1
EXHIBIT 10.43
KEY EMPLOYEE STOCK OPTION PLAN
OF
HERMES EUROPE RAILTEL B.V.
1. PURPOSES OF THE PLAN. The purposes of the Key Employee Stock Option
Plan are to attract and retain the best available personnel for
positions of substantial responsibility; to replace the GTS-Hermes,
Inc., 1994 Stock Option Plan, and convert options granted to the
Employees under the GTS-Hermes, Inc., 1994 Stock Option Plan to options
granted under this Plan; to provide additional incentives to the key
employees of the Company; and to promote the success of the business of
the Company and its subsidiaries and divisions.
2. DEFINITIONS. As used herein, and in any Option granted hereunder, the
following definitions shall apply:
(a) "Board" shall mean the Supervisory Board of Directors of the
Company.
(b) "Cause" shall mean any action of the Optionee or any
failure to act by the Optionee which constitutes:
(i) fraud, embezzlement or any felony in connection with
the Optionee's duties as an Employee of the Company or
any parent, subsidiary or affiliate of the Company, or
willful misconduct or the commission of any other act
which causes or may reasonably be expected to cause
substantial economic or reputational injury to the
Company or any such subsidiary or affiliate of the
Company, including any violation of the United States
Foreign Corrupt Practices Act;
(ii) a continuing conflict of interest or continuing
failure to follow reasonable directions or
instructions of the Board or Managing Director of the
Company. A conflict of interest or a failure to follow
directions of the Company shall be deemed to be
continuing if the Optionee shall have received written
notice thereof and shall have not terminated the
conflict of interest or failure to follow directions
within thirty days after receipt of such notice; or
(iii) an extended period of absence by the Optionee from the
performance of the obligations of the Optionee under
the Optionee's employment contract with the Company,
which absence shall be for a reason other than a
disability, and which has not been approved in writing
in advance by the Company.
(c) "Company" shall mean Hermes Europe Railtel B.V., a Dutch
corporation.
2
(d) "Committee" shall mean the Compensation Committee appointed by
the Board in accordance with Section 4 of the Plan. If the
Board does not appoint or ceases to maintain a Committee, the
term "Committee" shall refer to the entire Board.
(e) "Continuous Employment" shall mean the absence of any
interruption or termination of service as an employee of the
Company, or any parent, subsidiary or division, if the
employee is seconded to such parent, subsidiary or division.
For purposes of the preceding sentence, service shall not be
considered interrupted during any period of vacation, sick
leave, military leave or any other absence approved by
management and shall not be considered terminated as a result
of a transfer between locations within the Company, any
parent, subsidiary or division or among the Company, any
parent, subsidiary or division.
(f) "Disability" shall mean any physical or mental illness,
condition, or incapacity that:
(i) prevents the Employee from reasonably discharging
required services and employment duties;
(ii) shall be attested to in writing by a physician
acceptable to the Company; and (iii) continues during
any period of three consecutive months or for periods
aggregating three months in any eighteen month period.
"Disability" shall be deemed to have occurred on the last day
of such applicable three month period.
(g) "Employee" shall mean any person who is an employee of the
Company and whose participation in the Plan is determined by
the Committee to be in the best interest of the Company.
(h) "Fair Market Value" shall mean:
(i) if the Company is a private company at the time of
issue of Options or the subsequent sale of Option
Shares pursuant to Section 8(b) of the Plan, the fair
market value as of the relevant date, determined by an
internationally recognized investment banking firm
selected and approved by the Committee; and
(ii) if the Company is a public company and its Stock is
traded on a national securities exchange or similar
market at the time of the issue of Options or
subsequent sale of Option Shares pursuant to Section
8(b) of the Plan, the daily closing price averaged
over a period of twenty (20) days consisting of the
day as of which Fair Market Value is being determined
and the nineteen (19) consecutive trading days
preceding such day.
2
3
(i) "Initial Options" shall mean those Options granted to certain
Employees in consideration for the cancellation and return of
all Original Options granted to such Employees under the
Original Plan.
(j) "Option" shall mean an option to purchase Receipts
representing a beneficial interest in Option Shares granted
pursuant to the Plan and held by the Trust.
(k) "Option Agreement" shall mean a written agreement between the
Company and the Optionee setting forth the terms and
conditions of the grant and exercise of Options by the
Optionee as determined by the Committee pursuant to the Plan.
(l) "Option Shares" shall mean the shares of Stock held by the
Trust.
(m) "Optionee" shall mean an Employee who is granted an Option
under the Plan.
(n) "Original Option" shall mean an option granted to an Optionee
under the Original Plan, and which is to be replaced by an
Initial Option granted pursuant to the Plan.
(o) "Original Plan" shall mean the GTS-Hermes, Inc., 1994 Stock
Option Plan.
(p) "Plan" shall mean this Key Employee Stock Option Plan of the
Company.
(q) "Purchase Office" shall mean the foundation under Dutch law:
"(Stichting) Purchase, Sales and Deposit Office Hermes" to
perform as a depository for, and to buy and sell, receipts.
(r) "Retirement" shall mean a voluntary termination of employment
by an Employee who is at least age fifty-five (55) and who has
completed five (5) years of Continuous Employment with the
Company.
(s) "Receipt" shall mean a depository receipt representing a
beneficial interest in a share of Option Stock, such receipt
being issued by the Trust.
(t) "Share" shall mean a share of the Stock, as adjusted in
accordance with Section 7 of the Plan.
(u) "Stock" shall mean the common stock of the Company authorized
under the articles of association of the Company.
(v) "Trust" shall mean the foundation under Dutch law: "(Stichting
Administratiekantoor) Hermes Foundation" to hold Option Shares
and issue Receipts formed by the Company on November __, 1997.
3
4
3. STOCK SUBJECT TO THE PLAN.
(a) Receipts and Option Shares Subject to Grant. Without limiting
the application of Section 7 of the Plan, the maximum
aggregate number of Receipts for Option Shares into which
Options may be exercised at any time shall not exceed 24,760
Receipts for an identical number of Option Shares. The
Committee may adopt reasonable counting procedures to ensure
appropriate counting of Receipts and Option Shares, avoid
double counting of Receipts and Option Shares, and make
adjustments if the number of Receipts and Option Shares
actually delivered differs from the number of Shares
previously counted in connection with an award.
(b) Cancelled and Similar Receipts and Option Shares. In the event
of a lapse, expiration, termination, forfeiture or
cancellation of any Option granted under the Plan without the
issuance of Receipts, the Option Shares (underlying such
Receipts) subject to or reserved for such Option may be used
again for new grants of Options hereunder; provided that in no
event may the number of Option Shares for which Receipts will
be issued hereunder exceed 24,760. Any Receipts and Option
Shares withheld or surrendered to arrange for the payment of
withholding taxes pursuant to Section 7(n) or withheld or
surrendered in full or partial payment of the exercise price
of an Option pursuant to Section 7(e) may be used again in
connection with the grant of new Options, subject to the
maximum limitation of 24,760 Receipts and Option Shares.
(c) Future Value Determinations. So long as the Company is
privately-owned, an internationally recognized investment
banking firm annually shall determine the Fair Market Value of
the Option Shares as at December 31, and deliver to the
Company and the Participants a certificate setting forth the
fair market value of the Option Shares as soon as practicable
after the completion of the audit of the financial statements
of the Company, but no later than March 15 of the immediately
following year, such Fair Market Value shall be applicable for
purposes of the Plan for the immediately following
twelve-month period..
4. ADMINISTRATION OF THE PLAN.
(a) Procedure. The Plan shall be administered by the Committee
which shall consist of three (3) members of the Board and who
shall serve subject to the direction of the Board and such
terms and conditions as the Board may prescribe. Members of
the Committee may not hold or receive an Option. Once
appointed, the Committee shall continue to serve until
otherwise directed by the Board. From time to time, the Board
may increase the size of the Committee, remove members (with
or without cause), and appoint replacement or additional
members of the Committee. The Board also may remove all
members of the Committee and, thereafter, directly administer
the Plan.
(b) Powers of the Committee. Subject to the provisions of the
Plan, the Committee shall have discretionary authority to: (i)
grant Options to Employees; (ii) determine the number of
Shares represented by Receipts to be issued upon exercise of
each Option; (iii) interpret the Plan; (iv) prescribe, amend
and rescind
4
5
rules and regulations relating to the Plan; (v) establish the
terms and conditions of each Option granted under the Plan
(which terms and conditions need not be identical in any two
Options); (vi) with the consent of the holder thereof, modify
or amend any Option; (vii) authorize any person to execute on
behalf of the Company any instruments required to effect the
grant of an Option awarded by the Committee; (viii) accelerate
or (with the consent of an Optionee) defer an exercise date of
any Option subject to the provisions of Section 7(a) of the
Plan; (ix) make changes to the Plan which are required to
comply with any applicable securities law; and (x) to make all
other determinations deemed necessary or advisable for the
administration of the Plan. The Committee shall also
constitute the governing board of the Trust.
(c) Indemnification. No member of the Committee shall be liable
for any action or determination made in good faith with
respect to the Plan or any Option awarded under it. To the
maximum extent permitted by applicable law, each member of the
Committee shall be indemnified and held harmless by the
Company against any cost or expense (including legal fees) or
liability (including any sum paid in settlement of a claim
with the approval of the Company) arising out of any act or
omission to act in connection with the Plan unless arising out
of such member's own fraud or bad faith. Such indemnification
shall be in addition to any rights of indemnification the
members may have as members of the Board or under the by-laws
of the Company.
(d) Effect of the Committee's Decision. All decisions,
determinations and interpretations of the Committee shall be
final and binding on all potential or actual Optionees, any
other holder of an Option, Receipt or other equity security of
the Company, and all other persons. The Committee may employ
counsel to advise it on any matter. In any controversy
regarding the administration of the Plan, any arbitrator or
court reviewing any decision, determination or interpretation
of the Committee shall not set aside or modify such decision,
determination or interpretation unless it is arbitrary,
capricious or clearly contrary to the terms of the Plan.
5. ELIGIBILITY.
(a) Persons Eligible to Participate. Options under the Plan shall
be granted only to Employees. Each Employee who is nominated
for a grant of Initial Options shall, as a condition to such
grant, surrender and agree to the termination of any Original
Options granted pursuant to the Original Plan.
(b) No Right to Continuing Employment. Neither the establishment
nor operation of the Plan shall confer upon any Optionee or
any other person any right with respect to continuation of
employment or other service with the Company, any parent,
subsidiary or division, nor shall the Plan interfere in any
way with the right of the Optionee or other person or the
right of the Company, parent, subsidiary or division to
terminate such employment or service at any time.
5
6
6. TERM OF PLAN. The Plan shall become effective upon its adoption by the
Board and shall continue in effect until 6 December, 2004, unless terminated
earlier by the Board pursuant to Section 10 of the Plan.
7. TERM AND CONDITIONS OF OPTIONS. Each Option shall be evidenced by an
Option Agreement, in form and substance as shall be determined by the Committee,
and shall be subject to the following terms and conditions and to such other
terms and conditions determined by the Committee:
(a) Term. The term of each Option, except Initial Options, granted
under the Plan shall be ten (10) years from the date of grant
of such Option unless terminated earlier under the terms
hereof or the applicable Option Agreement. The term of any
Initial Option shall be ten (10) years from the date of grant
of the Original Option it replaces. Upon the expiration of the
term of each Option and without any action by the Company or
Committee, no Option shall be exercisable after the expiration
of its term.
(b) Exercise Price. The price at which a Receipt for an Option
Share may be purchased pursuant to the exercise of an Option
shall be determined by the Committee at the time of grant of
such Option provided that except with respect to the Initial
Options, such exercise price shall not be less than the Fair
Market Value of that underlying Option Share on the date of
the grant of the Option
(c) Vesting Period. Any Option granted hereunder shall be
exercisable at such times and under such conditions as
determined by the Committee and as shall be permissible under
the terms of the Plan, but only after the Optionee shall have
satisfied all applicable conditions to such exercise. Unless
the Committee specifically determines otherwise in the Option
Agreement at the time of the grant of the Option, each Initial
Option shall vest and become exercisable in accordance with
the vesting provision of the Original Options granted to each
Employee under the Original Plan.
(d) Exercise Procedures. An Option shall be deemed to be exercised
when written notice of such exercise has been given to the
Company and to the member (designated by the Company) of the
Committee (which also serves as governing Board of the Trust)
in accordance with the terms of the applicable Option
Agreement by the person entitled to exercise the Option, and
full payment for the Receipts for Option 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 herein, the
Committee shall cause the Trust to issue Receipts for the
Option Shares represented thereby. An Optionee shall be deemed
to be the beneficial holder of the number of the Option Shares
underlying the Receipts acquired pursuant to the exercise of
an Option as of the date of exercise of the Option. When
Options have been duly exercised hereunder and under the
Option Agreements, the Company shall issue to the Trust for
the benefit of the Optionee a number of Option Shares to the
Trust equal to the number of Receipts issued to such Optionee.
6
7
(e) Consideration. The consideration to be paid for the Receipts
upon exercise of an Option shall be made either (i) in cash or
cash equivalent, including cashiers' check; (ii) by surrender
to the Purchase Office of previously-acquired Receipts of
which underlying Option Shares have a Fair Market Value at the
time of such surrender at least equal to the Exercise Price of
the Options; (iii) through the withholding by the Company of
Receipts of which underlying Option Shares have a Fair Market
Value at the time of withholding at least equal to the
Exercise Price of the Options; or (iv) by a combination of the
foregoing.
(f) Adjustments Upon Changes in Capitalization.
(i) Subject to any required action by the shareholders of
the Company, the number of Receipts for Option Shares
covered by each outstanding Option and the per-Receipt
exercise price for each such Option, shall be
proportionately adjusted for any increase or decrease
in the number of issued Shares resulting from a stock
split, reverse stock split, combination,
reclassification, the payment of a stock dividend on
the Stock of the Company, or any other increase or
decrease in the number of Shares of the Company
effected without receipt of consideration by the
Company; provided, however, that conversion of any
convertible securities of the Company shall not cause
such adjustment. Such adjustments shall be made by the
Committee, whose determination in that respect shall
be final, binding and conclusive. Except as 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 and price of Receipts subject
to an Option or the number or price of related Option
Shares.
(ii) The Committee may, if it so determines in the exercise
of its sole discretion, also make provision for
adjusting the number of Receipts or number or class of
securities underlying Receipts covered by any Option,
as well as the price paid therefor, in the event of
the Company's effecting one or more reorganizations,
recapitalizations, rights offerings, or other
increases or reductions of the number of Shares of its
outstanding Stock, or in the event of the Company's
consolidation with or merger into any other
corporation.
(iii) Unless otherwise determined by the Board, upon the
dissolution or liquidation of the Company, the Options
granted hereby shall terminate and thereupon become
unexercisable, null and void. Optionees shall be given
not less than ten (10) days' notice of an anticipated
dissolution or liquidation and exercisability of each
outstanding Option shall be accelerated so that the
Optionee may within such period exercise up to the
entire unexercised portion of his or her Option.
Optionees shall not be entitled hereunder to any
payment, severance, consideration or damages
whatsoever as a result of such dissolution or
liquidation.
7
8
(g) Disability of Optionee. In the event of an Optionee's
Disability during the Term of an Option, any vested Option
held by the Optionee at the time of Disability may be
exercised at any time within one (1) year following the date
of Disability to the extent that the Optionee was entitled to
exercise the Option at the date of the Disability provided
that such Optionee is at the time of such Disability, or was
within the 90-day period prior thereto, an Employee of the
Company in Continuous Employment of the Company from the date
of the grant of the Option until the date of such Disability,
and provided further that no Option may be exercised after the
expiration of the term of the Option.
(h) Retirement of Option. In the event of the Retirement of an
Optionee during the Term of a vested Option, such Option may
be exercised by the Optionee at any time within ninety (90)
days following the Retirement date to the extent that the
Optionee was entitled to exercise the Option at the time of
his or her retirement; provided that such Optionee is at the
time of such Retirement, or was within the 90-day period
immediately prior thereto, an Employee of the Company in
Continuous Employment with the Company from the date of the
grant of the Option until the date of Retirement; and provided
further that no Option may be exercised after the expiration
of the Term of the Option.
(i) Death of Optionee. In the event of the death of an Optionee
during the Term of a vested Option, the Option may be
exercised by the estate or other legal representative of the
Optionee for a period of up to one (1) year following the
Optionee's date of death to the extent that the Optionee was
entitled to exercise the Option at the time of the death
provided that no Option may be exercised after the expiration
of the Term of the Option.
(j) Optionee's Termination for Cause. In the event that an
Optionee is terminated as an Employee of the Company for Cause
during the Term of an Option, all Options previously granted
to the Employee shall immediately terminate and become
unexercisable, null and void, and no Receipts for Option
Shares shall be issued with respect to any Option held by the
Optionee.
(k) Other Termination. Unless otherwise determined by the
Committee at or after a grant of an Option, if an Optionee
shall cease to be an Employee for any reason other than
Disability, Retirement, death, or for Cause, such individual's
Option shall automatically terminate; provided that, if the
Optionee is involuntarily terminated without Cause, any vested
Options held by such Optionee may be exercised for the lesser
of three months or the balance of such Option's Term. Except
as specifically set forth herein, all Options held by an
Employee shall automatically terminate and no longer be
exercisable as of the date of such Employee's termination of
employment with the Company.
(l) Change in Control. An Option Agreement may contain provisions
for accelerated vesting of the Option upon certain
circumstances arising subsequent to a change
8
9
in control of or over the Company. The existence and terms and
conditions of such provisions shall be at the sole and
absolute discretion of the Committee as determined at the time
the Option is granted and set forth in the applicable Option
Agreement.
(m) Tax Withholding. 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 granted under the Plan, the Optionee may elect, prior
to the date the amount of such withholding is determined (the
"Tax Date") to make such payment, or an increased payment by
delivering cash or irrevocably directing the Trust to withhold
from the Receipts, which would otherwise be issued upon
exercise of the Option, such number of Receipts representing
Option 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 number of
Receipts otherwise issuable upon exercise of the Option minus
the number of Receipts 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. Optionees shall be responsible for any income or
other taxes triggered by the grant, exercise or transfer of
Options and for any such taxes resulting from the Trust's sale
of Option Shares.
8. NON-TRANSFERABILITY OF OPTIONS AND RECEIPTS FOR OPTION SHARES.
(a) Options. 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 and
may be exercised, during the lifetime of the Optionee, only by
the Optionee. If the Option Agreement permits, the Optionee
may designate a beneficiary who may (i) exercise an Option
under Section 7(d) above, or (ii) receive Receipts for Option
Shares issued pursuant to the exercise of an Option where the
death of an Optionee occurs between the date on which the
Optionee exercises the Option and the date the Company issues
the Receipt.
(b) Receipts and Option Shares.
(i) The Committee may impose such other restrictions on
Receipts and Option Shares as it deems advisable. The
certificates, if any, representing the Receipts or
Option Shares shall bear a legend which shall give
notice of such restrictions on the transferability of
the such Receipts or Option Shares.
(ii) Except as otherwise provided by the Committee, if
there is no public market for the Option Shares at the
time the Optionee wishes to sell any Receipts, the
Optionee shall first offer to sell such Receipts to
the Purchase Office at the Fair Market Value of the
Option Shares represented
9
10
by such Receipts. If the Purchase Office fails to
accept the offer to purchase such Receipts within
forty-five (45) days after receipt of such offer, the
Optionee shall be free to sell or transfer such
Receipts in compliance with applicable law. If the
Optionee does not sell or transfer such Receipts
within ninety (90) days, then the Optionee may not
sell such Receipts without again offering the Receipts
to the Purchase Office pursuant to the terms of this
Paragraph. If the Purchase Office accepts the
Optionee's initial or later offer(s), the Purchase
Office shall pay the Optionee the purchase price for
all accepted Receipts within thirty six (36) months of
the Receipts tendered payable, such payment to be made
in four equal annual installments commencing on the
date of such acceptance by the Purchase Office. The
Purchase Office may make payments for purchasing the
Receipts in cash, stock of Global TeleSystems Group,
Inc. (provided its stock is publicly traded) or both.
Determinations by the Purchase Office whether to
accept the offer of an Optionee to purchase Receipts
shall be made by the Committee.
(iii) If there is a public market for the Option Shares,
then the Receipts shall be freely transferable by the
Optionee to the extent permitted by applicable law.
9. TIME OF GRANTING OPTIONS. Unless otherwise specified by the Committee,
the effective date of grant of an Option under the Plan shall be the later of
(i) the date on which the Committee makes the determination to grant such
Option; or (ii) the date on which any conditions precedent to such grant are
satisfied; provided that, notwithstanding the foregoing or any contrary
provision herein, the deemed date of grant of an Initial Option for the purposes
of calculating its vesting and termination date(s) shall be the date of grant of
the Employee's Original Option replaced by such Initial Option.
10. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or terminate
the Plan from time to time in such respects as the Board may deem advisable,
except that, without approval of the Company's shareholders, no such amendment
or modification shall increase the number of Shares subject to the Plan or add
any material rights or modifications to Options under the Plan. The Committee
may amend the Plan from time to time to ensure the Plan's compliance with
applicable securities laws, regulations or rulings. Any amendment or termination
of the Plan, other than any amendment required by applicable securities laws,
regulations or rulings, shall not affect Options already granted; and such
Options shall remain in full force and effect as if the Plan had not been
amended or terminated.
11. CONDITIONS UPON ISSUANCE OF RECEIPTS, OPTION SHARES. Notwithstanding
anything to the contrary herein, Receipts shall not be issued unless the
exercise of the associated Option and the issuance and delivery of such Receipts
pursuant thereto shall comply with all relevant provisions of law and the
requirements of any stock exchange upon which the related Option Shares may then
be listed. The Company reserves the right to obtain the approval of counsel for
the Company with respect to such compliance prior to the issuance of any
Receipts.
10
11
12. RESERVATION OF OPTION SHARES. During the term of this Plan, the
Company will keep available and reserve the number of Option Shares required to
satisfy its obligations hereunder. No Optionee (individually or as a member of a
group), and no beneficiary or other person claiming under or through such
Optionee, shall have any right, title or interest in or to any Stock allocated
or reserved for purposes of the Plan or subject to any Option, except as to
Shares , if any, as shall have been issued to the Trust.
13. INFORMATION TO OPTIONEE. During the term of any Option, the Company
shall provide or otherwise make available to each Optionee a copy of its annual
report and such other financial information that is provided to its shareholders
in accordance with the provisions of the Company's Bylaws and applicable law.
14. SHAREHOLDER APPROVAL. This Plan shall be subject to approval by the
affirmative vote of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting duly held.
15. BINDING EFFECT. This Plan and any Option Agreement issued hereunder
shall be binding upon the Company, its legal representatives, successors and
assigns.
16. GOVERNING LAW. The construction and effect of the Plan and any
agreement hereunder shall be determined in accordance with the laws of The
Netherlands.
11