any time
within ninety (90) days following the retirement date, but only to the extent
that the Optionee was entitled to exercise the Option at the time of the
retirement of Optionee, subject to the condition that no Option shall be
exercised after the expiration of the Option period. For purposes of this
paragraph (3), the term "retirement" shall mean voluntary termination of
employment by an Employee who is at least age fifty-five (55) and who has
completed five (5) years of employment with the Company, or termination of
service on the Board of Directors by a Non-Employee
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Director who is at least age fifty-five (55) and who has completed five (5)
years of service on the Board of Directors.
(4) Death of Optionee or Employee. In the event of the death
during the Option period of Optionee who at the time of his death is, or was
within the 30-day period immediately prior thereto, an Employee and who was in
Continuous Employment as such from the date of the grant of the Option until
the date of death, the Option may be exercised for a period of up to one (1)
year following the date of death, at any time prior the expiration of the
Option Period, by the Optionee or, if applicable, Optionee's estate or by a
person who acquired the right to exercise the Option by bequest, inheritance or
otherwise as a result of the Optionee's death, but only to the extent that the
Optionee was entitled to exercise the Option at the time of Employee's death
subject to the condition that no Option shall be exercised after the expiration
of the Option period.
(c) Method
(1) Notice and Payment. An option shall be deemed to be exercised
when written notice of such exercise has been given company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. As soon as administratively practicable following the
exercise of an Option in the manner set forth above, the Company shall issue or
cause its transfer agent to issue stock certificates representing the Shares
purchased.
(2) Exercise of Option With Stock or Net of Exercise Price. An
Optionee may elect to exercise an Option in whole or in part by (i) delivering
whole shares of the Company's Common Stock previously owned by such Optionee
(whether or not acquired through the prior exercise of a stock option) having
a fair market value equal to the option price; or (ii) directing the Company to
withhold from the Shares that would otherwise be issued upon exercise of the
Option that number of whole Shares having a fair market value equal to the
Option price. Shares of the Company's Common Stock so delivered or withheld
shall be valued at their fair market value at the close of last business day
immediately preceding the date of exercise of the Option, as determined by the
Board of Directors of the Company. Any balance of the Option price shall be
paid in cash. After the Registration Date, any exercise of the Option by any
person subject to short-swing trading liability under Section 16(b) of the
Exchange Act shall comply with the relevant requirements of Exchange Act Rule
16b-3(d) or (e), regarding participant directed transactions.
(3) Voting and Dividend Rights. Until the issuance of such stock
certificates (as evidenced by the appropriate entry on the books of the Company
or of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Shares notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other rights for which the record
date occurs prior to the date the stock certificates are issued.
6. Non-Transferability of Options and Shares of Common Stock.
(a) Options. The Option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution and may be exercised, during the lifetime
of the Optionee, only by the Optionee. Notwithstanding the preceding sentence,
the Option may be transferred to a spouse of the Optionee only upon approval of
the Board of Directors of the Company, providing all the conditions of
exercisability and vesting have been met. The Optionee may designate a
beneficiary who may (i) exercise an Option under Section 5(b)(4) above, or (ii)
receive Shares issued pursuant to the
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exercise of an Option where the death of the Optionee occurs between the date
on which the Optionee exercises the Option and the date the Company issues the
Shares.
(b) Shares of Common Stock. Except as otherwise provided by the
Board of Directors of the Company, Optioned Shares acquired under an Option may
not be sold, pledged, assigned, hypothecated, transferred or disposed of in any
manner other than by will or by the laws of descent and distribution (provided
the Optionee's assigns or successors to such Optioned Shares remain subject to
the terms and conditions of this Agreement, including the Company's right of
first refusal to repurchase the Optioned Shares) without the Optionee first
offering to the Company the right to purchase the Optioned Shares at the fair
market value of the Shares on the date such offer is received by the Secretary
of the Company. If the Company fails to accept the offer to purchase such
Shares within Seven (7) days after receipt of such offer, the Optionee shall be
free to sell or transfer such Shares at the same fair market value at which
they were offered to the Company. If the Optionee does not sell or transfer
such Shares within Ninety (90) days thereafter, then the restrictions of this
Section 10 of the Plan shall remain in effect. The certificates representing
the Optioned Shares shall bear a legend which shall give notice of such
restrictions on the transferability of the Optioned Shares.
7. Tax Withholding on the Option. Upon each exercise of the
Option, Optionee agrees to make appropriate arrangements acceptable to the
Company for satisfaction of any applicable federal, state or local income and
employment tax withholding requirements as provided in the Plan. Without
limitation, when an Optionee is required to pay to the Company an amount with
respect to income or employment tax withholding obligations in connection with
the exercise of an Option, the Optionee may elect, prior to the date the amount
of such withholding is determined (the "Tax Date") to make such payment, or such
increased payment as the Optionee elects to make up to the maximum federal,
state and local marginal tax rates (including any related obligation under the
Federal Insurance Contribution Act) applicable to the Optionee and the
particular transaction, by (i) delivering cash; (ii) delivering part or all of
the payment in previously owned stock (whether or not acquired through the
prior exercise of a stock option); or (iii) irrevocably directing the Company
to withhold from the Shares that would otherwise be issued upon exercise of the
Option that number of whole Shares having a fair market value equal to the
amount of tax required or elected to be withheld (a "Withholding Election").
If an Optionee's Tax Date is deferred beyond the date of exercise and the
Optionee makes a Withholding Election, the Optionee will receive the full amount
of Shares otherwise issuable upon exercise of the Option minus the number of
Shares necessary to satisfy his or her minimum withholding requirements measured
on the date the Option is exercised (or such higher payment as he or she may
have elected to make) with adjustments to be made in cash after the Tax Date.
After the Registration Date, any withholding of Shares with respect to
taxes arising in connection with the exercise of an Option by any person subject
to short-swing trading liability under Section 16(b) of the Exchange Act shall
satisfy the following conditions:
(i) An advance election to withhold Shares in settlement of
a tax liability must satisfy the requirements of Exchange Act Rule
16b-3(d)(1)(i), regarding participant-directed transactions;
(ii) Absent such an election, the withholding of Shares to
settle a tax liability may occur only during the quarterly window period
described in Exchange Act Rule 16b-3(e);
(iii) Absent an advance election or window-period
withholding, the Optionee may deliver Shares owned prior to the exercise
of an Option to settle a tax liability arising upon exercise of the
Option, in accordance with Exchange Act Rule 16b-3(f); or
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(iv) The delivery of previously acquired Shares (but not the
withholding of newly acquired Shares) will be allowed where an election under
Section 83(b) of the Code accelerates the Tax Date to a day that occurs less
than six months after the advance election and is not within the quarterly
window period described in Exchange Act Rule 16b-3(e).
Any adverse consequences incurred by an Optionee with respect to his or
her participation in this Agreement, the use of Shares to pay any part of the
Option price or income or employment tax arising in connection with the
exercise of an Option shall be the sole responsibility of the Optionee. The
Company does not warrant or represent to the Optionee any tax consequence of
any transaction under this Agreement.
8. Notices. All notices to the Company under this Agreement shall
be in writing and shall be delivered by personal service or telegram,
telecopier, or registered or certified mail (if such service is not available,
then by first class mail), postage pre-paid, to such address as may be
designated from time to time by the Company, and which shall initially be:
Global TeleSystems Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxxx, 00xx Xxxxx
XxXxxx, Xxxxxxxx 00000
Telecopier: 000-000-0000
Attention: Corporate Secretary
All notices shall be deemed given when received.
9. No Effect on Terms of Employment. This Option Agreement shall
not affect any right or power of the Company to terminate or change the terms
of employment of Employee at any time and for any reason whatsoever, with or
without cause.
10. Integration. This Option Agreement and the Plan constitute the
entire agreement between the Company and Optionee pertaining to the subject
matter hereof, and supersede all oral and prior written or implied agreements
and understandings between the parties.
11. Waiver. Any failure to enforce any terms or conditions of this
Option Agreement by the Company shall not be deemed a waiver of that term or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.
12. Severability of Provisions. If any provision of this Option
Agreement shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof; and this Option
Agreement shall be construed and enforced as if it did not include such
provision.
13. Successors. This Option Agreement shall be binding upon and
inure to the benefit of any successor or successors of the company and any
assigns, successors or heirs of Optionee. Where the context permits, "Optionee"
as used in this Option Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution. Nothing in this Option Agreement shall be interpreted as imposing
any liability on the Company in favor of Optionee or such transferee of option
rights with respect to any loss, cost or expense which Optionee or
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transferee may incur in connection with, or arising out of any transaction
involving the Option granted hereunder.
14. Amendment of Option Agreement. This Option Agreement cannot be
amended except by a writing executed by the Company and the Optionee.
15. Applicable Law: Headings. This Option Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of
Virginia applicable to agreements made and to be performed exclusively in the
State of Virginia. The headings in this Option Agreement are solely for
convenience of reference and shall not affect its meaning or interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement to be
effective as of the date first written above.
Global TeleSystems Group, Inc.
/s/ [ILLEGIBLE]
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by:
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