STOCK OPTION AGREEMENT
AGREEMENT, made as of April 2, 1998 between GLOBAL
TELECOMMUNICATION SOLUTIONS, INC., a Delaware corporation (the "Company"), and
XXXXX XXXXXXXXXX (the "Optionee").
WHEREAS, the Optionee and Xx. Xxx Xxxxxxxx ("Xxxxxxxx") have
introduced the Company to Wien Securities ("Wien"), an entity that may commit,
prior to April 15, 1998, to provide certain financing to the Company;
WHEREAS, in consideration for making such introduction, the
Company has awarded each of the Optionee and Xxxxxxxx an option ("Option") to
purchase 50,000 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 Optionee 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 Optionee the right
and option to purchase all or any part of an aggregate of 50,000 shares of
Common Stock ("Option Shares") on the terms and conditions set forth herein.
Said Option is a nonqualified 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
$7.125 per share, subject to adjustment as hereinafter provided.
3. Exercisability. This Option is exercisable, subject to the terms and
conditions of this Agreement, at any time from and after September 1, 1998, and
it shall remain exercisable, except as otherwise provided herein, until the
close of business on April 2, 2003 (the "Exercise Period").
1
4. Termination of Option. Notwithstanding the foregoing, if the Company and Wien
do not enter into an agreement prior to April 15, 1998 with respect to Wien
providing financing to the Company, then the Option will terminate.
5. Withholding Tax. Not later than the date as of which an amount first must be
included in the gross income of the Optionee for Federal income tax purposes
with respect to the Option, the Optionee may be required to pay to the Company,
or make arrangements satisfactory to the Company 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 pursuant to this Agreement shall be conditioned upon such payment or
arrangements with the Company, if such payments or arrangements are required,
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 Optionee
from the Company.
6. Adjustments. If and to the extent that the number of issued shares of Common
Stock shall be increased or reduced by reclassification, common stock split,
common stock dividend on the Common Stock, 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 the 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.
7. Method of Exercise.
7.1 Notice to the Company. The Option shall 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.
2
7.2 Delivery of Option Shares. The Company shall deliver a certificate for
the Option Shares to the Optionee as soon as practicable after payment therefor.
7.3 Payment of Purchase Price.
7.3.1 Cash Payment. The Optionee 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 Cashless Payment. The Company, in its sole discretion, may allow the
Optionee to use Common Stock of the Company (or other securities or promissory
notes) owned by him (or to surrender a portion of this Option) to pay the
purchase price for the Option Shares (and any required Withholding Taxes). Such
payment would be made by delivery of 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, as defined below. The value of any Option
surrendered shall equal the difference between the Exercise Price and the Fair
Market Value on the date of surrender multiplied by the number of Option Shares
underlying the portion of the Option surrendered.
7.3.3 Fair Market Value. "Fair Market Value," unless otherwise required by
any applicable provision of the Internal Revenue Code of 1986, as amended, or
any regulations issued thereunder, means, as of any given date: (i) if the
Common Stock is listed on a national securities exchange or quoted on the Nasdaq
National Market or Nasdaq SmallCap Market, the last sale price of the Common
Stock in the principal trading market for the Common Stock on the last trading
day preceding the date of exercise, as reported by the exchange or Nasdaq, as
the case may be; (ii) if the Common Stock is not listed on a national securities
exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but
is traded in the over-the-counter market, the closing bid price for the Common
Stock on the last trading day preceding the date of exercise for which such
quotations are reported by the OTC Bulletin Board or the National Quotation
Bureau, Incorporated or similar publisher of such quotations; and (iii) if the
Fair Market Value of the Common Stock cannot be determined pursuant to clause
(i) or (ii) above, such price as the Board of Directors of the Company shall
determine, in good faith.
3
8. Nonassignability. The Option shall not be assignable or transferable, without
the consent of the Company, except by will or by the laws of descent and
distribution in the event of the death of the Optionee. No transfer of the
Option by the Optionee 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. Registration Rights. If the Company and Wien enter into an agreement prior to
April 15, 1998 with respect to Wien providing financing to the Company, then the
Optionee will receive the same registration rights that Wien receives for
securities issued by the Company in consideration for agreeing to provide such
financing.
10. Company Representations. The Company hereby represents and warrants to the
Optionee 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
(ii) the Option Shares, when issued and delivered by the Company to the
Optionee in accordance with the terms and conditions hereof, will be duly and
validly issued and fully paid and non-assessable.
11. Optionee Representations. The Optionee hereby represents and warrants to the
Company that:
(i) he is acquiring the Option and shall acquire the Option Shares for his
own account and not with a view towards the distribution thereof;
(ii) 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;
4
(iii) 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, except as provided herein, the Company is under
no obligation to register the Option Shares for sale under the 1933 Act;
(iv) 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 (ii) above;
(v) 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
(vi) the certificates evidencing the Option Shares shall bear the following
legends:
"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."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of April 2, 1998, a
copy of which is on file with the Company, and may not be transferred,
pledged or disposed of except in accordance with the terms and
conditions thereof."
12. Restriction on Transfer of Option Shares.
12.1 Anything in this Agreement to the contrary notwithstanding, Optionee
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) Optionee
has furnished the Company with notice of such proposed transfer and the
5
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, the
Optionee hereby agrees that, if he is, or at any time hereinafter becomes, an
employee or director of the Company or any subsidiary thereof, he shall not
sell, transfer by any means or otherwise dispose of the Option Shares acquired
by him 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, sent by
confirmed facsimile, registered or certified mail, or by private 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, faxed or mailed as provided
herein.
13.2 Optionee and Stockholder Rights. The Optionee 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. If Optionee is, or
hereinafter becomes, an employee or director of the Company or any subsidiary
thereof, nothing contained in this Agreement shall be deemed to confer upon the
Optionee any right to continued employment, or a continued directorship
position, with the Company or any subsidiary thereof, nor shall it interfere in
any way with the right of the Company to terminate the Optionee in accordance
with the provisions regarding such termination set forth in Optionee's written
employment agreement with the Company, or if there exists no such agreement, to
terminate Optionee at will, and/or terminate Optionee's directorship in
accordance with the Company's Certificate of Incorporation and By-laws and/or
the laws of the State of Delaware, as the case may be.
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 Optionee and the Company.
6
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 York (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.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
GLOBAL TELECOMMUNICATION
SOLUTIONS, INC. Address:
0000 Xxxxxx Xxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
By:__________________________
OPTIONEE:
Address:
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Fax:________________________
_______________________________
XXXXX XXXXXXXXXX
7
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
--------------------
DATE
Global Telecommunication Solutions, Inc.
0000 Xxxxxx Xxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: The Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of April 2, 1998 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
Section 7.3.3 of the Stock Option Agreement) of $---------.
|_| with the consent of the Company, by surrender of a portion of my
Option having a value of $_____________ as calculated in accordance
with Section 7.3.2 of the Stock Option Agreement.
|_| with the consent of the Company, __________________________
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;
1
(iv) 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;
(v) 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
(vi) the certificates evidencing the Option Shares shall bear the following
legends:
"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."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of April 2, 1998,
a copy of which is on file with the Company, and may not be
transferred, pledged or disposed of except in accordance with the
terms and conditions thereof."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
------------------------------ ----------------------------------------
(Signature) (Address)
------------------------------ ----------------------------------------
(Print Name)
----------------------------------------
(Social Security Number)
2
