Exhibit 4.1
TELEGROUP, INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
1. PURPOSE
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This Amended and Restated 1996 Stock Option Plan for Telegroup, Inc.
(the "Company") is intended to provide incentive to directors, officers, key
employees, and agents of the Company and its Subsidiaries by providing those
persons with opportunities to purchase shares of the Company's Common Stock
under (a) Incentive Stock Options and (b) other stock options.
2. DEFINITIONS
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Except as otherwise expressly provided herein or unless the context
otherwise requires, as used in this Plan, the following words and phrases
shall have the meanings set forth in this Section 2.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock, no par value, of the
Company.
(d) "COMPANY" shall mean Telegroup, Inc., the employer which has
established this Plan.
(e) "DISINTERESTED" shall mean disinterested within the meaning of
any applicable regulatory requirements, including Rule 16b-3, as
amended from time to time, as promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended from time to time.
(f) "FAIR MARKET VALUE" per share as of a particular date shall mean
(i) the closing sales price per share of Common Stock on the
principal national securities exchange, if any, on which the
Common Stock shall then be listed for the last preceding date on
which there was a sale of such Common Stock on such exchange, or
(ii) if the Common Stock is not then listed on a national
securities exchange, the last sales price per share of Common
Stock entered on a national inter-dealer quotation system for the
last preceding date on which there was a sale of such Common
Stock on such national inter-dealer quotation system, or (iii) if
no closing or last sales price per share of Common Stock is
entered on a national inter-dealer quotation system, the average
of the closing bid and asked prices for the Common Stock in the
over-the-counter market for the last preceding date on which
there was a quotation for such Common Stock in such market or
(iv) if no price can be determined under the preceding
alternatives, then the price per share as determined by the
Committee in good faith.
(g) "INCENTIVE STOCK OPTION" shall mean one or more options to
purchase Common Stock which, at the time such options are granted
under this Plan or any other such plan of the Company, qualify as
incentive stock options under Section 422 of the Code.
(h) "IPO" shall mean the initial public offering of the Company's
Common Stock.
(i) "NON-INCENTIVE STOCK OPTION" shall mean any option or options
that are not Incentive Stock Options.
(j) "OPTION" shall mean any option, including any Incentive Stock
Option or other option issued pursuant to this Plan.
(k) "OPTIONEE" shall mean any person to whom an Option is granted
under this Plan.
(l) "PARENT" shall mean any corporation (other than the Company) in
an unbroken chain of corporations ending with the Company if, at
the time of granting an Option, each of the corporations other
than the Company owns stock possessing fifty-one percent (51%) or
more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
(m) "PLAN" shall mean this Amended and Restated 1996 Stock Option
Plan.
(n) "RELIANCE PERIOD TERMINATION DATE" shall mean the date that is
the earlier of:
(1) The date of expiration or termination of the Plan;
(2) The date of any material modification of the Plan,
within the meaning of Treasury Regulation section
1.162-27(h)(1)(iii);
(3) The first date as of which all Options provided
for under the Plan have been issued; and
(4) The date of the first meeting of shareholders of
the Company at which Directors are to be elected
that occurs after the year 2000.
(o) "SUBSIDIARY" shall mean any corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company
if, at the time of granting an Option, each of the corporations
other than the last corporation in the unbroken chain owns stock
possessing fifty-one percent (51%) or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
(p) "TEN PERCENT SHAREHOLDER" shall mean an Optionee who, at the time
an Option is granted, owns directly or indirectly (within the
meaning of Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all
classes of stock of the Company, its Parent or a Subsidiary.
3. GENERAL ADMINISTRATION
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(a) The Plan shall be administered by the Compensation Committee
(the "Committee"), consisting of not less than two members of the Board. From
and after the consummation of the IPO, no person may serve as a member of the
Committee unless such person is both a Disinterested person as well as an
"outside director" within the meaning of Treasury Regulation section
1.162-27(e)(3)(i).
(b) The Committee shall have the authority in its discretion, subject
to the terms and conditions hereof, to administer this Plan and to exercise
all the powers and authorities either specifically granted to it hereunder or
that are necessary or that are advisable in the administration of the Plan,
including, without limitation, the authority to grant Options; to determine
the purchase price of shares of Common Stock covered by each Option (the
"OPTION PRICE"); to determine the persons to whom, and the time or times at
which, Options shall be granted; to determine the number of shares of Common
Stock to be covered by each Option; to interpret the Plan; to prescribe, amend
and rescind rules and regulations relating to the Plan; and to determine the
terms and provisions of the Option agreements (which need not be identical)
entered into in connection with Options granted under the Plan ("OPTION
AGREEMENTS").
(c) The Board shall fill all vacancies, however caused, in the
Committee. The Board may from time to time appoint additional members to the
Committee and may at any time, under the terms and conditions of the Company's
Bylaws, remove one or more Committee members and substitute others.
(d) No member of the Board or Committee shall be liable for any
action taken or determination made in good faith with respect to this Plan or
any Option granted hereunder.
4. RESTRICTIONS ON GRANTS TO COMMITTEE MEMBERS
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From and after the IPO, directors serving on the Committee are not
eligible to receive Options pursuant to the Plan.
5. GRANTING OF OPTIONS
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Options may be granted under this Plan at any time prior to April 1,
2007.
6. ELIGIBILITY
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(a) Subject to Section 4, Options may be granted to any director,
officer, key employee or agent of the Company or any Subsidiary, however,
incentive stock options will be available only to employees of the Company.
In determining from time to time the directors, officers, employees and agents
to whom Options shall be granted and the number of shares of Common Stock to
be covered by each Option, the Committee shall consider the duties of the
respective directors, officers, employees and agents, their present and
potential contributions to the success of the Company and its Subsidiaries and
such other factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan.
(b) At the time each Option is granted under the Plan the Committee
shall determine whether such Option is to be designated as an Incentive Stock
Option. Incentive Stock Options shall not be granted to a director who is not
an employee of the Company.
(c) An Option designated an Incentive Stock Option can, prior to its
exercise, be changed to a non-incentive Option if the Optionee consents to
amend his Option Agreement to provide that the exercise period of such Option
will be governed by Section 8(e)(2) hereof.
7. STOCK
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(a) The stock subject to the Options shall be shares of Common Stock.
Such shares may, in whole or in part, be authorized but unissued shares
contributed directly by the Company or shares which shall have been or which
may be acquired by the Company. The aggregate number of shares of Common
Stock for which Options may be granted from time to time under this Plan shall
be four million (4,000,000) shares (determined after the Company's planned
split in connection with the IPO), subject to adjustment as provided in
Section 8(g) hereof. The maximum number of shares of Common Stock for which
any one person may be granted Options under the Plan is six hundred sixty-six
thousand six hundred sixty-seven (666,667) shares (determined after
the Company's planned split in connection with the IPO), subject to adjustment
as provided in Section 8(g) hereof.
(b) If any outstanding Option under the Plan for any reason expires
or is terminated without having been exercised in full, the shares of Common
Stock allocable to the unexercised portion of such Option shall (unless this
Plan shall have been terminated) become available for subsequent grants of
Options hereunder.
8. TERMS AND CONDITIONS OF OPTIONS
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Each Option granted pursuant to this Plan shall be evidenced by one or
more Option Agreements in such forms as the Committee may from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:
(a) INCENTIVE STOCK OPTION PRICE. Each Incentive Stock Option shall
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state the Option Price, which, shall be not less than one hundred percent
(100%) of the Fair Market Value of the shares of Common Stock on the date of
grant of the Option; provided, however, in the case of an Incentive Stock
Option granted to a Ten Percent Shareholder, the Option Price shall not be
less than one hundred ten percent (110%) of such Fair Market Value. The
Option Price shall be subject to adjustment as provided in Section 8(h)
hereof. The date on which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such Option is
granted.
(b) NON-INCENTIVE STOCK OPTION PRICE. Each Option that is not an
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Incentive Stock Option shall state the Option Price. In the case of
Non-Incentive Stock Options granted on or before the Reliance Period
Termination Date, the Option Price shall not be less than fifty percent (50%)
of the Fair Market Value of the shares of Common Stock on the date of grant of
the Option. In the case of Non-Incentive Stock Options granted after the
Reliance Period Termination Date, the Option Price shall not be less than one
hundred percent (100%) of the Fair Market Value of the shares of Common Stock
on the date of grant of the Option. The Option Price shall be subject to
adjustment as provided in Section 8(h) hereof. The date on which the
Committee adopts a resolution expressly granting an Option shall be considered
the day on which such Option is granted.
(c) RESTRICTIONS. Any Common Stock issued under this Plan may
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contain restrictions and limitations including, but not limited to,
limitations on transferability that may constitute substantial risks of
forfeiture, as the Committee may determine.
(d) VALUE OF SHARES. Options may be granted to any eligible person
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for shares of Common Stock of any value, provided that the aggregate Fair
Market Value (determined at the time the Option is granted) of the Common
Stock with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all the plans of
the Company, its Parent and its Subsidiaries) shall not exceed $100,000.
(e) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in
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full, at the time of exercise, in cash or, with the approval of the Committee,
in shares of Common Stock having a Fair Market Value in the aggregate equal to
such Option Price or in a combination of cash and such shares.
(f) TERM AND EXERCISE OF OPTIONS.
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(1) INCENTIVE STOCK OPTIONS. Incentive Stock Options shall
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be exercisable over the exercise period specified by the Committee in an
Option Agreement, but in no event shall such period exceed ten (10) years from
the date of the grant of each such Incentive Stock Option; provided, however,
that in the case of an Incentive Stock Option granted to a Ten Percent
Shareholder, the exercise period shall not exceed five (5) years from the date
such Option is granted. An Incentive Stock Option may be exercised, as to any
or all full shares of Common Stock as to which the Incentive Stock Option has
become exercisable, by giving written notice of such exercise to the
Committee; provided, that an Incentive Stock Option may not be exercised at
any one (1) time for less than one hundred (100) shares of Common Stock (or
such number of shares as to which the Incentive Stock Option is then
exercisable if such number of shares is less than 100).
(2) NON-INCENTIVE STOCK OPTIONS. Options which have not been
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designated by the Committee as Incentive Stock Options shall be exercisable
over a period of ten (10) years.
(g) NONTRANSFERABILITY OF OPTIONS. Options granted under this Plan
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are not transferable other than by will or by the laws of descent and
distribution, and, during Optionee's lifetime, Options may be exercised only
by the Optionee.
(g) EFFECT OF CERTAIN CHANGES.
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(1) If there is any change in the number of shares of
Common Stock through the declaration of stock dividends,
recapitalization resulting in stock splits, or combinations or
exchanges of such shares, then the number of shares of Common
Stock available for Options, the number of such shares covered by
outstanding Options, and the Option Price of such Options shall
be proportionately adjusted to reflect any increase or decrease
in the number of issued shares of Common Stock; provided,
however, that any fractional shares resulting from such
adjustment shall be eliminated.
(2) In the event of a proposed dissolution or liquidation
of the Company, each Option granted under this Plan shall
terminate as of a date to be fixed by the Committee, provided,
however, that each Optionee shall have the right, immediately
prior to such termination, to exercise the Options as to all or
any part of the shares of Common Stock covered thereby, including
shares as to which such Options would not otherwise be
exercisable.
(3) In the event of any merger, consolidation or
reorganization of the Company, the Committee shall promptly make
an appropriate adjustment to the number and class of shares of
Common Stock available for Options, and to the
amount and kind of shares or other securities or property
receivable upon exercise of any outstanding Options after the
effective date of such transaction, and the price thereof
(subject to the limitations of Section 424 of the Code), to
preserve each Optionee's proportionate interest therein and to
preserve unchanged the aggregate Option Price.
(4) In the event of a change in the Common Stock as
presently constituted, which is limited to a change of all of its
authorized shares without par value into the same number of
shares with a par value or, if such shares have a par value, then
with a different par value, the shares resulting from any such
change shall be deemed to be Common Stock within the meaning of
the Plan.
(5) To the extent that the foregoing adjustments relate
to stock or securities of the Company, such adjustments shall be
made by the Committee, whose determination in that respect shall
be final, binding and conclusive, provided that each Option
granted pursuant to this Plan and designated an Incentive Stock
Option shall not be adjusted in a manner that causes the Option
to fail to continue to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code.
(6) Except as expressly provided in this Section 8(h), the
Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation, and any issue
by the Company of shares of stock of any class, or securities
convertible into or exchangeable for shares of stock of any
class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Option Price of
shares of Common Stock subject to an Option. The grant of an
Option pursuant to this Plan shall not affect in any way the
right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge, consolidate, or dissolve,
liquidate, sell or transfer all or any part of its business or
assets.
(i) RIGHTS AS A SHAREHOLDER. An Optionee or a transferee of an
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Option shall have no rights as a shareholder with respect to any shares
covered by an Option until the date of the issuance of a stock certificate to
such Optionee for such shares. No adjustments shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in Section 8(h)
hereof.
(j) OTHER PROVISIONS. The Option Agreements authorized under this
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Plan shall contain such other provisions, including, without limitation, (i)
the imposition of
restrictions upon the exercise of an Option and (ii) the
inclusion of any condition not inconsistent with such Option qualifying as an
Incentive Stock Option, as the Committee shall deem advisable, including
provisions with respect to compliance with federal and applicable state
securities laws.
9. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES
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(a) No later than the date of exercise of any Option granted
hereunder, the Optionee will pay to the Company or make arrangements
satisfactory to the Committee regarding payment of any federal, state and/or
local taxes of any kind required by law to be withheld upon the exercise of
such Option, and
(b) The Company shall, to the extent permitted or required by law,
have the right to deduct from any payment of any kind otherwise due to the
Optionee any federal, state and/or local taxes of any kind required by law to
be withheld upon the exercise of such Option.
10. TERM OF PLAN
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Options may be granted pursuant to this Plan from time to time within a
period of ten (10) years from the date on which this Plan is adopted by the
Board, provided that no Options granted under this Plan shall become
exercisable unless and until this Plan shall have been approved by the
Company's shareholders.
11. SAVINGS CLAUSE
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Notwithstanding any other provision hereof, this Plan is intended to
qualify as a plan pursuant to which Incentive Stock Options may be issued
under Section 422 of the Code. If this Plan or any provision of this Plan
shall be held to be invalid or to fail to meet the requirements of Section 422
of the Code or the regulations promulgated thereunder, such invalidity or
failure shall not affect the remaining parts of this Plan, but rather it shall
be construed and enforced as if the Plan or the affected provision thereof, as
the case may be, complied in all respects with the requirements of Section 422
of the Code.
12. AMENDMENT AND TERMINATION OF THE PLAN
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The Committee may at any time and from time to time suspend, terminate,
modify or amend this Plan, provided that any amendment that would increase the
aggregate number of shares of Common Stock as to which Options may be granted
under this Plan or the maximum number that may be granted to any individual
person shall be subject to the approval of the holders of a majority of the
Common Stock issued and outstanding, except that any such increase or
modification that may result from adjustments authorized by Section 8(h)
hereof shall not require such approval. Except as provided in Section 8
hereof, no suspension, termination, modification
or amendment of this Plan may adversely affect any Option previously granted
unless the written consent of the Optionee is obtained.
Adopted by the Board of Directors on April 9, 1997.
Attest:
/s/ Charles Johanson
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Secretary