Exhibit 4.1
The Global TeleSystems Group,
Inc. Amended and Restated Non-Employee
Directors' Stock Option Plan
GLOBAL TELESYSTEMS GROUP, INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
February 10, 1998
1. Purpose of the Plan. The purpose of this Plan is to permit
Eligible Directors of the Company to share in the growth of the value of the
Company through the grant and exercise of Options.
2. Definitions. For the purposes of the Plan, the following
terms shall be defined as set forth below:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
"Common Stock" means the Common Stock of the Company, par
value $.10 per share.
"Company" means Global TeleSystems Group, Inc., a Delaware
corporation, including any wholly owned subsidiary or affiliate, or any
successor organization.
"Disability" means permanent and total disability within the
meaning of Section 22(e)(3) of the Code.
"Eligible Director" means a person who is a non-employee
member of the Board.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means the fair market value of the Common
Stock as determined objectively by the Board, in good faith, using such
criteria as it deems relevant; provided, however, that where there is a
public market for the Common Stock, the fair market value per Share
shall be the average of the last reported bid and asked prices of the
Common Stock on the date of grant, as reported in The Wall Street
Journal (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation ("NASDAQ")
System) or, in the event the Common Stock is listed on a national
securities exchange, within the meaning of Section 6 of the Exchange
Act, the fair market value per Share shall be the closing price on such
exchange on the date of grant of the Option, as reported in The Wall
Street Journal.
"Incentive Stock Option" means any Option intended to be
designated as an "incentive stock option" within the meaning of Section
422 of the Code.
2
"Nonqualified Stock Option" means any Option that is not an
Incentive Stock Option.
"Option" means any option to purchase shares of the Common
Stock of the Company granted pursuant to this Plan.
"Option Agreement" means a written agreement between the
Company and the Optionee regarding the grant and exercise of Options to
purchase shares of Common Stock and the terms and conditions thereof.
"Optionee" means an Eligible Director who receives an Option
under the Plan.
"Plan" means this Company's Amended and Restated Non-Employee
Directors' Stock Option Plan, as amended from time to time.
"Rules" means that regulations promulgated by the Securities
and Exchange Commission under Section 16 of the Exchange Act.
Except where otherwise indicated by the context, any masculine
terminology used herein shall also include the feminine and vice versa, and the
definition of any term herein in the singular shall also include the plural and
vice versa.
3. Stock Subject to the Plan.
(a) Aggregate Number of Shares. The aggregate number of shares
of Common Stock that may be issued or transferred under the Plan is 1,275,000,
subject to adjustment pursuant to Section 3(b) below. Such shares may include
authorized but unissued shares of Common Stock or reacquired shares of Common
Stock. In the event the number of shares of Common Stock issued under the Plan
and the number of shares of Common Stock subject to outstanding awards (taking
into account the share counting requirements established under the Rules) equals
the maximum number of shares of Common Stock authorized under the Plan, no
further awards shall be made unless the Plan is amended (in accordance with the
Rules, if necessary) or additional shares of Common Stock become available for
further awards under the Plan. If and to the extent that Options granted under
the Plan terminate, expire or are canceled without having been exercised, such
shares shall again be available for subsequent awards under the Plan.
(b) Adjustments Upon Changes in Capitalization. If any change
is made to the Common Stock (whether by reason of merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, combination of
shares or exchange of shares or any other change in capital structure made
without receipt of consideration), then unless such event or change results in
the termination of all outstanding awards under the Plan, the Board shall
preserve the value of
3
the outstanding awards by adjusting the maximum number and class of shares
available under the Plan to reflect the effect on such event or change in the
Company's capital structure, and by making appropriate adjustments to the number
and class of shares subject to an outstanding award or the Option price of each
outstanding Option, except that any fractional shares resulting from such
adjustments shall be eliminated by rounding any portion of a share equal to .500
or greater up, and any portion of a share equal to less than .500 down, in each
case to the nearest whole number.
4. Administration of the Plan. The Plan shall be administered
by the Board. Subject to the provisions of the Plan, the Board shall be
authorized to:
(a) adopt, revise and repeal such administrative rules,
guidelines and practices governing this Plan as it shall from time to time deem
advisable;
(b) interpret the terms and provisions of the Plan and any
Option issued under the Plan (and any agreements relating thereto), and
otherwise settle all claims and disputes arising under the Plan;
(c) delegate responsibility and authority for the operation
and administration of the Plan, appoint employees and officers of the Company to
act on its behalf, and employ persons to assist in the fulfilling of its
responsibilities under the Plan; and
(d) otherwise supervise the administration of the Plan;
provided, however, that the Board shall have no discretion with respect to the
selection of Eligible Directors to receive Options hereunder, the number of
shares of Common Stock covered by such Option or the price or timing of any
Options granted hereunder; and provided further that any action by the Board
relating to the Plan will be taken only if approved by the affirmative vote of a
majority of the directors who are not then eligible to participate under the
Plan.
5. Option Grants.
(a) Number of Options Granted. The following number of Options
are hereby granted to each Eligible Director under the Plan:
Initial Grant
As of the effective date of the Plan, an Option to purchase
18,000 shares of Common Stock is granted to each person who on that
date is an incumbent Eligible Director.
With respect to each person who first becomes an Eligible
Director after the effective date of the Plan but prior to February 10,
1998, an Option to purchase 18,000
4
shares of Common Stock is granted as of the date such person first
becomes an Eligible Director.
With respect to each person who first becomes an Eligible
Director on or after February 10, 1998, an Option to purchase 22,500
shares of Common Stock is granted as of the date such person first
becomes an Eligible Director.
Subsequent Grant
As of the date of the third annual meeting of the Company's
shareholders following the grant of an Option to an Eligible Director
pursuant to subsection 5(a)(i) or (ii) above, provided the date of such
third annual meeting is prior to February 10, 1998, and provided
further that such Eligible Director remains an incumbent on the date of
such third annual meeting and will serve as an Eligible Director during
the next following year, an Option to purchase 13,500 shares of Common
Stock is granted to such Eligible Director.
As of the date of each annual meeting of the Company's
shareholders on or after February 10, 1998 and following the grant of
an Option to an Eligible Director pursuant to subsection 5(a)(i),
(ii), or (iii) above, provided that such Eligible Director remains an
incumbent on such date and will serve as an Eligible Director during
the next following year, an Option to purchase 9,000 shares of Common
Stock is granted to such Eligible Director.
(b) Nonqualified Options. All Options granted hereunder shall
be Nonqualified Stock Options. No Option granted pursuant to this Plan may be
designated as an Incentive Stock Option.
(c) Amendments to this Section 5. Notwithstanding any other
provision of the Plan, this Section 5 may not be amended more than once every
six months, except for amendments necessary to conform the Plan to changes in
the provisions of, or the regulations relating to, the Code.
6. Terms and Conditions of Options.
(a) Option Agreement. Each Option granted hereunder shall be
evidenced by an Option Agreement.
5
(b) Option Price. The Option price per share of Common Stock
covered by an Option granted hereunder shall be the Fair Market Value of the
Common Stock as of the date of grant.
(c) Option Term. The term of each Option shall be ten years.
No Option shall be exercised by any person after expiration of the term of the
Option.
(d) Exercisability. An Option shall be exercisable during its
term, subject to the following provisions of this Section 6(d):
Initial Grants Made Prior to February 10, 1998, Pursuant to
Section 5(a)(i) or 5(a)(ii). With respect to any Option granted prior
to February 10, 1998 to an Eligible Director pursuant to Section
5(a)(i) or 5(a)(ii), such Option shall become exercisable with respect
to 9,000 shares of Common Stock on the date six months following the
relevant date of grant, with respect to an additional 4,500 shares on
the date six months following the first annual meeting of the Company's
shareholders to occur after such date of grant, and with respect to the
final 4,500 shares on the date six months following the second annual
meeting of the Company shareholders to occur after such date of grant.
Initial Grants Made On or After February 10, 1998 Pursuant to
Section 5(a)(iii). With respect to any Option granted on or after
February 10, 1998 to an Eligible Director pursuant to Section 5
(a)(iii), such Option shall become exercisable with respect to 11,250
shares of Common Stock on the date six months following the relevant
date of grant, with respect to an additional 5,625 shares on the date
six months following the first annual meeting of the Company's
shareholders to occur after such date of grant, and with respect to the
final 5,625 shares on the date six months following the second annual
meeting of the Company shareholders to occur after such date of grant.
Subsequent Grants Made Prior to February 10, 1998 Pursuant to
Section 5(a)(iv). With respect to any Option granted prior to February
10, 1998 to an Eligible Director pursuant to Section 5(a)(iv), such
Option shall become exercisable with respect to 4,500 shares of Common
Stock on the date six months following the relevant date of grant, with
respect to an additional 4,500 shares on the date six months following
the first annual meeting of the Company's shareholders to occur after
such date of grant, and with respect to the final 4,500 shares on the
date six months following the second annual meeting of the Company's
shareholders to occur after such date of grant.
Subsequent Grants Made On or After February 10, 1998 Pursuant
to Section 5(a)(v). With respect to any Option granted on or after
February 10, 1998 to an Eligible Director pursuant to Section 5(a)(v),
such Option shall become exercisable with respect to 3,000 shares of
Common Stock on the date six months following the first annual meeting
of the Company's shareholders to occur after such date
6
of grant, and with respect to the final 3,000 shares on the date six
months following the second annual meeting of the Company's
shareholders to occur after such date of grant.
(e) Method of Exercise. Options may be exercised, in whole or
in part, at any time and from time to time during the Option exercise period, by
giving written notice of exercise to the Company specifying the number of shares
to be purchased. Such notice shall be accompanied by payment in full of the
purchase price, either in cash or by certified or bank check, or such other
instrument as the Board may accept. Payment in full or in part may also be made
in the form of unrestricted Common Stock already owned by the Optionee (and
based upon the Fair Market Value of the Common Stock so tendered as of the date
the Option is exercised, as determined by the Board). No shares of Common Stock
shall be issued until full payment therefor has been made. Eligible Directors
shall generally have the rights to dividends or other rights of a stockholder
with respect to shares subject to the Option when the Eligible Director has
given notice as to exercise, has paid in full for such shares and, if requested,
has given any representations required by the Board.
(f) Non-transferability. No Option shall be transferable by
the Optionee otherwise than by will, by the laws of descent and distribution,
pursuant to a qualified domestic relations order or as permitted under the
Rules, and all Options shall be exercisable, during the Optionee's lifetime,
only by the Optionee.
(g) Termination by Reason of Death. If an Optionee ceases to
be an Eligible Director by reason of death, any Option held by such Optionee may
thereafter be exercised to the extent then exercisable, by the legal
representative of the estate or by the legatee of the Optionee under the will of
the Optionee, for a period of one year from the date of such death or until the
expiration of the stated term of such Option, whichever period is shorter.
(h) Termination by Reason of Disability. If an Optionee ceases
to be an Eligible Director by reason of Disability, any Option held by such
Optionee may thereafter be exercised by the Optionee, to the extent it was
exercisable at the time of termination, for a period of one year from the date
of such termination or until the expiration of the stated term of such Option,
whichever period is shorter; provided, however, that if the Optionee dies within
such one-year period, any unexercised Option held by such Optionee shall
thereafter be exercisable to the extent it was exercisable at the time of death
for a period of one year from the date of such death or until the expiration of
the stated term of such Option, whichever period is shorter.
(i) Other Termination. If an Optionee ceases to be an Eligible
Director for any reason other than death or Disability (except as a result of
becoming an employee of the Company), any Option held by such Optionee may
thereafter be exercised by the Optionee, to the extent it was exercisable at the
time of such termination, for a period of three months from the date of such
termination or the expiration of the such termination, for a period of three
months from the date of such termination or the expiration of the stated term of
such Option, whichever
7
period is shorter; provided, however, that if the Optionee dies within such
three-month period, any unexercised Option held by such Optionee shall
thereafter be exercisable, to the extent to which it was exercisable at the time
of death, for a period of one year from the date of such death or until the
expiration of the stated term of the Option, whichever period is shorter. If an
Optionee ceases to be an Eligible Director by reason of his becoming an employee
of the Company and his employment with the Company is subsequently terminated,
any Option held by such Optionee may thereafter be exercised by the Optionee, to
the extent that it was exercisable at the time of such termination, for a period
of three months from the date of such termination or the expiration of the
stated term of the Option, whichever period is shorter; provided, however, that
if the Optionee dies within such three-month period, any unexercised Option held
by such Optionee shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one year from the date of such
death or until the expiration of the stated term of the Option, whichever period
is shorter.
7. Amendment and Termination. The Board may amend, alter or
discontinue the Plan at any time and from time to time (either by resolution or
unanimous consent), but no amendment, alteration, or discontinuation shall be
made which would impair the rights of an Optionee under an Option theretofore
granted, without the Optionee's consent, or which, without the approval of the
Company's stockholders, would require stockholder approval under the Rules or
under the requirements of any applicable federal or state law or regulation;
provided, however, that in no event may the provisions of the Plan respecting
eligibility to participate be amended more frequently than once every six
months, other than to comport with changes in the Code, or the Employee
Retirement Income Security Act of 1974, as amended, and any rules or regulations
thereunder; provided further that any amendment which, under the requirements of
applicable federal or state law or regulation or the rules of any stock exchange
or automated quotation system on which the Common Stock may then be listed or
quoted must be approved by the stockholders of the Company, shall not be
effective unless and until such stockholder approval has been obtained in
compliance with such law; and provided further that any amendment that must be
approved by the stockholders of the Company in order to maintain the continued
qualification of the Plan under Rule 16b-3(c)(2)(ii) under the Exchange Act, or
any successor provision, shall not be effective unless and until such
stockholder approval has been obtained in compliance with such Rule. The
Committee may amend the terms of any Option theretofore granted, prospectively
or retroactively, but no such amendment shall impair the rights of any Optionee
without the Optionee's consent. Notwithstanding any provision herein to the
contrary, the Board shall have broad authority to amend the Plan or any Option
to take into account changes in applicable tax laws, securities laws, accounting
rules and other applicable state and federal laws.
8. Unfunded Status of the Plan. The Plan is intended to
constitute an unfunded plan for incentive compensation. With respect to any
payments not yet made to an Optionee by the Company, nothing contained herein
shall give any such Optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Board may authorize
8
the creation of trusts or other arrangements to meet the obligations created
under the Plan to deliver Common Stock or payments in lieu thereof or with
respect to awards hereunder.
9. General Provisions.
(a) Representations by Optionees. The Board may require each
Optionee to represent to and agree with the Company in writing that the Optionee
is acquiring the shares of Common Stock without a view to distribution thereof.
The certificates for such shares may include any legend that the Company deems
appropriate to reflect any restrictions on transfer.
(b) No Restrictions on Adoption of Other Compensation
Arrangements. Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements (subject to stockholder
approval, if such approval is required) and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) No Right to Continuing Employment or Re-election. The
adoption of the Plan shall not confer upon any Optionee any right to continued
employment with the Company nor shall it interfere in any way with the right of
the Company to terminate its relationship with any of its employees, directors,
or independent contractors at any time.
(d) Tax Withholding. No later than the dates as of which an
amount first becomes includable in the gross income of the Optionee for
applicable income tax purposes with respect to any award under the Plan, the
Optionee shall pay to the Company or make arrangements satisfactory to the Board
regarding the payment of any federal, state or local taxes of any kind required
by law to be withheld with respect to such amount. Unless otherwise determined
by the Board, the minimum required withholding obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise
to the withholding requirement. The obligation of the Company under the Plan
shall be conditional upon such payment or arrangements and the Company shall to
the extent permitted by law have the right to deduct any such taxes from any
payment of any kind otherwise due to the Optionee.
(e) Right of First Refusal. At the time of grant, the Board
may provide in connection with any grant made under this Plan that the shares of
Common Stock received as a result of such grant shall be subject to a right of
first refusal pursuant to which the Optionee shall be required to offer to the
Company any shares that the Optionee wishes to sell with the price being the
then Fair Market Value of the Common Stock, subject to such other terms and
conditions as the Board may specify at the time of grant.
(f) Designation of a Beneficiary. The Board shall establish
such procedures as it deems appropriate for an Optionee to designate a
beneficiary to whom any amounts payable in the event of the Optionee's death are
to be paid.
9
(g) Applicable Law. The Plan shall be governed by and subject
to the laws of the State of Delaware and to all applicable laws and to the
approvals by any governmental or regulatory agency as may be required.
(h) Severability. If any provision of this Plan shall be held
illegal or invalid for any reason, such illegality or invalidity shall not
affect the remaining provisions of this Plan, but this Plan shall be construed
and enforced as if such illegal or invalid provision had never been included
herein.
(i) Compliance with Rule 16b-3. It is the intent of the
Company that this Plan comply in all respects with applicable provisions of Rule
16b-3 under the Exchange Act in connection with any grant of Options.
Accordingly, if any provision of this Plan or any agreement hereunder does not
comply with the requirements of Rule 16b-3 as then applicable to any such
Optionee, or would cause any Optionee to no longer be deemed a "disinterested
person" within the meaning of Rule 16b-3, such provision shall be construed or
deemed amended to the extent necessary to conform to such requirements with
respect to such Optionee. In addition, the Board shall have no authority to make
any amendment, alteration, suspension, discontinuation, or termination of the
Plan or any agreement hereunder to take other action if and to the extent such
authority would cause an Optionee's transactions under the Plan not to be
exempt, or Optionees no longer to be deemed "disinterested persons" under Rule
16b-3 of the Exchange Act.
10. Effective Date and Term of the Plan. The Plan shall be
effective as of November 14, 1994. No Options shall be granted pursuant to the
Plan on or after November 14, 2004, but Options granted prior to such date may
extend beyond that date.