STOCK OPTION AGREEMENT
AGREEMENT, made as of June 1, 1999, by and between GLOBAL
TELECOMMUNICATION SOLUTIONS, INC., a Delaware corporation (the "Company"), and
XXX X. XXXXXXXXXX, (the "Employee").
WHEREAS, on June 1, 1999 (the "Grant Date"), the Board of Directors
authorized the employment of the Employee pursuant to the terms of an Employment
Agreement dated as of June 1, 1999, and the grant to the Employee of an option
(the "Option") to purchase an aggregate of 320,000 shares of the authorized but
unissued common stock of the Company, $.01 par value ("Common Stock"),
conditioned upon the Employee's acceptance thereof upon the terms and conditions
set forth in this Agreement; and
WHEREAS, the Employee desires to acquire the Option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants to the Employee
the right and option ("Option") to purchase all or any part of an aggregate of
320,000 shares of Common Stock ("Option Shares") on the terms and conditions set
forth herein. The Option represented hereby is a non-qualified stock option not
intended to qualify under any section of the Internal Revenue Code of 1986, as
amended, and is not granted under any plan' including the Company's 1994
Performance Equity Plan ("Plan"). Certain terms used herein, however, are
defined under the Plan.
2. Exercise Price. The exercise price ("Exercise Price") of the
Option shall be as follows: $0.75 per share for 120,000 shares, $1.25 per share
for 120,000 shares, $1.75 per share for 40,000 shares and $2.00 per share for
40,000 shares, subject to adjustment as hereinafter provided.
3. Exercisability. This Option is exercisable, subject to the terms
and conditions of this Agreement, as follows: (i) Options to purchase 120,000 of
the Option Shares at $0.75 per share shall be exercisable on and after December
1,1999, (ii) Options to purchase 120,000 of the Option Shares at $1.25 per share
shall be exercisable on and after June 1,2000, (iii) Options to purchase 40,000
of the Option Shares at $1.75 per share shall be exercisable on and after June
1,2001, and (iv) Options to purchase 40,000 of the Option
Shares at $2.00 per share shall be exercisable on and after June 1, 2002. After
each portion of the Option vests, it shall remain exercisable for a period of
five years from the date of vesting, except as otherwise set forth in this
Agreement (the "Exercise Period").
4. Effect of Termination of Employment.
4.1 Termination Due to Death. If Employee's employment by the
Company terminates by reason of death, the Option shall become fully vested and
exercisable and may thereafter be exercised by the legal representative of the
estate or by the legatee of the Employee under the will of the Employee, for a
period of one year from the date of such death or until the expiration of the
Exercise Period, whichever period is shorter.
4.2 Termination Due to Disability. If Employee's employment by
the Company terminates by reason of Disability (as such term is defined under
the Plan), the Option shall become fully vested and exercisable and may
thereafter be exercised by the Employee for a period of one year from the date
of such termination or until the expiration of the Exercise Period, whichever
period is shorter.
4.3 Termination by the Company Without Cause and/or Due to
Retirement. If Employee's employment is terminated by the Company without cause
or due to Normal Retirement (as such term is defined under the Plan), then (i)
the portion of the Option which has vested by the date of termination of
employment may be exercised by the Employee until the expiration of the Exercise
Period and (ii) the portion of the Option that will vest within one year of the
date of termination of employment shall become fully vested and may be exercised
by the Employee until the expiration of the Exercise Period. The portion of the
Option not exercisable within one year of the date of termination of employment
shall immediately expire.
4.4 Other Termination.
(1) If Employee's employment is terminated for any
reason other than (i) death, (ii) Disability, (iii) Normal Retirement, or (iv)
without cause by the Company, the Option shall expire on the date of termination
of employment.
(2) The Board of Directors, in the event the Employee's
employment is terminated for cause, may require the Employee to return to the
Company the economic benefit of any Option Shares purchased hereunder by the
Employee within the
six month period prior to the date of termination. In such event, the Employee
hereby agrees to remit to the Company, in cash, an amount equal to the
difference between the Fair Market Value (as such term is defined under the
Plan) of the Option Shares on the date of termination (or the sales price of
such Shares if the Option Shares were sold during such six month period) and the
Exercise Price of such Shares.
5. Withholding Tax. Not later than the date as of which an amount
first must be included in the gross income of the Employee for Federal income
tax purposes with respect to the Option, the Employee shall pay to the Company,
or make arrangements satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount ("Withholding Tax"). The obligations of the
Company under the Plan and pursuant to this Agreement shall be conditioned upon
such payment or arrangements with the Company and the Company shall, to the
extent permitted by law, have the right to deduct any Withholding Taxes from any
payment of any kind otherwise due to the Employee from the Company.
6. Adjustments. In the event of any change in the number of
outstanding shares of Common Stock of the Company occurring as the result of a
stock split, reverse stock split or stock dividend on the Common Stock, after
the Grant Date, the Company shall proportionately adjust the number of Option
Shares and the Exercise Price of the Option. Any right to acquire a fractional
Option Share resulting from adjustments will be rounded to the nearest whole
Option Share. If the Company shall be the surviving corporation in any merger,
combination or consolidation, this Option shall pertain and apply to the Option
Shares to which the Employee is entitled hereunder, without adjustment. In the
event of a change in the par value of the shares of Common Stock which are
subject to this Option, this Option will be deemed to pertain to the shares
resulting from any such change. To the extent that the foregoing adjustments
relate to Common Stock, the adjustments will be made by the Board of Directors
whose determination will be final, binding and conclusive.
7. Method of Exercise.
7.1 Notice to the Company. The Option maybe exercised in whole
or in part by written notice in the form attached hereto as Exhibit A directed
to the Company at its principal place of business accompanied by full payment as
hereinafter provided of the exercise price for the number of Option Shares
specified in the notice and of the Withholding Taxes, if any.
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7.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Employee shall make cash
payments by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company; the Company shall not be required to
deliver certificates for Option Shares until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
7.3.2 Stock Payment. The Board of Directors, in its sole
discretion, may allow Employee to use Common Stock of the Company owned by him
to make any required payments by delivery of stock certificates in negotiable
form which are effective to transfer good and valid title thereto to the
Company, free of any liens or encumbrances. Shares of Common Stock used for this
purpose shall be valued at the Fair Market Value. Notwithstanding the foregoing,
the Company shall have the right to reject payment in the form of Common Stock
if in the opinion of counsel for the Company, (i) it could result in an event of
"recapture" under Section 16(b) of the Securities Exchange Act of 1934; (ii)
such shares of Common Stock may not be sold or transferred to the Company; or
(iii) such transfer could create legal difficulties for the Company.
8. Nonassignability. The Option shall not be assignable or
transferable, except by will or by the laws of descent and distribution in the
event of the death of the Employee. No transfer of the Option by the Employee by
will or by the laws of descent and distribution shall be effective to bind the
Company unless the Company shall have been furnished with written notice thereof
and a copy of the will and/or such other evidence as the Company may deem
necessary to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of the Option.
9. Accelerated Vesting and Exercisability. If (i) any person or
entity other than the Company and/or any officer, director or principal
stockholder (i.e., a holder [beneficially or of record] of more than ten percent
of the Company's voting stock) of the Company acquires securities of the Company
(in one or more transactions) having 25% or more of the total voting power of
all the Company's securities then outstanding and (ii) the Board of Directors of
the Company does not authorize or otherwise approve such
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acquisition, then the vesting periods of the Option shall be accelerated and the
Option shall immediately and entirely vest In such event, Employee shall have
the immediate right to purchase all the Option Shares, subject to the provisions
of this Agreement.
10. Company Representations. The Company hereby represents and
warrants to the Employee that:
(i) the Company, by appropriate and all required action,
is duly authorized to enter into this Agreement and consummate all of the
transactions contemplated hereunder; and
(2) the Option Shares, when issued and delivered by the
Company to the Employee in accordance with the terms and conditions
hereof, will be duly and validly issued and fully paid and non-assessable.
11. Employee Representations. The Employee hereby represents and
warrants to the Company that:
(1) he is acquiring the Option and shall acquire the
Option Shares for his own account and not with a view towards the
distribution thereof;
(2) he has received a copy of all reports and documents
required to be filed by the Company with the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934, as amended,
within the last 24 months and all reports issued by the Company to its
stockholders;
(3) he understands that he must bear the economic risk
of the investment in the Option Shares, which cannot be sold by him unless
they are registered under the Securities Act of 1933 (the "1933 Act") or
an exemption therefrom is available thereunder and that the Company is
under no obligation to register the Option Shares for sale under the 1933
Act;
(4) in his position with the Company, he has had both
the opportunity to ask questions and receive answers from the officers and
directors of the Company and all persons acting on its behalf concerning
the terms and conditions of the offer made hereunder and to obtain any
additional information to the extent the Company possesses or may possess
such information or can acquire it
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without unreasonable effort or expense necessary to verify the accuracy of
the information obtained pursuant to clause (ii) above;
(5) he is aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the Option
Shares in the absence of registration under the 1933 Actor an exemption
therefrom as provided herein; and
(6) if, at the time of issuance of the Option Shares,
the issuance of such shares have not been registered under the 1933 Act,
the certificates evidencing the Option Shares shall bear the following
legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
12. Restriction on Transfer of Options Shares.
12.1 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him without
registration under the 1933 Act, or in the event that they are not so
registered, unless (i) an exemption from the 1933 Act registration requirements
is available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
12.2 Anything in this Agreement to the contrary
notwithstanding, Employee hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Option Shares acquired by him (i) prior to six
months after the Grant Date and (ii) except in accordance with Company's policy,
if any, regarding the sale and disposition of securities owned by employees
and/or directors of the Company.
13. Miscellaneous.
13.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally, transmitted by electronic means
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or sent by a nationally recognized next-day courier to the parties at their
respective addresses set forth herein, or to such other address as either shall
have specified by notice in writing to the other. Notice shall be deemed duly
given hereunder when delivered or transmitted as provided herein.
13.2 Employee and Stockholder Rights. The Employee shall not
have any of the rights of a stockholder with respect to the Option Shares until
such shares have been issued after the due exercise of the Option. Nothing
contained in this Agreement shall be deemed to confer upon Employee any right to
continued employment with the Company or any subsidiary thereof, nor shall it
interfere in any way with the right of the Company to terminate Employee in
accordance with the provisions regarding such termination set forth in
Employee's written employment agreement with the Company, or if there exists no
such agreement, to terminate Employee at will.
13.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof This
Agreement may not be amended except by writing executed by the Employee and the
Company.
13.5 Binding Effect: Successors. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
13.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey (without regard
to choice of law provisions).
13.7 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the day and year first above:
GLOBAL TELECOMMUNICATION Address: 00 Xxxx Xxxx, Xxxxx 000
SOLUTIONS, INC. Xxxxxxx, Xxx Xxxxxx 00000
By: /s/ Xxxxx Xxxxxxx
EMPLOYEE: Address: 00 Xxxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
/s/ Xxx X. Xxxxxxxxxx
-------------------------------
XXX X. XXXXXXXXXX
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
____________________________
DATE
GLOBAL TELECOMMUNICATION
SOLUTIONS, INC.
00 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Stock Option Committee of the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of June 1, 1999 with
Global Telecommunication Solutions, Inc. (the "Company"), I hereby irrevocably
elect to exercise the right to purchase ____________ shares of the Company's
common stock, par value $.01 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete applicable
box[es]):
|_| a [personal check] [certified check] [bank check] payable to the
order of "Global Telecommunication Solutions, Inc." in the sum of
$___________
|_| confirmation of wire transfer in the amount of $__________; and/or
|_| with the consent of the Company, a certificate for ___________
shares of the Company s Common Stock, free and clear of any
encumbrances, duly endorsed, having a Fair Market Value (as such
term is defined in the 1994 Performance Equity Plan) of
$______________.
I hereby represent and warrant to, and agree with, the Company that:
(i) I have acquired the Option and shall acquire the Option Shares
for my own account, for investment, and not with a view towards the
distribution thereof;
(ii) I have received a copy of all reports and documents required to
be filed by the Company with the Commission pursuant to the Exchange Act
within the last 24 months and all reports issued by the Company to its
stockholders;
(iii) I understand that I must bear the economic risk of the
investment in the Option Shares, which cannot be sold by me unless they
are registered under the Securities Act of 1933 (the "1933 Act") or an
exemption therefrom is available thereunder and that the Company is under
no obligation to register the Option Shares for sale under the 1933 Act;
(iv) I agree that I will not sell, transfer by any means or
otherwise dispose of the Option Shares acquired by me hereby except in
accordance with Company's policy, if any, regarding the sale and
disposition of securities owned by employees and/or directors of the
Company;
(v) in my position with the Company, I have had both the opportunity
to ask questions and receive answers from the officers and directors of
the Company and all persons acting on its behalf concerning the terms and
conditions of the offer made hereunder and to obtain any additional
information to the extent the Company possesses or may possess such
information or can acquire it without unreasonable effort or expense
necessary to verify the accuracy of the information obtained pursuant to
(ii) above;
(vi) I am aware that the Company shall place stop transfer orders
with its transfer agent against the transfer of the Option Shares in the
absence of registration under the 1933 Act or an exemption therefrom as
provided herein; and
(vii) if, at the time of issuance of the Option Shares, the issuance
of such shares have not been registered under the 1933 Act, the
certificates evidencing the Option Shares shall bear the following legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
________________________________ __________________________________
(Signature) (Address)
________________________________ __________________________________
(Print Name)
__________________________________
(Social Security Number)
