As filed with the Securities and Exchange Commission on March 9, 1998
Registration No. 333-_______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
Form S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Global TeleSystems Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-3068423
(State or other jurisdiction (I.R.S. Employer
of organization) Identification No.)
----------
1751 Pinnacle Drive
North Tower--12th Floor
McLean, VA 22102
(703) 918-4500
(Address and telephone number of principal executive offices)
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GLOBAL TELESYSTEMS GROUP, INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
STOCK OPTION AGREEMENTS WITH CERTAIN INDIVIDUALS
(Full title of the plans)
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William H. Seippel
1751 Pinnacle Drive
North Tower--12th Floor
McLean, VA 22102
(703) 918-4558
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to be to be Offering Price Per Aggregate Registration
Registered Registered Share(1) Offering Price(1) Fee
- ------------------------------------------- ------------------- ----------------------- ---------------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.10 . . . . . . 519,000 $0.533 $ 276,627.00
216,000 10.7944 2,331,590.40 $10,883.54
1,059,000 32.375 34,285,125.00
- ------------------------------------------- ------------------- ----------------------- ---------------------- -----------------
</TABLE>
(1) The proposed maximum offering price per share and proposed aggregate
offering price (a) with respect to 216,000 shares being offered pursuant
to options outstanding under the Global TeleSystems Group, Inc.
Non-Employee Directors' Stock Option Plan (the "Plan"), is based on the
weighted average exercise price of such options, (b) with respect to
519,000 shares being offered pursuant to options outstanding under stock
option agreements with certain individuals, is based on the exercise price
of such options and (c) with respect to 1,059,000 shares to be offered
under the Plan, is based on the average bid and asked prices of the shares
of Common Stock on Nasdaq on March 6, 1998 in accordance with Rule
457(h)and Rule 457(c) under the Securities Act of 1993, as amended (the
"Securities Act"), and is being utilized solely for the purpose of
calculating the registration fee.
Exhibit Index Appears on Page 9
<PAGE>
Part I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.*
Item 2. Registrant Information and Employee Plan Annual Information.*
- --------------------
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from this Registration Statement in accordance with
Rule 428 under the Securities Act, and the "Note" to Part I of Form S-8.
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
The following document listed below which has been filed by
GTS TeleSystems Group, Inc. (the "Registrant") with the Securities and Exchange
Commission (the "Commission") (or furnished by the Registrant to the Commission)
are incorporated by reference in this Registration Statement: the description of
the Registrant's Common Stock contained in the Registration Statement on Form
S-1 filed by the Registrant with the Commission on February 4, 1998 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, all documents subsequently filed or furnished by
the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, prior to the filing of a post-effective amendment which indicates that all
Ordinary Shares offered hereby have been sold or which deregisters all Ordinary
Shares then remaining unsold, shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing or furnishing of such
documents.
Item 4. Description of Securities.
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
Not Applicable.
Item 6. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of
Delaware (the "DGCL") provides, in summary, that directors and officers of
Delaware corporations such as the Registrant are entitled, under certain
circumstances, to be indemnified against all expenses and liabilities (including
attorneys' fees) incurred by them as a result of suits brought against them in
their capacity as a director or officer if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the Registrant and, with respect to any criminal action or proceeding, if they
had no reasonable cause to believe their conduct was unlawful; provided that no
indemnification may be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the Registrant,
unless and only to the extent that the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, they are fairly and
reasonably entitled to indemnity for such expenses which such court shall deem
proper. Any such indemnification may be made by the company only as authorized
in each specific case upon a determination by the stockholders or disinterested
directors that indemnification is proper because the indemnitee has met the
applicable standard of conduct.
Section 102(b)(7) of the DGCL permits a corporation to include
in its certificate of incorporation a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or
3
<PAGE>
limit the liability of a director (i) for any breach of the director's duty or
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL (relating to unlawful payment of
dividends and unlawful stock purchase and redemption) or (iv) for any
transaction from which the director derived an improper personal benefit.
The Registrant's Certificate of Incorporation (the
"Certificate") provides that the Registrant's directors shall not be liable to
the Registrant or its stockholders for monetary damages for breach of fiduciary
duty as a director; provided, however, that such exculpation from liabilities is
not permitted with respect to liability arising from items described in clauses
(i) through (iv) in the preceding paragraph. The Certificate and the
Registrant's by-laws further provide that the Registrant shall indemnify its
directors and officers to the fullest extent permitted by the DGCL.
The directors and officers of the Registrant are covered under
directors' and officers' liability insurance policies maintained by the
Registrant.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
See Index to Exhibits on page 9.
Item 9. Undertakings.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in aggregate, represent a fundamental change
in the information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with
respect to the plan of distribution not previously disclosed
in this registration statement or any material change to such
information in the registration statement;
4
<PAGE>
provided, however, that the undertakings set forth in paragraphs (1)(i)
and (1)(ii) above do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in
this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment 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.
(3) 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.
(b) The Registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the Registrant's
annual report on Form 10-K pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and each filing of an employee benefit plan annual report pursuant
to Section 15(d) of the Exchange Act) that is incorporated by reference in this
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.
(c) Insofar as indemnification for liabilities arising under
the Securities Act 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 SEC such
indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
5
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities
Act, 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 McLean, Virginia, on this 9th day of March, 1998.
GLOBAL TELESYSTEMS GROUP, INC.
By: /s/ Gerald W. Thames
-----------------------------
Name: Gerald W. Thames
Title: President and Chief
Executive Officer
6
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Gerald W. Thames, William H.
Seippel and Grier Raclin, and each of them severally, his true and lawful
attorney or attorneys with power of substitution and resubstitution to sign in
his name, place and stead in any and all such capacities the Registration
Statement and any and all amendments thereto (including post-effective
amendments) and any documents in connection therewith, and to file the same with
the Securities and Exchange Commission, each of said attorneys to have power to
act with or without the other, and to have full power and authority to do and
perform, in the name and on behalf of each such officer and director of the
Registrant who shall have executed such a power of attorney, every act
whatsoever which such attorneys, or any one of them, may deem necessary or
desirable to be done in connection therewith as fully and to all intents and
purposes as such officer or director of the Registrant might or could do in
person.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed below on March 9, 1998 by
the following persons in the capacities indicated.
Name and Signature Title
- ------------------ -----
/s/ Gerald W. Thames President, Chief Executive
- ----------------------- Officer and Director
Gerald W. Thames
Executive Vice President of Finance
/s/ William H. Seippel and Chief Financial Officer
- -----------------------
William H. Seippel
Chairman of the Board
of Directors
- -----------------------
Alan B. Slifka
/s/ Gary Gladstein Director
- -----------------------
Gary Gladstein
Director
- -----------------------
Michael A. Greeley
/s/ Bernard McFadden Director
- -----------------------
Bernard McFadden
/s/ Steward J. Paperin Director
- -----------------------
Stewart J. Paperin
7
<PAGE>
Name and Signature Title
- ------------------ -----
/s/ W. James Peet Director
- -----------------------
W. James Peet
/s/ Jean Salmona Director
- -----------------------
Jean Salmona
/s/ Morris A. Sandler Director
- -----------------------
Morris A. Sandler
/s/ Joel Schatz Director
- -----------------------
Joel Schatz
- -----------------------
Adam Solomon
8
<PAGE>
Exhibit Index
Exhibit No. Description of Document
4.1 The Global TeleSystems Group, Inc. Amended and Restated
Non-Employee Directors' Stock Option Plan
4.2 Stock Option Agreement Between the Registrant and A.B. Slifka
& Co.
4.3 Stock Option Agreement Between the Registrant and John Steiner
4.4 Stock Option Agreement Between the Registrant and Joel Schatz
4.5 Stock Option Agreement Between the Registrant and Elaine
Sandler
5 Opinion of Shearman & Sterling, counsel to the Registrant as
to the legality of the securities registered hereby.
23.1 Consent of Ernst & Young LLP
23.2 Consent of Shearman & Sterling (included in Exhibit 5).
24 Powers of Attorney (included on signature page).
Exhibit 4.1
The Global TeleSystems Group,
Inc. Amended and Restated Non-Employee
Directors' Stock Option Plan
<PAGE>
GLOBAL TELESYSTEMS GROUP, INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
February 10, 1998
1. Purpose of the Plan. The purpose of this Plan is to permit
Eligible Directors of the Company to share in the growth of the value of the
Company through the grant and exercise of Options.
2. Definitions. For the purposes of the Plan, the following
terms shall be defined as set forth below:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
"Common Stock" means the Common Stock of the Company, par
value $.10 per share.
"Company" means Global TeleSystems Group, Inc., a Delaware
corporation, including any wholly owned subsidiary or affiliate, or any
successor organization.
"Disability" means permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
"Eligible Director" means a person who is a non-employee
member of the Board.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means the fair market value of the Common
Stock as determined objectively by the Board, in good faith, using such
criteria as it deems relevant; provided, however, that where there is a
public market for the Common Stock, the fair market value per Share
shall be the average of the last reported bid and asked prices of the
Common Stock on the date of grant, as reported in The Wall Street
Journal (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation ("NASDAQ")
System) or, in the event the Common Stock is listed on a national
securities exchange, within the meaning of Section 6 of the Exchange
Act, the fair market value per Share shall be the closing price on such
exchange on the date of grant of the Option, as reported in The Wall
Street Journal.
"Incentive Stock Option" means any Option intended to be
designated as an "incentive stock option" within the meaning of Section
422 of the Code.
<PAGE>
2
"Nonqualified Stock Option" means any Option that is not an
Incentive Stock Option.
"Option" means any option to purchase shares of the Common
Stock of the Company granted pursuant to this Plan.
"Option Agreement" means a written agreement between the
Company and the Optionee regarding the grant and exercise of Options to
purchase shares of Common Stock and the terms and conditions thereof.
"Optionee" means an Eligible Director who receives an Option
under the Plan.
"Plan" means this Company's Amended and Restated Non-Employee
Directors' Stock Option Plan, as amended from time to time.
"Rules" means that regulations promulgated by the Securities
and Exchange Commission under Section 16 of the Exchange Act.
Except where otherwise indicated by the context, any masculine
terminology used herein shall also include the feminine and vice versa, and the
definition of any term herein in the singular shall also include the plural and
vice versa.
3. Stock Subject to the Plan.
(a) Aggregate Number of Shares. The aggregate number of shares
of Common Stock that may be issued or transferred under the Plan is 1,275,000,
subject to adjustment pursuant to Section 3(b) below. Such shares may include
authorized but unissued shares of Common Stock or reacquired shares of Common
Stock. In the event the number of shares of Common Stock issued under the Plan
and the number of shares of Common Stock subject to outstanding awards (taking
into account the share counting requirements established under the Rules) equals
the maximum number of shares of Common Stock authorized under the Plan, no
further awards shall be made unless the Plan is amended (in accordance with the
Rules, if necessary) or additional shares of Common Stock become available for
further awards under the Plan. If and to the extent that Options granted under
the Plan terminate, expire or are canceled without having been exercised, such
shares shall again be available for subsequent awards under the Plan.
(b) Adjustments Upon Changes in Capitalization. If any change
is made to the Common Stock (whether by reason of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination of
shares or exchange of shares or any other change in capital structure made
without receipt of consideration), then unless such event or change results in
the termination of all outstanding awards under the Plan, the Board shall
preserve the value of
<PAGE>
3
the outstanding awards by adjusting the maximum number and class of shares
available under the Plan to reflect the effect on such event or change in the
Company's capital structure, and by making appropriate adjustments to the number
and class of shares subject to an outstanding award or the Option price of each
outstanding Option, except that any fractional shares resulting from such
adjustments shall be eliminated by rounding any portion of a share equal to .500
or greater up, and any portion of a share equal to less than .500 down, in each
case to the nearest whole number.
4. Administration of the Plan. The Plan shall be administered
by the Board. Subject to the provisions of the Plan, the Board shall be
authorized to:
(a) adopt, revise and repeal such administrative rules,
guidelines and practices governing this Plan as it shall from time to time deem
advisable;
(b) interpret the terms and provisions of the Plan and any
Option issued under the Plan (and any agreements relating thereto), and
otherwise settle all claims and disputes arising under the Plan;
(c) delegate responsibility and authority for the operation
and administration of the Plan, appoint employees and officers of the Company to
act on its behalf, and employ persons to assist in the fulfilling of its
responsibilities under the Plan; and
(d) otherwise supervise the administration of the Plan;
provided, however, that the Board shall have no discretion with respect to the
selection of Eligible Directors to receive Options hereunder, the number of
shares of Common Stock covered by such Option or the price or timing of any
Options granted hereunder; and provided further that any action by the Board
relating to the Plan will be taken only if approved by the affirmative vote of a
majority of the directors who are not then eligible to participate under the
Plan.
5. Option Grants.
(a) Number of Options Granted. The following number of Options
are hereby granted to each Eligible Director under the Plan:
Initial Grant
As of the effective date of the Plan, an Option to purchase
18,000 shares of Common Stock is granted to each person who on that
date is an incumbent Eligible Director.
With respect to each person who first becomes an Eligible
Director after the effective date of the Plan but prior to February 10,
1998, an Option to purchase 18,000
<PAGE>
4
shares of Common Stock is granted as of the date such person first
becomes an Eligible Director.
With respect to each person who first becomes an Eligible
Director on or after February 10, 1998, an Option to purchase 22,500
shares of Common Stock is granted as of the date such person first
becomes an Eligible Director.
Subsequent Grant
As of the date of the third annual meeting of the Company's
shareholders following the grant of an Option to an Eligible Director
pursuant to subsection 5(a)(i) or (ii) above, provided the date of such
third annual meeting is prior to February 10, 1998, and provided
further that such Eligible Director remains an incumbent on the date of
such third annual meeting and will serve as an Eligible Director during
the next following year, an Option to purchase 13,500 shares of Common
Stock is granted to such Eligible Director.
As of the date of each annual meeting of the Company's
shareholders on or after February 10, 1998 and following the grant of
an Option to an Eligible Director pursuant to subsection 5(a)(i),
(ii), or (iii) above, provided that such Eligible Director remains an
incumbent on such date and will serve as an Eligible Director during
the next following year, an Option to purchase 9,000 shares of Common
Stock is granted to such Eligible Director.
(b) Nonqualified Options. All Options granted hereunder shall
be Nonqualified Stock Options. No Option granted pursuant to this Plan may be
designated as an Incentive Stock Option.
(c) Amendments to this Section 5. Notwithstanding any other
provision of the Plan, this Section 5 may not be amended more than once every
six months, except for amendments necessary to conform the Plan to changes in
the provisions of, or the regulations relating to, the Code.
6. Terms and Conditions of Options.
(a) Option Agreement. Each Option granted hereunder shall be
evidenced by an Option Agreement.
<PAGE>
5
(b) Option Price. The Option price per share of Common Stock
covered by an Option granted hereunder shall be the Fair Market Value of the
Common Stock as of the date of grant.
(c) Option Term. The term of each Option shall be ten years.
No Option shall be exercised by any person after expiration of the term of the
Option.
(d) Exercisability. An Option shall be exercisable during its
term, subject to the following provisions of this Section 6(d):
Initial Grants Made Prior to February 10, 1998, Pursuant to
Section 5(a)(i) or 5(a)(ii). With respect to any Option granted prior
to February 10, 1998 to an Eligible Director pursuant to Section
5(a)(i) or 5(a)(ii), such Option shall become exercisable with respect
to 9,000 shares of Common Stock on the date six months following the
relevant date of grant, with respect to an additional 4,500 shares on
the date six months following the first annual meeting of the Company's
shareholders to occur after such date of grant, and with respect to the
final 4,500 shares on the date six months following the second annual
meeting of the Company shareholders to occur after such date of grant.
Initial Grants Made On or After February 10, 1998 Pursuant to
Section 5(a)(iii). With respect to any Option granted on or after
February 10, 1998 to an Eligible Director pursuant to Section 5
(a)(iii), such Option shall become exercisable with respect to 11,250
shares of Common Stock on the date six months following the relevant
date of grant, with respect to an additional 5,625 shares on the date
six months following the first annual meeting of the Company's
shareholders to occur after such date of grant, and with respect to the
final 5,625 shares on the date six months following the second annual
meeting of the Company shareholders to occur after such date of grant.
Subsequent Grants Made Prior to February 10, 1998 Pursuant to
Section 5(a)(iv). With respect to any Option granted prior to February
10, 1998 to an Eligible Director pursuant to Section 5(a)(iv), such
Option shall become exercisable with respect to 4,500 shares of Common
Stock on the date six months following the relevant date of grant, with
respect to an additional 4,500 shares on the date six months following
the first annual meeting of the Company's shareholders to occur after
such date of grant, and with respect to the final 4,500 shares on the
date six months following the second annual meeting of the Company's
shareholders to occur after such date of grant.
Subsequent Grants Made On or After February 10, 1998 Pursuant
to Section 5(a)(v). With respect to any Option granted on or after
February 10, 1998 to an Eligible Director pursuant to Section 5(a)(v),
such Option shall become exercisable with respect to 3,000 shares of
Common Stock on the date six months following the first annual meeting
of the Company's shareholders to occur after such date
<PAGE>
6
of grant, and with respect to the final 3,000 shares on the date six
months following the second annual meeting of the Company's
shareholders to occur after such date of grant.
(e) Method of Exercise. Options may be exercised, in whole or
in part, at any time and from time to time during the Option exercise period, by
giving written notice of exercise to the Company specifying the number of shares
to be purchased. Such notice shall be accompanied by payment in full of the
purchase price, either in cash or by certified or bank check, or such other
instrument as the Board may accept. Payment in full or in part may also be made
in the form of unrestricted Common Stock already owned by the Optionee (and
based upon the Fair Market Value of the Common Stock so tendered as of the date
the Option is exercised, as determined by the Board). No shares of Common Stock
shall be issued until full payment therefor has been made. Eligible Directors
shall generally have the rights to dividends or other rights of a stockholder
with respect to shares subject to the Option when the Eligible Director has
given notice as to exercise, has paid in full for such shares and, if requested,
has given any representations required by the Board.
(f) Non-transferability. No Option shall be transferable by
the Optionee otherwise than by will, by the laws of descent and distribution,
pursuant to a qualified domestic relations order or as permitted under the
Rules, and all Options shall be exercisable, during the Optionee's lifetime,
only by the Optionee.
(g) Termination by Reason of Death. If an Optionee ceases to
be an Eligible Director by reason of death, any Option held by such Optionee may
thereafter be exercised to the extent then exercisable, 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 from the date of such death or until the
expiration of the stated term of such Option, whichever period is shorter.
(h) Termination by Reason of Disability. If an Optionee ceases
to be an Eligible Director by reason of Disability, any Option held by such
Optionee may thereafter be exercised by the Optionee, to the extent it was
exercisable at the time of termination, for a period of one year from the date
of such termination or until the expiration of the stated term of such Option,
whichever period is shorter; provided, however, that if the Optionee dies within
such one-year period, any unexercised Option held by such Optionee shall
thereafter be exercisable to the extent it was exercisable at the time of death
for a period of one year from the date of such death or until the expiration of
the stated term of such Option, whichever period is shorter.
(i) Other Termination. If an Optionee ceases to be an Eligible
Director for any reason other than death or Disability (except as a result of
becoming an employee of the Company), any Option held by such Optionee may
thereafter be exercised by the Optionee, to the extent it was exercisable at the
time of such termination, for a period of three months from the date of such
termination or the expiration of the such termination, for a period of three
months from the date of such termination or the expiration of the stated term of
such Option, whichever
<PAGE>
7
period is shorter; provided, however, that if the Optionee dies within such
three-month 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 from the date of such death or until the
expiration of the stated term of the Option, whichever period is shorter. If an
Optionee ceases to be an Eligible Director by reason of his becoming an employee
of the Company and his employment with the Company is subsequently terminated,
any Option held by such Optionee may thereafter be exercised by the Optionee, to
the extent that it was exercisable at the time of such termination, for a period
of three months from the date of such termination or the expiration of the
stated term of the Option, whichever period is shorter; provided, however, that
if the Optionee dies within such three-month 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 from the date of such
death or until the expiration of the stated term of the Option, whichever period
is shorter.
7. Amendment and Termination. The Board may amend, alter or
discontinue the Plan at any time and from time to time (either by resolution or
unanimous consent), but no amendment, alteration, or discontinuation shall be
made which would impair the rights of an Optionee under an Option theretofore
granted, without the Optionee's consent, or which, without the approval of the
Company's stockholders, would require stockholder approval under the Rules or
under the requirements of any applicable federal or state law or regulation;
provided, however, that in no event may the provisions of the Plan respecting
eligibility to participate be amended more frequently than once every six
months, other than to comport with changes in the Code, or the Employee
Retirement Income Security Act of 1974, as amended, and any rules or regulations
thereunder; provided further that any amendment which, under the requirements of
applicable federal or state law or regulation or the rules of any stock exchange
or automated quotation system on which the Common Stock may then be listed or
quoted must be approved by the stockholders of the Company, shall not be
effective unless and until such stockholder approval has been obtained in
compliance with such law; and provided further that any amendment that must be
approved by the stockholders of the Company in order to maintain the continued
qualification of the Plan under Rule 16b-3(c)(2)(ii) under the Exchange Act, or
any successor provision, shall not be effective unless and until such
stockholder approval has been obtained in compliance with such Rule. 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 the Optionee's consent. Notwithstanding any provision herein to the
contrary, the Board shall have broad authority to amend the Plan or any Option
to take into account changes in applicable tax laws, securities laws, accounting
rules and other applicable state and federal laws.
8. Unfunded Status of the Plan. The Plan is intended to
constitute an unfunded plan for incentive compensation. With respect to any
payments not yet made to an Optionee by the Company, nothing contained herein
shall give any such Optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Board may authorize
<PAGE>
8
the creation of trusts or other arrangements to meet the obligations created
under the Plan to deliver Common Stock or payments in lieu thereof or with
respect to awards hereunder.
9. General Provisions.
(a) Representations by Optionees. The Board may require each
Optionee to represent to and agree with the Company in writing that the Optionee
is acquiring the shares of Common Stock without a view to distribution thereof.
The certificates for such shares may include any legend that the Company deems
appropriate to reflect any restrictions on transfer.
(b) No Restrictions on Adoption of Other Compensation
Arrangements. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements (subject to stockholder
approval, if such approval is required) and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) No Right to Continuing Employment or Re-election. The
adoption of the Plan shall not confer upon any Optionee any right to continued
employment with the Company nor shall it interfere in any way with the right of
the Company to terminate its relationship with any of its employees, directors,
or independent contractors at any time.
(d) Tax Withholding. No later than the dates as of which an
amount first becomes includable in the gross income of the Optionee for
applicable income tax purposes with respect to any award under the Plan, the
Optionee shall pay to the Company or make arrangements satisfactory to the Board
regarding the payment of any federal, state or local taxes of any kind required
by law to be withheld with respect to such amount. Unless otherwise determined
by the Board, the minimum required withholding obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise
to the withholding requirement. The obligation of the Company under the Plan
shall be conditional upon such payment or arrangements and the Company shall to
the extent permitted by law have the right to deduct any such taxes from any
payment of any kind otherwise due to the Optionee.
(e) Right of First Refusal. At the time of grant, the Board
may provide in connection with any grant made under this Plan that the shares of
Common Stock received as a result of such grant shall be subject to a right of
first refusal pursuant to which the Optionee shall be required to offer to the
Company any shares that the Optionee wishes to sell with the price being the
then Fair Market Value of the Common Stock, subject to such other terms and
conditions as the Board may specify at the time of grant.
(f) Designation of a Beneficiary. The Board shall establish
such procedures as it deems appropriate for an Optionee to designate a
beneficiary to whom any amounts payable in the event of the Optionee's death are
to be paid.
<PAGE>
9
(g) Applicable Law. The Plan shall be governed by and subject
to the laws of the State of Delaware and to all applicable laws and to the
approvals by any governmental or regulatory agency as may be required.
(h) Severability. If any provision of this Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of this Plan, but this Plan shall be construed
and enforced as if such illegal or invalid provision had never been included
herein.
(i) Compliance with Rule 16b-3. It is the intent of the
Company that this Plan comply in all respects with applicable provisions of Rule
16b-3 under the Exchange Act in connection with any grant of Options.
Accordingly, if any provision of this Plan or any agreement hereunder does not
comply with the requirements of Rule 16b-3 as then applicable to any such
Optionee, or would cause any Optionee to no longer be deemed a "disinterested
person" within the meaning of Rule 16b-3, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements with
respect to such Optionee. In addition, the Board shall have no authority to make
any amendment, alteration, suspension, discontinuation, or termination of the
Plan or any agreement hereunder to take other action if and to the extent such
authority would cause an Optionee's transactions under the Plan not to be
exempt, or Optionees no longer to be deemed "disinterested persons" under Rule
16b-3 of the Exchange Act.
10. Effective Date and Term of the Plan. The Plan shall be
effective as of November 14, 1994. No Options shall be granted pursuant to the
Plan on or after November 14, 2004, but Options granted prior to such date may
extend beyond that date.
Exhibit 4.2
Stock Option Agreement Between
the Registrant and A.B.
Slifka & Co.
<PAGE>
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("this Option
Agreement") is entered into as of November 5, 1991, by and between San
Francisco/Moscow Teleport, Inc., a California corporation (the "Company"), and
A.B. Slifka & Co. ("Optionee").
1. Option Agreement Independent of Plan; Defined Terms. This
Option Agreement is entered into pursuant to the mutual agreement of the
parties, and is separate from and not intended to be subject to the 1992 Stock
Option Plan of the Company (the "Plan"). Nevertheless, capitalized terms used in
this Option Agreement shall have the same meanings given to them in the Plan,
unless otherwise indicated in this Agreement.
2. Grant of Option. The Company hereby grants to Optionee the
right and option ("Option") to purchase all or any part of an aggregate of One
Hundred Fifty Thousand (150,000) shares of the common stock of the Company on
the terms and conditions set forth herein ("Optioned Shares"). The Option is
not, and is not intended to meet the requirements for, an incentive stock option
within the meaning in Section 422 of the Internal Revenue Code (the "Code").
3. Exercise Price and Consideration for Exercise.
(a) Exercise Price. The exercise price for the purchase of the
Optioned Shares purchasable upon exercise of the Option shall be $0.80 for each
of the Optioned Shares, for a total exercise price of One Hundred Twenty
Thousand Dollars ($120,000) for 150,000 Optioned Shares.
(b) Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option shall be payment in cash or by check or
with Shares of the Company's Common Stock as provided below.
4. Term and Vesting of Option.
(a) Term. The term of the Option shall commence on December 1,
1991 (the "Grant Date") and terminate on November 30, 2001, or on such earlier
date as provided hereinafter. In no event shall the term of the Option be longer
than ten (10) years and one (1) day from the Grant Date. The vested portion of
the Option shall be exercisable as to any part or all of the aggregate number of
Optioned Shares as provided below.
(b) Vesting. Optionee shall become vested and have the right
to exercise the vested portion of the Option. The Option shall become vested to
the extent of (i) one-third (1/3) of the Optioned Shares as of the December 31
of the calendar year in which the Option is
<PAGE>
granted, (ii) two-thirds (2/3) of the Optioned Shares as of the December 31 of
the calendar year immediately following the calendar year in which the Option is
granted, and (iii) all of the Optioned Shares as of the December 31 of the
second calendar year following the calendar year in which the Option is granted,
subject to the Optionee's Continuous Employment during such time. The Option may
not be exercised for fractional shares or for less than ten (10) Shares.
5. Time and Method for Exercising the Option.
(a) Time. Optionee may exercise the Option in one or more
installments and from time to time with respect to the vested portion of the
Option.
(b) Termination; Disability; Retirement; Death.
(1) Termination of Status as Employee or Non-Employee
Director. If Optionee shall cease to be an Employee or Non-Employee Director for
any reason other than permanent and total disability (within the meaning of
Section 22(e)(3) of the Code as determined in the sole discretion of the Board
of Directors of the Company), retirement or death, the Option shall
automatically terminate thirty (30) days following the date he or she ceases to
be an Employee or Non-Employee Director. Prior to such termination of the
Option, the Optionee may exercise his or her Option to the extent that he or she
was entitled to exercise on the termination date, subject to the condition that
no Option shall be exercised after the expiration of the Option period.
(2) Disability of Optionee. In the event of the permanent
and total disability (within the meaning of Section 22(e)(3) of the Code as
determined in the sole discretion of the Board of Directors of the Company)
during the Option period of an Optionee who is at the time of commencement of
such disability, or was within the 90-day period prior thereto, an employee or
Non-Employee Director and who was in Continuous Employment as such from the date
of the grant of the Option until the date of disability or termination, the
Option may be exercised at any time within one (1) year following the date of
disability, but only to the extent that the Optionee was entitled to exercise
the Option at the time of the termination or disability, whichever comes first,
subject to the condition that no Option shall be exercised after the expiration
of the Option period.
(3) Retirement of Optionee. In the event of the retirement
during the Option period of an Optionee who is at the time of such retirement,
or was within the 90-day period prior thereto, an Employee or a Non-Employee
Director and who was in Continuous Employment as such from the date of the grant
of the Option until the date of the retirement, then the Option may be exercised
by the Optionee at any time within ninety (90) days following the retirement
date, but only to the extent that the Optionee was entitled to exercise the
Option at the time of his or her retirement, subject to the condition that no
Option shall be exercised after the expiration of the Option period. For
purposes of this paragraph
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<PAGE>
(3), the term "retirement" shall mean voluntary termination of employment by an
Employee who is at least age fifty-five (55) and who has completed five (5)
years of employment with the Company, or termination of service on the Board of
Directors by a Non-Employee Director who is at least age fifty-five (55) and who
has completed five (5) years of service on the Board of Directors.
(4) Death of Optionee. In the event of the death during
the Option period of an Optionee who is, at the time of his or her death, or
was, within the 30-day period immediately prior thereto, an Employee or
Non-Employee Director and who was in Continuous Employment as such from the date
of the grant of the Option until the date of death, the Option may be exercised
for a period of up to one (1) year following the date of death, at any time
prior to the expiration of the Option period, by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest, inheritance or
otherwise as a result of the Optionee's death, but only to the extent that the
Optionee was entitled to exercise the Option at the time of death subject to the
condition that no Option shall be exercised after the expiration of the Option
period.
(c) Method.
(1) Notice and Payment. An Option shall be deemed to be
exercised when written notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the Option is
exercised has been received by the Company. As soon as administratively
practicable following the exercise of an Option in the manner set forth above,
the Company shall issue or cause its transfer agent to issue stock certificates
representing the Shares purchased.
(2) Exercise of Option with Stock or Net of Exercise
Price. An Optionee may elect to exercise an Option in whole or in part by (i)
delivering whole shares of the Company's Common Stock previously owned by such
Optionee (whether or not acquired through the prior exercise of a stock option)
having a fair market value equal to the option price; or (ii) directing the
Company to withhold from the Shares that would otherwise be issued upon exercise
of the Option that number of whole Shares having a fair market value equal to
the Option price. Shares of the Company's Common Stock so delivered or withheld
shall be valued at their fair market value at the close of the last business day
immediately preceding the date of exercise of the Option, as determined by the
Board of Directors of the Company. Any balance of the Option price shall be paid
in cash.
(3) Voting and Dividend Rights. Until the issuance of such
stock certificates (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Shares, notwithstanding
3
<PAGE>
the exercise of the Option. No adjustment will be made for a dividend or other
rights for which the record date occurs prior to the date the stock certificates
are issued.
6. Non-Transferability of Options and Shares of Common Stock.
(a) Options. The Option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent and distribution and may be exercised, during the lifetime
of the Optionee, only by the Optionee. Notwithstanding the preceding sentence,
the Option may be transferred to a spouse of the Optionee only upon approval of
the Board of Directors of the Company, providing all the conditions of
exercisability and vesting have been met. The Optionee may designate a
beneficiary who may (i) exercise an Option under Section 5(b)(4) above, or (ii)
receive Shares issued pursuant to the exercise of an Option in which the death
of the Optionee occurs between the date on which the Optionee exercises the
Option and the date the Company issues the Shares.
(b) Shares of Common Stock. Except as otherwise provided by
the Board of Directors of the Company, Optioned Shares acquired under an Option
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner other than by will or by the laws of descent and distribution
(provided the Optionee's assigns or successors to such Optioned Shares remain
subject to the terms and conditions of this Agreement, including the Company's
right of first refusal to repurchase the Optioned Shares) without the Optionee
first offering to the Company the right to purchase the Optioned Shares at the
fair market value of the Shares on the date such offer is received by the
Secretary of the Company. If the Company fails to accept the offer to purchase
such Shares within seven (7) days after receipt of such offer, the Optionee
shall be free to sell or transfer of such Shares at the same fair market value
at which they were offered to the Company. If the Optionee does not sell or
transfer such Shares within Ninety (90) days thereafter, then the restrictions
of this Section 6 shall remain in effect. The certificates representing the
Optioned Shares shall bear a legend that shall give notice of such restrictions
on the transferability of the Optioned Shares.
7. Tax Withholding on the Option. Upon each exercise of the
Option, Optionee agrees to make appropriate arrangements acceptable to the
Company for satisfaction of any applicable federal, state or local income and
employment tax withholding requirements. Without limitation, when an Optionee is
required to pay to the Company an amount with respect to income or employment
tax withholding obligations in connection with the exercise of an option, the
Optionee may elect, prior to the date the amount of such withholding is
determined (the "Tax Date") to make such payment, or such increased payment as
the Optionee elects to make up to the maximum federal, state and local marginal
tax rates (including any related obligation under the Federal Insurance
Contribution Act) applicable to the Optionee and the particular transaction, by
(i) delivering cash; (ii) delivering part or all of the payment in previously
owned stock (whether or not acquired through the prior exercise of a stock
option); or (iii) irrevocably directing the Company to withhold from the Shares
that
4
<PAGE>
would otherwise be issued upon exercise of the Option that number of whole
Shares having a fair market value equal to the amount of tax required or elected
to be withheld (a "Withholding Election"). If an Optionee's Tax Date is deferred
beyond the date of exercise and the Optionee makes a Withholding Election, the
Optionee will receive the full amount of Shares otherwise issuable upon exercise
of the Option minus the number of Shares necessary to satisfy his or her minimum
withholding requirements measured on the date the Option is exercised (or such
higher payment as he or she may have elected to make) with adjustments to be
made in cash after the Tax Date.
After the Registration Date, any withholding of Shares with
respect to taxes arising in connection with the exercise of an Option by any
person subject to short-swing trading liability under Section 16(b) of the
Exchange Act shall satisfy the following conditions:
(i) An advance election to withhold Shares in settlement of a
tax liability must satisfy the requirements of Exchange Act Rule
16b-3(d)(1)(i), regarding participant-directed transactions;
(ii) Absent such an election, the withholding of Shares to
settle a tax liability may occur only during the quarterly window
period described in Exchange Act Rule 16b-3(e);
(iii) Absent an advance election or window-period withholding,
the Optionee may deliver Shares owned prior to the exercise of an
Option to settle a tax liability arising upon exercise of the Option,
in accordance with Exchange Act Rule 16b-3(f); or
(iv) The delivery of previously acquired Shares (but not the
withholding of newly acquired Shares) will be allowed when an election
under Section 83(b) of the Code accelerates the Tax Date to a day that
occurs less than six months after the advance election and is not
within the quarterly window period described in Exchange Act Rule 16b-
3(e).
Any adverse consequences incurred by an Optionee with respect to his or her
participation in this Agreement, the use of Shares to pay any part of the Option
price or income or employment tax arising in connection with the exercise of an
Option (including, without limitation, any adverse tax consequences arising as a
result of a disqualifying disposition within the meaning of Section 422 of the
Code) shall be the sole responsibility of the Optionee. The Company does not
warrant or represent to the Optionee any tax consequence of any transaction
under this Agreement.
8. Notices. All notices to the Company under this Agreement
shall be in writing and shall be delivered by personal service or telegram,
telecopier, or registered or certified mail (if such service is not available,
then by first class mail), postage prepaid, to
5
<PAGE>
such address as may be designated from time to time by the Company, and which
shall initially be:
San Francisco/Moscow Teleport, Inc.
477 Madison Avenue, 8th Floor
New York, New York 10022
Telecopier: 212-935-1831
Attention: President
All notices shall be deemed given when received.
9. No Effect on Terms of Employment. This Option Agreement
shall not affect any right or power of the Company to terminate or change the
terms of employment of Optionee at any time and for any reason whatsoever, with
or without cause.
10. Integration. This Option Agreement constitutes the entire
agreement between the Company and Optionee pertaining to the subject matter
hereof, and supersedes all oral and prior written or implied agreements and
understandings between the parties.
11. Waiver. Any failure to enforce any terms or conditions of
this Option Agreement by the Company shall not be deemed a waiver of that term
or condition, nor shall any waiver or relinquishment of any right or power at
any one time or times be deemed a waiver or relinquishment of that right or
power for all or any other times.
12. Severability of Provisions. If any provision of this
Option Agreement shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision hereof; and this Option
Agreement shall be construed and enforced as if it did not include such
provision.
13. Successors. This Option Agreement shall be binding upon
and inure to the benefit of any successor or successors of the Company and any
assigns, successors or heirs of Optionee. When the context permits, "Optionee,"
as used in this Option Agreement, shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution. Nothing in this Option Agreement shall be interpreted as imposing
any liability on the Company in favor of Optionee or such transferee of option
rights with respect to any loss, cost or expense that Optionee or transferee may
incur in connection with, or arising out of any transaction involving, the
Option granted hereunder.
14. Amendment of Option Agreement. This Option Agreement
cannot be amended except by a writing executed by the Company and the Optionee.
6
<PAGE>
15. Applicable Law; Headings. This Option Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of California applicable to agreements made and to be performed exclusively in
the State of California. The headings in this Option Agreement are solely for
convenience of reference and shall not affect its meaning or interpretation.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Option Agreement as of the date first written above.
SAN FRANCISCO/MOSCOW OPTIONEE
TELEPORT, INC.
/s/SFMT, Inc. /s/A.B. Slifka & Co.
- ---------------------- ------------------------
8
Exhibit 4.3
Stock Option Agreement Between
the Registrant and John Steiner
<PAGE>
STOCK OPTION AGREEMENT (this "Agreement") dated as of
September 16, 1994, between SFMT, INC., a Delaware corporation (the "Company"),
and John Steiner ("Steiner").
WHEREAS, San Francisco/Moscow Teleport, Inc., a California
corporation and a predecessor corporation of the Company, granted certain stock
options to Steiner;
WHEREAS, SFMT has not previously entered into a stock option
agreement with Steiner to document the grant of such options;
WHEREAS, such options are in consideration of Steiner's
arranging for the obtaining of capital financing for the Company in 1988; and
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the Company and Steiner
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Commission" means the Securities and Exchange Commission or
any similar agency then having jurisdiction to enforce the Securities
Act.
"Common Stock" means common stock, par value $.0001 per share,
of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder.
"Legended Certificate" means a certificate evidencing a number
of shares of Common Stock issued upon the exercise of any Options and
imprinted with a legend to indicate that if the offer and sale of such
shares have not been registered under the Securities Act, such shares
may be sold only pursuant to a registration statement under the
Securities Act or an exemption from registration under the Securities
Act that the Company has determined is available for such sale.
<PAGE>
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint
stock company or any other entity or organization, including a
government or political subdivision or any agency or instrumentality
thereof.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
ARTICLE II
OPTIONS
SECTION 2.01. Grant of Options. Subject to the terms and
conditions contained herein, the Company confirms the grant in 1998 to Steiner,
effective as of the date hereof, Options to purchase 12,500 shares of Common
Stock. Each Option shall be exercisable at an exercise price of $.80 per share
(the "Option Price"). Shares issuable upon the exercise of any Options are
hereinafter referred to as "Option Shares". The Options shall be exercisable as
hereinafter provided.
SECTION 2.02. Terms and Conditions of Options. The Options
evidenced hereby are subject to the following terms and conditions:
(a) Restrictions on Transfer. The Options shall not be
transferable other than by will or the laws of descent and
distribution, and the Options may not be exercised by anyone other than
Steiner during Steiner's lifetime. Each transferee shall, as a
condition to the transfer of any Options, execute an agreement pursuant
to which it shall become a party to this Agreement.
(b) Expiration. Each unexercised Option shall terminate on
December 31, 2003.
SECTION 2.03. Exercise of Options; Restrictions on Option
Shares. (a) Notice. Subject to the conditions set forth in Sections 2.03(b) and
2.03(c), Steiner may exercise all or any portion of his Options by giving
written notice thereof to the Company. The date of exercise of the Options with
respect to the number of shares of Common Stock specified in the notice shall be
the later of (i) the date on which the Company receives such written notice or
(ii) the date on which the conditions provided in Sections 2.03(b), 2.03(c) and
2.03(d) are satisfied.
(b) Payment. Prior to the delivery to Steiner of a Legended
Certificate evidencing shares of Common Stock in respect of which all or a
portion of his Options shall have been exercised. Steiner shall have paid to the
Company the Option Price of all shares of Common Stock purchased pursuant to
such exercise of such Options in cash.
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<PAGE>
(c) Limitation of Exercise. Options shall not be exercisable
unless the offer and sale of the Common Stock subject to the Options has been
registered under the Securities Act, or the Company has determined that an
exemption from registration under the Securities Act is available.
(d) Stockholder Rights. Steiner shall not have any rights as a
stockholder with respect to any shares of Common Stock issuable upon exercise of
an Option until a certificate or certificates evidencing such Option Shares
shall have been issued to Steiner and no adjustment shall be made for dividends
or distributions or other rights in respect of any share for which the record
date is prior to the date upon which Steiner shall become the holder of record
thereof. Steiner, with respect to the Option Shares so issued to him, shall have
all rights of a holder of Common Stock as to such Option Shares, subject to the
restrictions set forth in this Section 2.03.
(e) Dividends and Distributions. Any shares of Common Stock,
received by Steiner as a result of a stock dividend on any Option Shares or a
stock distribution to him as the holder of Option Shares shall be subject to the
same restrictions as the Option Shares and all references to Option Shares
hereunder shall be deemed to include such shares of Common Stock.
(f) Certificate. Upon receipt of payment and satisfaction of
the obligations imposed by Sections 2.03(c) and 2.03(d), the Company shall
deliver to Steiner a Legended Certificate in Steiner's name evidencing the
appropriate number of shares of Common Stock issued upon exercise of any Options
so exercised.
SECTION 2.04. Effect of Certain Corporate Changes. (a) Subject
to the other terms of Article II, in the event that (i) the Company is merged or
consolidated with another corporation, (ii) all or substantially all the assets
of the Company are acquired by another corporation, person or entity, (iii) the
Company is reorganized, dissolved or liquidated (each such event in (i), (ii) or
(iii) being hereinafter referred to as a "Reorganization Event") or (iv) the
Board of Directors of the Company shall propose that the Company enter into a
Reorganization Event, then the terms of the Options shall be adjusted so that,
upon the exercise thereof, Steiner shall be entitled to receive the amount and
type of consideration that he would have been entitled to receive with respect
to his Option Shares if Steiner had exercised immediately prior to such
Reorganization Event all previously unexercised Options granted hereunder.
(b) Other Adjustments. In the event of a stock dividend,
reverse stock split, stock split or other similar transaction, the Company shall
adjust the number of shares of Common Stock subject to each Option accordingly.
Such adjustment shall be conclusive and binding for all purposes.
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<PAGE>
ARTICLE III
MISCELLANEOUS
SECTION 3.01. No Restrictions on Right of Company to Effect
Corporate Changes. This Agreement shall not affect in any way the right or power
of the Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure, or its business, or any merger or consolidation of the Company, or
any issue of stock or options, warrants or rights to purchase stock or of bonds,
debentures or preferred or prior preference stock whose rights are superior to
or affect the Common Stock or the rights thereof or which are convertible into
or exchangeable for Common Stock, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
SECTION 3.02. Exchange Act. Notwithstanding anything contained
herein to the contrary, if the Company determines that the consummation of any
transaction under this Agreement would result in the possible imposition of
liability on Steiner pursuant to Section 16(b) of the Exchange Act, the Company
shall defer such transaction to the extent necessary to avoid such liability,
but in no event in excess of 180 days.
SECTION 3.03. Binding Obligations; Survival; Assignment. This
Agreement shall be binding on and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. All agreements and covenants
made herein shall survive the issuance of the Options and the Option Shares to
Steiner and, notwithstanding any investigation heretofore or hereafter made by
Steiner or the Company or on Steiner's or the Company's behalf, shall continue
in full force and effect. Steiner may not assign any of his rights hereunder
except by will or the laws of descent and distribution.
SECTION 3.04. Communications. All notices, demands and other
communications provided for hereunder shall be in writing and shall be given by
registered or certified mail (return receipt requested), telegram, telecopy,
courier service or personal delivery, if to Steiner, addressed in care of John
Steiner, John Steiner-King Partners, 1000 Jasmine Circle, Boulder, Colorado
80304, telecopy number (303) 786-9626, or such other address as Steiner may
designate in writing; and, if to the Company, addressed in care of SFMT, Inc.,
477 Madison Avenue, New York, New York 10022, Attention: N.S. Molberger, or to
such other address as the Company may designate in writing.
SECTION 3.05. Miscellaneous. This Agreement may be executed in
one or more counterparts and by the parties hereto in separate counterparts,
each of which, when so executed and delivered, shall be deemed to be an original
and, taken together, shall constitute one and the same instrument. Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition
or
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<PAGE>
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction. The Article and Section headings used or contained in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement. Except as otherwise provided in this Agreement,
no amendment, modification, supplement or waiver of or to any provision of this
Agreement shall be effective unless in writing and signed by Steiner and the
Company. This Agreement, together with the other writings referred to herein or
delivered pursuant hereto, together contain the entire understanding of the
parties with respect to the subject matter contained herein and supersede all
prior arrangements or understandings with respect thereto. This Agreement shall
be governed by, and construed in accordance with, laws of the State of New York
applicable to contracts wholly performed in the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
SFMT, INC.
/s/ SFMT, Inc.
-------------------------------
John Steiner
/s/ John Steiner
-------------------------------
5
Exhibit 4.4
Stock Option Agreement Between
the Registrant and Joel Schatz
<PAGE>
[SFMT Letterhead]
TO: Joel Schatz
FROM: Thomas M. Davidson
DATE: November 6, 1991
SUBJECT: Board of Directors Compensation Committee Action
On November 5, 1991, the SFMT Compensation Committee of the
Board of Directors met and approved the following actions on your behalf:
1. Salary Increase - Retroactive to November 1, 1991, your
salary will be increased from $84,000 to $92,400 per annum, with the first
installment payable on November 30, 1991.
2. Bonus Payment - On November 30, 1991, you will be issued a
$10,000 bonus payment (less applicable taxes) in partial recognition of your
contributions to SFMT.
3. Stock Options - The Committee awarded you 33,500 stock
options exercisable at $0.80 per share, as follows:
Date Number of Shares
---- ----------------
12/31/91 11,170
12/31/92 11,170
12/31/93 11,160
4. Benefits Owed and Payable at Death - SFMT acknowledges that
any funds or commitments unfulfilled in the event of your death will be conveyed
to your heirs.
The Committee has authorized the Company's secretary to
circulate to all SFMT shareholders for a vote a formal stock option plan at the
earliest possible date. Upon confirmation of the plan, stock certificates will
be available upon exercise of your shares.
Please let me know if you have any questions with respect to
any of the above actions of the Compensation Committee.
Cordially,
/s/ Thomas M. Davidson
[Thomas M. Davidson
President and Chief
Executive Officer]
Exhibit 4.5
Stock Option Agreement Between
the Registrant and Elaine Sandler
<PAGE>
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT ("Option Agreement")
is effective as of November 5, 1991, by and between San Francisco/Moscow
Teleport, Inc., a California corporation (the "Company"), Morris A. Sandler
("Employee"), an employee and director of the Company and Elaine Sandler
("Optionee"), an individual who, with the approval of the Board of Directors of
the Company, has heretofore received a complete assignment from Employee of the
option provided for below.
1. Option Agreement Independent of Plan; Defined Terms.
This Option Agreement is entered into pursuant to the mutual
agreement of the parties, and is not intended to be subject to a stock option
plan of the Company. Nevertheless, capitalized terms used in this Option
Agreement shall have the same meanings given to them in the draft form of stock
option plan annexed hereto (the "Plan"), unless otherwise indicated in this
Agreement.
2. Grant of Option.
The Company hereby grants to Employee the right and option
("Option") to purchase all or any part of an aggregate of One Hundred Fifty
Thousand (150,000) shares of the common stock of the Company on the terms and
conditions set forth herein ("Optioned Shares"). The Option is not, and is not
intended to meet the requirements for, an incentive stock option within the
meaning in Section 422 of the Internal Revenue Code (the "Code"). The Company
acknowledges that the rights of Employee hereunder have heretofore been assigned
to Optionee and agrees to recognize such assignment.
3. Exercise Price and Consideration for Exercise.
(a) Exercise Price. The exercise price for the purchase of the
Optioned Shares purchasable upon exercise of the Option shall be $0.80 for each
of the Optioned Shares, for a total exercise price of One Hundred Twenty
Thousand Dollars ($120,000) for 150,000 Optioned Shares.
(b) Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option shall be payment in cash or by check or
with Shares of the Company's Common Stock as provided below.
<PAGE>
4. Term and Vesting Option.
(a) Term. The term of the Option shall commence on November 5,
1991 (the "Grant Date") and terminate on November 4, 2001, or on such earlier
date as provided hereinafter. In no and one (1) day from the Grant Date. The
vested portion of the Option shall be exercisable as to any part or all of the
aggregate number of Optioned Shares as provided below.
(b) Vesting. Optionee shall become vested and have the right
to exercise the vested portion of the Option. The Option shall become vested to
the extent of (i) one-third (1/3) of the optioned Shares as of the December 31
of the calendar year in which the Option is granted, (ii) two-thirds (2/3) of
the Optioned Shares as of the December 31 of the calendar year immediately
following the calendar year in which the Option is granted, and (iii) all of the
Optioned Shares as of the December 31 of the second calendar year following the
calendar year in which the Option is granted, subject to the Employee's
Continuous Employment during such time. The Option may not be exercised for
fractional shares or for less than ten (10) Shares.
5. Time and Method for Exercising the Option.
(a) Time. Optionee may exercise the Option in one or more
installments and from time to time with respect to the vested portion of the
Option.
(b) Termination; Disability; Retirement; Death.
(1) Termination of Status as Employee or Non-Employee
Director. If Employee shall cease to be an Employee or Non-Employee Director for
any reason other than permanent and total disability (within the meaning of
Section 22(e)(3) of the Code as determined in the sole discretion of the Board
of Directors of the Company), retirement or death, the Option shall
automatically terminate thirty (30) days following the date he ceases to be an
Employee or Non-Employee Director. Prior to such termination of the Option, the
Optionee may exercise her Option to the extent that she was entitled to exercise
on the termination date, subject to the condition that no Option shall be
exercised after the expiration of the Option period.
(2) Disability of Employee. In the event of the permanent
and total disability (within the meaning of Section 22(e)(3) of the Code as
determined in the sole discretion of the Board of Directors of the Company)
during the Option period of Employee who is at the time of commencement of such
disability, or was within the 90-day period prior thereto, an Employee or
Non-Employee Director and who was in Continuous Employment as such from the date
of the grant of the Option until the date of disability or termination, the
Option may be exercised at any time within one (1) year following the date of
disability, but only to the extent that the Optionee was entitled to exercise
the Option at the time of the termination or disability, whichever comes first,
subject to the condition that no Option shall be exercised after the expiration
of the option period.
2
<PAGE>
(3) Retirement of Optionee. In the event of the retirement
during the Option period of Employee who is at the time of such retirement, or
was within the 90-day period prior thereto, an Employee or a Non-Employee
Director and who was in Continuous Employment as such from the date of the grant
of the Option until the date of the retirement, then the Option may be exercised
by the Optionee at any time within ninety (90) days following the retirement
date, but only to the extent that the Optionee was entitled to exercise the
Option at the time of the retirement of Employee, subject to the condition that
no option shall be exercised after the expiration of the Option period. For
purposes of this paragraph (3), the term "retirement" shall mean voluntary
termination of employment by an Employee who is at least age fifty-five (55) and
who has completed five (5) years of employment with the Company, or termination
of service on the Board of Directors by a Non-Employee Director who is at least
age fifty-five (55) and who has completed five (5) years of service on the Board
of Directors.
(4) Death of Optionee or Employee. In the event of the
death during the Option period of Employee who at the time of his death is, or
was within the 30-day period immediately prior thereto, an Employee or
Non-Employee Director and who was in Continuous Employment as such from the date
of the grant of the Option until the date of death, the Option may be exercised
for a period of up to one (1) year following the date of death, at any time
prior to the expiration of the option period, by the Optionee or, if applicable,
Optionee's estate or by a person who acquired the right to exercise the option
by bequest, inheritance or otherwise as a result of the Optionee's death, but
only to the extent that the Optionee was entitled to exercise the Option at the
time of employee's death subject to the condition that no Option shall be
exercised after the expiration of the Option period.
(c) Method.
(1) Notice and Payment. An Option shall be deemed to be
exercised when written notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the Shares with respect to which the Option is
exercised has been received by the Company. As soon as administratively
practicable following the exercise of an Option in the manner set forth above,
the Company shall issue or cause its transfer agent to issue stock certificates
representing the Shares purchased.
(2) Exercise of Option with Stock or Net of Exercise
Price. An Optionee may elect to exercise an Option in whole or in part by (i)
delivering whole shares of the Company's Common Stock previously owned by such
Optionee (whether or not acquired through the prior exercise of a stock option)
having a fair market value equal to the Option price; or (ii) directing the
Company to withhold from the Shares that would otherwise be issued upon exercise
of the Option that number of whole Shares having a fair market value equal to
the Option price. Shares of the Company's Common Stock so delivered or withheld
shall be valued at their fair market value at the close of the last business day
immediately preceding the date of exercise of the Option, as determined by the
Board of Directors of the Company. Any balance of the Option price shall be paid
in cash.
3
<PAGE>
(3) Voting and Dividend Rights. Until the issuance of such
stock certificates (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Shares notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other rights for which the record date
occurs prior to the date the stock certificates are issued.
6. Non-Transferability of Options and Shares of Common Stock.
(a) Options. The Option may not hereafter be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent and distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee. Notwithstanding the
preceding sentence, the Option may be transferred to a spouse of the Optionee
only upon approval of the Board of Directors of the Company, providing all the
conditions of exercisability and vesting have been met. The Optionee may
designate a beneficiary who may (i) exercise an Option under Section 5(b)(4)
above, or (ii) receive Shares issued pursuant to the exercise of an Option where
the death of the Optionee occurs between the date on which the Optionee
exercises the Option and the date the Company issues the Shares.
(b) Shares of Common Stock. Except as otherwise provided
by the Board of Directors of the Company, Optioned Shares acquired under an
Option may not be sold, pledged, assigned, hypothecated, transferred or disposed
of in any manner other than by will or by the laws of descent and distribution
(provided the Optionee's assigns or successors to such Optioned Shares remain
subject to the terms and conditions of this Agreement, including the Company's
right of first refusal to repurchase the Optioned Shares) without the Optionee
first offering to the Company the right to purchase the Optioned Shares at the
fair market value of the Shares on the date such offer is received by the
Secretary of the Company. If the Company fails to accept the offer to purchase
such Shares within seven (7) days after receipt of such offer, the Optionee
shall be free to sell or transfer such Shares at the same fair market value at
which they were offered to the Company. If the Optionee does not sell or
transfer such Shares within ninety (90) days thereafter, then the restrictions
of this Section 6 shall remain in effect. The certificates representing the
Optioned Shares shall bear a legend which shall give notice of such restrictions
on the transferability of the Optioned Shares.
7. Tax Withholding on the Option.
Upon each exercise of the Option, optionee agrees to make
appropriate arrangements acceptable to the Company for satisfaction of any
applicable federal, state or local income and employment tax withholding
requirements. Without limitation, when an Optionee is required to pay to the
Company an amount with respect to income or employment tax withholding
obligations in connection with the exercise of an Option, the Optionee may
elect, prior to the date the amount of such withholding is determined (the "Tax
Date") to make such payment, or such increased payment as the Optionee elects to
make up to the maximum federal, state and local marginal tax rates (including
any related obligation under the Federal Insurance
4
<PAGE>
Contribution Act) applicable to the Optionee and the particular transaction, by
(i) delivering cash; (ii) delivering part or all of the payment in previously
owned stock (whether or not acquired through the prior exercise of a stock
option); or (iii) irrevocably directing the Company to withhold from the Shares
that would otherwise be issued upon exercise of the Option that number of whole
Shares having a fair market value equal to the amount of tax required or elected
to be withheld (a "Withholding Election"). If an Optionee's Tax Date is deferred
beyond the date of exercise and the Optionee makes a Withholding Election, the
Optionee will receive the full amount of Shares otherwise issuable upon exercise
of the Option minus the number of Shares necessary to satisfy his or her minimum
withholding requirements measured on the date the Option is exercised (or such
higher payment as he or she may have elected to make) with adjustments to be
made in cash after the Tax Date.
After the Registration Date, any withholding of Shares with
respect to taxes arising in connection with the exercise of an Option by any
person subject to short-swing trading liability under Section 16(b) of the
Exchange Act shall satisfy the following conditions:
(i) An advance election to withhold Shares in settlement
of a tax liability must satisfy the requirements of Exchange Act Rule
16b-3(d)(1)(i), regarding participant-directed transactions;
(ii) Absent such an election, the withholding of Shares to
settle a tax liability may occur only during the quarterly window period
described in Exchange Act Rule 16b-3(e);
(iii) Absent an advance election or window-period
withholding, the Optionee may deliver Shares owned prior to the exercise of an
Option to settle a tax liability arising upon exercise of the Option, in
accordance with Exchange Act Rule 16b-3(f); or
(iv) The delivery of previously acquired shares (but not
the withholding of newly acquired Shares) will be allowed where an election
under Section 83(b) of the Code accelerates the Tax Date to a day that occurs
less than six months after the advance election and is not within the quarterly
window period described in Exchange Act Rule 16b-3(e).
Any adverse consequences incurred by an Optionee with respect to his or her
participation in this Agreement, the use of Shares to pay any part of the Option
price or income or employment tax arising in connection with the exercise of an
Option (including without limitation any adverse tax consequences arising as a
result of a disqualifying disposition within the meaning of Section 422 of the
Code) shall be the sole responsibility of the Optionee. The Company does not
warrant or represent to the Optionee any tax consequence of any transaction
under this Agreement.
8. Notice.
All notices to the Company under this Agreement shall be in
writing and shall be delivered by personal service or telegram, telecopier, or
registered or certified mail (if such
5
<PAGE>
service is not available, then by first class mail), postage pre-paid, to such
address as may be designated from time to time by the Company, and which shall
initially be:
San Francisco/Moscow Teleport, Inc.
477 Madison Avenue, 5th Floor
New York, New York 10022
Telecopier: 212-935-1831
Attention: President
All notices shall be deemed given when received.
9. No Effect on Terms of Employment.
This Option Agreement shall not affect any right or power of
the Company to terminate or change the terms of employment of Employee at any
time and for any reason whatsoever, with or without cause.
10. Integration.
This Option Agreement constitutes the entire agreement between
the Company, Employee and Optionee pertaining to the subject matter hereof, and
supersede all oral and prior written or implied agreements and understandings
between the parties.
11. Waiver.
Any failure to enforce any terms or conditions of this Option
Agreement by the Company shall not be deemed a waiver of that term or condition,
nor shall any waiver or relinquishment of any right or power at any one time or
times be deemed a waiver or relinquishment of that right or power for all or any
other times.
6
<PAGE>
12. Severability of Provisions.
If any provision of this Option Agreement shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision hereof; and this Option Agreement shall be construed and
enforced as if it did not include such provision.
13. Successors.
This Option Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any assigns,
successors or heirs of Optionee. Where the context permits, "Optionee" as used
in this Option Agreement shall include Optionee's executor, administrator or
other legal representative or the person or persons to whom Optionee's rights
pass by will or the applicable laws of descent and distribution. Nothing in this
Option Agreement shall be interpreted as imposing any liability on the Company
in favor of Optionee or such transferee of option rights with respect to any
loss, cost or expense which Optionee or transferee may incur in connection with,
or arising out of any transaction involving, the Option granted hereunder.
14. Amendment of Option Agreement.
This Option Agreement cannot be amended except by a writing
executed by the Company and Optionee.
7
<PAGE>
15. Applicable Law; Headings.
This Option Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California applicable to
agreements made and to be performed exclusively in the State of California. The
headings in this Option Agreement are solely for convenience of reference and
shall not affect its meaning or interpretation.
IN WITNESS WHEREOF, the parties hereto have executed this
Option Agreement to be effective as of the date first written above.
SAN FRANCISCO/MOSCOW
TELEPORT, INC. OPTIONEE
/s/ SFMT, Inc. /s/ Elaine Sandler
- ----------------------- --------------------------------
Elaine Sandler
EMPLOYEE
/s/ Morris Sandler
--------------------------------
Morris A. Sandler
8
Exhibit 5
Opinion of Shearman & Sterling
<PAGE>
[Shearman & Sterling Letterhead]
March 2, 1998
Global TeleSystems Group, Inc.
1751 Pinnacle Drive
North Tower--12th Floor
McLean, Virginia 22102
Ladies and Gentlemen:
We have acted as counsel to Global TeleSystems Group, Inc., a
Delaware corporation (the "Company"), in connection with the preparation and
filing by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, of a Registration Statement on Form S-8 (the
"Registration Statement") with respect to 1,794,000 shares (the "Shares") of
common stock, par value $.10 per share, of the Company (the "Common Stock"), to
be issued from time to time pursuant to the (i) Global TeleSystems Group, Inc.
Non-Employee Directors' Stock Option Plan and (ii) Stock Option Agreements with
Certain Individuals (each, a "Plan").
In this capacity, we have examined the Registration Statement
and the Plans and originals or copies identified to our satisfaction of such
corporate records of the Company, certificates and statements of public
officials, officers of the Company and others, and such other documents,
agreements and instruments as we have deemed necessary as a basis for the
opinion hereinafter expressed. In our examinations, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with originals of all documents submitted to us
as copies.
The opinion expressed below is limited to the law of the State
of New York, General Corporation Law of Delaware and the Federal law of the
United States, and we do not express any opinion herein concerning any other
law.
Based upon the foregoing and having regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares have
been duly authorized by the
<PAGE>
Company and, when (a) issued and delivered by the Company in accordance with the
terms of the relevant Plan and (b) paid for in full in accordance with the terms
of the relevant Plan, the Shares will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/s/ Shearman & Sterling
2
Exhibit 23.1
Consent of Ernst & Young LLP
<PAGE>
Exhibit 23.1
Consent of Ernst & Young LLP
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8), pertaining to the Non-Employee Directors' Stock
Option Plan and Stock Option Agreements with Certain Individuals of
Global TeleSystems Group, Inc., of our reports dated December 16, 1997
(Global TeleSystems Group, Inc.), February 21, 1997 (EDN Sovintel), and
December 23, 1997 (Hermes Europe Railtel B.V.), included in the
Registration Statement on Form S-1 (No. 333-36555) of Global
TeleSystems Group, Inc., filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Vienna, Virginia
February 25, 1998
