STOCK OPTION AGREEMENT
Date: February 13, 1999
This Agreement (the "Agreement") dated the date first stated above (the
"Date of Grant"), is entered into between the Xxxxxx Family Trust ("Optionor")
and Xxxxx Xxxxxx ("Optionee").
WHEREAS, Optionee has agreed to provide certain consulting services to
Optionor; and
WHEREAS, Optionee is unwilling to provide such consulting services unless
Optionor grants to Optionee an option to purchase certain shares of Common Stock
(the "Stock") of Teleglobe Inc. (the "Company"), as set forth herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Grant of Option
---------------
a) Subject to the terms and conditions hereinafter set forth, Optionor
hereby grants to Optionee, on the Date of Grant, an option to
purchase up to one hundred and forty thousand, one hundred and
ninety seven (140,197) shares of Stock at a price of $30.75 per
share (the "Option Price"), the fair market value of such shares as
reported on the New York Stock Exchange on the Date of Grant. Such
option is hereinafter referred to as the "Option" and the shares of
Stock purchasable upon exercise of the Option are hereinafter
sometimes referred to as the "Option Shares."
b) The Option shall vest over three years. One third of the total
Option Shares shall vest on each anniversary of the Grant Date. The
first one third of the Option Shares shall vest on 2-13-2000; the
second one third of the Option Shares shall vest on 2-13-2001 and
the last one third of the Option Shares shall vest on 2-13-2002;
provided that Optionee has been employed by the Company during the
period from the Date of Grant until such date.
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2. Termination of Option
---------------------
a) The Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate
and become null and void upon the expiration of ten (10) years from
the Date of Grant (the "Option Term").
b) The Option may be exercised only by Optionee's estate, or by a
person who acquires the right to exercise the Option by bequest or
inheritance or by reason of the death of Optionee, provided that
such exercise occurs within the remaining Option Term.
3. Exercise of Option
------------------
a) Optionee may exercise the Option with respect to all or any part of
the number of Option Shares then exercisable hereunder by giving
Optionor written notice of intent to exercise. The notice of
exercise shall specify the number of Option Shares as to which
Optionee is exercising and the date of exercise thereof, which date
shall be at least five (5) days after the giving of such notice
unless an earlier time shall have been mutually agreed upon.
b) Full payment (in U.S. dollars) by Optionee of the Option Price for
the Option Shares purchased shall be made on or before the exercise
date specified in the notice of exercise in cash.
On the exercise date specified in Optionee's notice or as soon
thereafter as is practicable, Optionor shall deliver to Optionee a
certificate or certificates for the Option Shares then being
purchased upon full payment for such Option Shares, together with a
duly endorsed stock power. The obligation of Optionor to deliver
Stock shall, however, be subject to the condition that if at any
time Optionor shall determine in his discretion that the consent or
approval of any governmental regulatory body, or an agreement by
Optionee with respect to the disposition of Option Shares, is
necessary or desirable as a condition of, or in connection with, the
Option or the issuance or purchase of the Option Shares, the Option
may not be exercised in whole or in part until such consent,
approval or agreement shall have been effected or obtained free of
any conditions not acceptable to Optionor and, if it would otherwise
expire, the term of the Option shall be extended until thirty (30)
days after receipt by Optionee of the foregoing.
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c) If Optionee fails to pay for any of the Option Shares specified in
such notice or fails to accept delivery thereof, Optionee's right to
purchase such Option Shares may be terminated by Optionor. The date
specified in Optionee's notice as the date of exercise shall be
deemed the date of exercise of the Option, provided that payment in
full for the Option Shares to be purchased upon such exercise shall
have been received by such date.
4. Put by Optionee
---------------
a) Optionee shall have the right (the "Put Option") by delivery of
written notice to Optionor (the "Put Notice") to cause Optionor to
purchase, and Optionor shall purchase, the number of Option Shares
stated in such Put Notice and owned by Optionee for which the
minimum holding period specified in Rule 144(d) (or any successor
rule) of the Securities Act of 1933, as amended, has not elapsed.
Such determination shall be made by counsel to Optionor in
consultation with Optionee's legal counsel. The purchase price per
share will be equal to the Put Price (as defined in this Section 4)
applicable to such shares.
b) The term "Put Price" with respect to the Option Shares shall mean
the Fair Market Value per share as of the date the Put Notice is
delivered to Optionor. "Fair Market Value" shall mean (i) the
closing sales price per share of Stock on the principal national
securities exchange, if any, on which the Stock shall then be listed
for the last preceding date on which there was a sale of such Stock
on such exchange, (ii) if the Stock is not then listed on a national
securities exchange, the last sales price per share of Stock entered
on a national inter-dealer quotation system for the last preceding
date on which there was a sale of such Stock on such national
inter-dealer quotation system, (iii) if no closing or last sales
price per share of Stock is entered on a national inter-dealer
quotation system, the average of the closing bid and ask prices for
the Stock in the over-the-counter market for the last preceding date
on which there was a quotation for such Stock in such market, or
(iv) if no price can be determined under the preceding alternatives,
then the price per share as determined by Optionor and Optionee in
good faith.
c) The closing of the purchase of Option Shares pursuant to the Put
Option shall take place at a location determined by Optionor within
ten (10) business days after the date of the Put Notice. At any
closing pursuant to this Section 4, Optionor shall deliver to
Optionee, against delivery of certificates representing
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the Option Shares, (i) cash or certified check(s) in an amount equal
to the aggregate Put Price payable in respect of such Option Shares,
(ii) a promissory note in the principal amount equal to the
aggregate Put Price in respect of such Option Shares, payable one
year from the date of the note (such promissory note shall bear
interest payable annually at the publicly announced prime rate
published in The Wall Street Journal on the date such note is
issued), or (iii) a combination of cash/check(s) and a note
(consistent with terms in (ii)) equal to the aggregate Put Price
payable in respect of such Option Shares.
d) If Optionee exercises the Put Option simultaneously with the
exercise of the Option, Optionor agrees to pay Optionee (under any
of the alternatives in Section 4(c)(i-iii) above) the difference
between the aggregate Put Price with respect to the Option Shares
and the aggregate Option Price with respect to the Option Shares,
but only if the Put Price is greater than the Option Price.
e) Notwithstanding anything to the contrary contained in this Section
4, the obligation of Optionor to purchase the Option Shares shall,
however, be subject to the condition that if at any time Optionor
shall determine in his discretion that the consent or approval of
any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the Put Option or the purchase
of Option Shares thereunder, the Put Option may not be exercised in
whole or in part until such consent, approval or agreement shall
have been effected or obtained free of any conditions not acceptable
to Optionor and, if it would otherwise expire, the term of the Put
Option shall be extended until thirty (30) days after receipt by
Optionee of the foregoing.
5. Adjustment of and Changes in Stock
a) If there is any change in the number of shares of Stock through the
declaration of stock dividends, recapitalization resulting in stock
splits, or combinations or exchanges of such shares, then the number
of Option Shares and the Option Price of the Option shall be
proportionately adjusted as deemed appropriate by Optionor to
reflect any increase or decrease in the number of issued shares of
Stock; provided, however, that any fractional shares resulting from
such adjustment shall be eliminated.
b) In the event of a proposed dissolution or liquidation of the
Company, each Option granted pursuant to this Agreement shall
terminate as of a date to be fixed by Optionor; provided, however,
that Optionee shall have the right,
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immediately prior to such termination, to exercise the Option as to
all or any part of the Option Shares covered thereby, including
shares as to which the Option would not otherwise be exercisable.
c) In the event of any merger, consolidation or reorganization of the
Company, the Optionor shall promptly make an appropriate adjustment
to the number of shares receivable upon exercise of the Option after
the effective date of such transaction and the Option Price to
preserve Optionee's interest therein.
d) In the event of a change in the Stock as presently constituted,
which is limited to a change of all of the Company's authorized
shares without par value into the same number of shares with a par
value or, if such shares have a par value, then with a different par
value, the shares resulting from any such change shall be deemed to
be Stock within the meaning of this Agreement.
e) Except as expressly provided in this Section 5, Optionee shall have
no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class
by the Company or by reason of any dissolution, liquidation, merger,
or consolidation, and any issue by the Company of shares of stock of
any class, or securities convertible into or exchangeable for shares
of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Option Price of
shares of Stock subject to an Option. The grant of an Option
pursuant to this Agreement shall not affect in any way the right or
power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or
to merge, consolidate, or dissolve, liquidate, sell or transfer all
or part of its business or assets.
6. Non-Transferability of Option
-----------------------------
The Option is not assignable or transferable by Optionee except by will or
by the laws of descent and distribution. During the life of Optionee, the
Option is exercisable only by such person or by such person's guardian or
legal representative.
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7. Employment Not Affected
-----------------------
Nothing in this Agreement shall confer upon Optionee the right to continue
in the employment of the Company or affect any right which the Company has
to terminate the employment of Optionee.
8. Stock for Investment
--------------------
Optionee shall upon each exercise of a part or all of the Option represent
and warrant that his purchase of Stock pursuant to the Option is for
investment only and not with a view to distribution involving a public
offering.
9. Rights as a Shareholder
-----------------------
Optionee shall have no rights as a shareholder of the Company unless and
until certificates for shares of Stock are delivered to him. No
adjustments shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or other
rights for which the record date is prior to the date such certificates
are delivered to Optionee, except as expressly provided in Section 5
hereof.
10. Agreement by Optionee Regarding Withholding Taxes
-------------------------------------------------
a) No later than the date of exercise of any Option granted hereunder,
Optionee will make arrangements satisfactory to Optionor and the
Company regarding payment of any federal, state and/or local taxes
of any kind required by law to be paid or withheld upon the exercise
of the Option.
b) Optionor and the Company shall have the right to deduct from any
payment of any kind otherwise due to Optionee any federal, state
and/or local taxes of any kind required by law to be paid or
withheld upon the exercise of the Option.
11. Notice
------
Any notice to Optionor provided for in this instrument shall be addressed
to him at 0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 0000, Xxxxxx, XX 00000 and any
notice to Optionee shall be addressed to him at 0000 X. Xxxxxxx
Xxxxxxxxxx, Xxxxx 0000, Xxxxxx, XX 00000. Any notice shall be deemed to be
duly given if and when
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properly addressed and posted by registered or certified mail, postage
prepaid return receipt requested.
12. Governing Law
-------------
The validity, construction, interpretation and effect of this instrument
shall exclusively be governed by and determined in accordance with the law
of the State of Texas, except to the extent preempted by federal law,
which shall to the extent govern.
IN WITNESS WHEREOF, Optionor and Optionee have placed their
signatures hereon, effective on the Date of Grant.
The Xxxxxx Family Trust, Optionor
By: /s/ Xxxxx X. Xxxxxx /s/ Xxxxx Xxxxxx
---------------------------- ----------------------------
Xxxxx X. Xxxxxx Optionee
Trustee
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