As filed with the Securities and Exchange Commission on June 28, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GST TELECOMMUNICATIONS, INC.
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(Exact name of registrant as specified in its charter)
Canada
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. employer identification no.)
1030-999 West Hastings Street, Vancouver, British Columbia, Canada V6C 2W2
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(Address of principal executive offices) (Zip Code)
GST TELECOMMUNICATIONS, INC.
1995 STOCK OPTION PLAN
1996 STOCK OPTION PLAN
1996 EMPLOYEE STOCK PURCHASE PLAN
WARRANT ISSUED AS OF OCTOBER 1, 1995
(Full title of the plan)
Robert H. Hanson, Senior Vice President
GST Telecommunications, Inc.
1285 Sheridan Avenue, Suite 245
Cody, Wyoming 82414
(Name and address of agent for service)
(307) 527-6048
(Telephone number, including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered share price fee
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<S> <C> <C> <C> <C>
Common Shares, no
par value 656,264 (1)(2) $6.617(2) $4,342,499 $1,497.42
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Common Shares, no
par value 1,243,736 (1)(3) $14.625(3) 18,189,639 6,272.29
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Common Shares, no
par value 300,000 (1) $6.75 2,025,000 698.28
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Total 2,200,000 24,557,138 $8,467.99
==================================================================================================
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended (the
"Securities Act"), an indeterminate number of Common Shares that may
become issuable pursuant to antidilution provisions of the Registrant's
1995 Stock Option Plan (the "1995 Plan"), 1996 Stock Option Plan (the
"1996 Option Plan") and 1996 Employee Stock Purchase Plan (the "1996
Purchase Plan" and, together with the 1995 Plan and the 1996 Option Plan,
the "Plans") and Warrant issued as of October 1, 1995 are also being
registered.
(2) Represents 656,264 shares with respect to which options have been granted
under the 1995 Plan and the 1996 Option Plan at a weighted average
exercise price of $6.617 per share.
<PAGE>
(3) An aggregate of 1,243,736 shares is to be offered under the Plans at
prices not presently determined. Pursuant to Rule 457(h) under the
Securities Act, the offering price of these additional Common Shares is
estimated solely for the purpose of determining the registration fee and
is based on $14.625, the per share average of high and low sale prices of
the Common Shares as reported by the American Stock Exchange ("AMEX") for
trading on June 24, 1996.
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<PAGE>
PROSPECTUS
762,250 COMMON SHARES
GST TELECOMMUNICATIONS, INC.
Common Shares (no par value per share)
This Prospectus relates to the reoffer and resale by certain selling
shareholders (the "Selling Shareholders"), some of whom may be deemed to be
"affiliates" as defined in Rule 405 of the Securities Act of 1933, as amended
(the "Securities Act"), of GST Telecommunications, Inc. (the "Company") of
shares (the "Shares") constituting a portion of the Common Shares, no par value
per share (the "Common Shares"), of the Company that may be issued by the
Company to the Selling Shareholders (i) upon the exercise of options granted or
to be granted under (a) the Company's 1995 Stock Option Plan (the "1995 Plan")
or (b) the Company's 1996 Stock Option Plan (the "1996 Option Plan"), (ii) upon
purchase from the Company pursuant to the Company's 1996 Employee Stock Purchase
Plan (the "1996 Purchase Plan") or (iii) upon the exercise of a warrant dated as
of October 1, 1995 issued to Stephen Irwin, the Vice Chairman of the Board and
Secretary of the Company (the "Warrant"). This Prospectus also relates to the
reoffer and resale of Shares to be acquired by individuals who may be deemed to
be "affiliates" of the Company (collectively, the "Future Selling Shareholders")
upon (i) exercise of stock options to be granted under the 1995 Plan and 1996
Plan, or (ii) purchase pursuant to the Stock Purchase Plan. If and when such
options are granted to or such Shares are purchased by the Future Selling
Shareholders, the Company intends to distribute a Prospectus Supplement as
required by Rule 424(b) of the Securities Act. Such Prospectus Supplement will
specify the names of the Future Selling Shareholders and the amount of Shares to
be reoffered and sold by them.
The offer and sale of the Shares to the Selling Shareholders and the
Future Selling Shareholders were previously registered under the Securities Act.
The Shares are being reoffered and resold for the accounts of the Selling
Shareholders and the Future Selling Shareholders and the Company will not
receive any of the proceeds from the resale of the Shares.
The Selling Shareholders have advised the Company that the resale of their
Shares may be effected from time to time in one or more transactions on the
American Stock Exchange ("AMEX"), in negotiated transactions or otherwise at
market prices prevailing at the time of the sale or at prices otherwise
negotiated. See "Plan of Distribution." The Company will bear all expenses in
connection with the preparation of this Prospectus.
AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS" AT PAGE 4 HEREOF.
The Company's Common Shares are traded on the AMEX under the symbol "GST."
On June 24, 1996, the last sale price for the Common Shares, as reported on
AMEX, was $14.625.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is June 28, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549;
500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and Seven World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Common Shares are listed on the AMEX and such reports and other information may
also be inspected at the offices of the AMEX, 86 Trinity Place, New York, New
York 10006.
TABLE OF CONTENTS
AVAILABLE INFORMATION..........................................-2-
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................-3-
RISK FACTORS...................................................-4-
THE COMPANY...................................................-12-
MATERIAL CHANGES..............................................-12-
USE OF PROCEEDS...............................................-13-
SELLING SHAREHOLDERS..........................................-13-
PLAN OF DISTRIBUTION..........................................-14-
LEGAL MATTERS.................................................-14-
EXPERTS.......................................................-14-
ADDITIONAL INFORMATION........................................-15-
-2-
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 20-F for the fiscal year ended
September 30, 1995, as amended, and Reports of Foreign Issuer on Form 6-K for
the quarters ended December 31, 1995, as amended and March 31, 1996 are
incorporated by reference in this Prospectus and shall be deemed to be a part
hereof. All subsequent annual reports filed by the Company on Form 20-F, 40-F,
10-K or otherwise, prior to the termination of this offering, are deemed to be
incorporated by reference in this prospectus and shall be deemed to be a part
hereof from the date of filing of such documents. All Reports on Form 6-K
subsequently filed by the Company pursuant to the Exchange Act and identified
therein as a Form 6-K being incorporated by reference herein, prior to the
termination of this offering, are deemed to be incorporated by reference in this
Prospectus and shall be deemed to be a part hereof from the date of filing of
such documents.
The Company's Application for Registration of its Common Shares under
Section 12(b) of the Exchange Act filed on March 3, 1994 is incorporated by
reference in this Prospectus and shall be deemed to be a part hereof.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents. Written requests for such copies should
be directed to GST Telecommunications, Inc. at 4317 N.E. Thurston Way,
Vancouver, Washington 98662, Attention: Investor Relations. Oral requests should
be directed to Investor Relations (telephone number (360) 254-4700).
----------
No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made hereby, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or the Selling Shareholders. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to any person in any state or other jurisdiction in which such offer or
solicitation is unlawful. The delivery of this Prospectus at any time does not
imply that information contained herein is correct as of any time subsequent to
its date.
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<PAGE>
RISK FACTORS
The securities offered hereby involve a high degree of risk. Prospective
investors should carefully consider the following risk factors before making an
investment decision.
Development and Expansion Risk and Possible Inability to Manage Growth
The Company is in the early stages of its operations. Its networks serving
the San Gabriel Valley, Tucson, Albuquerque, Fresno and Coalinga, have only
recently become commercially operational and the Company has not deployed
switches in its networks. The continued expansion and development of the
Company's networks and the success of the Company's switched and enhanced
services will depend, among other things, upon the Company's ability to assess
potential markets, design fiber backbone routes that provide ready access to a
substantial customer base, secure financing, obtain required rights-of-way,
building access and governmental permits, implement expanded interconnection and
collocation with facilities owned by local exchange telephone companies ("LECs")
and achieve a sufficient customer base, and upon subsequent changes in state and
federal regulations. There can be no assurance that any networks to be developed
or further developed will be completed on schedule, at a commercially reasonable
cost or within the Company's specifications. In addition, the expansion of the
Company's business may involve acquisitions, which, if made, could divert the
resources and management time of the Company and could require integration with
the Company's existing networks and services. The Company's future performance
will depend, in part, upon its ability to manage its growth effectively, which
will require it to continue to implement and improve its operating, financial
and accounting systems, to expand, train and manage its employee base and to
effectively manage the integration of any acquired business. These factors and
others could adversely affect the expansion of the customer base and service
offerings of the Company's existing networks, as well as commencement of
operations of new networks. The Company's inability either to expand in
accordance with its plans or to manage its growth could have a material adverse
effect on its business, financial condition and results of operations. See "The
Company."
Historical and Anticipated Future Operating Losses and Negative EBITDA
The Company has incurred and expects to continue to incur increasing
operating losses and negative EBITDA while it expands its business and builds
its customer base. The Company has incurred significant increases in expenses
associated with these activities and there can be no assurance that an adequate
customer base with respect to any or all of its services will be achieved or
sustained. The Company does not expect to achieve a significant market share for
any of its services. The Company had a net loss of approximately $20.5 million
and negative EBITDA of $11.1 million for the six months ended March 31, 1996.
The Company had a net loss of approximately $11.3 million and negative EBITDA of
$8.8 million for the year ended September 30, 1995 and a net loss of
approximately $3.5 million and negative EBITDA of $0.8 million for the 13 months
ended September 30, 1994. There can be no assurance that the Company will
achieve or sustain profitability or generate positive EBITDA. At September 20,
1995, the Company had a U.S. net operating loss carryforward of approximately
$8.5 million and Canadian net operating loss carryforward of approximately $5.8
million. While such loss carryforwards are available to offset future taxable
income of the Company, it is more likely than not that the Company will not
generate sufficient taxable income so as to utilize all or a substantial portion
of such loss carryforwards prior to their expiration.
Significant Capital Requirements
The Company believes that the net proceeds of approximately $171.3 million
from a private placement offering consummated in December 1995 ("the December
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<PAGE>
Offering"), together with cash on hand and borrowings expected to be available
under both a $100 million credit facility with Tomen America and its affiliates
("Tomen") (the "Tomen Facility") and the equipment financing being negotiated,
will provide sufficient funds for the Company to expand its business as
presently planned and to fund its operating expenses for the next 12 months.
Thereafter, the Company expects to require additional financing. However, in the
event that the Company's plans or assumptions change or prove to be inaccurate,
or its cash on hand, net proceeds from the December Offering and borrowings
under the Tomen Facility and the equipment financing being negotiated, prove to
be insufficient to fund the Company's growth and operations, or if the Company
consummates acquisitions, or if the Company's operating cash flow does not
increase substantially, the Company may be required to seek additional capital
sooner than currently anticipated. Sources of financing may include public or
private equity or debt financings by the Company or its subsidiaries, sales of
non-strategic assets or other financing arrangements. The Company has been
discussing with Tomen the possibility of modifying the Tomen Facility to provide
additional financing for the interconnection of the Company's California
networks and for the Hawaiian inter-island network. There can be no assurance
that additional financing under the Tomen Facility or otherwise will be
available to the Company or, if available, that it can be obtained on acceptable
terms or within the limitations contained in the indentures relating to the
Notes sold in the December Offering (the "Indentures") in any future financing
arrangement. Failure to obtain such financing could result in the delay or
abandonment of some or all of the Company's development and expansion plans and
expenditures and could have a material adverse effect on the Company's business.
Such failure could also limit the ability of the Company to make principal and
interest payments on its outstanding indebtedness, which would have a material
adverse effect on the value of the Common Shares.
The Company has no working capital or other credit facility under which it
may borrow for working capital and other general corporate purposes. There can
be no assurance that such a facility will be available to the Company in the
future or that if such a facility were available, that it would be available on
terms and conditions acceptable to the Company.
Substantial Indebtedness
At March 31, 1996, the Company had outstanding on a consolidated basis
approximately $219.2 million of indebtedness. The accretion of original issue
discount on the notes (the "Notes") will cause an increase in indebtedness of
$164.9 million by December 15, 2000. The Indentures limit, but do not prohibit,
the incurrence of additional indebtedness by the Company. The Company
anticipates that it will incur substantial additional indebtedness in the
future. At March 31, 1996, the Company had $82.5 million of availability under
the Tomen Facility to finance the development and construction of additional
networks, if and to the extent that proposals for funding projects are approved
by Tomen. Since March 31, 1996, approximately $11.7 million was borrowed under
the Tomen Facility. The Company expects to incur substantial additional
indebtedness in the future. The Company is negotiating with equipment
manufacturers for approximately $315.0 million of financing. There can be no
assurance that any such equipment financing will be available to the Company on
acceptable terms or at all.
The level of the Company's indebtedness could have important consequences
to its future prospects, including the following: (i) the ability of the Company
to obtain any necessary financing in the future for working capital, capital
expenditures, debt service requirements or other purposes may be limited; (ii) a
substantial portion of the Company's cash flow from operations, if any, must be
dedicated to the payment of principal of and interest on its indebtedness and
other obligations and will not be available for other purposes; (iii) the
Company's level of indebtedness could limit its flexibility in planning for, or
reacting to changes in, its business; (iv) the Company will be more highly
-5-
<PAGE>
leveraged than some of its competitors, which may place it at a competitive
disadvantage; and (v) the Company's high level of indebtedness will make it more
vulnerable in the event of a downturn in its business.
Possible Inability to Service Debt
The Company has been experiencing increasing negative EBITDA and the
Company's earnings before fixed charges were insufficient to cover fixed charges
for the six months ended March 31, 1996, the year ended September 30, 1995 and
the 13 months ended September 30, 1994 by $21.4 million, $13.8 million and $3.0
million, respectively. There can be no assurance that it will be able to improve
its earnings before fixed charges or EBITDA or that the Company will be able to
meet its debt service obligations. As the Company does not currently have a
revolving credit facility, if a shortfall occurs, alternative financing would be
necessary in order for the Company to meet its liquidity requirements and there
can be no assurance that such financing would be available. In such event, the
Company could face substantial liquidity problems. In addition, the Company
anticipates that cash flow from operations may be insufficient to repay the
Notes in full at maturity in which event such indebtedness would need to be
refinanced. There can be no assurance that the Company will be able to effect
such refinancing. The ability of the Company to meet its obligations and to
effect such refinancings will be dependent upon, among other things, the future
performance of the Company, which will be subject to prevailing economic
conditions and to financial, business and other factors, including factors
beyond the control of the Company. Failure by the Company to meet its
obligations could result in a default on its indebtedness, including the Notes,
which would permit the holders of such indebtedness to accelerate the maturity
thereof.
Financial and Operating Restrictions Imposed by Existing Indebtedness
The Indentures and the Tomen Facility impose significant operating and
financial restrictions on the Company. Such restrictions affect, and in certain
cases significantly limit or prohibit, among other things, the ability of the
Company to incur additional indebtedness or to create liens on its assets, pay
dividends, sell assets, engage in mergers or acquisitions or make investments.
Failure to comply with any such covenant could result in a default thereunder,
which could result in an acceleration of such indebtedness.
Difficulties in Implementing Local and Enhanced Services
The Company plans to deploy high capacity, digital switches in the cities
in which it operates or plans to operate networks, as well as in certain cities
where the Company will rely on LEC facilities for transmission. This will enable
the Company to offer interstate switched access services and, as regulatory
conditions permit, intrastate switched access, enhanced services and local dial
tone. The Company expects negative operating margins from its switched services,
during the 12 to 18 month period after a switch is deployed. For switches
operating in conjunction with the Company's networks, the Company expects
operating margins to improve as the network is expanded and Larger volumes of
traffic are carried on the Company's network. Until such time, the Company will
rely on the LEC to originate and terminate a significant portion of its switched
services traffic. For switches operating in cities where the Company will rely
on LEC facilities for transmission, negative operating margins are expected
under current LEC pricing tariffs. Although under the Telecommunications Act of
1996 (the "Telecommunications Act") the LECs will be required to unbundle local
tariffs and permit the Company to purchase only the origination and termination
services it needs, thereby decreasing operating expenses, there can be no
assurance that such unbundling will be effected in a timely manner and result in
prices favorable to the Company. In addition, the Company's ability to
successfully implement its switched and enhanced services will require the
negotiation of resale agreements with LECs and other competitive local exchange
telephone companies ("CLECs") and the negotiation of interconnection agreements
-6-
<PAGE>
with incumbent LECs. The Company's switched services may not be profitable due
to, among other factors, lack of customer demand, competition from other CLECs
and pricing pressure from the LECs. Implementation of the Company's switched and
enhanced services is subject to the Company's ability to obtain equipment
financing for switches and upon equipment manufacturers' ability to meet the
Company's switch deployment schedule. Although the Company is negotiating with
equipment manufacturers for approximately $315.0 million of equipment financing,
it has not entered into definitive agreements and there can be no assurance that
the Company will obtain such financing, that all or any of such switches will be
deployed or that, if deployed, such switches will be utilized to the degree
contemplated by the Company. The Company has no experience providing switched
access services and there can be no assurance that the Company will be able to
successfully implement its switched and enhanced services strategy.
Recent Commencement of Marketing
The Company has only recently begun marketing the services of certain of
its networks and, as a result, the Company has relatively few customers and has
generated limited revenue from its CLEC services. Although the Company actively
markets its products and services, there can be no assurance that the Company
will be able to attract new customers or retain existing customers.
Dependence on Key Customers
The Company's five largest telecommunications services customers accounted
for approximately 47.8%, 26.8% and 0.7% of the Company's consolidated revenues
for the six months ended March 31, 1996, the year ended September 30, 1995 and
the 13 months ended September 30, 1994, respectively. During the year ended
September 30, 1995, a former customer of the Company's wholly-owned subsidiary,
International Telemanagement Group, Inc. ("ITG"), which is presently the subject
of a bankruptcy proceeding, accounted for 5.3% of the Company's consolidated
revenues. It is anticipated that during the early stages of development of
individual networks, before obtaining a sufficient amount of end-user revenues,
the Company will be dependent on a limited number of long distance carriers for
a significant portion of its revenues. While long distance carriers have high
volume requirements and have utilized CLECs, they generally are more price
sensitive than end-users. The five largest customers of the Company's
manufacturing operations accounted for 7.1%, 16.1% and 22.2% of the Company's
consolidated revenues for the six months ended March 31, 1996, the year ended
September 30, 1995 and the 13 months ended September 30, 1994, respectively. The
loss of, or decrease of business from, one or more significant customers could
have a material adverse effect on the business, financial condition and results
of operations of the Company.
Competition
The telecommunications industry is highly competitive. In most markets,
the Company's principal competitor for local exchange services is the Regional
Bell Operating Company ("RBOC") or GTE Corporation ("GTE"). Other competitors
may include other CLECs, microwave and satellite carriers, wireless
telecommunications providers and private networks built by large end-users.
Potential competitors (using similar or different technologies) include cable
television companies, utilities and local telephone companies outside their
current local service areas. In addition, the Company anticipates future
competition from large long distance carriers, such as AT&T Corp. ("AT&T"), MCI
Communications Corporation ("MCI") and Sprint Corporation ("Sprint"), which have
announced plans to offer integrated local and long distance telecommunications
services as regulations allow. Consolidation of telecommunications companies and
the formation of strategic alliances within the telecommunications industry, as
well as the development of new technologies, could give rise to significant new
competitors to the Company.
-7-
<PAGE>
As a recent entrant in the integrated telecommunications services
industry, the Company has not achieved and does not expect to achieve a
significant market share for any of its services. In particular, the RBOCs, GTE
and other local telephone companies have long-standing relationships with their
customers, have financial, technical and marketing resources substantially
greater than those of the Company, have the potential to subsidize competitive
services with revenues from a variety of businesses and currently benefit from
certain existing regulations that favor the LECs over the Company in certain
respects. While recent regulatory initiatives, which allow CLECs such as the
Company to interconnect with LEC facilities, provide increased business
opportunities for the Company, such interconnection opportunities have been
accompanied by increased pricing flexibility for and relaxation of regulatory
oversight of the LECs. For example, the Federal Communications Commission
("FCC") granted LECs additional flexibility in pricing their interstate special
and switched access services on a central office specific basis. Under this
pricing scheme, LECs may establish pricing zones based on access traffic density
and charge different prices for central offices in each zone. The Company
anticipates that the FCC will grant LECs increasing pricing flexibility as the
number of interconnections and competitors increases. In addition, the FCC
enacted interim pricing rules that restructure LEC switched transport rates in
order to facilitate competition for switched access. If regulators allow LECs to
charge CLECs increased fees in conjunction with interconnection to their
networks, the financial condition of the Company could be adversely affected. If
the LECs lower their rates, the Company and others providing CLEC and other
telecommunications services may be forced by market conditions to charge less
for their services in order to compete. There can be no assurance that the
Company will be able to achieve or maintain significant revenue or compete
effectively in any of its markets.
To the extent the Company interconnects with and uses LEC networks to
service the Company's customers, the Company is dependent upon the technology
and capabilities of the LECs to meet certain telecommunications needs of the
Company's customers and to maintain its service standards. The Company will
become increasingly dependent on interconnection with LECs as switched services
become a greater percentage of the Company's business. The Telecommunications
Act imposes interconnection obligations on LECs, but there can be no assurance
that the Company will be able to obtain the services it requires at rates, and
on terms and conditions, that permit the Company to offer switched services at
rates that are both profitable and competitive. In the event that the Company
experiences difficulties in obtaining high quality, reliable and reasonably
priced service from the LECs, the attractiveness of the Company's services to
its customers could be impaired.
The long distance telecommunications industry has relatively insignificant
barriers to entry, numerous entities competing for the same customers and a high
average churn rate, as customers frequently change long distance providers in
response to the offering of lower rates or promotional incentives by
competitors. The Company competes with major carriers such as AT&T, MCI and
Sprint, as well as other national and regional long distance carriers and
resellers, many of whom are able to provide services at costs that are lower
than the Company's current costs. In addition, as a result of the
Telecommunications Act, RBOCs also will become competitors in the long distance
telecommunications industry upon the satisfaction of certain conditions. The
Company believes that the principal competitive factors affecting its long
distance operations are pricing, customer service, accurate billing, clear
pricing policies and, to a lesser extent, variety of services. The ability of
the Company to compete effectively will depend upon its continued ability to
maintain high quality, market driven services at prices generally equal to or
below those charged by its competitors. The FCC has, on several occasions since
1984, approved or required price reductions by AT&T. The FCC has announced a
decision pursuant to which AT&T will no longer be regulated as a dominant long
distance carrier. This decision removes AT&T from price-cap regulations with
respect to its long distance services as well as other regulatory and reporting
requirements that previously
-8-
<PAGE>
only applied to AT&T as the sole carrier designated by the FCC as dominant in
the long distance market. This decision, which is subject to certain other
commitments and undertakings agreed to by AT&T, is expected to increase AT&T's
flexibility in competing in the long distance services market and, in
particular, will eliminate the longer tariff notice requirements previously
applicable only to AT&T. To maintain its competitive posture, the Company
believes that it must be in a position to reduce its prices in order to meet
reductions in rates, if any, by others. Any such reductions could adversely
affect the Company.
The Internet services market is highly competitive. There are no
substantial barriers to entry, and the Company expects that competition will
continue to intensify. The Company's competitors in this market include Internet
service providers, other telecommunications companies, online services provides
and Internet software providers. Many of these competitors have greater
financial, technological and marketing resources than those available to the
Company.
The Company's wholly-owned subsidiary, National Applied Computer
Technologies, Inc. ("NACT"), competes with other lower to medium capacity switch
manufacturers and software providers. As its business develops and new switches
are introduced, NACT's competitors may include larger switch and
telecommunications equipment manufacturers such as Lucent Technologies Inc.,
Harris Corp., Siemens AG, Alcatel Alsthom Compagnie Generale D'Electricite,
Telefonaktiebolaget L.M. Ericsson and Northern Telecom, Ltd. Most of NACT's
potential competitors have substantially greater financial, technical and
marketing resources than NACT and may threaten the viability of NACT if such
other companies commence efforts to compete in the segment of the switch
manufacturing market in which NACT operates.
Government Regulation
The Company's networks and the provision of switched and private line
services are subject to significant regulation at the federal, state and local
levels. Delays in receiving required regulatory approvals or the enactment of
new adverse regulation or regulatory requirements may have a material adverse
effect upon the Company.
The FCC exercises jurisdiction over the Company to the extent its services
involve the provision, origination and termination of interstate or
international telecommunications, including resale of long distance services. As
such a provider, the Company must file tariffs with the FCC. In addition, the
Company must obtain prior FCC authorization for domestic and international long
distance services. State regulatory commissions exercise jurisdiction over the
Company to the extent it provides intrastate services. As such a provider, the
Company is required to obtain regulatory authorization and/or file tariffs at
state agencies in most of the states in which it operates. Local authorities
control the Company's access to municipal rights-of-way. The networks are also
subject to numerous local regulations such as building codes and licensing. Such
regulations vary on a city by city and county by county basis. There can be no
assurance that state or federal commissions will grant required authority or
refrain from taking action against the Company, if it is found to have provided
services without obtaining the necessary authorizations. If authority is not
obtained or if tariffs are not filed, or are not updated, or otherwise do not
fully comply with the tariff filing rules of the FCC or state regulatory
agencies, third parties or regulators could challenge these actions. Such
challenges could cause the Company to incur substantial legal and administrative
expenses. The recently enacted Telecommunications Act provides for a significant
deregulation of the domestic telecommunications industry, including the local
exchange, long distance and cable television industries. Since the
Telecommunications Act has only recently been enacted, it is too early to
predict what effect such legislation will have on the Company and its
operations.
-9-
<PAGE>
In addition, the FCC imposes restrictions on foreign ownership of
communications service providers utilizing radio frequencies. The operations of
the Company's Hawaiian network use, among other transmission facilities,
microwave radio facilities operating pursuant to FCC licenses granted to Pacwest
Network, Inc., an entity that is controlled by John Warta, the Company's
President and Chief Executive Officer. The FCC also has the authority, which it
is not presently exercising, to impose restrictions on foreign ownership of
communications service providers not utilizing radio frequencies, which could
have a material adverse effect on the Company's CLEC and other businesses.
Need to Adapt to Technological Change
The telecommunications industry is subject to rapid and significant
changes in technology, with the Company relying on third parties for the
development of and access to new technology. The effect of technological
changes, including changes to wireline and wireless transmission technologies,
on the business of the Company cannot be predicted. The Company believes its
future success will depend, in part, on its ability to anticipate or adapt to
such changes and to offer, on a timely basis, services that meet customer
demands.
The future success of NACT will depend in part upon its ability to keep
pace with advancing technology and standards within the switch manufacturing
industry. There can be no assurance that NACT's products will not be rendered
obsolete by switch products incorporating technological advances designed by
competitors that are not available to NACT.
Possible Adverse Litigation Outcome
An action was commenced against NACT alleging that its telephone systems
incorporating prepaid calling features infringe upon a patent issued in 1987. An
unfavorable decision in this action could have a material adverse effect on the
Company.
Dependence on Key Personnel
The efforts of a small number of key management and operating personnel
will largely determine the Company's success and the loss of any of such persons
could adversely affect the Company. The success of the Company also depends in
part upon its ability to hire and retain highly skilled and qualified operating,
marketing, financial and technical personnel. The competition for qualified
personnel in the telecommunications industry is intense and, accordingly, there
can be no assurance that the Company will be able to hire or retain necessary
personnel.
Dependence on Rights-of-Way and Other Third Party Agreements
The Company must obtain easements, rights-of-way, entry to premises,
franchises and licenses from various private parties, actual and potential
competitors and state and local governments in order to construct and operate
its networks. There can be no assurance that the Company will obtain
rights-of-way and franchise agreements on acceptable terms or that current or
potential competitors will not obtain similar rights-of-way and franchise
agreements that will allow them to compete against the Company. If any of the
existing franchise or license agreements were terminated or not renewed and the
Company were forced to remove its fiber optic cables or abandon its network in
place, such termination could have a material adverse effect on the Company.
Variability of Quarterly Operating Results
As a result of the limited revenues and significant expenses associated
with the expansion and development of its networks and services, the Company
anticipates that its operating results could vary significantly from period to
-10-
<PAGE>
period. In addition, revenues relating to the Company's network businesses are
and may continue to be dependent upon a small number of customers and contracts,
revenues under which are likely to vary significantly from period to period.
Risk of Joint Investments
The Company's Phoenix network is operated by Phoenix Fiber Access, Inc.
("Phoenix Fiber"), an entity in which the Company has a 50% ownership interest.
Phoenix Fiber has been managed by a governing board that the Company does not
control. The risk is present in this joint venture, and in other joint ventures
in which the Company may subsequently determine to participate, that the other
joint venture partners may at any time have economic, business or legal
interests or goals that are inconsistent with those of the joint venture or the
Company. The risk is also present that a joint venture partner may be unable to
meet its economic or other obligations to the venture and that the Company may
be required to fulfill some or all of those obligations. In addition, if the
Company enters into international joint ventures, the operations of such
ventures will be subject to various risks not present in the Company's domestic
operations, such as fluctuations in currency exchange rates, nationalization or
expropriation of assets, import/export controls, political instability,
limitations on foreign investment, restrictions on the ability to convert
currency and the additional expenses and risks inherent in conducting operations
in geographically distant locations with customers speaking different languages
and having different cultural approaches to the conduct of business.
Volatility of Market Price of Common Shares
Since the Common Shares have been publicly traded, their market price has
fluctuated over a wide range and may continue to do so in the future. The market
price of the Common Shares could be subject to significant fluctuations in
response to various factors and events, including among other things, the depth
and liquidity of the trading market of the Common Shares, variations in the
Company's operating results and the difference between actual results and the
results expected by investors and analysts. In addition, from time to time the
stock market has experienced broad price and volume fluctuations that have often
been unrelated to the operating performance of companies. These broad market
fluctuations also may adversely affect the market price of the Common Shares.
Risks of Investment in a Canadian Corporation
The Company is a Canadian corporation. Certain directors and officers and
certain of the Company's professionals are residents of Canada. As a result, it
may be difficult for U.S. shareholders to effect service of process within the
United States upon the Company or upon such directors, officers and
professionals or to collect judgments of U.S. courts predicated upon civil
liability under U.S. federal securities and other laws. The Company has been
advised that there is substantial doubt as to whether Canadian courts would (i)
enforce judgements of U.S. courts obtained against the Company or such
directors, officers and professionals predicated upon the civil labilities
provisions of U.S. laws or (ii) impose liabilities in original actions against
the Company or its directors, officers and professionals predicated solely upon
U.S. laws. In addition, the Company's status as a Canadian company limits the
ability of the Company to hold or control common carrier radio frequency
licenses in the United States.
Potential Resales of a Substantial Number of Shares; Registration Rights
At May 31, 1996, the Company had outstanding 21,168,989 Common Shares. Of
these shares, 19,603,743 Common Shares are freely tradeable, except for (i) any
Common Shares held by "affiliates" of the Company within the meaning of Rule 144
under the Securities Act (2,999,758 of such 19,603,743 shares at May 31, 1996),
which shares will be subject to the resale limitations of Rule 144, (ii) an
aggregate of 750,000 Common Shares subject to escrow under regulations of the
-11-
<PAGE>
Vancouver Stock Exchange (the "VSE") and (iii) 1,000,000 Common Shares subject
to escrow. The remaining 1,565,246 Common Shares are "restricted securities," as
that term is defined in Rule 144 and may only be sold pursuant to a registration
statement under the Securities Act or an applicable exemption from registration
thereunder, including pursuant to Rule 144. Of such 1,556,246 shares, the
Company is contractually obligated to register for resale an aggregate of
414,199 shares. In addition, at May 31, 1996, (i) 3,005,223 Common Shares were
reserved for issuance upon exercise of outstanding stock options, with exercise
prices ranging from $3.55 to $10.00 per share, (ii) 896,155 Common Shares were
reserved for issuance upon exercise of outstanding warrants, with exercise
prices ranging from $5.52 to $12.96 per share and (iii) 2,823,749 Common Shares
were reserved for issuance upon conversion of the convertible notes sold in the
December Offering (the "Convertible Notes") (based on the aggregate accreted
value of Convertible Notes on June 15, 1996). The Company has registered or is
obligated to register the resale of the Common Shares issuable upon exercise of
the options and the warrants. The Company is also obligated to register the
issuance of the Common Shares issuable upon conversion of the Convertible Notes.
The future sale or the expectation of future sales of Common Shares in the
public market could adversely affect the prevailing market prices for the Common
Shares and could impair the Company's ability to raise capital through the sale
of Common Shares.
Potential Anti-Takeover Provisions
The Company's Board of Directors has the authority, without any further
vote or action by the Company's shareholders, to issue up to 10,000,000
Preference Shares, without par value (the "Preference Shares"), in one or more
series and to determine the designations, power,s preferences and relative,
participating, optional or other rights thereof, including without limitation,
the dividend rate (and whether dividends are cumulative), conversion rights,
voting rights, rights and terms of redemption, redemption price and liquidation
preference. Although the Company has no current plans to issue any Preference
Shares, the rights of the holders of Common Shares would be subject to, and may
be adversely affected by, the rights of the holders of any Preference Shares
that may be issued in the future. Issuance of Preference Shares could have the
effect of delaying, deterring or preventing a change in control of the Company,
including the imposition of various procedural and other requirements that could
make it more difficult for holders of Common Shares to effect certain corporate
actions, including the ability to replace incumbent directors and to accomplish
transactions opposed by the incumbent Board of Directors.
THE COMPANY
Overview
The Company provides a broad range of integrated telecommunications
products and services, primarily to customers located in the western continental
United States and Hawaii. Since inception as a facilities-based CAP, the Company
has constructed and operates state-of-the-art, digital telecommunications
networks that provide an alternative to incumbent LECs. The Company has expanded
beyond the scope of traditional competitive access provider operations into CLEC
services and currently provides a range of enhanced telecommunications services
that include long distance, Internet access, and data services. In addition, the
Company expects to offer switched access and local dial tone services to
complement its existing telecommunications service offerings. The Company also
manufactures telecommunications switching equipment and network management and
billing systems through its wholly-owned subsidiary, NACT.
MATERIAL CHANGES
In the December Offering, the Company sold $20,000,187 137/8% Convertible
Senior Subordinated Discount Notes due 2005 in December 1995 and GST USA, Inc.
-12-
<PAGE>
sold $160,001,496 137/8% Senior Discount Notes due 2005 in a private placement.
Of the net proceeds of the December Offering, $2.0 million was applied to the
repayment of short-term indebtedness, and the balance will be used for capital
expenditures and to fund future operating deficits and for working capital
purposes.
USE OF PROCEEDS
The Company will receive the exercise price of the options when exercised
by the holders thereof. The Company will not receive any of the proceeds from
the reoffer and resale of the Shares by the Selling Shareholders and the Future
Selling Shareholders.
SELLING SHAREHOLDERS
This Prospectus relates to the reoffer and resale of Shares issued or that
may be issued to the Selling Shareholders under the 1995 Plan, the 1996 Option
Plan, the 1996 Purchase Plan or the Warrant.
The following table sets forth (i) the number of Common Shares
beneficially owned by each Selling Shareholder prior to the Offering, (ii) the
number of Shares to be offered for resale by each Selling Shareholder and (iii)
the number and percentage of Common Shares to be held by each Selling
Shareholder after completion of the offering.
<TABLE>
<CAPTION>
Number of Common
Number of Shares/Percentage of
Number of Common Shares to be Class to be Owned
Shares Owned Prior Offered for After Completion of
Name to the Offering Resale the Offering
- --------------------------- ---------------- ------------ -----------------
<S> <C> <C> <C>
W. Gordon Blankstein(1) 469,967(2) 85,000 384,967/1.8%
Robert H. Hanson(3) 166,950(4) 42,500 124,450/*
Peter E. Legault(5) 121,233(6) 19,750 101,483/*
Jack G. Armstrong(7) 50,000(8) 30,000 10,000/*
Thomas E. Sawyer(9) 315,130(10) 70,000 245,130/1.2%
John Warta(11) 2,013,667(12) 100,000 1,913,667/9.0%
Stephen Irwin (13) 536,212(14) 415,000 54,545/*
</TABLE>
- ----------
* Less than 1%.
(1) Mr. Blankstein was a director of the Company from November 1992 to January
1993 and has been a director of the Company since January 1994. He became
Chairman of the Board of Directors in February 1995.
(2) Includes (i) 244,167 Common Shares issuable upon exercise of options and
(ii) 200,000 Common Shares held in escrow pursuant to policies of the VSE.
Does not include 133,333 Common Shares issuable upon the exercise of
options that are not exercisable until the market price of the Common
Shares on the AMEX reaches certain levels for certain prescribed periods.
(3) Mr. Hanson has been a director of the Company since February 1993 and has
been the Senior Vice President - Corporate Development and Chief Financial
Officer since September 1993.
(4) Includes 100,000 Common Shares issuable upon exercise of options.
(5) Mr. Legault has been a director of the Company since April 1993.
(6) Includes 40,000 Common Shares issuable upon exercise of options.
(7) Mr. Armstrong has been a director of the Company since July 1994.
(8) Includes 40,000 Common Shares issuable upon exercise of options.
(9) Mr. Sawyer has been the Chairman of the Board of Directors and Chief
Executive Officer of NACT since October 1988. He became the Chief
Technology Officer of the Company in December 1993.
(10) Includes 155,000 Common Shares issuable upon exercise of options.
-13-
<PAGE>
(11) Mr. Warta has been the President, Chief Executive Officer and a director
of the Company since March 1995.
(12) Includes (i) 191,667 Common Shares issuable upon exercise of options and
(ii) 1,000,000 Common Shares held by Pacwest, an entity controlled by John
Warta. Mr. Warta has an 80% ownership interest in Pacwest ("Pacwest").
Does not include 133,333 Common Shares issuable upon the exercise of
options that are not exercisable until the market price of the Common
Shares on the AMEX reaches certain levels for certain prescribed periods.
(13) Mr. Irwin has been the Vice-Chairman of the Company since October 1995 and
Secretary of the Company since November 1992.
(14) Includes 181,667 shares issuable upon exercise of options and a warrant to
purchase 300,000 common shares issuable upon exercise of a warrant. Does
not include 133,3333 common shares issuable on the exercise of options
that are not exercisable until the trading price of the common shares on
the AMEX reaches certain levels for certain prescribed periods.
PLAN OF DISTRIBUTION
It is anticipated that all of the Shares will be offered by the Selling
Shareholders from time to time in one or more transactions on the AMEX, in
negotiated transactions or otherwise at market prices prevailing at the time of
the sale or at prices otherwise negotiated. The Selling Shareholders have
advised the Company that they are not parties to any agreement, arrangement or
understanding as to such sales.
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Shares
offered hereby have been passed upon for the Company by Messrs. Olshan Grundman
Frome & Rosenzweig LLP, 505 Park Avenue, New York, New York 10022. Stephen
Irwin, counsel to Olshan Grundman Frome & Rosenzweig LLP, is an officer and
director of the Company and holds 54,545 Common Shares and has been granted
options and warrants to purchase an additional 615,000 Common Shares, the resale
of 415,000 of which Common Shares are being registered pursuant to the
Registration Statement of which this Prospectus forms a part.
EXPERTS
The consolidated balance sheet of GST Telecommunications, Inc. and its
subsidiaries as of September 30, 1995 and the consolidated statements of
operations and deficit and cash flows for the year ended September 30, 1995,
have been incorporated by reference herein in reliance upon the report of KPMG
Peat Marwick LLP, independent certified public accountants, and upon the
authority of said firm as experts in accounting and auditing. The consolidated
balance sheet of GST Telecommunications, Inc. and its subsidiaries as of
September 30, 1994 and the consolidated statements of operations and deficit and
cash flows for the 13 months ended September 30, 1994 and year ended August 31,
1993 have been incorporated by reference herein in reliance upon the report of
KPMG Peat Marwick Thorne, independent chartered accountants, upon the authority
of said firm as experts in accounting and auditing. The audited financial
statements of International Telemanagement Group, Inc. as of December 31, 1994
and 1993 and for the year ended December 31, 1994 and the period January 23,
1993 (date of inception) through December 31, 1993 have been included herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, and upon the authority of said firm as experts in accounting and
auditing. The financial statements of the IntelCom-Greenstar Joint Venture for
the periods ended September 30, 1994 and 1993 have been incorporated by
reference herein upon reliance upon the report of KPMG Peat Marwick Thorne,
independent chartered accountants, and upon authority of said firm as experts in
accounting and auditing.
-14-
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-8 under the Securities Act with respect to the Shares offered hereby. For
further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement. Statements contained in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each instance, reference is made to the copy of
such contract or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such reference.
-15-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Page(s)
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Independent Auditors' Report..............................................F-2
Balance Sheets at December 31, 1994 and 1993 .............................F-3
Statements of Operations for the four months
ended April 30, 1995, the year
ended December 31, 1994 and for the period
January 23, 1993 (date of inception)
through December 31, 1993 ................................................F-4
Statements of Stockholders' Deficit for
the four months ended April 30, 1995,
the year ended December 31, 1994 and for
the period January 23, 1993 (date of
inception) through December 31, 1993......................................F-5
Statements of Cash Flows for the four
months ended April 30, 1995, the year ended
December 31, 1994 and for the period
January 23, 1993 (date of inception)
through December 31, 1993.................................................F-6
Notes to Financial Statements.............................................F-7
GST TELECOMMUNICATIONS, INC.
Description of Unaudited Pro Forma Financial Statements
Reflecting the Acquisition of International Management
Group, Inc. (ITG) By GST Telecommunications, Inc. (GTI)................F-11
Pro Forma Statement of Operations for
the twelve months ended September 30, 1995.............................F-12
Notes to Pro Forma Statement
of Operations for the twelve months ended September 30, 1995...........F-13
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
International Telemanagement Group, Inc.:
We have audited the accompanying balance sheets of International Telemanagement
Group, Inc. (the Company), as of December 31, 1994 and 1993, and the related
statements of operations, stockholders' deficit, and cash flows for the year
ended December 31, 1994, and for the period January 23, 1993 (date of inception)
through December 31 1993. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of International Telemanagement
Group, Inc., as of December 31, 1994 and 1993, and the results of its operations
and its cash flows for the year ended December 31, 1994 and for the period
January 23, 1993 (date of inception) through December 31, 1993 in conformity
with generally accepted accounting principles.
As discussed in note 2, effective May 1, 1995, the Company was acquired by GST
Telecom, Inc.
/S/ KPMG PEAT MARWICK LLP
Detroit, Michigan
July 21, 1995
F-2
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Balance Sheets
December 31, 1994 and 1993
<TABLE>
<CAPTION>
Assets 1994 1993
------ ---- ----
<S> <C> <C>
Current assets:
Cash $ 702,392 71,309
Trade accounts receivable, less allowance for doubtful accounts of $164,000
and $52,000, at 1994 and 1993, respectively 1,167,346 370,643
Due from officers and employees - 48,690
Other receivables 9,152 5,000
Prepaid expenses and other current assets 80,713 115,805
------------ ------------
Total current assets 1,959,603 611,447
Property and equipment, net (note 3) 1,318,870 1,175,495
--------- ---------
$ 3,278,473 1,786,942
============ =========
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Current installments of notes payable to related parties (note 5) $ 368,380 95,520
Current installments of long-term debt (note 4) 98,185 -
Current installments of capital lease obligations (note 7) 175,668 144,897
Accounts payable and accrued line charges, net 3,735,260 1,107,141
Due to affiliates - 4,417
Other accrued expenses and liabilities 157,789 22,049
Deferred revenues 23,982 22,363
------------ ------------
Total current liabilities 4,559,264 1,396,387
--------- ---------
Notes payable to related parties, less current installments (note 5) 246,040 -
Long-term debt, less current installments (note 4) 131,945 -
Capital lease obligations, less current installments (note 7) 747,227 890,913
------------ ------------
Total liabilities 5,684,476 2,287,300
--------- ---------
Commitments and contingencies (notes 7, 9, and 10)
Stockholders' deficit:
Common stock, no par value, 750 shares authorized, 200 issued and
outstanding 1,000 1,000
Additional paid-in capital 598,630 332,678
Accumulated deficit (2,973,765) (834,036)
--------- ------------
(2,374,135) (500,358)
Less: Treasury stock, at cost of 88 shares (31,868) -
------------ -----------
Net stockholders' deficit (2,406,003) (500,358)
--------- ------------
$ 3,278,473 1,786,942
============ =========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Statements of Operations
<TABLE>
<CAPTION>
For the Period
January 23,
1993
(Date of
Four Months Year Ended Inception) through
Ended April 30, 1995 December 31, December 31,
(Unaudited) 1994 1993
-------------------- ------------ -------------------
<S> <C> <C> <C>
Net sales and services $ 5,010,908 12,202,063 1,494,943
Cost of goods and services 4,766,433 11,788,135 1,735,717
--------- ---------- ---------
Gross profit (loss) 244,475 413,928 (240,774)
Selling, general, and administrative expenses 988,203 2,014,635 507,824
------------ -------------- ------------
Loss from operations (743,728) (1,600,707) (748,598)
Other income (expense):
Interest expense (53,373) (140,338) (16,503)
Other expense, net - (398,684) (68,935)
------------ -------------- ------------
Net loss $ (797,101) (2,139,729) (834,036)
============ ========== ============
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Statements of Stockholders' Deficit
<TABLE>
<CAPTION>
For the Period January 23, 1993 (Date of Inception)
Through December 31, 1993
--------------------------------------------------------------------------------------------
Additional
Common Paid-in Accumulated Treasury Stockholders'
Stock Capital Deficit Stock Deficit
----- ------- ------- ----- -------
<S> <C> <C> <C> <C>
Balances at inception $ - - - - -
Issuance of common stock 1,000 332,678 - - 332,678
Net loss - - (834,036) - (834,036)
------ ---------- ------- - -------
Balances at end of period $ 1,000 332,678 (834,036) - (500,358)
===== ======= ======= = =======
Year Ended December 31, 1994
--------------------------------------------------------------------------------------------
Additional
Common Paid-in Accumulated Treasury Stockholders'
Stock Capital Deficit Stock Deficit
----- ------- ------- ----- -------
Balances at beginning of period $ 1,000 332,678 (834,036) - (500,358)
Capital contributions - 272,000 - - 272,000
Distributions to shareholder - (6,048) - - (6,048)
Repurchase of shares - - - (31,868) (31,868)
Net loss - - (2,139,729) - (2,139,729)
------ ---------- --------- --------- ---------
Balances at end of period $ 1,000 598,630 (2,973,765) (31,868) (2,406,003)
===== ======= ========= ====== =========
Four Months Ended April 30, 1995 (Unaudited)
--------------------------------------------------------------------------------------------
Additional
Common Paid-in Accumulated Treasury Stockholders'
Stock Capital Deficit Stock Deficit
----- ------- ------- ----- -------
Balances at beginning of period $ 1,000 598,630 (2,973,765) (31,868) (2,406,003)
Capital contributions - 10,600 - - 10,600
Repurchase of shares - - - (2,050) (2,050)
Net loss - - (797,101) - (797,101)
------ ---------- ------------ --------- ------------
Balances at end of period $ 1,000 609,230 (3,770,866) (33,918) (3,194,554)
===== ======= ========= ====== =========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Statements of Cash Flows
<TABLE>
<CAPTION>
For the Period
January 23,
1993 (Date of
Four Months Inception)
Ended April 30, Year Ended through
1995 December 31, December 31,
(Unaudited) 1994 1993
----------- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (797,101) (2,139,729) (834,036)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 114,773 318,926 57,859
Changes in assets and liabilities:
Trade accounts receivable (165,145) (796,703) (370,643)
Due from officers and employees -- 48,690 (48,690)
Other receivables 6,652 (4,152) (5,000)
Prepaid expenses and other current assets (13,000) 35,092 (115,805)
Accounts payable and accrued line charges 912,626 2,808,920 1,107,141
Due to affiliates -- (4,417) 4,417
Other accrued expenses and liabilities 35,127 135,740 22,049
Deferred revenues 92,129 1,619 22,363
---------- ---------- ----------
Net cash provided by (used in) operating
activities 186,061 403,986 (160,345)
---------- ---------- ----------
Cash flows from investing activities - capital (60,550) (462,301) (1,233,354)
expenditures for property and equipment -- -- --
Net cash used in investing activities (60,550) (462,301) (1,233,354)
---------- ---------- ----------
Cash flows from financing activities:
Repayment of long-term debt (369,121) 49,329
Net borrowings on revolving note payable to related
parties -- 265,000 95,520
Net repayments on notes payable to officers and
employees -- 253,900 --
Repurchase of treasury stock (2,050) (31,868) --
Payments made under capital leases -- (112,915) 1,035,810
Additional paid in capital 10,600 272,000 --
Distributions to shareholder -- (6,048) --
Proceeds from stock issuance -- -- 333,678
---------- ---------- ----------
Net cash provided by financing activities (360,571) 689,398 1,465,008
---------- ---------- ----------
Net increase (decrease) in cash (235,060) 631,083 71,309
Cash at beginning of year 702,392 71,309 --
---------- ---------- ----------
Cash at end of year $ 467,322 702,392 71,309
========== ========== ==========
Supplemental disclosures of cash flow information -
cash paid during the year for interest $ 44,025 132,073 9,513
========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Notes to Financial Statements
December 31, 1994 and 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
International Telemanagement Group, Inc. (the Company), is a domestic and
international interexchange carrier offering long distance, 800, private
line, and other services to its customers. ITG was incorporated in January
1993 under the laws of the state of Ohio.
(a) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation of property
and equipment is provided principally on a straight-line basis over
the estimated useful lives of the related assets. Assets recorded
under capital leases are amortized over the terms of the leases.
(b) INCOME TAXES
The stockholders of the Company have elected to be treated as an S
corporation, whereby taxable income and/or losses are allocated to the
stockholder rather than to the Company. Accordingly, the accompanying
financial statements do not include provisions for federal and state
taxes on income earned by the Company.
(c) REVENUE RECOGNITION
Income from services is recognized when the contracted service is
rendered.
(d) GENERAL CREDIT RISK
The Company grants credit to customers on open account, substantially
all of whom are in the telecommunications industry.
(2) SUBSEQUENT EVENT
On May 1, 1995, the Company entered into a purchase agreement with GST
Telecom, Inc. (GST Net), in which all outstanding stock of the Company
was sold for cash. GST Net has indicated its intention to fully fund the
operations of the Company and maintain the Company operations principally
in the lines of business in which it currently operates.
(3) PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
Property and equipment at December 31, 1994 and 1993, consisted of:
1994 1993
---- ----
<S> <C>
Leasehold improvements $ 6,243 6,243
Machinery and equipment 1,689,412 1,227,111
--------- ---------
1,695,655 1,233,354
Less accumulated depreciation and amortization (376,785) (57,859)
------------ ------------
Property and equipment, net $ 1,318,870 1,175,495
=========== =========
</TABLE>
F-7
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Notes to Financial Statements, Continued
(4) LONG-TERM DEBT
<TABLE>
<CAPTION>
Long-term debt at December 31, 1994 and 1993, consists of the following:
1994 1993
---- ----
<S> <C> <C>
Note payable to customer, 0% interest, monthly payments of $6,944, $ 215,278 -
Note payable to supplier, 7% interest, monthly payments of $14,939,
including interest, due February 1995 14,852 -
---------- -
Total long-term debt 230,130 -
Less current installments (98,185) -
---------- -
Long-term debt, less current installments $ 131,945 -
======= =
</TABLE>
In addition, the Company has incurred borrowings from related parties (see
note 5).
As of December 31, 1994, the maturities of long-term debt are as follows:
Year Ended
December 31,
------------
1995 $ 98,185
1996 83,333
1997 48,612
------------
$ 230,130
============
(5) RELATED PARTY TRANSACTIONS
The Company has entered into numerous transactions with its principal
stockholder and other related entities controlled by its stockholders.
F-8
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Notes to Financial Statements, Continued
(5) RELATED PARTY TRANSACTIONS, CONTINUED
The Company's principal stockholder or entities controlled by the
stockholder have obtained financing from two financial institutions. These
funds were, in turn, loaned to the Company. The unwritten agreement between
the Company and the related parties is that the Company will make all
necessary payments under the stated bank terms. The terms are as follows:
<TABLE>
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Note payable, bearing interest at 8.25%, payable in monthly
installments of $8,615, due in full September 1997 $ 349,420 95,520
Note payable, bearing interest at 1% over the prime rate, due in
full December 12, 1994. On March 9, 1995, the loan was renewed
by the bank 265,000 -
------- --------
Total notes payable related parties 614,420 95,520
Less current installments 368,380 95,520
------- ------
Notes payable to related parties, less current
installments $ 246,040 -
======= ========
</TABLE>
The Company rents office space and telecommunications equipment from
related parties on a month-to-month basis. Rental expense for the periods
ended December 31, 1994 and 1993, totaled $248,572 and $96,057,
respectively.
(6) COMMON STOCK
During 1994, the Company repurchased common shares from its stockholders at
a cost of $31,868.
(7) LEASES
The Company leases telecommunications and computer equipment under capital
leases. Additionally, certain communications equipment is leased under
operating leases. Lease terms include per-minute charges and minimum fee
levels.
F-9
<PAGE>
INTERNATIONAL TELEMANAGEMENT GROUP, INC.
Notes to Financial Statements, Continued
(7) LEASES, CONTINUED
Future minimum lease payments under capital and operating leases are as
follows:
<TABLE>
<CAPTION>
1994 1993
--------------------------- --------------------------
Capital Operating Capital Operating
Leases Leases Leases Leases
------ ------ ------ ------
<S> <C> <C> <C> <C>
Year ending December 31:
1994 $ - - 196,988 23,924
1995 261,464 143,544 283,555 143,544
1996 283,555 143,544 283,555 143,544
1997 276,751 143,544 283,555 143,544
1998 268,714 119,620 276,650 119,620
1999 44,183 - 44,183 -
------------ --------- ------------- --------
Total lease payments 1,134,667 550,252 1,368,486 574,176
======= =======
Less amount representing interest
(211,772) (332,676)
------------ -------------
Total obligations under
capital leases 922,895 1,035,810
Current installments of capital
lease obligations 175,668 144,897
----------- -------------
Capital lease obligations,
less current installments $ 747,227 890,913
========== =======
</TABLE>
Total rental expense under operating leases for the periods ended December
31, 1994 and 1993, totaled $23,900 and $4,500, respectively.
The Company also leases certain equipment and office space from related
parties (see note 5).
(8) MAJOR CUSTOMERS
Gross revenues of approximately $3,000,000 were derived from two major
customers for the year ended December 31, 1994.
(9) SERVICE CONTRACTS
The Company has entered into service contracts with telecommunication
providers which require a minimum service fee on a monthly basis. The
Company has committed to minimum revenues of $350,000 per month by May
1995, and must pay one-half of any shortfall.
(10) CONTINGENCIES
The Company is a party to a number of lawsuits and claims relating to
service liability. While the ultimate results of lawsuits or other
proceedings against the Company cannot be predicted with certainty,
management does not expect that the settlement of these matters will have a
material adverse effect on the financial position of the Company.
F-10
<PAGE>
DESCRIPTION OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
REFLECTING THE ACQUISITION OF INTERNATIONAL MANAGEMENT (ITG)
GROUP, INC. BY GST TELECOMMUNICATIONS, INC. (GTI)
The following unaudited pro forma consolidated financial statements have
been prepared giving effect to the acquisition of ITG as if the transaction had
taken place as of October 1, 1994.
On May 1, 1995, GTI acquired 100% of the outstanding stock of ITG for
consideration of $74,761, the assumption of certain liabilities and an earnout
provision. The acquisition has been accounted for using the purchase method. All
of the excess purchase price was allocated to goodwill as the net book value of
the assets acquired approximated fair market value at the time of the
acquistion.
The unaudited pro forma financial information is not necessarily indicative
of the results of operations which would have been attained had the acquisition
been consummated at any of the foregoing assumed dates, or which may be attained
in the future. The pro forma financial information should be read in conjunction
with the historical financial statements of GTI and ITG.
F-11
<PAGE>
GST TELECOMMUNICATIONS, INC.
PRO FORMA STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED SEPTEMBER 30, 1995
(unaudited)
<TABLE>
<CAPTION>
Historical
----------------------------- Pro Forma Pro Forma
GTI ITG Adjustments Total
(A)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Product $ 7,563,087 0 7,563,087
Telecommunication services 11,118,373 11,403,482 22,521,855
- -------------------------------------------------------------------------------------------------------------------
18,681,460 11,403,482 30,084,942
- -------------------------------------------------------------------------------------------------------------------
Cost of goods sold/services:
Product 3,095,679 0 3,095,679
Telecommunication services 12,198,610 11,071,799 23,270,409
- -------------------------------------------------------------------------------------------------------------------
15,294,289 11,071,799 26,366,088
- -------------------------------------------------------------------------------------------------------------------
Gross margin 3,387,171 331,683 3,718,854
Operating expenses
General and administration 8,880,162 2,348,523 11,228,685
Marketing,travel and promotion 2,493,159 30,373 2,523,532
Research and development 1,270,590 0 1,270,590
Depreciation and amortization 2,373,912 344,337 287,472 (B) 3,005,721
--------------------------------------------------------------------------------------------------------
Loss from operations (11,630,652) (2,391,550) (287,472) (14,309,674)
Other income (expenses):
Interest income 302,605 0 302,605
Interest expense (837,850) (123,631) (961,481)
Foreign exchange loss (7,365) 0 (7,365)
Loss from joint ventures (660,653) 0 (660,653)
Other non-op expense (679,205) (258,036) (937,241)
- -------------------------------------------------------------------------------------------------------------------
(1,882,468) (381,667) 0 (2,264,135)
- -------------------------------------------------------------------------------------------------------------------
Loss before income taxes
and non-controlling interest (13,513,120) (2,773,217) (287,472) (16,573,809)
Income tax expense (166,015) 0 (166,015)
- -------------------------------------------------------------------------------------------------------------------
Loss before non-controlling interest
in income of subsidiaries (13,679,135) (2,773,217) (287,472) (16,739,824)
Non-controlling interest in loss of subsidiaries 2,364,431 0 2,364,431
- -------------------------------------------------------------------------------------------------------------------
Loss for the period (11,314,704) (2,773,217) (287,472) (14,375,393)
===============================================================
Loss per share (0.82) (1.04)
===============================================================
Weighted average common and common
equivalent shares outstanding 13,780,796 13,780,796
===============================================================
</TABLE>
F-12
<PAGE>
GST TELECOMMUNICATIONS, INC.
NOTES TO PRO FORMA STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED SEPTEMBER 30, 1995
(A) The following is a computation of the purchase price:
Cash paid in closing 200
Direct costs of acquisition-Legal fees 74,561
----------
74,761
==========
The purchase price is allocated as follows:
Book value of nets assets acquired 3,160,682
Liabilities assumed (6,918,875)
Excess of cost over value assigned (goodwill) 3,832,954
----------
74,761
==========
(B) To amortize goodwill on a straight-line basis over 10 years 287,472
==========
F-13
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents Reference
The following documents filed by GST Telecommunications, Inc. (the
"Company") with the Securities and Exchange Commission are incorporated herein
by reference:
1. The Company's Annual Report on Form 20-F for the fiscal year
ended September 30, 1995, as amended.
2. The Company's Current Reports on Form 6-K for the quarters ended
December 31, 1995, as amended, and March 31, 1996.
3. The description of the Company's Common Shares, no par value per
share, in the Company's Registration Statement on Form 8-A filed on March 3,
1994.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act
of 1934, as amended, after the effective date of this registration statement and
prior to the filing of a post-effective amendment which indicates that all
securities offered hereunder have been sold or which de-registers all securities
then remaining unsold, shall be deemed to be incorporated by reference herein
and to be a part hereof from the date of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interest of Named Experts and Counsel
Certain legal matters in connection with the issuance of the Shares
offered hereby have been passed upon for the Company by Messrs. Olshan Grundman
Frome & Rosenzweig LLP, 505 Park Avenue, New York, New York 10022. Stephen
Irwin, counsel to Olshan Grundman Frome & Rosenzweig LLP, is an officer and
director of the Company and holds 54,545 Common Shares and has been granted
options and warrants to purchase an additional 615,000 Common Shares.
Item 6. Indemnification of Directors and Officers
Except as hereinafter set forth, there is no statute, charter
provision, by-law, contract or other arrangement under which any controlling
person, director or officer of the Company is insured or indemnified in any
manner against liability which he may incur in his capacity as such.
The Company's authority to indemnify its directors and officers is
governed by the provisions of Section 124 of the Canada Business Corporations
Act, as follows:
(1) Indemnification. Except in respect of an action by or on behalf
of the corporation or body corporate to procure a judgment in its favor, a
corporation may indemnify a director or officer of the corporation, a former
director or officer of the corporation or a person who acts or acted at the
corporation's request as a director or officer of a body corporate of which the
corporation is or was a shareholder or creditor, and his heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
II-1
<PAGE>
he is made a party by reason of being or having been a director or officer of
such corporation or body corporate, if
(a) he acted honestly and in good faith with a view to the best
interests of the corporation; and
(b) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he had
reasonable grounds for believing that his conduct was lawful.
(2) Indemnification in derivative actions. A corporation may with
the approval of a court indemnify a person referred to in subsection (1) in
respect of an action by or on behalf of the corporation or body corporate to
procure a judgment in its favor, to which he is made a party by reason of being
or having been a director or an officer of the corporation or body corporate,
against all costs, charges and expenses reasonably incurred by him in connection
with such action if he fulfills the conditions set out in paragraphs (1)(a) and
(b).
(3) Indemnity as of right. Notwithstanding anything in this section,
a person referred to in subsection (1) is entitled to indemnity from the
corporation in respect of all costs, charges and expenses reasonably incurred by
him in connection with the defense of any civil, criminal or administrative
action or proceeding to which he is made a party by reason of being or having
been a director or officer of the corporation or body corporate, if the person
seeking indemnity
(a) was substantially successful on the merits in his defense of
the action or proceeding, and
(b) fulfills the conditions set out in paragraphs (1)(a) and (b).
(4) Directors' and officers' insurance. A corporation may purchase
and maintain insurance for the benefit of any person referred to subsection (1)
against any liability incurred by him
(a) in his capacity as a director or officer of the corporation,
except where the liability relates to his failure to act
honestly and in good faith with a view to the best interests
of the corporation; or
(b) in his capacity as a director or officer of another body
corporate where he acts or acted in that capacity at the
corporation's request, except where the liability relates to
his failure to act honestly and in good faith with a view to
the best interests of the body corporate.
(5) Application to court. A corporation or a person referred to in
subsection (1) may apply to a court for an order approving an indemnity under
this section and the court may so order and make any further order it thinks
fit.
(6) Notice to Director. An applicant under subsection (5) shall give
the Director notice of the application and the Director is entitled to appear
and be heard in person or by counsel.
(7) Other notice. On an application under subsection (5), the court
may order notice to be given to any interested person and such person is
entitled to appear and be heard in person or by counsel.
The Company's by-laws provide that every director and officer of the
Company and his heirs, executors, administrators and other legal personal
representatives shall be indemnified and held harmless from and against (a) any
II-2
<PAGE>
liability and all costs, charges and expenses that he sanctions or incurs in
respect of any action, suit or proceeding that is proposed or commenced against
him for or in respect of anything done or permitted by him in respect of the
execution of the duties of his office and (b) all other costs, charges and
expenses that he sustains or incurs in respect of the affairs of the Company.
The Company maintains a $5,000,000 directors and officers liability
insurance policy.
Item 7. Exemption From Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Exhibit Index
4(a) 1995 Stock Option Plan, as amended.
4(b) 1996 Stock Option Plan.
4(c) 1996 Employee Stock Purchase Plan.
4(d) Warrant dated as of October 1, 1995 issued to Stephen Irwin.
5 Opinion of Olshan Grundman Frome & Rosenzweig LLP with respect to
the securities registered hereunder.
23(a) Consent of Olshan Grundman Frome & Rosenzweig LLP (included in its
opinion filed as Exhibit 5).
23(b) Consent of KPMG Peat Marwick LLP with respect to GST
Telecommunications, Inc.
23(c) Consent of KPMG Peat Marwick Thorne with respect to GST
Telecommunications, Inc.
23(d) Consent of KPMG Peat Marwick LLP with respect to International
Telemanagement Group, Inc.
23(e) Consent of KPMG Peat Marwick Thorne with respect to Intelcom-
Greenstar Joint Venture.
24 Powers of Attorney (included on the signature page to this
Registration Statement).
Item 9. Undertakings
The undersigned registrant hereby undertakes:
a. To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
b. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
II-3
<PAGE>
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
c. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Vancouver, Province of British Columbia, Country of
Canada on this 28th day of June, 1996.
GST TELECOMMUNICATIONS, INC.
-------------------------------------------
(Registrant)
By: /s/ W. Gordon Blankstein
--------------------------------------
W. Gordon Blankstein, Chairman of the Board
POWER OF ATTORNEYS AND SIGNATORIES
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated. Each of the undersigned officers and
directors of GST Telecommunications, Inc. hereby constitutes and appoints W.
Gordon Blankstein, John Warta, Stephen Irwin and Robert H. Hanson and each of
them singly, as true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him in his name in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
Registration Statement and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and to prepare any and all exhibits thereto, and other documents in
connection therewith, and to make any applicable state securities law or blue
sky filings, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done to enable GST Telecommunications, Inc. to comply with the provisions
of the Securities Act of 1933, as amended, and all requirements of the
Securities and Exchange Commission, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Signature Title Date
--------- ----- ----
/s/ W. Gordon Blankstein Chairman of the Board June 28, 1996
- --------------------------
(W. Gordon Blankstein)
/s/ John Warta President, Chief Executive Officer June 28, 1996
- -------------------------- (Principal Executive Officer) and
(John Warta) Director
/s/ Robert H. Hanson Senior Vice President - Corporate June 28, 1996
- -------------------------- Development, Chief Financial
(Robert H. Hanson) Officer (Principal Financial
Officer) and Director
/s/ Clifford V. Sander Senior Vice President, Treasurer June 28, 1996
- -------------------------- and Chief Accounting Officer
(Clifford V. Sander) (Principal Accounting Officer)
/s/ Stephen Irwin Vice Chairman of the Board, June 28, 1996
- -------------------------- Secretary and Director
(Stephen Irwin)
/s/ Ian Watson Director June 28, 1996
- --------------------------
(Ian Watson)
/s/ Peter E. Legault Director June 28, 1996
- --------------------------
(Peter E. Legault)
/s/ Jack G. Armstrong Director June 28, 1996
- --------------------------
(Jack G. Armstrong)
II-5
<PAGE>
/s/ Takashi Yoshida Director June 28, 1996
- --------------------------
(Takashi Yoshida)
/s/ Thomas E. Sawyer Director June 28, 1996
- --------------------------
(Thomas E. Sawyer)
The Company's Authorized Representative
in the United States
/s/ Robert H. Hanson June 28, 1996
- --------------------------
Robert H. Hanson
The 1995 Plan. Pursuant to the requirements of the Securities Act of 1933, the
trustees (or other persons who administer the employee benefit plan) have duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Vancouver, Province of
British Columbia, Country of Canada, on June 28, 1996.
GST TELECOMMUNICATIONS, INC.
1995 STOCK OPTION PLAN
----------------------------------
(1995 Plan)
GST TELECOMMUNICATIONS, INC.
1996 STOCK OPTION PLAN
----------------------------------
(1996 Plan)
GST TELECOMMUNICATIONS, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
----------------------------------
(Stock Purchase Plan)
By: /s/ Jack G. Armstrong
-----------------------------------
Jack G. Armstrong,
Member of Compensation Committee
By: /s/ Ian Watson
-----------------------------------
Ian Watson,
Member of Compensation Committee
By: /s/ Peter E. Legault
-----------------------------------
Peter E. Legault,
Member of Compensation Committee
II-6
Exhibit 4.(a)
GST TELECOMMUNICATIONS, INC.
1995 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 1995 Stock Option Plan (the "Plan") is intended as an incentive, to
retain in the employ of and as consultants and advisors to GST
TELECOMMUNICATIONS, INC., a Canadian corporation with its principal office at
4317 N.E. Thurston Way, Vancouver, Washington 98662 (the "Company") and any
Subsidiary of the Company, within the meaning of Section 425(f) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), persons of
training, experience and ability, to attract new employees, directors, advisors
and consultants whose services are considered valuable, to encourage the sense
of proprietorship and to stimulate the active interest of such persons in the
development and financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the Plan
shall constitute incentive stock options within the meaning of Section 422 of
the Code (the "Incentive Options") while certain other options granted pursuant
to the Plan shall be nonqualified stock options (the "Nonqualified Options").
Incentive Options and Nonqualified Options are hereinafter referred to
collectively as "Options."
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee"), which shall
serve at the pleasure of the Board. The Committee, subject to Sections 3 and 5
hereof, shall have full power and authority to designate recipients of Options,
to determine the terms and conditions of respective Option agreements (which
need not be identical) and to interpret the provisions and supervise the
administration of the Plan. The Committee shall have the authority, without
limitation, to designate which Options granted under the Plan shall be Incentive
Options and which shall be Nonqualified Options. To the extent any Option does
not qualify as an Incentive Option, it shall constitute a separate Nonqualified
Option.
Subject to the provisions of the Plan, the Committee shall interpret the
Plan and all Options granted under the Plan, shall make such rules as it deems
necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan in the manner and to the
extent that the Committee deems desirable
<PAGE>
to carry into effect the Plan or any Options. The act or determination of a
majority of the Committee shall be the act or determination of the Committee and
any decision reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority at a
meeting duly held. Subject to the provisions of the Plan, any action taken or
determination made by the Committee pursuant to this and the other Sections of
the Plan shall be conclusive on all parties.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as recipients of Options
(the "Optionees") shall include employees, officers and directors of, and
consultants and advisors to, the Company or any Subsidiary; provided that
Incentive Options may only be granted to employees of the Company and the
Subsidiaries. In selecting Optionees, and in determining the number of shares to
be covered by each Option granted to Optionees, the Committee may consider the
office or position held by the Optionee or the Optionee's relationship to the
Company, the Optionee's degree of responsibility for and contribution to the
growth and success of the Company or any Subsidiary, the Optionee's length of
service, age, promotions, potential and any other factors that the Committee may
consider relevant. An Optionee who has been granted an Option hereunder may be
granted an additional Option or Options, if the Committee shall so determine.
4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total of 1,750,000
shares of the Company's Common Shares (the "Stock") shall be subject to the
Plan. The shares of Stock subject to the Plan shall consist of unissued shares
or previously issued shares held by any Subsidiary of the Company, and such
amount of shares of Stock shall be and is hereby reserved for such purpose. Any
of such shares of Stock that may remain unsold and that are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purposes of the Plan, but until termination of the Plan the Company
shall at all times reserve a sufficient number of shares of Stock to meet the
requirements of the Plan. Should any Option expire or be cancelled prior to its
exercise in full or should the number of shares of Stock to be delivered upon
the exercise in full of an Option be reduced for any reason, the shares of Stock
theretofore subject to such Option may be subject to future Options under the
Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the following conditions
and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable:
-2-
<PAGE>
(a) OPTION PRICE. The purchase price of each share of Stock purchasable
under an Incentive Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; provided,
however, that with respect to an Optionee who, at the time such Incentive Option
is granted, owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
of any Subsidiary, the purchase price per share of Stock shall be at least 110%
of the Fair Market Value per share of Stock on the date of grant. The purchase
price of each share of Stock purchasable under a Nonqualified Option shall not
be less than 80% of the Fair Market Value of such share of Stock on the date the
Option is granted; provided, however, that an Optionee who is a Canadian
taxpayer may require that any Nonqualified Option granted to him provide for the
purchase of shares of Stock upon exercise thereof at a price equal to the Fair
Market Value per share of Stock on the date of grant. The exercise price for
each Option shall be subject to adjustment as provided in Section 7 below. Fair
Market Value means the closing price of publicly traded shares of Stock on the
principal United States securities exchange on which shares of Stock are listed
(if the shares of Stock are so listed), or on the NASDAQ Stock Market (if the
shares of Stock are regularly quoted on the NASDAQ Stock Market), or, if not so
listed or regularly quoted, the mean between the closing bid and asked prices of
publicly traded shares of Stock in the over-the-counter market, or, if such bid
and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code. Anything in
this Section 5(a) to the contrary notwithstanding, in no event shall the
purchase price of a share of Stock be less than the minimum price permitted
under rules and policies of the American Stock Exchange and the Vancouver Stock
Exchange.
(b) OPTION TERM. The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than five years after the date such
Option is granted.
(c) EXERCISABILITY. Subject to Section 5(j) hereof, Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at the time of grant, provided, however,
that no Option shall be exercisable until at least six months have elapsed after
the date of grant of such Option.
(d) METHOD OF EXERCISE. Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, by
check or such other instrument as may be acceptable to the
-3-
<PAGE>
Committee. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of Stock owned by
the Optionee (based on the Fair Market Value of the Stock on the trading day
before the Option is exercised). An Optionee shall have the right to dividends
and other rights of a stockholder with respect to shares of Stock purchased upon
exercise of an Option after (i) the Optionee has given written notice of
exercise and has paid in full for such shares and (ii) becomes a stockholder of
record with respect thereto.
(e) NON-TRANSFERABILITY OF OPTIONS. Options are not transferable and may be
exercised solely by the Optionee during his lifetime or after his death by the
person or persons entitled thereto under his will or the laws of descent and
distribution. Any attempt to transfer, assign, pledge or otherwise dispose of,
or to subject to execution, attachment or similar process, any Option contrary
to the provisions hereof shall be void and ineffective and shall give no right
to the purported transferee.
(f) TERMINATION BY DEATH. Unless otherwise determined by the Committee at
grant, if any Optionee's employment with or service to the Company or any
Subsidiary terminates by reason of death, the Option may thereafter be
exercised, to the extent then exercisable (or on such accelerated basis as the
Committee shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year after the date of such death or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.
(g) TERMINATION BY REASON OF DISABILITY. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates by reason of total and permanent disability, any
Option held by such Optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if the Optionee dies within such 30 day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.
(h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary
-4-
<PAGE>
terminates by reason of Normal or Early Retirement (as such terms are defined
below), any Option held by such Optionee may thereafter be exercised to the
extent it was exercisable at the time of such Retirement (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if the Optionee dies within such 30 day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death, for
a period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.
For purposes of this paragraph (h), Normal Retirement shall mean retirement
from active employment with the Company or any Subsidiary on or after the normal
retirement date specified in the applicable Company or Subsidiary pension plan
or if no such pension plan, age 65. Early Retirement shall mean retirement from
active employment with the Company or any Subsidiary pursuant to the early
retirement provisions of the applicable Company or Subsidiary pension plan or if
no such pension plan, age 55.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee at
grant, if any Optionee's employment with or service to the Company or any
Subsidiary terminates for any reason other than death, Disability or Normal or
Early Retirement, the Option shall thereupon terminate, except that the portion
of any Option that was exercisable on the date of such termination of employment
may be exercised for the lesser of 30 days after the date of termination or the
balance of such Option's term if the Optionee's employment or service with the
Company or any Subsidiary is terminated by the Company or such Subsidiary
without cause (the determination as to whether termination was for cause to be
made by the Committee). The transfer of an Optionee from the employ of the
Company to a Subsidiary, or vice versa, or from one Subsidiary to another, shall
not be deemed to constitute a termination of employment for purposes of the
Plan.
(j) LIMIT ON VALUE OF INCENTIVE OPTION. The aggregate Fair Market Value,
determined as of the date the Incentive Option is granted, of Stock for which
Incentive Options are exercisable for the first time by any Optionee during any
calendar year under the Plan (and/or any other stock option plans of the Company
or any Subsidiary) shall not exceed $100,000.
(k) TRANSFER OF INCENTIVE OPTION SHARES. The stock option agreement
evidencing any Incentive Options granted under this Plan shall provide that if
the Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of Stock
issued to him upon exercise of an Incentive Option granted under the Plan
-5-
<PAGE>
within the two-year period commencing on the day after the date of the grant of
such Incentive Option or within a one-year period commencing on the day after
the date of transfer of the share or shares to him pursuant to the exercise of
such Incentive Option, he shall, within 10 days after such disposition, notify
the Company thereof and immediately deliver to the Company any amount of United
States federal income tax withholding required by law.
(l) LIMITATION ON OPTIONS HELD BY ONE PERSON. The aggregate number of
shares of Stock subject to options held by any one person shall not exceed that
number of shares as equals 5% of the outstanding shares of the Company.
6. TERM OF PLAN.
No Option shall be granted pursuant to the Plan on or after January 10,
2005, but Options theretofore granted may extend beyond that date.
7. CAPITAL CHANGE OF THE COMPANY.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event.
8. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been registered
under the United States Securities Act of 1933, as amended (the "Securities
Act"), or the Company has determined that such registration is unnecessary, each
person exercising an Option under the Plan may be required by the Company to
give a representation in writing that he is acquiring the shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof.
9. TAXES.
The Company may make such provisions as it may deem appropriate, consistent
with applicable law, in connection with any Options granted under the Plan with
respect to the withholding of any United States or Canadian taxes or any other
tax matters.
-6-
<PAGE>
10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on January 10, 1995, provided however that the
Plan shall subsequently be approved by majority vote of the Company's
shareholders not later than January 9, 1996.
11. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee under any
Option theretofore granted without his consent, and except that no amendment
shall be made which, without the approval of the shareholders of the Company
would:
(a) materially increase the number of shares that may be issued under
the Plan, except as is provided in Section 7;
(b) materially increase the benefits accruing to the Optionees under
the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less than
100% of the Fair Market Value per share of Stock on the date of grant
thereof or the exercise price of a Nonqualified Option to less than 80% of
the Fair Market Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in Section
5(b).
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without his consent. The Committee may also substitute new Options
for previously granted Options, including options granted under other plans
applicable to the participant and previously granted Options having higher
option prices, upon such terms as the Committee may deem appropriate.
12. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges (including the
American Stock Exchange and Vancouver Stock Exchange) as may be required.
-7-
<PAGE>
13. GENERAL PROVISIONS.
(a) CERTIFICATES. All certificates for shares of Stock delivered under the
Plan shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, or other securities commission having
jurisdiction, any applicable Federal, provincial or state securities law, any
stock exchange upon which the Stock is then listed and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.
(b) EMPLOYMENT MATTERS. The adoption of the Plan shall not confer upon any
Optionee of the Company or any Subsidiary, any right to continued employment or,
in the case of an Optionee who is a director, continued service as a director,
with the Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees, the service of any of its directors or the
retention of any of its consultants or advisors at any time.
(c) LIMITATION OF LIABILITY. No member of the Board or the Committee, or
any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) REGISTRATION OF STOCK. Notwithstanding any other provision in the Plan,
no Option may be exercised unless and until the Stock to be issued upon the
exercise thereof has been registered under the Securities Act and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration in the United States or exempt from the prospectus and
registration requirements under applicable provincial legislation. The Company
shall not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder, or to comply with an appropriate exemption from registration under
such laws or the laws of any province in order to permit the exercise of an
Option and the issuance and sale of the Stock subject to such Option however,
the Company may in its sole discretion register such Stock at such time as the
Company shall determine. If the Company chooses to comply with such an exemption
from registration, the Stock issued under the Plan may, at the direction of the
Committee, bear an appropriate restrictive legend restricting the transfer or
pledge of the Stock represented
-8-
<PAGE>
thereby, and the Committee may also give appropriate stop transfer instructions
to the Company's transfer agents.
GST TELECOMMUNICATIONS, INC.
January 10, 1995, as amended
through September 21, 1995
-9-
Exhibit 4.(b)
GST TELECOMMUNICATIONS, INC.
1996 STOCK OPTION PLAN
1. PURPOSE OF THE PLAN.
This 1996 Stock Option Plan (the "Plan") is intended as an incentive, to
retain in the employ of and as consultants and advisors to GST
TELECOMMUNICATIONS, INC., a Canadian corporation with its principal office at
4317 N.E. Thurston Way, Vancouver, Washington 98662 (the "Company") and any
Subsidiary of the Company, within the meaning of Section 425(f) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), persons of
training, experience and ability, to attract new employees, directors, advisors
and consultants whose services are considered valuable, to encourage the sense
of proprietorship and to stimulate the active interest of such persons in the
development and financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the Plan
shall constitute incentive stock options within the meaning of Section 422 of
the Code (the "Incentive Options") while certain other options granted pursuant
to the Plan shall be nonqualified stock options (the "Nonqualified Options").
Incentive Options and Nonqualified Options are hereinafter referred to
collectively as "Options."
2. ADMINISTRATION OF THE PLAN.
The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee"), which shall
serve at the pleasure of the Board. The Committee, subject to Sections 3 and 5
hereof, shall have full power and authority to designate recipients of Options,
to determine the terms and conditions of respective Option agreements (which
need not be identical) and to interpret the provisions and supervise the
administration of the Plan. The Committee shall have the authority, without
limitation, to designate which Options granted under the Plan shall be Incentive
Options and which shall be Nonqualified Options. To the extent any Option does
not qualify as an Incentive Option, it shall constitute a separate Nonqualified
Option.
Subject to the provisions of the Plan, the Committee shall interpret the
Plan and all Options granted under the Plan, shall make such rules as it deems
necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan in the manner and to the
extent that the Committee deems desirable
<PAGE>
to carry into effect the Plan or any Options. The act or determination of a
majority of the Committee shall be the act or determination of the Committee and
any decision reduced to writing and signed by all of the members of the
Committee shall be fully effective as if it had been made by a majority at a
meeting duly held. Subject to the provisions of the Plan, any action taken or
determination made by the Committee pursuant to this and the other Sections of
the Plan shall be conclusive on all parties.
3. DESIGNATION OF OPTIONEES.
The persons eligible for participation in the Plan as recipients of Options
(the "Optionees") shall include employees, officers and directors of, and
consultants and advisors to, the Company or any Subsidiary; provided that
Incentive Options may only be granted to employees of the Company and the
Subsidiaries. In selecting Optionees, and in determining the number of shares to
be covered by each Option granted to Optionees, the Committee may consider the
office or position held by the Optionee or the Optionee's relationship to the
Company, the Optionee's degree of responsibility for and contribution to the
growth and success of the Company or any Subsidiary, the Optionee's length of
service, age, promotions, potential and any other factors that the Committee may
consider relevant. An Optionee who has been granted an Option hereunder may be
granted an additional Option or Options, if the Committee shall so determine.
4. STOCK RESERVED FOR THE PLAN.
Subject to adjustment as provided in Section 7 hereof, a total of 400,000
shares of the Company's Common Shares (the "Stock") shall be subject to the
Plan. The shares of Stock subject to the Plan shall consist of unissued shares
or previously issued shares held by any Subsidiary of the Company, and such
amount of shares of Stock shall be and is hereby reserved for such purpose. Any
of such shares of Stock that may remain unsold and that are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purposes of the Plan, but until termination of the Plan the Company
shall at all times reserve a sufficient number of shares of Stock to meet the
requirements of the Plan. Should any Option expire or be cancelled prior to its
exercise in full or should the number of shares of Stock to be delivered upon
the exercise in full of an Option be reduced for any reason, the shares of Stock
theretofore subject to such Option may be subject to future Options under the
Plan.
5. TERMS AND CONDITIONS OF OPTIONS.
Options granted under the Plan shall be subject to the following conditions
and shall contain such additional terms and conditions, not inconsistent with
the terms of the Plan, as the Committee shall deem desirable:
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<PAGE>
(a) OPTION PRICE. The purchase price of each share of Stock purchasable
under an Incentive Option shall be determined by the Committee at the time of
grant, but shall not be less than 100% of the Fair Market Value (as defined
below) of such share of Stock on the date the Option is granted; provided,
however, that with respect to an Optionee who, at the time such Incentive Option
is granted, owns (within the meaning of Section 424(d) of the Code) more than
10% of the total combined voting power of all classes of stock of the Company or
of any Subsidiary, the purchase price per share of Stock shall be at least 110%
of the Fair Market Value per share of Stock on the date of grant. The purchase
price of each share of Stock purchasable under a Nonqualified Option shall not
be less than 80% of the Fair Market Value of such share of Stock on the date the
Option is granted; provided, however, that an Optionee who is a Canadian
taxpayer may require that any Nonqualified Option granted to him provide for the
purchase of shares of Stock upon exercise thereof at a price equal to the Fair
Market Value per share of Stock on the date of grant. The exercise price for
each Option shall be subject to adjustment as provided in Section 7 below. Fair
Market Value means the closing price of publicly traded shares of Stock on the
principal United States securities exchange on which shares of Stock are listed
(if the shares of Stock are so listed), or on the NASDAQ Stock Market (if the
shares of Stock are regularly quoted on the NASDAQ Stock Market), or, if not so
listed or regularly quoted, the mean between the closing bid and asked prices of
publicly traded shares of Stock in the over-the-counter market, or, if such bid
and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company, or as determined by the
Committee in a manner consistent with the provisions of the Code. Anything in
this Section 5(a) to the contrary notwithstanding, in no event shall the
purchase price of a share of Stock be less than the minimum price permitted
under rules and policies of the American Stock Exchange and the Vancouver Stock
Exchange.
(b) OPTION TERM. The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than five years after the date such
Option is granted.
(c) EXERCISABILITY. Subject to Section 5(j) hereof, Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at the time of grant, provided, however,
that no Option shall be exercisable until at least six months have elapsed after
the date of grant of such Option.
(d) METHOD OF EXERCISE. Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the purchase price, in cash, by
check or such other instrument as may be acceptable to the
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<PAGE>
Committee. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of Stock owned by
the Optionee (based on the Fair Market Value of the Stock on the trading day
before the Option is exercised). An Optionee shall have the right to dividends
and other rights of a stockholder with respect to shares of Stock purchased upon
exercise of an Option after (i) the Optionee has given written notice of
exercise and has paid in full for such shares and (ii) becomes a stockholder of
record with respect thereto.
(e) NON-TRANSFERABILITY OF OPTIONS. Options are not transferable and may be
exercised solely by the Optionee during his lifetime or after his death by the
person or persons entitled thereto under his will or the laws of descent and
distribution. Any attempt to transfer, assign, pledge or otherwise dispose of,
or to subject to execution, attachment or similar process, any Option contrary
to the provisions hereof shall be void and ineffective and shall give no right
to the purported transferee.
(f) TERMINATION BY DEATH. Unless otherwise determined by the Committee at
grant, if any Optionee's employment with or service to the Company or any
Subsidiary terminates by reason of death, the Option may thereafter be
exercised, to the extent then exercisable (or on such accelerated basis as the
Committee shall determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee, for a
period of one year after the date of such death or until the expiration of the
stated term of such Option as provided under the Plan, whichever period is
shorter.
(g) TERMINATION BY REASON OF DISABILITY. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates by reason of total and permanent disability, any
Option held by such Optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if the Optionee dies within such 30 day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.
(h) TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary
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<PAGE>
terminates by reason of Normal or Early Retirement (as such terms are defined
below), any Option held by such Optionee may thereafter be exercised to the
extent it was exercisable at the time of such Retirement (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if the Optionee dies within such 30 day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time of death, for
a period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.
For purposes of this paragraph (h), Normal Retirement shall mean retirement
from active employment with the Company or any Subsidiary on or after the normal
retirement date specified in the applicable Company or Subsidiary pension plan
or if no such pension plan, age 65. Early Retirement shall mean retirement from
active employment with the Company or any Subsidiary pursuant to the early
retirement provisions of the applicable Company or Subsidiary pension plan or if
no such pension plan, age 55.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee at
grant, if any Optionee's employment with or service to the Company or any
Subsidiary terminates for any reason other than death, Disability or Normal or
Early Retirement, the Option shall thereupon terminate, except that the portion
of any Option that was exercisable on the date of such termination of employment
may be exercised for the lesser of 30 days after the date of termination or the
balance of such Option's term if the Optionee's employment or service with the
Company or any Subsidiary is terminated by the Company or such Subsidiary
without cause (the determination as to whether termination was for cause to be
made by the Committee). The transfer of an Optionee from the employ of the
Company to a Subsidiary, or vice versa, or from one Subsidiary to another, shall
not be deemed to constitute a termination of employment for purposes of the
Plan.
(j) LIMIT ON VALUE OF INCENTIVE OPTION. The aggregate Fair Market Value,
determined as of the date the Incentive Option is granted, of Stock for which
Incentive Options are exercisable for the first time by any Optionee during any
calendar year under the Plan (and/or any other stock option plans of the Company
or any Subsidiary) shall not exceed $100,000.
(k) TRANSFER OF INCENTIVE OPTION SHARES. The stock option agreement
evidencing any Incentive Options granted under this Plan shall provide that if
the Optionee makes a disposition, within the meaning of Section 424(c) of the
Code and regulations promulgated thereunder, of any share or shares of Stock
issued to him upon exercise of an Incentive Option granted under the Plan
-5-
<PAGE>
within the two-year period commencing on the day after the date of the grant of
such Incentive Option or within a one-year period commencing on the day after
the date of transfer of the share or shares to him pursuant to the exercise of
such Incentive Option, he shall, within 10 days after such disposition, notify
the Company thereof and immediately deliver to the Company any amount of United
States federal income tax withholding required by law.
(l) LIMITATION ON OPTIONS HELD BY ONE PERSON. The aggregate number of
shares of Stock subject to options held by any one person shall not exceed that
number of shares as equals 5% of the outstanding shares of the Company.
6. TERM OF PLAN.
No Option shall be granted pursuant to the Plan on or after January 5,
2006, but Options theretofore granted may extend beyond that date.
7. CAPITAL CHANGE OF THE COMPANY.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event.
8. PURCHASE FOR INVESTMENT.
Unless the Options and shares covered by the Plan have been registered
under the United States Securities Act of 1933, as amended (the "Securities
Act"), or the Company has determined that such registration is unnecessary, each
person exercising an Option under the Plan may be required by the Company to
give a representation in writing that he is acquiring the shares for his own
account for investment and not with a view to, or for sale in connection with,
the distribution of any part thereof.
9. TAXES.
The Company may make such provisions as it may deem appropriate, consistent
with applicable law, in connection with any Options granted under the Plan with
respect to the withholding of any United States or Canadian taxes or any other
tax matters.
-6-
<PAGE>
10. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on January 5, 1996, provided however that the
Plan shall subsequently be approved by majority vote of the Company's
shareholders not later than January 4, 1997.
11. AMENDMENT AND TERMINATION.
The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee under any
Option theretofore granted without his consent, and except that no amendment
shall be made which, without the approval of the shareholders of the Company
would:
(a) materially increase the number of shares that may be issued under
the Plan, except as is provided in Section 7;
(b) materially increase the benefits accruing to the Optionees under
the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the exercise price of an Incentive Option to less than
100% of the Fair Market Value per share of Stock on the date of grant
thereof or the exercise price of a Nonqualified Option to less than 80% of
the Fair Market Value per share of Stock on the date of grant thereof; or
(e) extend the term of any Option beyond that provided for in Section
5(b).
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without his consent. The Committee may also substitute new Options
for previously granted Options, including options granted under other plans
applicable to the participant and previously granted Options having higher
option prices, upon such terms as the Committee may deem appropriate.
12. GOVERNMENT REGULATIONS.
The Plan, and the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges (including the
American Stock Exchange and Vancouver Stock Exchange) as may be required.
-7-
<PAGE>
13. General Provisions.
(a) CERTIFICATES. All certificates for shares of Stock delivered under the
Plan shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, or other securities commission having
jurisdiction, any applicable Federal, provincial or state securities law, any
stock exchange upon which the Stock is then listed and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.
(b) EMPLOYMENT MATTERS. The adoption of the Plan shall not confer upon any
Optionee of the Company or any Subsidiary, any right to continued employment or,
in the case of an Optionee who is a director, continued service as a director,
with the Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees, the service of any of its directors or the
retention of any of its consultants or advisors at any time.
(c) LIMITATION OF LIABILITY. No member of the Board or the Committee, or
any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) REGISTRATION OF STOCK. Notwithstanding any other provision in the Plan,
no Option may be exercised unless and until the Stock to be issued upon the
exercise thereof has been registered under the Securities Act and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration in the United States or exempt from the prospectus and
registration requirements under applicable provincial legislation. The Company
shall not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder, or to comply with an appropriate exemption from registration under
such laws or the laws of any province in order to permit the exercise of an
Option and the issuance and sale of the Stock subject to such Option however,
the Company may in its sole discretion register such Stock at such time as the
Company shall determine. If the Company chooses to comply with such an exemption
from registration, the Stock issued under the Plan may, at the direction of the
Committee, bear an appropriate restrictive legend restricting the transfer or
pledge of the Stock represented
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thereby, and the Committee may also give appropriate stop transfer instructions
to the Company's transfer agents.
GST TELECOMMUNICATIONS, INC.
January 5, 1996
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Exhibit 4.(c)
GST TELECOMMUNICATIONS, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
The following are the provisions of the 1996 Employee Stock Purchase Plan
of GST Telecommunications, Inc.
1. PURPOSE. The purpose of the Plan is to provide eligible employees of the
Company and its Designated Subsidiaries with an opportunity to share in the
fortunes of the Company by acquiring or increasing their holdings of the Common
Shares of the Company, at a discount, through accumulated payroll deductions.
The Plan is also designed to encourage eligible employees to remain in the
employ of the Company. It is the intention of the Company that the Plan qualify
as an "Employee Stock Purchase Plan" under Section 423 of the Code. The
provisions of the Plan shall, accordingly, be construed so as to extend or limit
participation in a manner consistent with the requirements of Section 423 of the
Code.
2. DEFINITIONS.
(a) "Board" shall mean the Board of Directors of the Company or a committee
thereof duly authorized to administer the Plan in accordance with Section 13
hereof.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Shares" shall mean the Common Shares of the Company as more
fully described in Section 25 hereof.
(d) "Company" shall mean GST Telecommunications, Inc., a federally
chartered Canadian corporation, with its principal offices at 4317 N.E. Thurston
Way, Vancouver, Washington 98662.
(e) "Compensation" shall mean all regular gross earnings, including
payments for overtime, shift premium, incentive compensation, incentive
payments, bonuses, commissions or other compensation.
(f) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
<PAGE>
(g) "Designated Subsidiaries" shall mean the Subsidiaries that have been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
(h) "Dollars" or "$" shall mean U.S. Dollars.
(i) "Employee" shall have the meaning set forth in Section 3 hereof.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Exercise Date" shall mean the last day of each Offering Period of the
Plan if such date is a regular business day or the first regular business day
thereafter. A different date may be set by resolution of the Board.
(l) "Fair Market Value" of the Common Shares on a given date shall mean the
closing price of publicly traded Common Shares on the principal United States
securities exchange on which the Common Shares are listed (if the Common Shares
are so listed), or on the Nasdaq Stock Market (if the Common Shares are
regularly quoted on the Nasdaq Stock Market), or, if not so listed or regularly
quoted, the mean between the closing bid and asked prices of publicly traded
Common Shares in the over-the-counter market, or, if such bid and asked prices
shall not be available, as reported by any nationally recognized quotation
service selected by the Company, or as determined by the Board in a manner
consistent with the provisions of the Code.
(m) "Offering Date" shall mean the first day of each Offering Period of the
Plan if such date is a regular business day or the first regular business day
thereafter. A different date may be set by resolution of the Board.
(n) "Offering Period" shall have the meaning set forth in Section 4 hereof.
(o) "Option" shall mean an option granted to a Participant to purchase
Common Shares under the Plan.
(p) "Participant" shall mean an Employee who participates in this Plan in
accordance with Section 5 hereof.
(q) "Plan" shall mean the 1996 Employee Stock Purchase Plan of the Company.
(r) "Reserves" shall have the meaning set forth in Section 18 hereof.
(s) "SEC" shall mean the Securities and Exchange Commission.
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(t) "Securities Act" shall mean the Securities Act of 1933, as amended.
(u) "Subsidiary" shall mean a corporation of which not less than 50% of the
voting shares are held by the Company or a Subsidiary, whether or not such
corporation now exists or is hereafter organized or acquired by the Company or a
Subsidiary.
3. ELIGIBILITY.
(a) Any person who is regularly in the employ of the Company (an
"Employee") or any of its Designated Subsidiaries is eligible to receive Options
except (a) employees whose customary employment is less than 20 hours per week
and (b) employees whose customary employment is not more than five months in any
calendar year.
(b) Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an Option (i) if, immediately after the grant, such Employee
(or any other person whose stock would be attributed to such Employee pursuant
to Section 425(d) of the Code) would own stock and/or hold outstanding Options
to purchase stock possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company or of any subsidiary of the
Company, or (ii) that permits his rights to purchase stock under all employee
stock purchase plans (as described in Section 423 of the Code) of the Company
and its subsidiaries to accrue at a rate that exceeds $25,000 of Fair Market
Value of such stock (determined at the time such Option is granted) for each
calendar year in which such Option is outstanding at any time.
4. OFFERING PERIODS.
(a) The Plan shall be implemented by one offering during each six-month
period (each an "Offering Period"). Offering Periods shall commence on or about
April 1 and October 1 of each year as determined by the Board; provided,
however, that the first Offering Period under the Plan may be less than six
months.
(b) The Board shall have the power to change the duration of Offering
Periods with respect to future offerings without shareholder approval if such
change is announced at least 15 days prior to the scheduled beginning of the
first Offering Period to be affected.
5. PARTICIPATION.
(a) An Employee may become a Participant in the Plan by completing a
subscription agreement authorizing payroll deduction on the form provided by the
Company and filing it with
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the Company's Human Resources Manager on or prior to an Offering Date or such
other date as may be specified by the Board.
(b) Payroll deductions for a Participant shall commence on the first
payroll following the Offering Date and shall end on the Exercise Date of the
Offering Period to which such authorization is applicable, unless sooner
terminated by the Participant as provided in Section 10 hereof.
6. PAYROLL DEDUCTIONS.
(a) At the time a Participant files his subscription agreement, he shall
elect to have payroll deductions made on each payday during the Offering Period
in an amount not exceeding 10% of the Compensation that he receives on each
payday during the Offering Period, and the aggregate of such payroll deductions
during the Offering Period shall not exceed 10% of his aggregate Compensation
during such Offering Period.
(b) The total number of Common Shares purchased by any Participant shall in
no event exceed, in any Offering Period, the number of Common Shares that
$12,500 could purchase at the Fair Market Value of a Common Share on the
Offering Date.
(c) All payroll deductions made by a Participant shall be credited to his
account under the Plan. A Participant may not make any additional payments into
such account.
(d) A Participant may discontinue his participation in the Plan as provided
in Section 10 hereof, or may decrease (but not increase) the rate of his payroll
deductions one time during the Offering Period by completing or filing with the
Human Resources Manager of the Company a new authorization for payroll
deduction. The change in rate shall be effective 15 days following the Company's
receipt of the new authorization. If a Participant decreases the rate of his
payroll deductions more than one time during an Offering Period, such
Participant will be deemed to have terminated his participation in the Plan in
accordance with Section 10 hereof.
7. GRANT OF OPTION.
(a) On the Offering Date of each Offering Period, each Participant shall be
granted an Option to purchase (at the per share Option price) up to a number of
Common Shares determined by dividing such Participant's payroll deductions to be
accumulated during such Offering Period (not to exceed an amount equal to 10% of
his Compensation as of the date of the commencement of the applicable Offering
Period) by the lower of (i) 85% of the Fair Market Value of a Common Share on
the Offering Date, or (ii) 85% of the Fair Market Value of a Common Share on the
Exercise Date; provided that in no event shall an Employee be permitted to
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<PAGE>
purchase during any Offering Period more than a number of Common Shares
determined by dividing $12,500 by the Fair Market Value of a Common Share on the
Offering Date, and provided further that such purchase shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof. Fair Market Value of a
share of the Company's Common Shares shall be determined as provided in Section
7(b) hereof.
(b) The option price per Common Share of the Shares offered in a given
Offering Period shall be the lower of: (i) 85% of the Fair Market Value of a
Common Share on the Offering Date; or (ii) 85% of the Fair Market Value of a
Common Share on the Exercise Date.
8. EXERCISE OF OPTION. Unless a Participant withdraws from the Plan as
provided in Section 10 hereof, his Option shall be exercised automatically on
the Exercise Date of the Offering Period and the maximum number of full Common
Shares subject to such Option shall be purchased for him at the applicable
option price with the accumulated payroll deductions in his account. The Common
Shares purchased upon exercise of an Option hereunder shall be deemed to be
transferred to the Participant on the Exercise Date. During his lifetime, an
Option to purchase Common Shares hereunder is exercisable only by the
Participant to whom such Option is granted.
9. DELIVERY. Common Shares purchased upon exercise of the Participants'
Options shall be represented by one or more global certificates registered in
the name of a custodian from time to time selected by the Committee. Beneficial
interests in the global certificate(s) will be shown on, and transfers thereof
will be effected through records maintained by the Human Resources Manager of
the Company. Upon request of a Participant, the Company shall arrange for the
delivery to such Participant of a certificate representing the number of Common
Shares requested by such participant; provided that such Participant has
purchased at least that number of Common Shares pursuant to the Plan.
Certificated Common Shares delivered to a Participant shall not constitute a
portion of the global certificates. In the case of a Participant who has
requested that certificated Common Shares be delivered to him, any cash
remaining to the credit of such Participant's account that is insufficient to
purchase a full share of a Common Share of the Company shall be returned to said
Participant. In addition, no fractional Common Shares shall be delivered to such
Participant; he shall instead receive the cash value of such fractional Common
Shares.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) An employee's participation in the Plan may be terminated by signing
and delivering to the Human Resources Manager of the Company a notice of
withdrawal from the Plan. Such
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<PAGE>
withdrawal may be elected at any time prior to the Exercise Date of the
applicable Offering Period.
(b) Any withdrawal from a given Offering Period automatically terminates
the Participant's interest in that offering. A Participant withdrawing from an
offering must wait at least 90 days until executing a subscription agreement for
subsequent offerings.
(c) A Participant may withdraw all but not less than all the payroll
deductions credited to his account under the Plan at any time prior to the
Exercise Date of the Offering Period by giving written notice to the Company.
All of the Participant's payroll deductions credited to his account shall be
paid to him promptly after receipt of his notice of withdrawal and his Option
for the current period shall be automatically terminated, and no further payroll
deductions for the purchase of Common Shares shall be made during the Offering
Period.
(d) Upon termination of the Participant's Continuous Status as an Employee
prior to the Exercise Date of the Offering Period for any reason, including
retirement or death, the payroll deductions credited to his account shall be
returned to him or, in the case of his death, to the person or persons entitled
thereto under Section 14, and his Option shall be automatically terminated.
(e) In the event an Employee fails to remain in Continuous Status as an
Employee of the Company for at least 20 hours per week during the Offering
Period in which the employee is a Participant, he shall be deemed to have
elected to withdraw from the Plan and the payroll deductions credited to his
account shall be returned to him and his Option terminated.
(f) A Participant may discontinue his participation in the Plan, and may
decrease but not increase the rate of payroll deductions one time during the
Offering Period. Payroll deductions commence on the first payday following the
beginning of the employee's participation in the Offering Period, and continue
at the same rate until terminated or decreased.
11. INTEREST. No interest shall accrue on the payroll deductions of a
Participant in the Plan.
12. STOCK.
(a) The maximum number of Common Shares that shall be made available for
sale under the Plan shall be 500,000, subject to adjustment upon changes in
capitalization of the Company as provided in Section 18 hereof. If the total
number of Common Shares that would otherwise be subject to Options granted
pursuant to Section 7(a) hereof on the Offering Date of an Offering Period
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<PAGE>
exceeds the number of Common Shares then available under the Plan (after
deduction of all Common Shares for which Options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of the Common Shares
remaining available for Option grants in as uniform a manner as shall be
practicable and as it shall determine to be equitable. In such event, the
Company shall give written notice of such reduction of the number of Common
Shares subject to the Option to each Participant affected thereby and shall
similarly reduce the rate of payroll deductions, if necessary.
(b) The Participant shall have no interest or voting right in Common Shares
covered by his Option until such Option has been exercised.
(c) Common Shares to be delivered to a Participant under the Plan shall be
registered in the form of one or more global certificates in the name of the
Committee. Upon request of a Participant, Common Shares shall be registered in
the name of the Participant or in the name of the Participant and his spouse, in
which event they shall no longer be evidenced by the global certificates.
13. ADMINISTRATION. The Plan shall be administered by the Board or a
committee of members of the Board appointed by the Board. The administration,
interpretation or application of the Plan by the Board or its committee shall be
final, conclusive and binding upon all Participants. Members of the Board who
are eligible Employees are permitted to participate in the Plan, provided that:
(a) Members of the Board who are eligible to participate in the Plan may
not vote on any matter affecting the administration of the Plan or the grant of
any Option.
(b) If a Committee is established to administer the Plan, no member of the
Board who is eligible to participate in the Plan may be a member of the
Committee.
14. DESIGNATION OF BENEFICIARY.
(a) A Participant may file a written designation of a beneficiary who is to
receive any Common Shares and cash, if any, from the Participant's account under
the Plan in the event of such Participant's death subsequent to the end of the
Offering Period but prior to entry of such Common Shares on the records
maintained by the Company's Human Resources Manager and delivery to him of such
cash. In addition, a Participant may file a written designation of a beneficiary
who is to receive any cash from the Participant's account under the Plan in the
event of such Participant's death prior to the Exercise Date of the Offering
Period.
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<PAGE>
(b) Such designation of beneficiary may be changed by the Participant at
any time by written notice. In the event of the death of a Participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such Participant's death, the Company shall deliver such Common
Shares and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
Common Shares and/or cash to the spouse or to any one or more dependents or
relatives of the Participant, or if no spouse, dependent or relative is known to
the Company, then to such other person as the Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a Participant's
account, nor any rights with regard to the exercise of an Option, may be
assigned, transferred, pledged or otherwise disposed of in any way (other than
by will, the laws of descent and distribution or as provided in Section 14
hereof) by the Participant. Any such attempt at assignment, transfer, pledge or
other disposition shall be without affect, except that the Company may treat
such act as an election to withdraw funds in accordance with Section 10 hereof.
16. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts shall be maintained for each Participant.
Statements of account shall be given to Participants promptly following the
Exercise Date, which statements shall set forth the amounts of payroll
deductions, the per share purchase price, the number of Common Shares purchased
and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of Common Shares covered
by each Option that has not yet been exercised and the number of Common Shares
that have been authorized for issuance under the Plan but have not yet been
placed under option (collectively, the "Reserves"), as well as the price per
Common Share covered by each Option that has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
Common Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Shares, or any other increase or
decrease in the number of Common Shares effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as
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expressly provided herein, no issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Shares subject to an Option.
19. EFFECT OF LIQUIDATION, DISSOLUTION, SALE OF ASSETS OR MERGER. In the
event of the proposed dissolution or liquidation of the Company, all Options
shall terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board. The Board may, in the exercise of its
sole discretion in such instances, declare that all Options shall terminate as
of a date fixed by the Board and give each Participant the right to exercise his
Option as to all or any part thereof, including shares as to which an Option
would not otherwise be exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, an Option shall be assumed or an equivalent
Option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation. In the event that such successor
corporation refuses to assume the Options or to substitute an equivalent option,
the Board shall, in lieu of such assumption or substitution, provide for the
Participant to have the right to exercise the Options in full, including as to
Common Shares that would not otherwise then be purchasable. If the Board makes
an Option fully exercisable in lieu of assumption or substitution in the event
of a merger or sale of assets, the Board shall notify the Participant that the
Option shall be fully exercisable for a period of 30 days after the date of such
notice, and the Option shall terminate upon the expiration of such period.
The Board may, if it so determines in the exercise of its sole discretion,
also make provisions for adjusting the Reserves, as well as the price per Common
Share covered by each outstanding Option, in the event that the Company effects
one or more reorganizations, recapitalizations, rights offerings or other
increases or reductions of its outstanding Common Shares, and in the event of
the Company being consolidated with or merged into any other corporation.
20. AMENDMENT OR TERMINATION. The Board may at any time terminate or amend
the Plan. Except as provided in Section 18, no such termination can affect
Options previously granted, nor may an amendment make any change in any Option
theretofore granted which adversely affects the rights of any Participant, nor
may an amendment be made without prior approval of the shareholders of the
Company (obtained in a manner consistent with the provisions of the Code and all
other applicable law) if such amendment would:
(a) Increase the number of Common Shares that may be issued under the Plan;
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(b) Permit payroll deductions at a rate in excess of 10% of the
Participant's Compensation;
(c) Change the designation of the employees (or class of employees)
eligible for participation in the Plan; or
(d) If the Company has a class of equity securities registered under
Section 12 of the Exchange Act at the time of such amendment, materially
increase the benefits that may accrue to Participants under the Plan.
(e) To the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act, or with Section 423 of the Code (or any other applicable law
or regulation, including requirements of the NASD or any established stock
exchange), the Company shall obtain stockholder approval of any amendment to the
Plan in the requisite manner.
21. NOTICES. All notices or other communications by a Participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
22. SHAREHOLDER APPROVAL. The Plan was approved by the affirmative vote of
the holders of a majority of the outstanding Common Shares at the Company's
Annual Meeting of Shareholders held on February 15, 1996.
23. CONDITIONS UPON ISSUANCE OF COMMON SHARES. Common Shares shall not be
issued with respect to an Option unless the exercise of such Option and the
issuance and delivery of such Common Shares pursuant thereto shall comply with
all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the Common Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Common Shares are being purchased only for investment and
without any present intention to sell or distribute such Common Shares if, in
the opinion of counsel for the Company, such a representation is required by any
of the aforementioned applicable provisions of law.
24. RESTRICTIONS ON RESALE. Certain officers and directors of the Company
may be deemed to be "affiliates" of the Company as that term is defined under
the Securities Act. Common Shares acquired under the Plan by an affiliate may
only be re-
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offered or resold pursuant to an effective registration statement or pursuant to
Rule 144 promulgated under the Securities Act or another exemption from the
registration requirements of the Securities Act. Such reoffers or resales may
not be made in reliance on the Registration Statement filed in connection with
the offer to Participants of the Common Shares issuable hereunder.
25. SECURITIES TO BE PURCHASED. The security to be purchased under the Plan
is Common Shares, without par value, of the Company. Each Common Share entitles
the holder to one vote on matters submitted to a vote of the stockholders, a pro
rata share of such dividends as may be declared on the Common Shares and a pro
rata share of assets remaining available for distribution to stockholders upon a
liquidation of the Company. The Common Shares are not convertible and have no
preemptive rights. While the Board has authority, within certain limitations, to
issue shares of preference stock that would have one or more preferences over
the Common Shares, no preference stock is currently outstanding and the Company
has no present plans to issue any preference stock.
26. TERM OF PLAN. The Plan became effective on February 15, 1996 and shall
continue in effect for a term of 20 years unless sooner terminated under Section
20.
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Exhibit 4.(d)
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), UNDER ANY STATE
SECURITIES OR BLUE SKY LAWS OR UNDER ANY CANADIAN PROVINCIAL SECURITIES LAWS.
NEITHER THIS WARRANT NOR ANY OF SUCH SHARES MAY BE SOLD, ASSIGNED, TRANSFERRED,
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE ACT AND UNDER
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR EXEMPTIONS FROM SUCH
REGISTRATION OR IN THE ABSENCE OF REGISTRATION UNDER CANADIAN PROVINCIAL
SECURITIES LAWS OR EXEMPTION FROM SUCH REGISTRATION. THIS WARRANT MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT UPON THE CONDITIONS
SPECIFIED IN THIS WARRANT, AND NO SALE, ASSIGNMENT, TRANSFER, OR OTHER
DISPOSITION OF THIS WARRANT SHALL BE VALID OR EFFECTIVE UNLESS AND UNTIL THERE
SHALL HAVE BEEN COMPLIANCE WITH SUCH CONDITIONS.
Dated: As of October 1, 1995
WARRANT
To purchase up to 300,000 Common Shares
GST TELECOMMUNICATIONS, INC.
Expiring September 30, 2000
THIS IS TO CERTIFY THAT, for value received, STEPHEN IRWIN, or registered
assigns (the "Holder"), is entitled, subject to certain conditions set forth in
Sections 1.01 and 1.02 hereof, to purchase from GST TELECOMMUNICATIONS, INC., a
Delaware corporation (the "Company"), at the Company's principal executive
office, at the Exercise Price, up to the number of Common Shares, without par
value (the "Common Shares"), of the Company shown above, all subject to
adjustment and upon the terms and conditions as hereinafter provided, and is
entitled also to exercise the other appurtenant rights, powers and privileges
hereinafter described.
Certain terms used in this Warrant are defined in Article IV hereof.
ARTICLE I
METHOD OF EXERCISE
1.01. TIME OF EXERCISE. Subject to the provisions of Sections 1.02 and 1.03
hereof, this Warrant may be exercised to the extent of 100,000 Common Shares at
any time and from time to time after 9:00 a.m. Pacific Time on October 1, 1996
and prior to the Expiration Time; as to a further 100,000 Common Shares at any
time and from time to time after 9:00 a.m. Pacific Time on October 1, 1997 and
prior to the Expiration Time; and as to the remaining 100,000 Common Shares at
any time and from time to time after 9:00 a.m. Pacific Time on October 1, 1998
and prior to the Expiration Time.
<PAGE>
1.02. EARLY EXPIRATION OF WARRANT. Notwithstanding the provisions of
Section 1.01 hereof, in the event of termination of the Personal Services
Agreement by the GST Subsidiaries for Cause (as such term is defined in the
Personal Services Agreement), this Warrant, to the extent not previously
exercised, shall forthwith expire and terminate.
1.03 ACCELERATION OF EXERCISABILITY. In the event of the deemed termination
of the Personal Services Agreement in accordance with paragraph 17 thereof, the
Holder shall have the right, during the one year period subsequent to such
deemed termination, but in no event subsequent to the Expiration Time, to
exercise this Warrant (or the then unexercised portion thereof) whether or not
this Warrant (or the then unexercised portion thereof) is then exercisable in
accordance with Section 1.01 hereof.
1.04. METHOD OF EXERCISE. To exercise this Warrant in whole or in part, the
Holder shall deliver to the Company, at the Company's principal executive office
(a) this Warrant, (b) a written notice of such Holder's election to exercise
this Warrant, which notice shall specify the number of Common Shares to be
purchased, but in no event less than 1,000 shares, the denominations of the
share certificate or certificates desired and the name or names in which such
certificates are to be registered, and (c) payment of the Exercise Price with
respect to such shares. Such payment may be made, at the option of the Holder,
in cash, by certified or bank cashier's check, money order or wire transfer, in
the manner specified in the next succeeding paragraph, or in any other manner
consented to in writing by the Company, or any combination thereof.
In lieu of payment of the Exercise Price as provided in the previous
paragraph, the Holder may make such payment by way of cashless exercise as
follows:
(a) by delivery of Common Shares or other securities of the
Company already owned by the holder with an aggregate Market
Price on the date of exercise equal to the Exercise Price,
subject, however, to the provisions of Section 16(b) of the
Exchange Act; or
(b) through the written election of the Holder to exercise
such Warrant by surrendering the Warrant and receiving a number
of Common Shares equal to the full number of Common Shares
subject to the Warrant less that number of shares having an
aggregate Market Price on the date of exercise equal to the
Exercise Price.
The Company shall, as promptly as practicable after receipt of the items
required by the preceding paragraphs of this Section 1.04, execute and deliver
or cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of Common Shares
specified in such
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notice. The share certificate or certificates so delivered shall be in such
denominations as shall be specified in such notice and shall be issued in the
name of the Holder or, provided, in an opinion of counsel reasonably acceptable
to the Company, the following is permitted under the Act and applicable state
and Canadian provincial securities laws, such other name as shall be designated
in such notice. Such certificate or certificates shall be deemed to have been
issued, and such Holder or Holders or any other person so designated to be named
therein shall be deemed for all purposes to have become a Holder of record of
such shares, as of the date the aforementioned notice is received by the
Company. If this Warrant shall have been exercised only in part, the Company
shall, at the time of delivery of the certificate or certificates, deliver to
the Holder a new Warrant evidencing the right to purchase the remaining Common
Shares called for by this Warrant which new Warrant shall in all other respects
be identical with this Warrant, or, at the request of the Holder, appropriate
notations may be made on this Warrant which shall then be returned to the
Holder. The Company shall pay all expenses, taxes and other charges payable in
connection with the preparation, issuance and delivery of share certificates and
new Warrants, except that, if share certificates or new Warrants shall be
registered in a name or names other than the name of the Holder, funds
sufficient to pay all transfer taxes, if any, payable as a result of such
transfer shall be paid by the Holder at the time of delivering the
aforementioned notice of exercise or promptly upon receipt of a written request
of the Company for payment.
1.05. SHARES TO BE FULLY PAID AND NONASSESSABLE. All Common Shares issued
upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable and, if the Common Shares are then eligible for listing on any
national securities exchanges (as defined in the Exchange Act), or quoted on
NASDAQ, shall be duly listed or quoted thereon, as the case may be.
1.06. NO FRACTIONAL SHARES TO BE ISSUED. The Company shall not be required
to issue fractions of Common Shares upon exercise of this Warrant. If any
fractions of a share would, but for this Section, be issuable upon any exercise
of this Warrant, in lieu of such fractional share the Company shall pay to the
holder, in cash, an amount equal to the same fraction of the Closing Price per
Common Share for the Trading Day immediately prior to the date of such exercise.
1.07. SHARE LEGEND. Each certificate for Common Shares issued upon exercise
of this Warrant, unless at the time of exercise such shares are registered under
the Act, shall bear a legend substantially as follows:
THE COMMON SHARES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 AND NEITHER SUCH COMMON
SHARES NOR ANY INTEREST THEREIN MAY BE SOLD,
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TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM
UNDER SAID ACT AND THE RULES AND REGULATIONS
THEREUNDER. BY ITS ACCEPTANCE HEREOF, THE HOLDER OF
SUCH COMMON SHARES REPRESENTS THAT IT IS ACQUIRING
THESE COMMON SHARES FOR INVESTMENT AND AGREES TO COMPLY
IN ALL RESPECTS WITH ANY APPLICABLE STATE SECURITIES
LAWS, AND THE WARRANT RELATING TO THESE COMMON SHARES
ISSUED PURSUANT TO SUCH WARRANT, COVERING THE PURCHASE
OF THESE COMMON SHARES AND RESTRICTING THEIR TRANSFER,
COPIES OF WHICH MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICE.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the Act)
shall also bear such legend unless, in the opinion of counsel reasonably
acceptable to the Company, the securities represented thereby need no longer be
subject to restrictions on resale under the Act.
ARTICLE II
EXCHANGES, TRANSFERS AND REPLACEMENTS
2.01. EXCHANGE AND REGISTRATION OR TRANSFER OF WARRANTS. Provided, in an
opinion of counsel reasonably acceptable to the Company, the following is
permitted under the Act and applicable state and Canadian provincial securities
laws, the holder of this Warrant may, at its option, surrender this Warrant at
the principal executive office of the Company and receive in exchange therefor a
Warrant or Warrants for the same aggregate number of Common Shares as the
Warrant or Warrants so surrendered for exchange and registered to such person or
persons as may be designated by such holder.
This Warrant may be divided upon presentation hereof at the principal
executive office of the Company, together with a written notice specifying the
names and denominations in which the new Warrant or Warrants are to be issued,
signed by the holder hereof and thereof or their respective duly authorized
agents or attorneys. Subject to compliance with the preceding paragraph of this
Section 2.01 as to any transfer that which may be involved in the division, the
Company shall execute and deliver a new Warrant or Warrants to be divided in
accordance with such notice.
The Company shall keep, at said principal office, a register in which,
subject to such reasonable regulations as it may prescribe, the Company shall
register or cause to be registered
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Warrants and shall register or cause to be registered the transfer of the
Warrants as provided in this Section 2.01. Such register shall be in written
form. Upon due presentment for registration of transfer of any Warrants at such
office, the Company shall execute and register or cause to be registered and
deliver in the name of the transferee or transferees a new Warrant or Warrants
for an equal aggregate number of Common Shares.
The Company shall pay any tax or other governmental charge that may be
imposed in connection with any exchange of Warrants not involving a transfer,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with a transfer of
Warrants.
2.02. LOSS, THEFT OR DESTRUCTION OF WARRANT CERTIFICATES. Upon receipt of
evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Company,
or, in the case of any such mutilation, upon surrender and cancellation of the
Warrant, the Company will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same aggregate number of Common Shares.
2.03. CHANGE OF PRINCIPAL EXECUTIVE OFFICE. In the event the Company shall
change the address of its principal executive office, the Company shall give the
holder of this Warrant notice of any such change.
ARTICLE III
ANTIDILUTION PROVISIONS
3.01 ADJUSTMENTS GENERALLY. The Exercise Price and the number of Common
Shares (or other securities or property) issuable upon exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events, as provided in this Article III.
3.02 COMMON SHARE REORGANIZATION. If the Company shall subdivide its
outstanding Common Shares into a greater number of shares or consolidate its
outstanding Common Shares into a smaller number of shares (any such event being
called a "Common Share Reorganization"), then (a) the Exercise Price shall be
adjusted, effective immediately after the record date at which the holders of
Common Shares are determined for purposes of such Common Share Reorganization,
to a price determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be the
number of Common Shares outstanding on such record date before giving effect to
such Common Share Reorganization and the denominator of which shall be the
number
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of Common Shares outstanding after giving effect to such Common Share
Reorganization, and (b) the number of Common Shares subject to purchase upon
exercise of this Warrant shall be adjusted, effective at such time, to a number
determined by multiplying the number of Common Shares subject to purchase
immediately before such Common Share Reorganization by a fraction, the numerator
of which shall be the number of shares then outstanding after giving effect to
such Common Share Reorganization and the denominator of which shall be the
number of Common Shares outstanding immediately before such Common Share
Reorganization.
3.03 SPECIAL DIVIDENDS. If the Company shall issue or distribute to all or
substantially all holders of Common Shares evidences of indebtedness, any other
securities of the Company, or any cash, property or other assets, and if such
issuance or distribution does not constitute a cash dividend or distribution out
of surplus or net profits legally available therefor, or a Common Share
Reorganization (any such nonexcluded event being herein called a "Special
Dividend"), the Exercise Price shall be adjusted, effective immediately after
the record date at which the holders of Common Shares are determined for
purposes of such Special Dividend, to a price determined by multiplying the
Exercise Price then in effect by a fraction, the numerator of which shall be the
Market Price per Common Share on such record date less the then fair market
value (as reasonably determined in good faith by the Board of Directors of the
Company) of the evidences of indebtedness, securities or property or other
assets issued or distributed in such Special Dividend with respect to one Common
Share, and the denominator of which shall be the Closing Price per Common Share
on such record date.
3.04 CAPITAL REORGANIZATIONS. If there shall be any consolidation or merger
to which the Company is a party, other than a consolidation or a merger in which
the Company is a continuing corporation and which does not result in any
reclassification of, or change (other than a Common Share Reorganization or a
change in par value) in, outstanding Common Shares, or any sale or conveyance of
the property of the Company as an entirety or substantially as an entirety (any
such event being called a "Capital Reorganization"), then effective upon the
effective date of such Capital Reorganization, the Holder shall have the right
to purchase, upon exercise of this Warrant, the kind and amount of shares of
stock and other securities and property (including cash) which the Holder would
have owned or have been entitled to receive after such Capital Reorganization if
this Warrant had been exercised immediately prior to such Capital
Reorganization. As a condition to effecting any Capital Reorganization, the
Company or the successor or surviving corporation, as the case may be, shall
execute and deliver to each Warrantholder an agreement as to the Warrantholders'
rights in accordance with this Section 3.04, providing for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article III. The provisions of this
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Section 3.04 shall similarly apply to successive Capital Reorganizations.
3.05. CERTAIN OTHER EVENTS. If any event occurs as to which the foregoing
provisions of this Article III are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly protect the purchase rights of the Warrants in accordance
with the essential intent and principles of such provisions, then such Board
shall make such adjustments in the application of such provisions, in accordance
with such essential intent and principles, as shall be reasonably necessary, in
the good faith opinion of such Board, to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
increasing the Exercise Price or decreasing the number of Common Shares subject
to purchase upon exercise of this Warrant.
3.06. ADJUSTMENT RULES. (a) Any adjustments pursuant to this Article III
shall be made successively whenever an event referred to therein shall occur.
(b) If the Company shall set a record date to determine the holders of
Common Shares for purposes of a Common Share Reorganization or Capital
Reorganization, and shall legally abandon such action prior to effecting such
action, then no adjustment shall be made pursuant to this Article III in respect
of such action.
(c) All calculations under this Article III shall be made to the nearest
cent or to the nearest one hundredth (1/100th) of a share, as the case may be.
Notwithstanding any provision of this Article III to the contrary, no adjustment
in the Exercise Price shall be made if the amount of such adjustment would be
less than US $0.05, but any such amount shall be carried forward and an
adjustment with respect thereto shall be made at the time of and together with
any subsequent adjustment which, together with such amount and any other amount
or amounts so carried forward, shall aggregate US $0.05 or more.
(d) In any case in which the provisions of this Article III shall require
that an adjustment shall become effective immediately after a record date for an
event, the Company may defer until the occurrence of such event (i) issuing to
the holder of any Warrant exercised after such record date and before the
occurrence of such event the additional Common Shares issuable upon such
conversion by reason of the adjustment required by such event over and above the
Common Shares issuable upon such conversion before giving effect to such
adjustment and (ii) paying to such holder any amount of cash in lieu of a
fractional Common Share pursuant to Section 1.04; provided that the Company upon
request shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's rights to receive such additional shares, and such
cash, upon the occurrence of the event requiring such adjustment.
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3.07 PROCEEDINGS PRIOR TO ANY ACTION REQUIRING ADJUSTMENT. As a condition
precedent to the taking of any action that would require an adjustment pursuant
to this Article III, the Company shall take any action which may be necessary in
order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all Common Shares which the holders of Warrants are entitled
to receive upon exercise thereof.
3.08 STATEMENT REGARDING ADJUSTMENT. Whenever the Exercise Price or the
number of shares received upon exercise of the Warrants shall be adjusted as
provided in Article III, the Company shall forthwith file, at the office of any
transfer agent for the Warrants and at the principal office of the Company, a
statement showing in detail the facts requiring such adjustment and the Exercise
Price and the number of shares received upon exercise of the Warrants that shall
be in effect after such adjustment, and the Company shall also cause a copy of
such statement to be sent by mail, first class postage prepaid, to each holder
of Warrants, at its address appearing on the Company's records. Each such
statement shall be signed by the Company's independent public accountants. Where
appropriate, such copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of this Article III. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.
3.09 NOTICE TO HOLDERS. In the event the Company shall propose to take any
action of the type described in Article III (but only if the action of the type
described in Article III would result in an adjustment in the Exercise Price or
the number of shares received upon exercise of the Warrants), or to declare any
cash dividends or distribution out of surplus or net profits legally available
therefor, the Company shall give notice to each Warrantholder in the manner set
forth in Section 3.08, which notice shall specify the record date, if any, with
respect to any such action and the approximate date on which such action is to
take place. Such notice shall also set forth such facts with respect thereto as
shall be reasonably necessary to indicate the effect of such action (to the
extent such effect may be known at the date of such notice) on the Exercise
Price and the number, kind or class of shares or other securities or property
which shall be deliverable or purchasable upon the occurrence of such action or
deliverable upon exercise of the Warrants. In the case of any action that would
require the fixing of a record date, such notice shall be given at least 15 days
prior to the date so fixed, and in case of all other action, such notice shall
be given at least 20 days prior to the taking of such proposed action. Failure
to give such notice, or any defect therein, shall not affect the legality or
validity of any such action.
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ARTICLE IV
DEFINITIONS
The following terms, as used in this Warrant, have the following respective
meanings:
"Act" means the Securities Act of 1933, as amended, and any similar or
successor Federal statute, and the rules and regulations of the Securities and
Exchange Commission (or its successor) thereunder, all as the same shall be in
effect at the time.
"Capital Reorganization" shall have the meaning set forth in Section 3.04
hereof.
"Closing Price" on any day means (a) if the Common Shares are listed or
admitted for trading on a national securities exchange, the reported last sales
price or, if no such reported sale occurs on such day, the average of the
closing bid and asked prices on such day, in each case on the principal national
securities exchange on which the Common Shares are listed or admitted to
trading, (b) if the Common Shares are not listed or admitted to trading on any
national securities exchange, the average of the closing bid and asked prices in
the over-the-counter market on such day as reported by NASDAQ or any comparable
system or, if not so reported, as reported by any New York Stock Exchange member
firm selected by the Company for such purpose or (c) if no such quotations are
available on such day, the fair market value of one Common Share on such day as
determined in good faith by the Board of Directors of the Company.
"Common Shares" shall have the meaning set forth in the first paragraph of
this Warrant, subject to adjustment pursuant to Article III.
"Common Share Reorganization" shall have the meaning set forth in Section
3.02 hereof.
"Company" shall have the meaning set forth in the first paragraph of this
Warrant.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
any similar or successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"Exercise Price" means $6.75 per Common Share, subject to adjustment
pursuant to Article III hereof.
"Expiration Time" means 5:00 p.m. Pacific Time on September 30, 2000.
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"GST Subsidiaries" means GST USA, Inc. and GST Telecom Inc.
"Holder" shall have the meaning set forth in the first paragraph of this
Warrant and "Holders" shall include any and all successors and assigns of the
initial Holder with respect to this Warrant.
"Market Price" on any day means the average of the daily Closing Prices of
a Common Share for the 20 consecutive Trading Days ending on the most recent
Trading Day for which a closing price is available and if the Common Shares are
not then publicly traded Market Price shall be determined in good faith by the
Board of Directors of the Company.
"NASD" means The National Association of Securities Dealers, Inc.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
"Pacific Time" means Pacific Daylight Time or Pacific Standard Time,
whichever is in effect on the relevant date.
"Personal Services Agreement" means that certain Personal Services
Agreement dated as of October 1, 1995 by and between the GST Subsidiaries and
Stephen Irwin.
"Registrable Securities" means the Company's Common Shares issuable upon
exercise of this Warrant.
"Trading Day" means (a) if the Common Shares are listed or admitted to
trading on a national securities exchange, a day on which the principal national
securities exchange on which the Common Shares are listed or admitted to trading
is open for business or (b) if the Common Shares are not so listed or admitted
to trading, a day on which any New York Stock Exchange member firm is open for
business.
"Warrantholder" means a holder of a Warrant.
"Warrant" and "Warrants" shall mean this warrant and any warrants into
which this warrant may be divided in accordance with Section 2.01.
"Warrant Common Shares" means the Common Shares issued upon the exercise of
the Warrant.
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ARTICLE V
REDEMPTION AND CANCELLATION OF WARRANTS
5.01 REDEMPTION OF WARRANTS. The Warrants are not redeemable by the Company
and the Company has no right to purchase or otherwise acquire the Warrants.
5.02 CANCELLATION OF WARRANTS. The Company shall cancel any Warrant
surrendered for transfer, exchange or exercise.
ARTICLE VI
REGISTRATION RIGHTS
6.01 REGISTRATION RIGHTS. If the Company shall at any time or from time to
time determine to register any of its securities with the Securities and
Exchange Commission (other than by means of a registration statement on a form
(e.g., Form F-4, S-4 or S-8) which, by its terms, could not be used for the sale
and distribution of Common Shares), the Company shall:
(a) promptly (but not less than 15 days prior to the filing of any
registration statement) give written notice thereof (which shall include a list
of the jurisdictions, if any, in which the Company intends to register or
qualify such securities under the applicable blue sky or other state securities
laws) to each Holder and each holder of Warrant Common Shares;
(b) use its best efforts to effect such registration and any qualification
and compliance relating thereto, including, without limitation, the execution of
an undertaking to file post-effective amendments, appropriate qualification
under applicable blue sky or other state securities laws and appropriate
compliance with the Act and any other governmental requirements or regulations
as would permit or facilitate the sale and distribution of all Warrant Common
Shares (but not the Warrants).
6.02 EXPENSES. The Company shall bear all of its expenses in connection
with such registration, qualification and compliance under this Section 6,
including, without limitation, all registration and filing fees, printing
expenses and fees and disbursements of the Company's counsel and expenses of any
audits incident to or required by any such registration, qualification and
compliance, provided, that the Company shall not, in any event, be required to
bear the cost of any commissions and compensation paid, and concessions and
discounts allowed to, underwriters, dealers or others performing similar
functions in connection with the sale and distribution of the Warrant Common
Shares sold by any holders thereof.
6.03 INDEMNIFICATION. (a) If Registrable Securities are included in a
Registration Statement, the Company will indemnify each
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Holder and each holder of Warrant Common Shares against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on (A) any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or (B) any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (C) any violation by
the Company of any rule or regulation promulgated under the Act applicable to
the Company and relating to action or inaction required of the Company in
connection with any registration, qualification or compliance, and will
reimburse each Holder and each holder of Warrant Common Shares for any legal and
any other expenses reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by a Holder or
a holder of Warrant Common Shares specifically for use therein.
(b) Each party entitled to indemnification under this Section 6.03
(sometimes referred to as the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that unless such failure
materially and adversely affects the rights or abilities of the Indemnifying
Party to defend such action, the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 6.03. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. If any such Indemnified Party shall have reasonably concluded that
there may be one or more legal defenses available to such Indemnified Party that
are different from or additional to those available to the Indemnifying Party,
or that such claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section 6.03, the
Indemnifying Party shall not have the right to assume the defense of such action
on behalf of such Indemnified Party
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and such Indemnifying Party shall reimburse such Indemnified Party for that
portion of the fees and expenses of any counsel retained by the Indemnified
Party that is reasonably related to the matters covered by the indemnity
agreement provided in this Section 6.03; provided, that in no event shall the
Indemnifying Party be liable to reimburse the fees or expenses of more than one
counsel retained by Indemnified Parties hereunder in connection with any claim
or litigation resulting from such claim.
(c) If the indemnification provided for in this Section 6.03 shall for any
reason be unenforceable by an indemnified party, although otherwise available in
accordance with its terms, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of the losses, claims, damages, liabilities
or expenses with respect to which such indemnified party has claimed
indemnification, in such proportion as is appropriate to reflect the relative
fault of the indemnified party on the one hand and the indemnifying party on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The Company and each Holder agree that it would not be
just and equitable if contribution pursuant hereto were to be determined by pro
rata allocation or by any other method of allocation which does not take into
account such equitable considerations. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to herein shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject
hereof. No person guilty of fraudulent misrepresentation shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.
6.04 INFORMATION BY THE INVESTOR. Each Holder and each holder of Warrant
Common Share shall furnish in writing to the Company such information regarding
such person and the distribution proposed by such person as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Article VI.
6.05 NOTIFICATION; CONTINUATION OF EFFECTIVENESS. In the case of a
registration, qualification and compliance pursuant to this Section 6, the
Company will keep all Holders and all holders of Warrant Common Share promptly
advised in writing as to the initiation of proceedings for such registration,
qualification and compliance and as to the completion thereof, and will advise,
upon request, of the progress of such proceedings. The Company will, at its
expense, keep such registration, qualification and compliance effective, unless
otherwise noted herein, for a period of 12 months, or for such longer period as
may be required by the Act, by such action as may be necessary or appropriate to
permit the exercise or sale and
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distribution during such period of any Warrant not theretofore exercised or sold
and distributed and the sale or distribution of Warrant Common Shares not
theretofore sold or distributed including, without limitation, the filing of
post-effective amendments and supplements to any registration statement or
prospectus necessary to keep the registration current and further qualification
under any applicable blue sky or other state securities law, all as reasonably
requested by any Holder or holder of Warrant Common Shares with respect to which
such registration is being effected.
6.06 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company to
register securities granted by the Company under this Article VI may be assigned
by the Holder to a transferee or assignee of all or less than all the
Registrable Securities, provided that such transfer may otherwise be effected in
accordance with applicable securities laws and that the Company is given written
notice, as provided in Article VI.
6.07 PROSPECTUSES, ETC. The Company will, at its expense, furnish to each
Holder or holder of Warrant Common Shares with respect to which registration has
been effected, such number of prospectuses, offering circulars and other
documents incident to such registration and related qualification or compliance
as such holder from time to time may reasonably request.
6.08 LISTING ON SECURITIES EXCHANGES, ETC. The Company shall, at its
expense, promptly list on each national securities exchange, or NASDAQ, on which
Common Shares are at the time listed, upon official notice of issuance upon the
exercise of the Warrant, and maintain such listing of, all Common Shares from
time to time issuable upon the exercise of the Warrant, and when and if required
by the Exchange Act (or any similar statute then in effect) will register
thereunder all Common Shares from time to time so issuable.
6.09 UNDERWRITTEN OFFERINGS. In the event any registration under this
Article VI is underwritten and the managing underwriter determines that the
inclusion of all Registrable Securities that are to be included would materially
interfere with the successful completion thereof in the reasonable judgment of
such managing underwriter, then the number of Registrable Securities to be
included may be reduced on the same basis as other selling stockholders in such
registration.
ARTICLE VII
MISCELLANEOUS
7.01 NOTICES. All notices, requests and other communications provided for
herein shall be in writing, and shall be deemed to have been made or given when
delivered or mailed, first class, postage prepaid, or sent by telex or other
telegraphic
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communications equipment. Such notices and communications shall be addressed:
(a) if to the Company, to
GST Telecommunications, Inc.
4317 N.E. Thurston Way
Vancouver, Washington 98662
Attention: Chief Executive Officer; or
(b) if to the Holder, to its address as shown on the
registry books maintained pursuant to Section 2.01;
or in any of the foregoing cases at such other
address as such Person may hereafter specify for such
purpose by notice to the other Persons referred to
above.
7.02 WAIVERS; AMENDMENTS. No failure or delay of the Holder in exercising
any right, power or privilege, hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof, or any abandonment or
discontinuance of steps to enforce such a right, power or privilege, preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived if, but only if,
such amendment, modification or waiver is in writing and is signed by a majority
of the Holders; provided that no amendment, modification or waiver may change
the exercise price of (including without limitation any adjustments or any
provisions with respect to adjustments, the expiration of or the manner of
exercising the Warrants) without the consent in writing of all of the Holders.
7.03 GOVERNING LAW. This Warrant shall be construed in accordance with and
governed by the laws of the State of Delaware.
7.04 SURVIVAL OF AGREEMENTS; REPRESENTATIONS AND WARRANTIES, ETC. All
warranties, representations and covenants made by the Company herein or in any
certificate or other instrument delivered by or on behalf of it in connection
herewith or the Notes shall be considered to have been relied upon by the
Holders and shall survive the issuance and delivery of the Warrants and the
Common Shares issuable upon exercise of this Warrant, and shall continue in full
force and effect so long as this Warrant is outstanding. All statements in any
such certificate or other instrument shall constitute representations and
warranties hereunder.
7.05 COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Warrant contained by or on behalf
of the Company shall bind its successors and assigns, whether or not so
expressed.
-15-
<PAGE>
7.06 SEVERABILITY. In case any one or more of the provisions contained in
this Warrant shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired in such
jurisdiction and shall not invalidate or render illegal or unenforceable such
provision in any other jurisdiction.
7.07 HEADINGS. The headings used herein are for convenience of reference
only and shall not be deemed to be a part of this Warrant.
7.08 NO RIGHTS AS SHAREHOLDER. This Warrant shall not entitle the Holder to
any rights as a shareholder of the Company.
7.09 PRONOUNS. The pronouns "it" and "its" herein shall be deemed to mean
"he" or "his", as the context requires.
IN WITNESS WHEREOF, GST Telecommunications, Inc. has caused this Warrant to
be executed in its corporate name by one of its officers thereunto duly
authorized as of the day and year first above written.
GST TELECOMMUNICATIONS, INC.
By:_______________________________
(Title)
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OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 Park Avenue
New York, NY 10022
212 753 7200
June 28, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: GST Telecommunications, Inc. -
Registration Statement on Form S-8
----------------------------------
Gentlemen:
Reference is made to the Registration Statement on Form S-8 filed the date
hereof with the Securities and Exchange Commission (the "Registration
Statement") by GST Telecommunications, Inc., a federally chartered Canadian
corporation (the "Company"). The Registration Statement relates to an aggregate
of 2,200,000 Common Shares without par value of the Company (the "Shares"),
consisting of (i) 1,000,000 Shares to be issued and sold by the Company in
accordance with the Company's 1995 Stock Option Plan, as amended (the "1995
Plan"), (ii) 400,000 Shares to be issued and sold by the Company in accordance
with the Company's 1996 Stock Option Plan (the "1996 Option Plan"), (iii)
500,000 Shares to be issued to employees of the Company upon purchase from the
Company pursuant to the Company's 1996 Employee Stock Purchase Plan (together
with the 1995 Plan and the 1996 Option Plan, the "Plans"), and (iv) 300,000
Shares to be issued to Stephen Irwin, the Company's Vice Chairman of the Board
and Secretary, upon exercise of a warrant dated as of October 1, 1995 (the
"Warrant").
We advise you that we have examined originals or copies certified or
otherwise identified to our satisfaction of the Articles of Incorporation and
By-laws of the Company, each as amended to date, minutes of meetings of the
Board of Directors and shareholders of the Company, the Plans, the Warrant and
such other documents, instruments and certificates of officers and
representatives of the Company and public officials, and we have made such
examination of the law, as we have deemed appropriate as
<PAGE>
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
Securities and Exchange Commission
June 28, 1996
Page -2-
the basis for the opinion hereinafter expressed. In making such examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to original documents
of documents submitted to us as certified or photostatic copies.
Based upon the foregoing, we are of the opinion that the Shares, when
issued and paid for in accordance with the terms and conditions set forth in the
Plans and the Warrant, will be duly and validly issued, fully paid and
non-assessable.
We are members of the Bar of the State of New York and, except as stated
below, we express no opinion as to the laws of any jurisdiction other than the
State of New York and the federal laws of the United States of America. With
respect to the opinion set forth above, we have relied exclusively upon the
opinion of O'Neill & Company, an association of independent law corporations,
Vancouver, British Columbia.
We advise you that Stephen Irwin, the Vice Chairman of the Board and
Secretary of the Company, is of counsel to this firm. Mr. Irwin owns 54,545
Common Shares of the Company and options and warrants to purchase an aggregate
of 615,000 Shares, the resale of 415,000 of which Shares is being registered
pursuant to the Registration Statement. In addition, other attorneys of this
firm hold options to purchase Common Shares.
We consent to the reference to this firm under the caption "Legal Matters"
in the resale prospectus contemplated by the rules and regulations under the
Securities Act of 1933, as amended.
Very truly yours,
/S/ OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
------------------------------------------
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
The Board of Directors
GST Telecommunications, Inc.
We consent to the use of our report included in Form 20-F, dated November 17,
1995 except for note 12(b) and (c) which are as of December 19, 1995 and
November 20, 1995, respectively, incorporated herein by reference in the
Registration Statement of Form S-8, dated June 28, 1996, of GST
Telecommunications, Inc. and to the references to our firm under the "Experts"
heading in the prospectus.
/S/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Portland, Oregon
June 28, 1996
ACCOUNTANTS' CONSENT
To the Directors of
GST Telecommunications, Inc.
(formerly Greenstar Telecommunications Inc.)
We consent to the incorporation by reference in the registration statement filed
June 28, 1996 on Form S-8 of GST Telecommunications, Inc. (formerly Greenstar
Telecommunications Inc.) of our report dated December 8, 1994, relating to the
consolidated balance sheets of GST Telecommunications, Inc. as of September 30,
1994 and August 31, 1993 and the related consolidated statements of operations
and deficit and changes in financial position for the thirteen months ended
September 30, 1994 and for the year ended August 31, 1993, which report appears
in the September 30, 1995 annual report on Form 20-F of GST Telecommunications,
Inc., and to reference to our firm under the heading "Experts" in the
registration statements.
/s/ KPMG Peat Marwick Thorne
- ----------------------------
KPMG Peat Marwick Thorne
Chartered Accountants
Vancouver, Canada
June 28, 1996
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------
The Board of Directors
GST Telecommunications, Inc.
We consent to the use of our report over the financial statements of
International Telemanagement Group, Inc., included herein, dated Juuly 21, 1995
in the Registration Statement of Form S-8, dated June 28, 1996, of GST
Telecommunications, Inc. and to the references to our firm under the "Experts"
heading in the prospectus.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Portland, Oregon
June 28, 1996
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
GST Telecommunications, Inc.
We consent to the use of reports dated November 11, 1994 and January 12, 1994
except for note 4 which is as of January 21, 1994, relating to the balance
sheets of IntelCom-Greenstar Joint Venture as of September 30, 1994 and 1993,
respectively and the related statements of operations and participants' equity,
and financial position for the years ended September 30, 1994 and 1993
respectively included in Form 20-F, incorporated herein by reference in the
Registration Statement of Form S-8, dated June 28, 1996 of GST
Telecommunications, Inc. and to the references to our firm under the "Experts"
heading in the prospectus.
/s/ KPMG PEAT MARWICK THORNE
- ----------------------------
KPMG PEAT MARWICK THORNE
Chartered Accountants
Edmonton, Canada
June 28, 1996
