EXHIBIT 4.1
TELECOM COMMUNICATIONS, INC.
2005 STOCK AWARDS PLAN
1. Purpose. The purposes of the Telecom, Inc. 2005 Stock Awards Plan (the
"Plan") are (i) to encourage outstanding individuals to accept or continue
employment with Telecom Communications, Inc. ("Telecom" or the "Company") and
its subsidiaries or to serve as directors of Telecom, and (ii) to furnish
maximum incentive to those persons to improve operations and increase profits
and to strengthen the mutuality of interest between those persons and Telecom's
stockholders by providing them stock options and other stock and cash
incentives.
2. Administration. The Plan will be administered by the Compensation Committee
(the "Committee") of the Telecom Board of Directors (the "Board") consisting of
two or more directors as the Board may designate from time to time, each of whom
shall satisfy such requirements as:
(a) the Securities and Exchange Commission may establish for administrators
acting under plans intended to qualify for exemption under Rule 16b-3 or its
successor under the Securities Exchange Act of 1934 (the "Exchange Act"); (b)
any stock exchange or quotation system that the Company chooses to list its
securities on may establish pursuant to its rule-making authority; and (c) the
Internal Revenue Service may establish for outside directors acting under plans
intended to qualify for exemption under Section 162(m) of the Internal Revenue
Code of 1986, as amended (the "Code").
The Committee shall have the authority to construe and interpret the Plan and
any benefits granted thereunder, to establish and amend rules for Plan
administration, to change the terms and conditions of options and other benefits
at or after grant, and to make all other determinations which it deems necessary
or advisable for the administration of the Plan. The determinations of the
Committee shall be made in accordance with their judgment as to the best
interests of Telecom and its stockholders and in accordance with the purposes of
the Plan. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee, in writing signed by all the Committee
members. The Committee may authorize one or more officers of the Company to
select employees and consultants to participate in the Plan and to determine the
number of option shares and other rights to be granted to such participants,
except with respect to awards to officers subject to Section 16 of the Exchange
Act or officers who are or may become "covered employees" within the meaning of
Section 162(m) of the Code ("Covered Employees") and any reference in the Plan
to the Committee shall include such officer or officers.
3. Participants. Participants may consist of all employees of Telecom and its
subsidiaries, all non-employee directors of Telecom and consultants of Telecom.
Any corporation or other entity in which a 50% or greater interest is at the
time directly or indirectly owned by Telecom shall be a subsidiary for purposes
of the Plan. Designation of a participant in any year shall not require the
Committee to designate that person to receive a benefit in any other year or to
receive the same type or amount of benefit as granted to the participant in any
other year or as granted to any other participant in any year. The Committee
shall consider all factors that it deems relevant in selecting participants and
in determining the type and amount of their respective benefits.
4. Shares Available under the Plan. There is hereby reserved for issuance under
the Plan an aggregate of 30,000,000 shares of Telecom common stock. If there is
a lapse, expiration, termination or cancellation of any Stock Option issued
under the Plan prior to the issuance of shares thereunder or if shares of common
stock are issued under the Plan and thereafter are reacquired by Telecom, the
shares subject to those stock options and the reacquired shares shall be added
to the shares available for benefits under the Plan. Shares covered by a benefit
granted under the Plan shall not be counted as used unless and until they are
actually issued and delivered to a participant. Any shares covered by a Stock
Appreciation Right shall be counted as used only to the extent shares are
actually issued to the participant upon exercise of the right. In addition, any
shares of common stock exchanged by an optionee as full or partial payment to
Telecom of the exercise price under any Stock Option exercised under the Plan,
any shares retained by Telecom pursuant to a participant's tax withholding
election, and any shares covered by a benefit which is settled in cash shall be
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added to the shares available for benefits under the Plan. All shares issued
under the Plan may be either authorized and unissued shares or issued shares
reacquired by Telecom. Under the Plan, no participant may receive in any
calendar year (i) Stock Options relating to more than 10,000,000 shares, (ii)
Restricted Stock or Restricted Stock Units that are subject to the attainment of
Performance Goals of Section 13 hereof relating to more than 5,000,000 shares,
(iii) Stock Appreciation Rights relating to more than 10,000,000 shares, or (iv)
Performance Shares relating to more than 5,000,000 shares. No non-employee
director may receive in any calendar year Stock Options relating to more than
1,200,000 shares or Restricted Stock Units relating to more than 500,000 shares.
The shares reserved for issuance and the limitations set forth above shall be
subject to adjustment in accordance with Section 13 hereof. All of the available
shares may, but need not, be issued pursuant to the exercise of Incentive Stock
Options. Notwithstanding anything else contained in this Section 4, the number
of shares that may be issued under the Plan for benefits other than Stock
Options or Stock Appreciation Rights shall not exceed a total of 30,000,000
shares (subject to adjustment in accordance with Section 13 hereof).
5. Types of Benefits. Benefits under the Plan shall consist of Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Stock, Performance Units, and Other Stock Awards, all as described below.
6. Stock Options. Stock Options may be granted to participants, at any time as
determined by the Committee. The Committee shall determine the number of shares
subject to each option and whether the option is an Incentive Stock Option. The
option price for Incentive Stock Options shall be determined by the Committee
but shall not be less than 100% of the fair market value of Telecom's common
stock on the date the option is granted. Each option shall expire at such time
as the Committee shall determine at the time of grant. Options shall be
exercisable at such time and subject to such terms and conditions as the
Committee shall determine; provided, however, that no option shall be
exercisable later than the tenth anniversary of its grant. The option price,
upon exercise of any option, shall be payable to Telecom in full by (i) cash
payment or its equivalent, (ii) tendering previously acquired shares (held for
at least six months if the Company is accounting for Stock Options using APB
Opinion 25 or purchased on the open market) having a fair market value at the
time of exercise equal to the option price or certification of ownership of such
previously-acquired shares, (iii) delivery of a properly executed exercise
notice, together with irrevocable instructions to a broker to promptly deliver
to Telecom the amount of sale proceeds from the option shares or loan proceeds
to pay the exercise price and any withholding taxes due to Telecom, and (iv)
such other methods of payment as the Committee, at its discretion, deems
appropriate. In no event shall the Committee cancel any outstanding Stock Option
for the purpose of reissuing the option to the participant at a lower exercise
price or reduce the option price of an outstanding option.
7. Stock Appreciation Rights. Stock Appreciation Rights ("SARs") may be granted
to participants at any time as determined by the Committee. An SAR may be
granted in tandem with a Stock Option granted under this Plan or on a
free-standing basis. The Committee also may, in its discretion, substitute SARs
which can be settled only in stock for outstanding Stock Options, at any time
when the Company is subject to fair value accounting. The grant price of a
tandem or substitute SAR shall be equal to the option price of the related
option. The grant price of a free-standing SAR shall be equal to the fair market
value of Telecom's common stock on the date of its grant. An SAR may be
exercised upon such terms and conditions and for the term as the Committee in
its sole discretion determines; provided, however, that the term shall not
exceed the option term in the case of a tandem or substitute SAR or ten years in
the case of a free-standing SAR and the terms and conditions applicable to a
substitute SAR shall be substantially the same as those applicable to the Stock
Option which it replaces. Upon exercise of an SAR, the participant shall be
entitled to receive payment from Telecom in an amount determined by multiplying
the excess of the fair market value of a share of common stock on the date of
exercise over the grant price of the SAR by the number of shares with respect to
which the SAR is exercised. The payment may be made in cash or stock, at the
discretion of the Committee, except in the case of a substitute SAR which may be
made only in stock.
8. Restricted Stock and Restricted Stock Units. Restricted Stock and Restricted
Stock Units may be awarded or sold to participants under such terms and
conditions as shall be established by the Committee. Restricted Stock and
Restricted Stock Units shall be subject to such restrictions as the Committee
determines, including, without limitation, any of the following: (a) a
prohibition against sale, assignment, transfer, pledge, hypothecation or other
encumbrance for a specified period; or
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(b) a requirement that the holder forfeit (or in the case of shares or units
sold to the participant resell to Telecom at cost) such shares or units in the
event of termination of employment during the period of restriction.
All restrictions shall expire at such times as the Committee shall specify.
9. Performance Stock. The Committee shall designate the participants to whom
long-term performance stock ("Performance Stock") is to be awarded and determine
the number of shares, the length of the performance period and the other terms
and conditions of each such award; provided the stated performance period will
not be less than 12 months. Each award of Performance Stock shall entitle the
participant to a payment in the form of shares of common stock upon the
attainment of performance goals and other terms and conditions specified by the
Committee.
Notwithstanding satisfaction of any performance goals, the number of shares
issued under a Performance Stock award may be adjusted by the Committee on the
basis of such further consideration as the Committee in its sole discretion
shall determine. However, the Committee may not, in any event, increase the
number of shares earned upon satisfaction of any performance goal by any
participant who is a Covered Employee. The Committee may, in its discretion,
make a cash payment equal to the fair market value of shares of common stock
otherwise required to be issued to a participant pursuant to a Performance Stock
award.
10. Performance Units. The Committee shall designate the participants to whom
long-term performance units ("Performance Units") are to be awarded and
determine the number of units and the terms and conditions of each such award;
provided the stated performance period will not be less than 12 months. Each
Performance Unit award shall entitle the participant to a payment in cash upon
the attainment of performance goals and other terms and conditions specified by
the Committee.
Notwithstanding the satisfaction of any performance goals, the amount to be paid
under a Performance Unit award may be adjusted by the Committee on the basis of
such further consideration as the Committee in its sole discretion shall
determine. However, the Committee may not, in any event, increase the amount
earned under Performance Unit awards upon satisfaction of any performance goal
by any participant who is a Covered Employee and the maximum amount earned by a
Covered Employee in any calendar year may not exceed $ 8,500,000. The Committee
may, in its discretion, substitute actual shares of common stock for the cash
payment otherwise required to be made to a participant pursuant to a Performance
Unit award.
11. Other Stock Awards. In addition to the incentives described in sections 6
through 10 above, the Committee may grant other incentives payable in common
stock under the Plan as it determines to be in the best interests of Telecom and
subject to such other terms and conditions as it deems appropriate; provided an
outright grant of stock will not be made unless it is offered in exchange for
cash compensation that has otherwise already been earned by the recipient.
12. Performance Goals. Awards of Restricted Stock, Restricted Stock Units,
Performance Stock, Performance Units and other incentives under the Plan may be
made subject to the attainment of performance goals relating to one or more
business criteria within the meaning of Section 162(m) of the Code, including,
but not limited to, cash flow; cost; ratio of debt to debt plus equity; profit
before tax; economic profit; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings per share; operating
earnings; economic value added; ratio of operating earnings to capital spending;
free cash flow; net profit; revenues; revenue growth; price of Telecom common
stock; return on net assets, equity or stockholders' equity; market share; or
total return to stockholders ("Performance Criteria"). Any Performance Criteria
may be used to measure the performance of the Company as a whole or any business
unit of the Company and may be measured relative to a peer group or index. Any
Performance Criteria may include or exclude Special Items. Special Items shall
include (i) extraordinary, unusual and/or non-recurring items of gain or loss,
(ii) gains or losses on the disposition of a business, (iii) changes in tax or
accounting regulations or laws, or (iv) the effect of a merger or acquisition,
as identified in the Company's quarterly and annual earnings releases. In all
other respects, Performance Criteria shall be calculated in accordance with the
Company's financial statements, generally accepted accounting principles, or
under a methodology established by the Committee prior to the issuance of an
award which is consistently applied and identified in the audited financial
statements, including footnotes, or the Management Discussion and Analysis
section of the Company's annual report. However, the Committee may not in any
event increase the amount of compensation payable to a Covered Employee upon the
attainment of a performance goal.
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13. Adjustments Upon Certain Changes and Changes in Control. In the event of a
reorganization, recapitalization, spin-off, stock dividend, stock split,
combination, reclassification, reverse stock split, merger, consolidation,
split-up, spin-off, repurchase, liquidation, dissolution, or sale, transfer,
exchange or other disposition of all or substantially all of the assets of the
Company, or exchange of common stock or other securities of the Company,
issuance of warrants or other rights to purchase common stock or other
securities of the Company, or other similar corporate transaction or event or
other increase or reduction in the number of issued shares of common stock, the
Compensation Committee may, in order to prevent the dilution or enlargement of
rights under awards, make such adjustments in the number and type of shares
authorized by the Plan, the number and type of shares covered by, or with
respect to which payments are measured under, outstanding awards and the
exercise prices specified therein as may be determined to be appropriate and
equitable. In the event of any of the events or transactions described in the
preceding sentence, a change in control, or similar transaction by the Company
or any unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, if the Compensation Committee determines that such action is
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to any option, right or other award under the Plan, to facilitate such
transactions or events or to give effect to such changes in laws, regulations or
principles, the Compensation Committee in its discretion is hereby authorized to
provide in the agreement evidencing any award or by action taken prior to the
occurrence of such transaction or event: (i) for adjustments to such award in
order to prevent the dilution or enlargement of rights thereunder or to provide
for acceleration of benefits thereunder; (ii) for either the purchase of any
such stock option, SAR, or any restricted stock for an amount of cash equal to
the amount that could have been attained upon the exercise of such option, right
or award or realization of the Participant's rights had such option, right or
award been currently exercisable or payable or fully vested or the replacement
of such option, right or award with other rights or property selected by the
Compensation Committee in its sole discretion; (iii) that it cannot be exercised
after such event; (iv) that upon such event, such option, right or award be
assumed by the successor or survivor corporation, or a parent or subsidiary
thereof, or shall be substituted for by similar options, rights or awards
covering the stock of the successor survivor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices; and (v) that the restrictions imposed under a restricted
stock agreement upon some or all shares of restricted stock may be terminated,
and some or all shares of such restricted stock may cease to be subject to
repurchase or forfeiture after such event. With respect to stock options and
SARs intended to qualify as performance-based compensation under Section162(m),
no adjustment or action described in this section or in any other provision of
the Plan shall be authorized to the extent that such adjustment or action would
cause the 2005 Plan to violate Section 422(b)(1) of the Code or would cause such
stock option or SAR to fail to so qualify under Section 162(m), as the case may
be, or any successor provisions thereto. Furthermore, no such adjustment or
action shall be authorized to the extent such adjustment or action would result
in short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Compensation Committee determines that the
option or other award is not to comply with such exemptive conditions. A "Change
in Control" shall mean:
A Change in Control of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act, or any successor provision thereto, whether or not the Company is
then subject to such reporting requirement; provided that, without limitation,
such a Change in Control shall be deemed to have occurred if (a) any "person" or
"group" (as such terms are used in Section 13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of Telecom representing 20%
or more of the combined voting power of our then outstanding securities (other
than Telecom or any Company employee benefit plan; and, for purposes of the
Plan, no Change in Control shall be deemed to have occurred as a result of the
"beneficial ownership," or changes therein, of our securities by either of the
foregoing), (b) there shall be consummated (i) any consolidation or merger of
the Company in which the Company is not the surviving or continuing corporation
or pursuant to which shares of common stock would be converted into or exchanged
for cash, securities or other property, other than a merger of Telecom in which
the holders of common stock immediately prior to the merger have, directly or
indirectly, at least a 65% ownership interest in the outstanding common stock of
the surviving corporation immediately after the merger, or (ii) any sale, lease,
exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of Telecom other than
any such transaction with entities in which the holders of Telecom common stock,
directly or indirectly, have at least a 65% ownership interest, (c) the
Company's stockholders approve any plan or proposal for the liquidation or
dissolution of the Company, or (d) as the result of, or in connection with, any
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cash tender offer, exchange offer, merger or other business combination, sale of
assets, proxy or consent solicitation (other than by the Board), contested
election or substantial stock accumulation (a "Control Transaction"), the
members of the Board immediately prior to the first public announcement relating
to such Control Transaction shall thereafter cease to constitute a majority of
the Board.
14. Substitution and Assumption of Benefits. Without affecting the number of
shares reserved or available hereunder the Board or the Committee may authorize
the issuance of benefits under this Plan in connection with the assumption of,
or substitution for, outstanding benefits previously granted to individuals who
become employees of Telecom or any subsidiary as a result of any merger,
consolidation, acquisition of property or stock, or reorganization, upon such
terms and conditions as the Committee may deem appropriate.
15. Nontransferability. Each benefit granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and distribution and
each Stock Option and SAR shall be exercisable during the participant's lifetime
only by the participant or, in the event of disability, by the participant's
personal representative. In the event of the death of a participant, exercise of
any benefit or payment with respect to any benefit shall be made only by or to
the executor or administrator of the estate of the deceased participant or the
person or persons to whom the deceased participant's rights under the benefit
shall pass by will or the laws of descent and distribution. Notwithstanding the
foregoing, at its discretion, the Committee may permit the transfer of a Stock
Option by the participant, subject to such terms and conditions as may be
established by the Committee.
16. Taxes. Telecom shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares deliverable under the Plan, after
giving the person entitled to receive such payment or delivery notice and
Telecom may defer making payment or delivery as to any award, if any such tax is
payable until indemnified to its satisfaction. A participant may pay all or a
portion of any required withholding taxes arising in connection with the
exercise of a Stock Option or SAR or the receipt or vesting of shares hereunder
by electing to have Telecom withhold shares of common stock, having a fair
market value equal to the amount required to be withheld.
17. Duration, Amendment and Termination. No Incentive Stock Option shall be
granted more than ten years after the date of adoption of this Plan by the
Board; provided, however, that the terms and conditions applicable to any option
granted on or before such date may thereafter be amended or modified by mutual
agreement between Telecom and the participant, or such other person as may then
have an interest therein. The Board or the Committee may amend the Plan from
time to time or terminate the Plan at any time. However, no such action shall
reduce the amount of any existing award or change the terms and conditions
thereof without the participant's consent. No material amendment of the Plan
shall be made without stockholder approval.
18. Fair Market Value. The fair market value of Telecom's common stock at any
time shall be determined in such manner as the Committee may deem equitable, or
as required by applicable law or regulation.
19. Other Provisions.
(a) The award of any benefit under the Plan may also be subject to other
provisions (whether or not applicable to the benefit awarded to any other
participant) as the Committee determines appropriate, including provisions
intended to comply with federal or state securities laws and stock exchange
requirements, understandings or conditions as to the participant's employment,
requirements or inducements for continued ownership of common stock after
exercise or vesting of benefits, forfeiture of awards in the event of
termination of employment shortly after exercise or vesting, or breach of
noncompetition or confidentiality agreements following termination of
employment, or provisions permitting the deferral of the receipt of a benefit
for such period and upon such terms as the Committee shall determine.
(b) In the event any benefit under this Plan is granted to an employee who is
employed or providing services outside the United States and who is not
compensated from a payroll maintained in the United States, the Committee may,
in its sole discretion, modify the provisions of the Plan as they pertain to
such individuals to comply with applicable law, regulation or accounting rules.
(c) The Committee, in its sole discretion, may permit or require a participant
to have amounts or shares of common stock that otherwise would be paid or
delivered to the participant as a result of the exercise or settlement of an
award under the Plan credited to a deferred compensation or stock unit account
established for the participant by the Committee on the Company's books of
account.
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20. Governing Law. The Plan and any actions taken in connection herewith shall
be governed by and construed in accordance with the laws of the state of
Delaware (without regard to applicable Delaware principles of conflict of laws).
21. Stockholder Approval. The Plan was adopted by the Board on February 26,
2005, subject to stockholder approval. The Plan and any benefits granted
thereunder shall be null and void if stockholder approval is not obtained at the
next annual meeting of stockholders.
APPROVED BY THE BOARD OF DIRECTORS: February 26, 2005
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APPROVED BY THE STOCKHOLDERS: February 28, 2005
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