STOCK OPTION AGREEMENT
AGREEMENT, made as of May 3, 2000, by and between GLOBAL
TELECOMMUNICATION SOLUTIONS, INC., a Delaware corporation (the "Company"), and
Xxxx Xxxxxxxxxxx (the "Employee").
WHEREAS, the Employee is employed by the Company; and
WHEREAS, the Board of Directors has authorized the grant to the
Employee of an option (the "Option") to purchase an aggregate of 700,000 of the
authorized but unissued or treasury shares of the Common Stock of the Company,
$.01 par value ("Common Stock"), on 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:
Grant of Stock Option. The Company hereby grants to the Employee the
right and option to purchase all or any part of an aggregate of 700,000 shares
of the Common Stock ("Option Shares") on the terms and conditions set forth
herein. Said Option 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.
Exercise Price. The exercise price ("Exercise Price") of the Option
shall be as follows: $0.50 per share for 250,000 shares, $0.75 per share for
200,000 shares and $1.50 per share for 150,000 shares, subject to adjustment as
hereinafter provided.
Exercisability. This Option is exercisable, subject to the terms and
conditions of this Agreement, as follows: (i) Options to purchase 250,000 shares
at $0.50 per share effective immediately, (ii) Options to purchase 200,000
shares at $0.75 when the Common Stock trades on the OTC Bulletin Board for $4.00
per share for 15 consecutive business days, and (iii) Options to purchase
250,000 shares at $1.50 per share when the Common Stock trades on the OTC
Bulletin Board for $7.00 per shares for 15 consecutive business days. After each
portion of the Options vests, it shall remain exercisable for a period of five
years from the date of vesting ("Exercise Period"), except as otherwise set
forth in this Agreement.
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, 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, then the portion of the Option which has vested by
the date of termination of employment (including vesting on an accelerated basis
pursuant to Section 3) may be exercised for a period of one year from the date
of such termination of employment or until the expiration of the Exercise
Period, whichever is shorter. The portion of the Option not yet exercisable on
the date of termination of employment shall immediately expire.
4.4. Other Termination.
(a) 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.
(b) The Committee, 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 of the Option Shares on the date of
termination (or the sales price of such
2
Shares if the Option Shares were sold during such six month period) and the
Exercise Price of such Shares.
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.
Adjustments. If and to the extent that the number of issued
shares of Common Stock shall be increased or reduced by reclassification,
split-up, stock dividend, combination of shares, or any similar change in the
Common Stock of the Company as a whole, the Company shall proportionally adjust
the number and kind of Option Shares and the exercise price of the Option, to
such extent and in such manner as shall as closely as possible maintain
Optionee's proportionate interest in the Company and his rights hereunder. If
(i) the Company shall not be the surviving corporation in any merger,
combination, consolidation or similar type of corporate transaction, or (ii) if
the Company is the survivor, but the outstanding shares of Common Stock are
exchanged for securities of another company, or property, then the Board of
Directors will make appropriate provision so that this Option will be
exercisable for the full period as provided in this Agreement for securities or
other property of the surviving or other entity as if this Option had been
exercised for Common Stock immediately before such merger, combination,
consolidation or other transaction. No fractional shares of Common Stock shall
be issued as a result of any adjustment under this provision, and to the extent
any adjustment results in a fractional share of Common Stock, then the
adjustment will be to the lower full share.
Method of Exercise.
Notice to the Company. The Option may be 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.
3
Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
Payment of Purchase Price.
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.
Cashless Payment. The Committee, 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.
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.
Form S-8 Registration. The Company hereby grants to Employee
the right to request the Company to register the Employee's exercisable Option
Shares on Form S-8 filed by the Company after the date hereof and during the
period in which Employee is employed by the Company or by any subsidiary
thereof. Notwithstanding the foregoing, the Company shall have no obligation
hereunder in connection with any registration statement or amendment thereto
unless the Employee provides to the
4
Company information with respect to his ownership of Option Shares, manner of
proposed disposition and such other matters as the Company shall reasonably
request for disclosure in the registration statement or any amendment thereto.
Company Representations. The Company hereby represents and
warrants to Employee that:
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
The Option Shares, when issued and delivered by the
Company to Employee in accordance with the terms and conditions hereof, will be
duly and validly issued and fully paid and non-assessable.
Employee Representations. The Employee hereby represents and
warrants to the Company that:
he is acquiring the Option and shall acquire the Option
Shares for his own account and not with a view towards the distribution thereof;
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;
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;
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 without unreasonable effort or expense necessary to verify the
accuracy of the information obtained pursuant to clause (iii) 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 Act or an exemption therefrom as provided
herein; and
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."
Restriction on Transfer of Option Shares.
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.
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.
Miscellaneous.
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 or sent by registered or certified mail, or by private courier to the
6
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 mailed as provided herein.
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.
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.
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.
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.
Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without regard
to choice of law provisions).
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.
7
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement as of the day and year first above:
GLOBAL TELECOMMUNICATION Address: 000 Xxxxxxx Xxxxxx
SOLUTIONS, INC. Xxx Xxxx, Xxx Xxxx 00000
By:________________________________
Xxx X. Xxxxxxxxxx
Chief Financial Officer
EMPLOYEE: Address:
----------------------------
Xxxx Xxxxxxxxxxx
8
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
--------------------
DATE
GLOBAL TELECOMMUNICATION
SOLUTIONS, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 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 May
3, 2000 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:
1. 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;
2. 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;
3. 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;
9
4. 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;
4. 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 clause (ii) above;
5. 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
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."
Kindly forward to me my certificate at your earliest
convenience.
Very truly yours,
------------------------------
Signature
------------------------------
(Print Name)
------------------------------
(Address)
------------------------------
(Social Security Number)
10
