UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
GTC TELECOM CORP.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
_______________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_______________________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
_______________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_______________________________________________________________________
(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
(1) Amount Previously Paid:
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GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 13, 1999
TO OUR SHAREHOLDERS:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of GTC Telecom Corp., to be held on Monday, December 13,
1999 at 9:30 A.M., Pacific Time, at the DoubleTree Hotel, 3050
Bristol St., Costa Mesa, California, to consider and act upon the
following proposals, as described in the accompanying Proxy Statement:
1. To elect four (4) directors to serve until the next
Annual Meeting of Shareholders and thereafter until their successors
are elected and qualified.
2. To approve and ratify the GTC Telecom 1999 Stock Option
Plan for the directors, officers and employees of GTC Telecom Corp.
3. To amend the Articles of Incorporation of the Company to
add a class of Preferred stock.
4. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The foregoing items of business are more fully described in the
Proxy Statement accompanying this Notice.
The Board of Directors has fixed the close of business on October
29, 1999, as the record date for Shareholders entitled to notice of
and to vote at this meeting and any adjournments thereof.
By Order of the Board of Directors
/S/ Eric C. Clemons
Eric C. Clemons, Secretary
November 11 1999
Costa Mesa, California
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING
IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
YOU ARE URGED TO COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. YOUR PROXY WILL NOT BE USED
IF YOU ARE PRESENT AT THE ANNUAL MEETING AND DESIRE TO VOTE YOUR
SHARES PERSONALLY AT THAT TIME.
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3
Costa Mesa, California 92626
---------------
PROXY STATEMENT
---------------
GENERAL INFORMATION
Solicitation, Voting and Revocability of Proxies
The enclosed Proxy is solicited by the Board of Directors of GTC
Telecom Corp. (the "Company" or "GTC") for use in connection with
the Annual Meeting of Shareholders to be held at the DoubleTree
Hotel, 3050 Bristol St., Costa Mesa, California on Monday, December
13, 1999, at 9:30 a.m., and at any and all adjournments thereof for
the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Shareholders.
The persons named as proxies were designated by the Board of
Directors (the "Board") and are officers or directors of the
Company. Any Proxy may be revoked or superseded by executing a later
Proxy or by giving notice of revocation in writing prior to, or at,
the Annual Meeting, or by attending the Annual Meeting and voting in
person. Attendance at the meeting will not in and of itself
constitute revocation of the Proxy. All Proxies that are properly
completed, signed and returned to the Company prior to the meeting,
and not revoked, will be voted in accordance with the instructions
given in the Proxy. If a choice is not specified in the Proxy, the
Proxy will be voted:
1. FOR election of the director nominees listed below (Proposal 1),
2. FOR approval and ratification of the GTC Telecom 1999 Stock
Option Plan for the directors, officers and employees of GTC Telecom
Corp. (Proposal 2), and
3. FOR amending the Articles of Incorporation of the Company to
add a class of Preferred stock (Proposal 3).
Officers of the Company or their designees will tabulate votes cast
at the Annual Meeting. A majority of shares entitled to vote,
represented in person or by proxy, will constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes are each included
in the determination of the number of shares present and voting for
the purpose of determining whether a quorum is present, and each is
tabulated separately. In determining whether a proposal has been
approved, abstentions are counted as votes against a proposal and
broker non-votes are not counted.
If any other matters are properly presented at the Annual Meeting
for action, the persons named in the enclosed form of proxy will
have discretion to vote on such matters in accordance with their
best judgment. The Company does not know of any matters other than
those set forth above that will be presented at the Annual Meeting.
This Proxy Statement and the accompanying Proxy are being mailed to
shareholders on or about November 20, 1999. The entire cost of the
solicitation of Proxies will be borne by the Company. It is
contemplated that this solicitation will be primarily by mail. In
addition, some of the officers, directors and employees of the
Company may solicit Proxies personally or by telephone, fax,
telegraph or cable. Officers and employees soliciting proxies will
not receive any additional compensation for their services. The
Company will reimburse brokers and other nominees for their
reasonable out-of-pocket expenses incurred in forwarding
solicitation material to beneficial owners of shares held of record
by such brokers or nominees.
Outstanding Shares and Voting Rights
The only class of the Company's equity securities outstanding is its
Common Stock. Shareholders of record at the close of business on
October 29, 1999 are entitled to one vote for each share of Common
Stock held by them. As of October 29, 1999, there were 16,229,999
shares of Common Stock outstanding. A majority of the shares of the
Company's Common Stock present or represented and entitled to vote
at the meeting is required to approve each proposal presented at the
meeting.
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, are set forth
below, along with their biographies. See "ELECTION OF DIRECTORS"
for the biographies of the Company's directors.
Name Positions
- ---- ---------
S. Paul Sandhu President and Chief Executive Officer,
and Director
Eric Clemons Chief Operating Officer and Director
Gerald DeCiccio Chief Financial Officer
Mark Fleming Executive Vice President
John M. Eger Director
Clay T. Whitehead Director
Biographical summaries regarding Mr. Sandhu, Mr. Clemons, Mr. Eger
and Mr. Whitehead have been presented earlier. Biographical
information on the executive officers follows:
GERALD DECICCIO, 42, joined the Company in January 1999 as Chief
Financial Officer. Mr. DeCiccio has over eighteen years experience
in the financial and accounting field. Prior to joining GTC, Mr.
DeCiccio was the Vice President of Finance and Administration for
National Telephone & Communications, Inc., ("NT&C") a $150 million
inter-exchange carrier and provider of communications products and
services. While at NT&C, Mr. DeCiccio managed NT&C's finance,
accounting, human resources and legal departments. Between 1995 and
1997, Mr. DeCiccio was the Corporate Controller for Newport
Corporation, a $140 million multi-national manufacturer /
distributor of laser and optics products. Prior to that, Mr.
DeCiccio was the Director of Audit and Quality Systems for Sunrise
Medical, Inc., a $750 million multi-national manufacturer /
distributor of health care products. From 1980 to 1984, Mr.
DeCiccio was a Supervising Senior Accountant for Ernst and Young.
Mr. DeCiccio received his Bachelor of Science in Accounting from
Loma Linda University, and his Masters of Science in Finance and
Systems Technology from the University of Southern California. Mr.
DeCiccio is a Certified Public Accountant in the State of California.
MARK FLEMING, 40, joined the Company in October 1998 as Executive
Vice President. Mr. Fleming has sixteen years of business strategy,
planning, and analysis experience within the competitive consumer
products / services industries. For the past seven years, Mr.
Fleming worked in the telecommunications industry, holding several
finance and marketing management positions at MCI. Some of the key
business / operational issues that Mr. Fleming managed while at MCI
included pricing strategy, market positioning, new product
development, sales channel and customer service performance reviews,
capital investment decisions and overall business planning /
analysis for Residential Markets and Local Services divisions. Mr.
Fleming received his Bachelor of Arts degree in Business
Administration from Principia College in 1980, and attained his
Masters in Business Administration, with honors from the University
of Southern California in 1986.
EXECUTIVE COMPENSATION
The Summary Compensation Table shows certain compensation
information for services rendered in all capacities for the fiscal
year ended June 30, 1999, the period ended June 30, 1998, and the
fiscal year ended December 31, 1997. Other than as set forth
herein, no executive officer's salary and bonus exceeded $100,000 in
any of the applicable years. The following information includes the
dollar value of base salaries, bonus awards, the number of stock
options granted and certain other compensation, if any, whether paid
or deferred.
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
Awards Payouts
Restricted Securities
Name Other Annual Stock Underlying LTIP All Other
and Principal Salary Bonus Compensation Awards Options Payouts Compensation
Position Year ($) ($) ($) ($) SARs(#) ($) ($)
- ------------ ---- ------ ----- ------------ --------- --------- -------- -----------
Paul Sandhu 1999 85,500 -0- -0- -0- -0- -0- -0-
(President, (6/30)
CEO)
1998 40,000 -0- -0- 76,000 200,000 -0- -0-
(6/30)
1997 n/a -0- -0- -0- -0- -0- -0-
Eric Clemons 1999 90,836 -0- -0- -0- -0- -0- -0-
(COO) (6/30)
1998 40,500 -0- -0- 19,000 100,000 -0- -0-
(6/30)
1997 n/a -0- -0- -0- -0- -0- -0-
STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS BY THE COMPANY
The following stock options are held by the following directors and
executive officers of the Company. These stock options relate to the
options to purchase the common stock of GTC Telecom Corp. The
amounts shown as potential realizable values on these options are
based on arbitrarily assumed annualized rates of appreciation in the
price of GTC Common Stock of five percent and ten percent over the
term of the options, as set forth in Securities and Exchange
Commission ("SEC") rules.
Exercise Price Date of
Employee Type Number per share Expiration
- -------- ---- -------- --------- ----------
S. Paul Sandhu options 200,000(1) 0.235 12/1/01
Eric Clemons options 100,000(2) 0.235 12/1/01
Gerald DeCiccio options 25,000(3) .01 6/1/02
options 41,667(4) 4.00 12/1/02
options 41,667(4) 4.00 12/1/03
options 41,666(4) 4.00 12/1/04
Mark Fleming options 10,000(5) .01 4/14/02
options 30,000(6) 3.50 0/14/02
options 30,000(6) 3.50 0/14/03
options 30,000(6) 3.50 10/14/04
(1) These options were issued on January 5, 1998 pursuant to an
employment contract between Mr. Sandhu and GTC and vest immediately.
(2) These options were issued on January 5, 1998 pursuant to an
employment contract between Mr. Clemons and GTC and vest immediately.
(3) These options were issued on December 1, 1998 pursuant to an
employment contract between Mr. DeCiccio and GTC and vest six months
from the date of the employment contract (vest June 1, 1999).
(4) These options were issued on December 1, 1998 pursuant to an
employment contract between Mr. DeCiccio and GTC and vest in 1/3
increments each year beginning December 1, 1999. Each increment
expires 36 months after its vesting.
(5) These options were issued on October 14, 1998 pursuant to an
employment contract between Mr. Fleming and GTC and vest six months
from the date of the employment contract (vest April 14, 1999).
(6) These options were issued on October 14, 1998 pursuant to an
employment contract between Mr. Fleming and GTC and vest in 1/3
increments each year beginning October 14, 1999. Each increment
expires 36 months after its vesting.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
The following table summarizes exercises of stock options during the
fiscal year ended June 30, 1999 by each of the executive officers
and the fiscal year-end value of unexercised options for such
executive officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Number of Unexercised Value of Unexercised In-
Securities Underlying The-Money Option/SARs
Shares Acquired On Value Realized Options/SARs At FY-End (#) At FY-End($)
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ------ ------------------ -------------- -------------------------- -------------------------
Paul Sandhu -0- -0- 200,000/0 47,500/0
Eric Clemons -0- -0- 100,000/0 23,750/0
Gerald DeCiccio -0- -0- 66,667/125,000 166,918/500,000
Mark Fleming -0- -0- 40,000/60,000 105,100/210,000
EMPLOYMENT AGREEMENTS
On December 1, 1998, the Company entered into an Employment
Agreement with Paul Sandhu, the Company's President and CEO, whereby
the Company will pay Mr. Sandhu an annual salary of $84,000.
Pursuant to the Agreement, Mr. Sandhu's salary shall increase to
$168,000 should the Company either maintain a positive cash flow for
two consecutive months, or the Company successfully completes a Form
SB-2 registered offering of its securities. In addition to his
annual salary, the Agreement confirmed the prior issuance of options
to purchase 200,000 shares of the Company's Common Stock at an
exercise price of $0.2375 previously granted to Mr. Sandhu pursuant
to an employment agreement between Mr. Sandhu and GenTel dated
January 5, 1998. These options vested upon execution of the
Agreement. The Agreement may be canceled at any time by either the
Company or Mr. Sandhu. However, if the Company terminates the
Agreement without cause, as defined in the Agreement, the Company
shall be obligated to pay Mr. Sandhu 25% of his annual salary as
severance.
On December 1, 1998, the Company entered into an Employment
Agreement with Eric Clemons, the Company's Chief Operating Officer
("COO"), whereby the Company will pay Mr. Clemons an annual salary
of $76,000. Pursuant to the Agreement, Mr. Clemons' salary shall
increase to $152,000 should the Company either maintain a positive
cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities. In
addition to his annual salary, the Agreement confirmed the prior
issuance of options to purchase 100,000 shares of the Company's
Common Stock at an exercise price of $0.2375 previously granted to
Mr. Clemons pursuant to an employment agreement between Mr. Clemons
and GenTel dated January 5, 1998. These options vested upon
execution of the Agreement. The Agreement may be canceled at any
time by either the Company or Mr. Clemons. However, if the Company
terminates the Agreement without cause, as defined in the Agreement,
the Company shall be obligated to pay Mr. Clemons 25% of his annual
salary as severance.
On December 1, 1998, the Company entered into an Employment
Agreement with Gerald DeCiccio, the Company's Chief Financial
Officer, whereby the Company will pay Mr. DeCiccio an annual salary
of $105,000. Pursuant to the Agreement, Mr. DeCiccio's salary shall
increase to $144,000 should the Company either maintain a positive
cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities. In
addition to his annual salary, the Agreement grants Mr. DeCiccio
options to purchase 150,000 shares of the Company's Common Stock.
Twenty-five thousand (25,000) of the options are set to vest six (6)
months from the execution of the Agreement at an exercise price of
$.01, expiring three years from the date of vesting if not
exercised. The remaining 125,000 options are scheduled to vest in
1/3 increments each following year provided that Mr. DeCiccio is
employed with the Company. The Agreement may be canceled at any
time by either the Company or Mr. DeCiccio. However, if the Company
terminates the Agreement without cause, as defined in the Agreement,
the Company shall be obligated to pay Mr. DeCiccio 25% of his annual
salary as severance.
On October 14, 1998, the Company entered into an Employment
Agreement with Mark Fleming, the Company's Executive Vice-President,
whereby the Company will pay Mr. Fleming an annual salary of
$70,000. Pursuant to the Agreement, Mr. Fleming's salary shall
increase to $107,000 should the Company either maintain a positive
cash flow for two consecutive months, or the Company successfully
completes a Form SB-2 registered offering of its securities. In
addition to his annual salary, the Agreement grants Mr. Fleming
options to purchase 100,000 shares of the Company's Common Stock.
Ten thousand (10,000) of the options are set to vest six (6) months
from the execution of the Agreement at an exercise price of $.01,
expiring three years from the date of vesting if not exercised. The
remaining 90,000 options are scheduled to vest in 1/3 increments
each following year provided that Mr. Fleming is employed with the
Company. The Agreement may be canceled at any time by either the
Company or Mr. Fleming. However, if the Company terminates the
Agreement without cause, as defined in the Agreement, the Company
shall be obligated to pay Mr. Fleming 25% of his annual salary as
severance.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Michelson Agreement
On June 17, 1998, the Company entered into a Corporate Development
Agreement with the Michelson Group. As part of the Agreement,
Michelson has agreed to provide consultation and corporate
development services on behalf of the Company. In return, the
Company has agreed to compensate the Michelson Group in the amount
of $6,500 per month in addition to warrants to purchase up to 9.9%
of the outstanding shares of the Common Stock of the Company (as
calculated following the completion of the July 21, 1998 private
placement) at an exercise price of $0.01. Pursuant to the
Agreement, the Michelson Group has agreed that the exercise of the
warrants adhere to the following schedule: one fourth of the
warrants can be exercised upon execution of the Agreement; an
additional one fourth when the Company breaks escrow on its initial
private placement of securities; an additional one fourth once the
Company's market capitalization reaches $40,000,000; and the
remaining one fourth upon the Company breaking escrow on a debt or
equity financing of $3,000,000 or more. Pursuant to an amendment to
the Agreement in November 3, 1998, the Company agreed to waive the
requirements for the vesting of the fourth tranche of warrants
provided under this Agreement. These warrants resulted in $584,516
being charged by the Company for consulting fees rendered in fiscal
1998 and 1999. As of June 30, 1999, all 1,417,008 of the vested
warrants have been exercised.
Acquisition of Gentel Communications
On August 31, 1998, the Company (which at the time was designated
Bobernco, Inc., a Nevada corporation) acquired all of the
outstanding common stock of GenTel Communications, Inc., a Colorado
corporation in a business combination described as a "reverse
acquisition." As part of the reorganization, the Company issued
8,986,950 shares of its Common Stock to the shareholders of GenTel
in exchange for all of the outstanding shares of Common Stock of
GenTel. Such shares include the shares owned by officers and
directors of the Company as set forth in the Section "Security
Ownership of Certain Beneficial Owners and Management" hereunder.
Loan To Company By S. Paul Sandhu
The Company has borrowed $73,500 from its President and CEO. These
borrowings ("Borrowings") were for use as working capital. The
Company does not expect to borrow any additional funds beyond the
total amount currently borrowed from the President and CEO. Under
the terms of the Borrowings, the Company will be required to repay
the principal of $73,500 within one year with 10% interest. The
Borrowings are not secured.
NASD Administrative Action
Between 1989 and 1994, Mr. Clemons was a licensed NASD broker. As a
broker, Mr. Clemons was subject to three claims related to such
engagement and subsequently an administrative action by the NASD
related to his work as a licensed broker. Mr. Clemons was found
liable for an award of $4,000 on one of the actions and subsequently
in April 1997, was fined $65,000 and barred from association with
any NASD member with the ability for re-application following a
period of two years.
Lock-up of Shares Held by Management
In August 1999, S. Paul Sandhu, the Company's President & CEO, and
Eric Clemons, the Company's Chief Operating Officer, agreed to a
lock-up of their shares. As part of the agreement, Mr. Sandhu and
Mr. Clemons have agreed to register a minimum of 25,000 shares each
between now and the year 2000.
Options Issued to Directors of the Company
On May 4, 1999, the Company issued 526,316 shares of "restricted"
(as that term is defined under Rule 144 of the Securities Act of
1933) Common Stock to Clay T. Whitehead, a director of the Company,
pursuant to an option agreement entered into between the Company and
Mr. Whitehead in April, 1999 which granted Mr. Whitehead an option
to purchase up to 526,316 shares of the Company's Common Stock at an
exercise price of $0.475 per share. A total of approximately
$352,632 of compensation expense was recorded at the date of grant
in April 1999. The issuance was exempt under Section 4(2) of the
Securities Act of 1933.
On October 20, 1999, the Company granted 526,000 options to purchase
526,000 shares of "restricted" (as that term is defined under Rule
144 of the Securities Act of 1933) Common Stock, at an exercise
price of $1.00 per share, to John M. Eger, a director of the
Company, pursuant to an option agreement entered into between the
Company and Mr. Eger. A total of approximately $527,740 of
compensation expense was recorded at the date of grant in October
1999. The issuance was exempt under Section 4(2) of the Securities
Act of 1933.
Registration of Shares on Form S-8 filed with the Securities and
Exchange Commission
In September 1999, the Company issued an aggregate of 67,675 shares
to seven consultants of the Company and the Cutler Law Group, the
Company's securities counsel, in exchange for consultation and legal
services provided to the Company valued at approximately $271,000.
The transaction was exempt under Section 4(2) of the Securities Act
of 1933. These shares were subsequently registered on Form S-8
filed with the Securities and Exchange Commission on October 6, 1999.
In addition, the Company registered on the same Form S-8 filed with
the Securities and Exchange Commission, 411,000 options held by
employees valued at approximately $1,184,000 and 750,000 options
pursuant to its 1999 Stock Option Plan.
PROPOSAL ONE
ELECTION OF DIRECTORS
Directors are elected by the shareholders at each annual meeting to
hold office until their respective successors are elected and
qualified. Pursuant to the Bylaws of the Company, the Board of
Directors consists of not less than one (1) nor more than five (5)
directors, and the number is presently fixed at four (4) members.
As a result of the acquisition of Gentel Communications, Inc. by the
Company, the Company's prior Board of Directors resigned and
appointed S. Paul Sandhu and Eric Clemons to fill their vacancies.
See "Certain Relationships and Related Transactions Merger with
GenTel Communications". Clay T. Whitehead was appointed to the
Board on September 16, 1998 to fill one of the vacancies and John M.
Eger was appointed to the Board on October 20, 1999 to fill an
additional vacancy left over from the acquisition of GenTel by the
Company.
Voting for the election of directors is non-cumulative, which means
that a simple majority of the shares voting may elect all of the
directors. Each share of Common Stock is entitled to one vote and,
therefore, has a number of votes equal to the number of authorized
directors. Proxies may not be voted for more than four (4) directors.
Although management of the Company expects that each of the
following nominees will be available to serve as a director, in the
event that any of them should become unavailable prior to the Annual
Meeting, management's proxies will be voted for a nominee or
nominees designated by management or will be voted for a lesser
number of directors. If there are other nominees, management's
proxies will be voted so as to elect the greatest number of the
following nominees. Management has no reason to believe that any of
its nominees, if elected, will be unavailable to serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED
BELOW.
The nominees for election to the Board of Directors as selected by
the Board of Directors of the Company are set forth below
alphabetically:
Eric Clemons
John M. Eger
S. Paul Sandhu
Clay T. Whitehead
The biographies of nominees, including certain additional
information, are set forth below:
ERIC CLEMONS, 28, is currently the Company's Chief Operating Officer
and a director of the Company. Mr. Clemons has been with GTC since
its inception. Mr. Clemons has over eight (8) years experience with
sales and marketing organizations. Mr. Clemons most recently was
Vice President of Marketing for Intelligent Electronic
Communications managing a staff of 50 employees. Mr. Clemons has
attended The Wharton School of Business executive management
programs.
JOHN M. EGER, 59, was appointed to the Board on October 20, 1999.
Mr. Eger is currently the holder of the prestigious Lionel Van
Deerlin Endowed Chair of Communications and Public Policy at San
Diego State University. He is also the President and CEO of the
World Foundation for Smart Communities, a non-profit,
non-governmental educational program dedicated to helping
communities understand the importance of information technology as a
catalyst for transforming life and work in the 21st Century. Mr.
Eger formerly headed CBS Broadcast International which he
established and was Senior Vice President of the CBS Broadcast
Group. From 1971-1973, Mr. Eger was legal assistant to the chairman
of the Federal Communications Commission, and from 1974-1976 served
as Telecommunications Advisor to Presidents Nixon and Ford and was
also the Head of the White House Office of Telecommunications Policy
(OTP). Other positions Mr. Eger has held include serving as
Chairman of the Board of the San Diego Processing Corporation,
Chairman of San Diego Mayor Susan Golding's City of the Future
Advisory Committee and Chairman of Governor Pete Wilson's California
Commission on Information Technology.
S. PAUL SANDHU, 38, is currently the Company's President and Chief
Executive Officer and a director of the Company. Mr. Sandhu has
been with GTC since its inception. Mr. Sandhu has over ten (10)
years experience with start-up and emerging growth companies. Mr.
Sandhu was Co-Founder, President and Co-Owner of Maximum Security
("Maximum"), a Security and surveillance company he started in 1992.
While at Maximum, Mr. Sandhu actively managed a staff of over 200
employees. In 1997 Mr. Sandhu sold the business to his partner.
Mr. Sandhu graduated from the University of Punjab in India with a
degree in Engineering.
CLAY T. WHITEHEAD, 57, was appointed to the Board on September 16,
1998. Mr. Whitehead is currently President of Clay Whitehead
Associates, a strategic consulting and business development company
which concentrates on the telecommunications and media industries.
Clay Whitehead Associates primarily works with large companies to
develop business projects in the areas of telecommunications and
television. Mr. Whitehead has participated in the formation,
strategy development, regulatory posture, and financing of a number
of telecommunications businesses in the United States and
internationally. Mr. Whitehead has also served as a special
assistant to President Nixon, with policy responsibility for NASA,
the Atomic Energy Commission, and the National Science Foundation.
From 1971 to 1974, he was director of the U.S. Office of
Telecommunications Policy. From 1979 to 1983, Mr. Whitehead founded
and was president of Hughes Communications, Inc., a subsidiary of
Hughes Aircraft Company.
The following directors presently serve as directors of the
following public corporations:
Clay T. Whitehead Prudential Funds, a number
of Prudential mutual funds;
Crosswalk.com, an internet
e-commerce company.
John M. Eger WaveExpress, a joint venture
of Saranov Labs and Wave Systems;
Solana Technology, an electronic
watermarking company; E-Tel Corp.,
a manufacturer of internet telephones.
MEETINGS AND COMPENSATION OF BOARD OF DIRECTORS
The Board of Directors of the Company held one meeting during the
year ended June 30, 1999. Each director attended the meeting. The
Board does not meet on any pre-determined schedule but meets on an
as needed basis. Board members are reimbursed for out-of-pocket
expenses and will receive $1,500 and 2,500 shares of the Company's
restricted (as that term is defined by Rule 144 of the Securities
Act of 1933) Common Stock per quarter.
PROPOSAL TWO
APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN
Background and Purpose
The purpose of the GTC 1999 Omnibus Stock Option Plan (the
"Plan")is to provide a means to attract and retain competent
personnel and to provide to participating officers, directors,
employees and consultants long-term incentive for high levels of
performance and for unusual efforts to improve the financial
performance of the Company. The Board believes that it is in the
Company's and its shareholders' best interest to provide to such
persons, through the granting of stock options, an opportunity to
participate in the appreciation and value of the Common Stock of the
Company. The Plan provides for the grant of either incentive or
non-statutory options. The following description of the primary
features of the Plan is qualified in all respects by reference
to the full text of the Plan.
Incentive and Nonstatutory Options
The Plan provides both for incentive stock options ("Incentive
Options") specifically tailored to the provisions of the Internal
Revenue Code (the "Code") and for options not qualifying as
Incentive Options ("Nonstatutory Options"). Options are designated
as Incentive Options or Nonstatutory Options by the Board when
granted. The use of the term "option" herein shall mean both
Incentive Options and Nonstatutory Options.
To obtain certain tax benefits, the Plan establishes special
rules for Incentive Options, including the requirement that such
Incentive Options may be granted to an individual only for shares
having a maximum aggregate fair market value not exceeding $100,000
(valued at the time of grant) for any year in which such shares
first become available for purchase through the exercise of such
Incentive Options. The option price per share for Incentive Options
must not be less than the fair market value per share of the Common
Stock on the date of grant. In order for the Incentive Options to
qualify for certain tax benefits, the Plan must be ratified by
the Shareholders of the Company. Failure to obtain ratification of
the Plan will not invalidate the Plan but will disqualify the
Incentive Options with regards to certain tax benefits.
Eligibility and Administration
Employees and consultants of the Company, including officers and
directors, are eligible to receive options granted under the 1999
Plan. The approximate number of persons eligible to receive options
under the Plan is 28. The Plan authorizes the granting of
options to purchase up to 750,000 shares of Common Stock. The shares
subject to the options will generally be made available from
authorized but unissued shares. The Plan will be administered
by the Board of Directors ("Board"). The Board has full authority to
award options under the Plan, to establish the terms of the
option agreements, and to take all other action deemed appropriate
for administration of the Plan.
Options will generally be granted after recommendation by
management. In general, the Company will not receive any cash or
other consideration for the granting or extension of options, but
options are generally issued in recognition of services rendered or
to be rendered to the Company. On October 18, 1999, the Company's
Board of Directors has granted an aggregate of 78,000 Incentive
Options, exercisable at $2.9375 per share (the fair market value of
the Company's Common Stock on the day of grant) to 21 employees of
the Company and an aggregate of 510,000 Nonstatutory Options,
exercisable at $1.10 per share, to the officers of the Company as
follows:
Officer: Options
-------- -------
Paul Sandhu 250,000
Eric Clemons 150,000
Gerald DeCiccio 50,000
Mark Fleming 50,000
Frank Naccarelli 10,000
Because the employees, directors and consultants who may participate
in the Plan in the future and the amount of their options are
determined by the Board in its discretion, it is not possible to
state the name or positions of, or the number of options that may be
granted to, the Company's employees, directors and consultants in
the future.
Terms and Conditions of Options
Except as otherwise described in this Proxy Statement, options may
be granted under the Plan under such terms and conditions as
the Board may determine from time to time. Under the Plan,
Incentive Options are awarded with an exercise price equal to the
fair market value of the Common Stock. Nonstatutory Options are
awarded with an exercise price of 25% to 100% of the fair market
value of the Common Stock on the date of grant, and no option may be
exercised later than 10 years from the date of the grant. Payment
for shares purchased upon the exercise of an option must be made in
cash, in shares of the outstanding Common Stock, or in a combination
of cash and shares.
Unless otherwise determined by the Board, options granted under the
Plan may not be assigned and, during the lifetime of the
optionee, may be exercised only by him or her. If an optionee's
employment is terminated for any reason other than death or
disability, any unvested options shall expire immediately. Options
already vested shall expire, subject to the expiration date of the
option, within 30 days from the optionee's termination date, unless
extended by the Board for up to no more than three months from the
optionee's termination date. If employment is terminated because of
death or disability, the option may be exercised (subject to the
expiration date of the option) for up to one year after such
termination, but only to the extent it was exercisable on the date
of death or disability.
Pursuant to a Registration Statement on Form S-8, filed with the
Securities and Exchange Commission on October 6, 1999, the Company
has registered the shares underlying the 750,000 options provided
for in the Plan. As a consequence, shares issued pursuant to
options granted under the plan are freely tradeable and may be
resold by optionees in the open market.
Modification and Termination
The Plan provides for adjustment in the number and class of
shares subject to the Plan and to the option rights and the
exercise prices of such option rights granted thereunder, in the
event of stock dividends, stock splits, reverse stock splits,
recapitalization, reorganization, certain mergers, consolidation,
acquisition, or other changes in the capital structure of the Company.
The Plan will terminate on September 30, 2009. In addition, the
Board of Directors may, at any time, terminate the Plan or
amend it except with respect to certain matters for which
shareholder approval is required under the Code or Securities and
Exchange Commission rules applicable to the Plan. Under such
rules, any amendment that would materially increase the cost of the
Plan to the Company or the benefits to eligible employees would
require shareholder approval. No amendment or termination of the
Plan by the Board of Directors may adversely affect any option
previously granted under the Plan without the consent of the
optionee.
Federal Income Tax Consequences
The following is a brief summary of the principal federal income tax
consequences under current federal income tax laws relating to
awards under the Plan. This summary is not intended to be
exhaustive and, among other things, does not describe state or local
tax consequences.
In general, an optionee will be subject to tax at the time a
Nonstatutory Option is exercised (but not at the time of grant), and
he or she will include in ordinary income in the taxable year in
which he or she exercises a Nonstatutory Option an amount equal to
the difference between the exercise price and the fair market value
of the shares acquired on the date of exercise, and the Company will
generally be entitled to deduct such amount for federal income tax
purposes except as such deductions may be limited by the Revenue
Reconciliation Act of 1993 ("1993 Tax Act"), described below. Upon
disposition of shares, the appreciation (or depreciation) after the
date of exercise will be treated by the optionee as either
short-term or long-term capital gain or loss depending on whether
the shares have been held for the then-required holding period.
In general, an optionee will not be subject to tax at the time an
Incentive Option is granted or exercised. Upon disposition of the
shares acquired upon exercise of an Incentive Option, long-term
capital gain or loss will be recognized in an amount equal to the
difference between the disposition price and the exercise price,
provided that the optionee has not disposed of the shares within two
years of the date of grant or within one year from the date of
exercise. If the optionee disposes of the shares without satisfying
both holding period requirements (a "Disqualifying Disposition"),
the optionee will recognize ordinary income at the time of such
Disqualifying Disposition to the extent of the difference between
the exercise price and the lesser of the fair market value of the
share on the date the Incentive Option was exercised or the date of
sale. Any remaining gain or loss is treated as short-term or
long-term capital gain or loss depending upon how long the shares
have been held. The Company is not entitled to a tax deduction upon
either the exercise of an Incentive Option or upon disposition of
the shares acquired pursuant to such exercise, except to the extent
that the optionee recognizes ordinary income in a Disqualifying
Disposition and then only to the extent that such deduction is not
limited by the 1993 Tax Act.
If the optionee pays the exercise price, in full or in part, with
previously acquired shares, the exchange will not affect the tax
treatment of the exercise. However, if such exercise is effected
using shares previously acquired through the exercise of an
Incentive Option, the exchange of the previously acquired shares
will be considered a disposition of such shares for the purpose of
determining whether a Disqualifying Disposition has occurred.
Commencing with the Company's 2000 fiscal year, the federal income
tax deduction that the Company may take for otherwise deductible
compensation payable to executive officers who, on the last day of
the fiscal year, are treated as "named executive officers" in the
Company's Proxy Statement for such year will be limited by the 1993
Tax Act to $1,000,000. Under the provisions of the 1993 Tax Act, the
deduction limit on compensation will apply to all compensation,
except compensation deemed under the 1993 Tax Act to be
"performance-based" and certain compensation related to retirement
and other employee benefit plans. The determination of whether
compensation related to the Plan is performance-based for
purposes of the 1993 Tax Act will be dependent upon a number of
factors, including shareholder approval of the Plan, and the
exercise price at which options are granted. The 1993 Tax Act also
prescribes certain limitations and procedural requirements in order
for compensation to qualify as performance-based, including rules
which require that in the case of compensation paid in the form of
stock options, the option price be not less than the fair market
value of the stock at date of grant and that the plan under which
the options are granted states the maximum number of shares with
respect to which options may be granted during a specified period to
any employee. Although the Company has structured the Plan to
satisfy the requirements of the 1993 Tax Act with regard to its
"performance-based" criteria, there is no assurance that awards
thereunder will so satisfy such requirements, and accordingly, the
Company may be limited in the deductions it may take with respect to
awards under the Plan.
Approval and ratification of the Option Plan will require the
affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock present or represented and
voting at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL AND
RATIFICATION OF THE OPTION PLAN.
PROPOSAL THREE
AMENDMENT TO ARTICLES OF INCORPORATION
On June 28, 1999, the Board of Directors approved, subject to
stockholder approval, an Amendment to the Company's Certificate of
Incorporation to authorize 10,000,000 shares of preferred stock, par
value $0.001, the rights and preferences to be determined by the
Board of Directors. The Company proposes to amend Article 4 of the
Company's Articles of Incorporation to read as follows:
"4. The capital stock of the Corporation shall consist of
50,000,000 shares of Common Stock, $0.001 par value and 10,000,000
shares of preferred stock, $0.001 par value.
The shares of Preferred Stock may be issued from time to
time in one or more series. The Board of Directors of the
Corporation (the "Board of Directors") is expressly authorized to
provide for the issue of all or any of the shares of the Preferred
Stock in one or more series, and to fix the number of shares and to
determine or alter for each such series, such voting powers, full or
limited, or no voting powers, and such designations, preferences,
and relative, participating, optional, or other rights and such
qualifications, limitations, or restrictions thereof, as shall be
stated and expressed in the resolution or resolutions adopted by the
Board of Directors providing for the issue of such shares (a
"Preferred Stock Designation") and as may be permitted by the
General Corporation Law of the State of Nevada. The Board of
Directors is also expressly authorized to increase or decrease (but
not below the number of shares of such series then outstanding) the
number of shares of any series subsequent to the issue of shares of
that series. In case the number of shares of any such series shall
be so decreased, the shares constituting such decrease shall resume
the status that they had prior to the adoption of the resolution
originally fixing the number of shares of such series."
The Board of Directors believes that it is advisable and in the best
interests of the Company to have available authorized but unissued
shares of Preferred Stock to provide for future needs. The
additional but unissued shares of Preferred Stock will be available
for issuance from time to time by the Company in the discretion of
the Board of Directors, normally without further stockholder action
(except as may be required for a particular transaction by
applicable law, requirements of regulatory agencies or by stock
exchange rules), for any proper corporate purpose including, among
other things, future acquisitions of property or securities of other
corporations, stock dividends, stock splits, stock options,
convertible debt and equity financing. The Company's Board of
Directors believes that the additional but unissued Preferred Stock
may be necessary for future financing and to attract potential new
equity capital to carry out the Company's business objectives.
However, the Company is not currently contemplating, and has not
entered into any agreements for any equity or debt financing
requiring the issuance of any Preferred Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of September 30, 1999,
with respect to each person who is known by the Company to own
beneficially 5% or more of the Company's outstanding Common Stock,
the number of shares and the percentage so owned, as well as the
beneficial ownership of Common Stock of the Company by the
directors, the executive officers of the Company and all directors
and executive officers as a group.
Name and Amount and Percent of
Address of Nature of Shares of
Beneficial Beneficial Common Stock
Owner Ownership Outstanding (6)
- ---------- ------------ ---------------
Reet Trust 2,000,000(1) 12.47%
8018 Santa Ana Canyon,
Suite 100-112
Anaheim Hills, CA 92808
Michelson Group 1,054,483 6.57%
5000 Birch Street,
Suite 9600
Newport Beach, CA 92660
S. Paul Sandhu 4,333,608(2) 27.02%
Eric Clemons 1,444,152(3) 9.00%
Gerald DeCiccio 66,667(4) 0.42%
Mark Fleming 40,000(5) 0.25%
John M. Eger 526,000 3.28%
Clay T. Whitehead 526,316 3.28%
All directors and
officers as a group
(6 persons) 6,936,743 43.25%
(1) The trustee of the Reet Trust is Teg Sandhu, father of S. Paul
Sandhu. However, S. Paul Sandhu disclaims any beneficial ownership
to the shares held by the Reet Trust.
(2) Includes an aggregate of 200,000 options to acquire shares of
Company common stock in accordance with Mr. Sandhu's employment
agreement.
(3) Includes an aggregate of 100,000 options to acquire shares of
Company common stock in accordance with Mr. Clemons' employment
agreement and 30,000 shares held in the name of Clemons International
Trading, Inc.
(4) Includes vested options to purchase up to 66,667 shares of the
Company common stock, but excludes options to purchase 83,333 shares
of Company common stock that are not exercisable during the next 60
days.
(5) Includes vested options to purchase up to 40,000 shares of the
Company common stock, but excludes options to purchase 60,000 shares
of Company common stock that are not exercisable during the next 60
days.
(6) In calculating percentage ownership, all shares of Common Stock
which a named shareholder has the right to acquire within 60 days
from the date of this Proxy Statement upon exercise of options or
warrants are deemed to be outstanding for the purpose of computing
the percentage of Common Stock owned by that shareholder, but are
not deemed to be outstanding for the purpose of computing the
percentage of Common Stock owned by any other shareholders.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more
than ten percent of a registered class of the Company's equity
securities to file with the SEC initial reports of ownership and
reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten
percent shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. To the
Company's knowledge, based solely on the review of copies of such
reports furnished to the Company and written representations that no
other reports were required, the Company has been informed that Eric
Clemons, the Company's Chief Operating Officer failed to timely file
a required Form 4 reporting certain transfers on August 11, 1999 of
Common Stock owned by Mr. Clemons. A Form 4 reporting these
transfers was subsequently filed by Mr. Clemons. Additionally, the
Company is informed that Clay T. Whitehead, a director of the
Company failed to timely file a Form 3 Initial Statement of
Beneficial Ownership. The Company has been informed that Mr.
Whitehead filed the required filing on October 1, 1999. To the best
of the Company's knowledge, during the years ended June 30, 1999 and
1998, all Section 16(a) filing requirements applicable to the
Company's officers, directors and greater than ten percent
shareholders, except for those mentioned above, were complied with.
SHAREHOLDER PROPOSALS
Any shareholder desiring to submit a proposal for action at the 2000
Annual Meeting of Shareholders and presentation in the Company's
proxy statement with respect to such meeting should arrange for such
proposal to be delivered to the Company's offices, 3151 Airway Ave.,
Suite P-3, Costa Mesa, California 92626, addressed to Eric Clemons,
no later than September 1, 2000 in order to be considered for
inclusion in the Company's proxy statement relating to the meeting.
Matters pertaining to such proposals, including the number and
length thereof, eligibility of persons entitled to have such
proposals included and other aspects are regulated by the Securities
Exchange Act of 1934, Rules and Regulations of the Securities and
Exchange Commission and other laws and regulations to which
interested persons should refer. The Company anticipates that its
next annual meeting will be held in November 2000.
On May 21, 1998, the Securities and Exchange Commission adopted an
amendment to Rule 14a-4, as promulgated under the Securities and
Exchange Act of 1934, as amended. The amendment to Rule 14a-4(c)(1)
governs the Company's use of its discretionary proxy voting
authority with respect to a shareholder proposal which is not
addressed in the Company's proxy statement. The new amendment
provides that if a proponent of a proposal fails to notify the
Company at least 45 days prior to the month and day of mailing of
the prior year's proxy statement, then the Company will be allowed
to use its discretionary voting authority when the proposal is
raised at the meeting, without any discussion of the matter in the
proxy statement.
With respect to the Company's 2000 Annual Meeting of Shareholders,
if the Company is not provided notice of a shareholder proposal,
which the shareholder has not previously sought to include in the
Company's proxy statement, by September 1, 2000, the Company will be
allowed to use its voting authority as described above.
OTHER MATTERS
The Company has enclosed with this Proxy Statement a copy of the
Company's Annual Report on Form 10-KSB to Shareholders for the
year ended June 30, 1999.
Management knows of no other matters to come before the meeting. If,
however, any other matter properly comes before the meeting, the
persons named in the enclosed Proxy form will vote in accordance
with their judgment upon such matter.
Shareholders who do not expect to attend in person are urged to
promptly execute and return the enclosed Proxy.
By order of the Board of Directors
/s/ Eric C. Clemons
Eric C. Clemons
Secretary
Costa Mesa, California
November 11 1999
APPENDIX 1
GTC TELECOM, INC.
an Nevada corporation
OMNIBUS STOCK OPTION PLAN
1. Name, Effective Date and Purpose.
1.1 This Plan document is intended to implement and govern two
separate stock option plans of GTC TELECOM, INC. (the "Company"):
The Incentive Stock option plan ("Plan A") and the Nonstatutory
Stock Option Plan ("Plan B"). Plan A provides for the granting of
options that are intended to qualify as incentive stock options
("Incentive Stock Options") within the meaning of Section 422A(b) of
the Internal Revenue Code (the "Code"), as amended. Plan B provides
for the granting of options that are not intended to so qualify.
Unless specified otherwise, all the provisions of this Plan relate
equally to both Plan A and Plan B and are condensed for convenience
into one Plan document.
1.2 Plan A and Plan B are each established effective as of
October 1, 1999. The purpose of Plan A and Plan B (sometimes
together referred to as the "Plan" or this "Plan") is to promote the
growth and general prosperity of the Company and its Affiliated
Companies. This Plan will permit the Company to grant options
("Options") to purchase shares of its common stock ("Common Stock").
The granting of Options will help the Company attract and retain
the best available persons for positions of substantial
responsibility, and will provide certain employees with an
additional incentive to contribute to the success of the Company and
its Affiliated Companies. For purposes of this Plan, the term
"Affiliated Companies" shall mean any component member of a
controlled group of corporations, as defined under Code Section
1563, in which the Company is also a component member.
2. Administration.
2.1 The Plan shall be administered solely by the Board of
Directors (the "Board"). All decisions, determinations and
interpretations of the Board shall be final and binding on all
Optionees.
2.2 The Board shall have sole authority, in its absolute
discretion, to determine which of the eligible persons of the
Company and its Affiliated Companies shall receive Options
("Optionees"), and, subject to the express provisions and
restrictions of this Plan, shall have sole authority, in its
absolute discretion, to determine the time when Options shall be
granted, the terms and conditions of any Option other than those
terms and conditions fixed under this Plan, the number of shares
which may be issued upon exercise of an Option and the means of
payment for such shares, and shall have authority to do everything
necessary or appropriate to administer the Plan.
2.3 Aggregate limitations with respect to all participants in
the Plan:
2.3.1 The Board shall not grant Options covering more than
the number of Available Shares of Common Stock to any employee in
any Plan Year.
2.4 Aggregate limitations with respect to the participation of
directors and officers in the Plan:
2.4.1 No more than the number of Available Shares of Common
Stock may be optioned and sold to directors of the Company under
Plan A and Plan B considered in the aggregate in any Plan Year.
2.4.2 No more than the Available Shares of Common Stock may
be optioned and sold to non-director officers of the Company under
Plan A and Plan B considered in the aggregate in any Plan Year.
2.5 Definitions:
2.5.1 Available Shares: Those shares specified in Section
4.1 as available for issuance pursuant to this Plan in any Plan Year.
2.5.2 Officer: The chief executive officer, president,
chief financial officer, chief accounting officer, any vice
president in charge of a principal business function (such as sales,
administration, finance, or legal) and any other person who performs
similar policy-making functions for the Company.
2.5.3 Parent Corporation: A corporation as defined in
Section 425(e) of the Code.
2.5.4 Plan Year: Any twelve (12) month period (or shorter
period during the final year of this Plan) commencing October 1
during the term of this Plan.
2.5.5 Restricted Shareholder: An individual who, at the
time an Option is granted under either Plan A or Plan B, owns stock
possessing more than 10% of the total combined voting power of all
classes of stock of the employer corporation or of its Parent
Corporation or Subsidiary Corporation, with stock ownership to be
determined in light of the attribution rules set forth in Section
425(d) of the Code.
2.5.6 Subsidiary Corporation: A corporation as defined in
Section 425(f) of the Code.
3. Eligibility.
3.1 Plan A: The Board may, in its discretion, grant one or more
Options under Plan A to any employee of the Company or its
Affiliated Companies, including any employee who is a director of
the Company or of any of its Affiliated Companies presently existing
or hereinafter organized or acquired. Such Options may be granted
to one or more such employees without being granted to other
eligible employees, as the Board may deem fit.
3.2 Plan B: The Board may, in its discretion, grant one or more
options under Plan B to any key management employee, any employee or
non-employee director of the Company or its Affiliated Companies,
including any employee who is a director of the Company or of any of
its Affiliated Companies presently existing or hereinafter organized
or acquired, or any person who performs consulting or other services
for the Company or its Affiliated Companies and who is designated by
the Board as eligible to participate in Plan B. Such Options may be
granted to one or more such persons without being granted to other
eligible persons, as the Board may deem fit.
4. Stock to be Optioned.
4.1 The aggregate number of shares which may be optioned and
sold under Plan A and Plan B in any Plan Year shall not exceed the
following amounts of the shares of Authorized Common Stock of the
Company:
Plan Year Available Shares
---------- ----------------
October 1, 1999 - September 30, 2000 750,000 shares
Each subsequent Plan Year beginning 5% of outstanding stock
on October 1 of each such
Plan Year
The foregoing constitutes an absolute cumulative limitation on the
total number of shares, that may be optioned under both Plan A and
Plan B in any Plan Year. Therefore, at any particular date during a
Plan Year, the maximum aggregate number of shares which may be
optioned under either Plan A or Plan B or both is equal to the
Available Shares minus the number of shares previously optioned and
sold under both Plan A and Plan B during that Plan Year. All shares
to be optioned and sold under either Plan A or Plan B may be either
authorized but unissued shares or shares held in the treasury.
4.2 Shares of Common Stock that: (i) are repurchased by the
Company after issuance hereunder pursuant to the exercise of an
Option, or (ii) are not purchased by the Optionee prior to the
expiration or termination of the applicable Option, shall again
become available to be covered by Options to be issued hereunder and
shall not, as of the effective date of such repurchase or
expiration, be counted as covered by an outstanding Option for
purposes of the above-described maximum number of shares which may
be optioned hereunder.
5. Option Price. The Option Price for shares of Common Stock to
be issued under Plan A shall be 100%, and under Plan B between 25%
to 100%, of the fair market value of such shares on the date on
which the Option covering such shares is granted by the Board (or
the Committee, if authorized by the Board), except that if on the
date on which such Option is granted the Optionee is a Restricted
Shareholder, then such Option Price for Options granted under Plan A
shall be 110% of the fair market value of the shares of Common Stock
subject to the Option on the date such Option is granted by the
Board. The fair market value of the shares of Common Stock for all
purposes of this Plan is to be determined by the Board in its sole
discretion, exercised in good faith.
6. Term of Plan. Plan A and Plan B shall become effective on
October 1, 1999. Both Plan A and Plan B shall continue in effect
until September 30, 2009 unless terminated earlier by action of the
Board. No Option may be granted hereunder after September 30, 2009.
7. Exercise of Option. Subject to the actions, conditions
and/or limitations set forth in this Plan document and/or any
applicable Stock Option Agreement entered into hereunder, Options
granted under this Plan shall be exercisable in accordance with the
following rules:
7.1 No Option granted under Plan A may be exercised in whole or
in part until six (6) months after the date on which the Option is
granted by the Board, or by the Committee if so authorized
(hereinafter the "Option Grant Date").
7.2 Subject to the specific provisions of this Section 7,
Options shall become exercisable at such times and in such
installments (which may be cumulative) as the Board shall provide in
the terms of each individual Option; provided, however, each Option
granted under the Plan shall become exercisable in installments of
not more than 20% of the number of shares covered by such Option
each year from the Option Grant Date; and provided, further, that by
a resolution adopted after an Option is granted the Board may, on
such terms and conditions as it may determine to be appropriate and
subject to the specific provisions of this section 7, accelerate the
time at which such Option or installment thereof may be exercised.
For purposes of this Plan, any accrued installment of an Option
granted hereunder shall be referred to as an "Accrued Installment."
7.3 Subject to the specific restrictions contained in this
Section 7, an Option may be exercised when Accrued Installments
accrue, as provided in the terms under which such Option was
granted, for a period of up to ten (10) years from the Option Grant
Date. In no event shall any Option be exercised on or after the
expiration of said maximum applicable period, regardless of the
circumstances then existing (including but not limited to the death
or termination of employment of the Optionee).
7.4 The Board shall fix the expiration date of the Option (the
"Option Expiration Date") at the time the Option grant is authorized.
8. Rules Applicable to Certain Dispositions.
8.1 Notwithstanding the foregoing provisions of Section 7, in
the event the Company or the shareholders of the Company enter into
an agreement to dispose of all or substantially all of the assets or
capital stock of the Company by means of a sale, merger,
consolidation, reorganization, liquidation, or otherwise, an Option
shall become immediately exercisable with respect to the full number
of shares subject to that Option during the period commencing as of
the later of (i) date of execution of such agreement or (ii) six (6)
months after the Option Grant Date, and ending as of the earlier of:
8.1.1 the Option Expiration Date; or
8.1.2 the date on which the disposition of assets or
capital stock contemplated by the agreement is consummated.
The exercise of any Option made exercisable solely by reason of this
Section 8.1 shall be conditioned upon the consummation of the
disposition of assets or stock under the above referenced agreement.
Upon the consummation of any such disposition of assets or stock,
the Plan and any unexercised Options issued hereunder (or any
unexercised portion thereof) shall terminate and cease to be effective.
8.2 Notwithstanding the foregoing, in the event that any such
agreement shall be terminated without consummating the disposition
of said stock or assets, any unexercised non-vested installments
that had become exercisable solely by reason of the provisions of
section 8.1 shall again become non-vested and unexercisable as of
said termination of such agreement.
8.3 Notwithstanding the provisions set forth in Section 8.1, the
Board may, at its election and subject to the approval of the
corporation purchasing or acquiring the stock or assets of the
Company (the "Surviving Corporation"), arrange for the Optionee to
receive upon surrender of Optionee's Option a new option covering
shares of the Surviving Corporation in the same proportion, at an
equivalent option price and subject to the same terms and conditions
as the old Option. For purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to
such new option immediately after consummation of such disposition
of stock or assets over the aggregate option price of such shares of
the Surviving Corporation shall not be more than the excess of the
aggregate fair market value of all shares subject to the old Option
immediately before consummation of such disposition of stock or
assets over the aggregate Option Price of such shares of the
Company, and the new option shall not give the Optionee additional
benefits which such Optionee did not have under the old Option or
deprive the Optionee of benefits which the Optionee had under the
old Option. If such substitution of options is effectuated, the
Optionee's rights under the old Option shall thereupon terminate.
9. Mergers and Acquisitions.
9.1 If the Company at any time should succeed to the business of
another corporation through a merger or consolidation, or through
the acquisition of stock or assets of such corporation, Options may
be granted under the Plan to option holders of such corporation or
its subsidiaries, in substitution for options or rights to purchase
stock of such corporation held by them at the time of succession.
The Board shall have sole and absolute discretion to determine the
extent to which such substitute Options shall be granted (if at
all), the person or persons within the eligible group to receive
such substitute Options (who need not be all option holders of such
corporation), the number of Options to be received by each person,
the Option Price of such Option, and the terms and conditions of
such substitute Options; provided however, that the terms and
conditions of the substitute Options shall comply with the
provisions of Section 425 of the Code, such that the excess of the
aggregate fair market value of the shares subject to such substitute
Option immediately after the substitution or assumption over the
aggregate option price of such shares is not more than the excess of
the aggregate fair market value of all shares subject to the
substitution Option immediately before such substitution or
assumption over the aggregate option price of such shares, and the
substitution Option or the assumption of the old option does not
give the holder thereof additional benefits which he or she did not
have under such old option.
9.2 Notwithstanding anything to the contrary herein, no Option
shall be granted, nor any action taken, permitted or omitted, which
could cause the Plan, or any Options granted hereunder as to which
Rule 16b-3 under the Securities Exchange Act of 1934 may apply, not
to comply with such Rule.
10. Termination of Employment.
10.1 In the event that the Optionee's employment,
directorship or consulting or other arrangement with the Company (or
Affiliated Company) is terminated for any reason other than death or
disability, any unexercised Accrued Installments of the Option
granted hereunder to such terminated Optionee shall expire and
become unexercisable as of the earlier of:
10.1.1 the applicable Option Expiration Date; or
10.1.2 a date 30 days after such termination occurs,
provided, however, that the Board may, in the exercise of its
discretion, extend said date up to and including a date three months
following such termination with respect to Options granted under
Plan A, or up to and including a date two years following such
termination with respect to Options granted under Plan B.
10.2 In the event that Optionee's employment, directorship
or consulting or other arrangement with the Company is terminated
due to the death or disability of the Optionee, any unexercised
Accrued Installments of the Option granted hereunder to such
Optionee shall expire and become unexercisable as of the earlier of:
10.2.1 the applicable Option Expiration Date; or
10.2.2 the first anniversary of the date of death of
such Optionee (if applicable); or
10.2.3 the first anniversary of the date of the
termination of employment, directorship or consulting or other
arrangement by reason of disability (if applicable). Any such
Accrued Installments of a deceased Optionee may be exercised prior
to their expiration by (and only by) the person or persons to whom
the Optionee's Option right shall pass by will or by the laws of
descent and distribution, if applicable, subject, however, to all
the terms and conditions of this Plan and the applicable Stock
Option Agreement governing the exercise of Options granted hereunder.
10.3 For purposes of this section 10, an Optionee shall be
deemed employed by the Company (or Affiliated Company) during any
period of leave of absence from active employment as authorized by
the Company (or Affiliated Company).
11. Exercise of Options.
11.1 An Option shall be deemed exercised when written
notice of such exercise has been given to the Company at its
principal business office by the person entitled to exercise the
Option and full payment in cash or cash equivalents (or with shares
of Common Stock pursuant to section 14) for the shares with respect
to which the Option is exercised has been received by the Company.
The Board may cause the Company to give or arrange for financial
assistance (including without limitation direct loans, with or
without interest, secured or unsecured, or guarantees of third party
loans) to an Optionee for the purpose of providing funds for the
purchase of shares pursuant to the exercise of Options, when in the
judgment of the Board such assistance is in the best interests of
the Company, is consistent with the Certificate of Incorporation and
Bylaws of the Company and applicable laws, and will permit the
shares to be fully paid and nonassessable when issued.
11.2 An Option may be exercised in accordance with this
section 11 as to all or any portion of the shares covered by an
Accrued Installment of the Option from time to time during the
applicable Option period, but shall not be exercisable with respect
to fractions of a share.
11.3 As soon as practicable after any proper exercise of
an Option in accordance with the provisions of this Plan, the
Company shall deliver to the Optionee at the main office of the
Company, or such other place as shall be mutually acceptable, a
certificate or certificates representing the shares of Common Stock
as to which the Option has been exercised. The time of issuance and
delivery of the Common Stock may be postponed by the Company for
such period as may be required for it with reasonable diligence to
comply with any applicable listing requirements of any national or
regional securities exchange and any law or regulation applicable to
the issuance and delivery of such shares.
12. Authorization to Issue Options and Shareholder Approval.
Unless in the judgment of counsel to the Company such permit is not
necessary with respect to particular grants, Options granted under
the Plan shall be conditioned upon the Company obtaining any
required permit from the California Department of Corporations
and/or other appropriate governmental agencies, free of any
conditions not acceptable to the Board, authorizing the Company to
grant such Options, provided, however, such condition shall lapse as
of the effective date of issuance of such permit(s) in a form to
which the Company does not object within sixty (60) days. The grant
of Options under the Plan also is conditioned on approval of the
Plan by the vote or consent of the holders of a majority of the
outstanding shares of the Company's Common Stock and no Option
granted hereunder shall be effective or exercisable unless and until
the Plan has been so approved.
13. Limit on Value of Optioned Shares. The aggregate fair market
value (determined as of the Option Grant Date) of the shares of
Common Stock to which Options granted under Plan A are exercisable
for the first time by any employee of the Company during any
calendar year under all incentive stock option plans of the Company
and its Affiliated Companies shall not exceed $100,000. The
limitation imposed by this section 13 shall not apply to Options
granted under Plan B.
14. Payment of Exercise Price with Company Stock. The Board may
provide that, upon exercise of the Option, the Optionee may elect to
pay for all or some of the shares of Common Stock underlying the
Option with shares of Common Stock of the Company previously
acquired and owned at the time of exercise by the Optionee, subject
to all restrictions and limitations of applicable laws, rules and
regulations, including Section 425(c)(3) of the Code, and provided
that the Optionee will make representations and warranties
satisfactory to the Company regarding his or her title to the shares
used to effect the purchase, including without limitation
representations and warranties that the Optionee has good and
marketable title to such shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options
or restrictions, and has full power to deliver such shares without
obtaining the consent or approval of any person or governmental
authority other than those which have already given consent or
approval in a form satisfactory to the Company. The equivalent
dollar value of the shares used to effect the purchase shall be the
fair market value of the shares on the date of the purchase as
determined by the Board in its sole discretion, exercised in good
faith.
15. Stock Option Agreements. The terms and conditions of Options
granted under the Plan shall be evidenced by a Stock Option
Agreement (hereinafter referred to as the "Agreement") executed by
the Company and the person to whom the Option is granted. Each
agreement shall contain the following provisions:
15.1 A provision fixing the number of shares which may be
issued upon exercise of the Option;
15.2 A provision establishing the Option exercise price
per share;
15.3 A provision establishing the times and the
installments in which Options may be exercised, provided, however,
such times and installments shall not be more than 20% of the number
of shares covered by such Option each year from the Option Grant Date;
15.4 A provision incorporating therein this Plan by
reference;
15.5 A provision clarifying which Options are intended to
be Incentive Stock Options under Plan A and which are intended to be
nonstatutory stock options under Plan B;
15.6 A provision fixing the maximum duration of the Option
as not more than five (5) years from the Option Grant Date for
Options granted under Plan A and not more than ten (10) years from
the Option Grant Date for Options granted under Plan B;
15.7 Such representations and warranties by the Optionee
as may be required by section 25 of this Plan or as may be required
by the Board in its discretion;
15.8 Any other restriction (in addition to those
established under this Plan) as may be established by the Board with
respect to the exercise of the Option, the transfer of the Option,
and/or the transfer of the shares purchased by exercise of the
Option, provided that such restrictions are not in conflict with
this Plan; and
15.9 Such other terms and conditions consistent with this
Plan as may be established by the Board.
16. Taxes, Fees and Expenses. The Company shall pay all original
issue and transfer taxes (but not income taxes, if any) with respect
to the grant of Options and/or the issue and transfer of shares
pursuant to the exercise of such Options, and all other fees and
expenses necessarily incurred by the Company in connection
therewith, and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for
the Company, shall be applicable thereto.
17. Withholding of Taxes. The grant of Options hereunder and the
issuance of Common Stock pursuant to the exercise of such Options is
conditioned upon the Company's reservation of the right to withhold,
in accordance with any applicable law, from any compensation payable
to the Optionee any taxes required to be withheld by federal, state
and local law as a result of the grant or exercise of any such Option.
18. Amendment or Termination of the Plan.
18.1 The Board may amend this Plan from time to time in
such respects as the Board may deem advisable, provided, however,
that no such amendment shall operate to (i) affect adversely an
Optionee's rights under this Plan with respect to any Option granted
hereunder prior to the adoption of such amendment, except as may be
necessary, in the judgment of counsel to the Company, to comply with
any applicable law, (ii) increase the maximum aggregate number of
shares which may be optioned and sold under the Plan (unless
shareholders approve such increase), (iii) change the manner of
determining the option exercise price, (iv) change the classes of
persons eligible to receive Options under the Plan, or (v) extend
the maximum duration of the Option or the Plan.
18.2 The Board may at any time terminate this Plan. Any
such termination of the Plan shall not, without the written consent
of the Optionee, alter the terms of Options already granted, and
such Options shall remain in full force and effect as if this Plan
had not been terminated.
19. Options Not Transferable. Options granted under this Plan
may not be sold, pledged, hypothecated, assigned, encumbered, gifted
or otherwise transferred or alienated in any manner, either
voluntarily or involuntarily by operation of law, other than by will
or the laws of descent of distribution, and may be exercised during
the lifetime of an Optionee only by such Optionee.
20. No Restrictions on Transfer of Stock. Common Stock issued
pursuant to the exercise of an Option granted under this Plan
(hereinafter "Optioned Stock"), or any interest in such Optioned
Stock, may be sold, assigned, gifted, pledged, hypothecated,
uncumbered or otherwise transferred or alienated in any manner by
the holder(s) thereof, subject, however, to any representations or
warranties requested under section 25 of this Plan and also subject
to compliance with any applicable federal, state or other local law,
regulation or rule governing the sale or transfer of stock or
securities.
21. Reservation of Shares of Common Stock. The Company, during
the term of this Plan, shall at all times reserve and keep available
such number of shares of its Common Stock sufficient to satisfy the
requirements of the Plan.
22. Restrictions on Issuance of Shares. The Company, during the
term of this Plan, shall use its best efforts to obtain from the
appropriate regulatory agencies any requisite authorization to grant
Options or issue and sell such number of shares of its Common Stock
as necessary to satisfy the requirements of the Plan. The inability
of the Company to obtain from any such regulatory agency having
jurisdiction thereof the authorization deemed by the Company's
counsel to be necessary to the lawful grant of Options or the
issuance and sale of any shares of its stock hereunder or the
inability of the Company to confirm to its satisfaction that any
grant of Options or issuance and sale of any shares of such stock
will meet applicable legal requirements shall relieve the Company of
any liability in respect of the non-issuance or sale of such stock
as to which such authorization or confirmation have not been obtained.
23. Notices. Any notice to be given to the Company pursuant to
the provisions of this Plan shall be addressed to the Company in
care of its Secretary at its principal office, and any notice to be
given to a person to whom an Option is granted hereunder shall be
addressed to him or her at the address given beneath his or her
signature on his or her Stock Option Agreement, or at such other
address as such person or his or her transferee (upon the transfer
of Optioned Stock) may hereafter designate in writing to the
Company. Any such notice shall be deemed duly given when enclosed
in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and registry or
certification fee prepaid, in a post office or branch post office
regularly maintained by the United States Postal Service. It should
be the obligation of each Optionee and each transferee holding
optioned stock to provide the Secretary of the Company, by letter
mailed as provided hereinabove, with written notice of his or her
correct mailing address.
24. Adjustments Upon Changes in Capitalization. If the
outstanding shares of Common Stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind
of shares of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split or reverse stock
split, then an appropriate and proportionate adjustment shall be
made in the number or kind of shares which may be issued upon
exercise or Options granted under the Plan; provided, however, that
no such adjustment need be made if, upon the advice of counsel, the
Board determines that such adjustment may result in the receipt of
federally taxable income to holders of Options granted hereunder or
the holders of Common Stock or other classes of the Company's
securities.
25. Representations and Warranties. As a condition to the grant
of any Option hereunder or the exercise of any portion of an Option,
the Company may require the person to be granted or exercising such
Option to make any representations and/or warranty to the Company as
may, in the judgment of counsel to the Company, be required under
any applicable law or regulation, including, but not limited to, a
representation and warranty that the Option and/or shares issuable
or issued upon exercise of such Option are being acquired only for
investment, for such person's own account and without any present
intention to sell or distribute such Option or shares, as the case
may be, if, in the opinion of counsel for the Company, such
representation is required under the Securities Act of 1933, the
California Corporate Securities Law of 1968 or any other applicable
law, regulation or rule of any governmental agency.
26. No Enlargement of Employee Rights. This Plan is purely
voluntary on the part of the Company, and the continuance of the
Plan shall not be deemed to constitute a contract between the
Company and any employee, or to be consideration for or a condition
of the employment of any employee. Nothing contained in the Plan
shall be deemed to give any employee the right to be retained in the
employ of the Company or its Affiliated Companies, or to interfere
with the right of the Company or an Affiliated Company to discharge
any employee thereof at any time. No employee shall have any right
to or interest in Options authorized hereunder prior to the grant of
such an Option to such employee, and upon such grant he or she shall
have only such rights and interests as are expressly provided
herein, subject, however, to all applicable provisions of the
Company's Certificate of Incorporation, as the same may be amended
from time to time.
27. Information to Option Holders. During the period any options
granted to employees of the Company remain outstanding, such
employee-option holders shall be entitled to receive, on an annual
or other periodic basis, financial and other information regarding
the Company. The Board shall exercise its discretion with regard to
the nature and extent of the financial information so provided,
giving due regard to the size and circumstances of the Company and,
if the Company provides annual reports to its shareholders, the
Company's practice in connection with such annual reports.
Notwithstanding the above, if the issuance of options under either
Plan A or Plan B is limited to key employees whose duties in
connection with the company assure their access to equivalent
information, this section 27 shall not apply to such employees and
plan. A copy of this Plan shall be delivered to the Secretary of
the Company and shall be shown by him or her to each eligible person
making reasonable inquiry concerning it. A copy of this Plan also
shall be delivered to each Optionee at the time his or her Options
are granted.
28. Legends on Stock Certificates. Each certificate representing
Common Stock issued under this Plan shall bear whatever legends are
required by federal or state law or by any governmental agency. In
particular, unless an appropriate registration statement is filed
pursuant to the Federal Securities Act of 1933, as amended, with
respect to the shares of Common Stock issuable under this Plan, each
certificate representing such Common Stock shall be endorsed on its
face with the following legend or its equivalent:
Neither the Option pursuant to which the shares represented
by this certificate are issued nor said shares have been
registered under the Securities Act of 1933, as amended (the
"Act"). Transfer or sale of such securities or any interest
therein is unlawful except after registration, or pursuant to
an exemption from the registration requirements, as provided
in the Act and the regulations thereunder.
29. Specific Performance. The Options granted under this Plan
and the Optioned Stock issued pursuant to the exercise of such
Options cannot be readily purchased or sold in the open market, and,
for that reason among others, the Company and its shareholders will
be irreparably damaged in the event that this Plan is not
specifically enforced. In the event of any controversy concerning
the right or obligation to purchase or sell any such Option or
Optioned Stock, such right or obligation shall be enforceable in a
court of equity by a decree of specific performance. Such remedy
shall, however, be cumulative and not exclusive, and shall be in
addition to any other remedy which the parties may have.
30. Invalid Provision. In the event that any provision of this
Plan is found to be invalid or otherwise unenforceable under any
applicable law, such invalidity or enforceability shall not be
construed as rendering any other provisions contained herein invalid
or unenforceable, and all such other provisions shall be given full
force and effect to the same extent as though the invalid or
unenforceable provision was not contained herein.
31. Applicable Law. This Plan shall be governed by and construed
in accordance with the laws of the State of California.
32. Successors and Assigns. This Plan shall be binding on and
inure to the benefit of the Company and the employees to whom an
Option is granted hereunder, and such employees' heirs, executors,
administrators, legatees, personal representatives, assignees and
transferees.
IN WITNESS WHEREOF, pursuant to the due authorization and
adoption of this Plan by the Board on September 20, 1999, the Company
has caused this Plan to be duly executed by its duly authorized
officers.
GTC TELECOM, INC.
__/s/ Paul Sandhu____________
By: Paul Sandhu
Its: President
PROXY
GTC TELECOM CORP.
3151 Airway Ave., Suite P-3, Costa Mesa, California 92626
Proxy for Annual Meeting of Shareholders December 3, 1999
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
The undersigned hereby appoint S. PAUL SANDHU and ERIC CLEMONS, and
each of them, as proxy or proxies for the undersigned, with full
power of substitution, who may act by unanimous vote of said proxies
or their substitutes as shall be present at the meeting, or, if only
one be present, then the one shall have all the powers hereunder, to
represent and to vote, as designated on the other side (If no
direction is made, this Proxy will be voted FOR Proposals 1, 2 and
3), all of the shares of GTC Telecom Corp. (the "Company") standing
in the name of the undersigned, at the Annual Meeting of
Shareholders of the Company to be held on Friday, December 3, 1999,
at 9:30 a.m. at the DoubleTree Hotel, 3050 Bristol St., Costa Mesa,
California, 92626, and any adjournment thereof. In their discretion,
the proxies are authorized to vote upon such other business as may
properly come before the meeting.
Please mark your votes as indicated in this example
The Board of Directors recommends a vote FOR Items 1, 2 and 3.
WITHHELD
FOR FOR
ITEM 1 - ELECTION OF DIRECTORS
NOMINEES:
ERIC C. CLEMONS [ ] [ ]
S. PAUL SANDHU [ ] [ ]
JOHN M. EGER [ ] [ ]
CLAY T. WHITEHEAD [ ] [ ]
WITHHELD FOR: (Write that nominee's name in the space provided
below)._________________________________________
FOR AGAINST ABSTAIN
ITEM 2 - TO APPROVE AND RATIFY THE
GTC TELECOM 1999 STOCK OPTION PLAN [ ] [ ] [ ]
FOR AGAINST ABSTAIN
ITEM 3 - TO AMEND THE ARTICLES OF [ ] [ ] [ ]
INCORPORATION TO AUTHORIZE
THE ISSUANCE OF PREFERRED
STOCK
Signature(s) _____________________________ Date:____________
_____________________________
(Print Name)
NOTE: Please sign as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.