EXHIBIT 4.1
SHENANDOAH TELECOMMUNICATIONS COMPANY
STOCK INCENTIVE PLAN
SHENANDOAH TELECOMMUNICATIONS COMPANY
STOCK INCENTIVE PLAN
ARTICLE I.
DEFINITIONS
1.01. Administrator means the Committee and any delegate of the
Committee that is appointed in accordance with Article III.
1.02. Affiliate means any "subsidiary or "parent" corporation (within
the meaning of Section 424 of the Code) of the Company.
1.03. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an award of Restricted Stock or an Option or SAR granted to
such Participant.
1.04. Board means the Board of Directors of the Company.
1.05. Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.06. Committee means the Personnel Committee of the Board which shall
be comprised of two or more individuals who allow the Committee to satisfy the
requirements of Securities and Exchange Commission Rule 16b-3(c)(2)(i). The
Committee shall be appointed by the Board.
1.07. Common Stock means the common stock of the Company.
1.08. Company means Shenandoah Telecommunications Company.
1.09. Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.10. Fair Market Value means, on any given date, the fair market value
of a share of Common Stock as determined by the Committee using any reasonable
method in good faith.
1.11. Initial Value means, with respect to an SAR, the Fair Market
Value of one share of Common Stock on the date of grant.
1.12. Option means a stock option that entitles the holder to purchase
from the Company a stated number of shares of Common Stock at the price set
forth in an Agreement.
1.13. Participant means an employee of the Company or an Affiliate,
including an employee who is a member of the Board, who satisfies the
requirements of Article IV and is selected by the Administrator to receive a
Restricted Stock award, an Option, an SAR, or a combination thereof.
1.14. Plan means the Shenandoah Telecommunications Company Stock
Incentive Plan.
1.15. Restricted Stock means Common Stock awarded to a Participant
under Article IX. Shares of Common Stock shall cease to be Restricted Stock
when, in accordance with the terms of the applicable Agreement, they become
transferable and free of substantial risks of forfeiture.
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1.16. SAR means a stock appreciation right that entitles the holder to
receive, with respect to each share of Common Stock encompassed by the exercise
of such SAR, the amount determined by the Administrator and specified in an
Agreement. In the absence of such a determination, the holder shall be entitled
to receive, with respect to each share of Common Stock encompassed by the
exercise of such SAR, the excess of the Fair Market Value on the date of
exercise over the Initial Value. References to "SARs" include both Corresponding
SARs and SARs granted independently of Options, unless the context requires
otherwise.
1.17. Ten Percent Shareholder means any individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of an Affiliate. An individual shall be considered to own any voting
stock owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own proportionately
any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a shareholder, partner
or beneficiary.
ARTICLE II.
PURPOSES
The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in its future success and to associate their
interests with
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those of the Company and its shareholders. The Plan is intended to permit the
award of shares of Restricted Stock, the grant of SARs, and the grant of both
Options qualifying under Section 422 of the Code ("incentive stock options") and
Options not so qualifying. No Option that is intended to be an incentive stock
option shall be invalid for failure to qualify as an incentive stock option. The
proceeds received by the Company from the sale of Common Stock pursuant to this
Plan shall be used for general corporate purposes.
ARTICLE III.
ADMINISTRATION
The Plan shall be administered by the Administrator. The Administrator
shall have authority to award Restricted Stock and to grant Options and SARs
upon such terms (not inconsistent with the provisions of this Plan) as the
Administrator may consider appropriate. Such terms may include conditions (in
addition to those contained in this Plan) on the exercisability of all or any
part of an Option or SAR or on the transferability or forfeitability of
Restricted Stock. Notwithstanding any such conditions, the Administrator may, in
its discretion, accelerate the time at which any Option or SAR may be exercised
or the time at which Restricted Stock may become transferable or nonforfeitable.
In addition, the Administrator shall have complete authority to interpret all
provisions of this Plan; to prescribe the form of Agreements; to adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan;
and to make all other
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determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done
in good faith with respect to this Plan or any Agreement, Option, SAR or
Restricted Stock award. All expenses of administering this Plan shall be borne
by the Company.
The Committee, in its discretion, may delegate to one or more officers
of the Company, all or part of the Committee's authority and duties with respect
to grants and awards to individuals who are not subject to the reporting and
other provisions of Section 16 of the Securities Exchange Act of 1934, as in
effect from time to time. The Committee may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions of
the Committee's delegate or delegates that were consistent with the terms of the
Plan.
ARTICLE IV.
ELIGIBILITY
4.01. General. Any employee of the Company or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of this Plan) is
eligible to participate in this Plan. The Administrator will select the
individuals who will
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participate in this Plan. Directors of the Company who are employees of the
Company or an Affiliate may be selected to participate in this Plan. A member of
the Committee may not participate in this Plan during his service on the
Committee or during the period thereafter if his participation would prevent the
Committee from being "disinterested" for purposes of Securities and Exchange
Commission Rule 16b-3 as in effect from time to time.
4.02. Grants. The Administrator will designate individuals to whom
shares of Restricted Stock are to be awarded and to whom Options and SARs are to
be granted and will specify the number of shares of Common Stock subject to each
award or grant. An Option may be granted with or without a related SAR. An SAR
may be granted with or without a related Option. All shares of Restricted Stock
awarded and all Options and SARs granted under this Plan shall be evidenced by
Agreements which shall be subject to the applicable provisions of this Plan and
to such other provisions as the Administrator may adopt. No Participant may be
granted incentive stock options or related SARs (under all incentive stock
option plans of the Company and its Affiliates) that are first exercisable in
any calendar year for stock having an aggregate Fair Market Value (determined as
of the date an Option is granted) that exceeds $100,000. The preceding annual
limitation shall not apply with respect to Options that are not incentive stock
options.
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ARTICLE V.
STOCK SUBJECT TO PLAN
Upon the award of shares of Restricted Stock the Company may issue
shares of Common Stock from its authorized but unissued Common Stock. Upon the
exercise of any Option or SAR, the Company may deliver to the Participant (or
the Participant's broker if the Participant so directs), shares of Common Stock
from its authorized but unissued Common Stock. The maximum aggregate number of
shares of Common Stock that may be issued pursuant to the exercise of Options
and SARs and the award of Restricted Stock under this Plan is 240,000 shares.
The maximum aggregate number of shares of Common Stock that may be issued under
this Plan shall be subject to adjustment as provided in Article X. If an option
is terminated, in whole or in part, for any reason other than its exercise or
the exercise of a Corresponding SAR, the number of shares of Common Stock
allocated to the Option or portion thereof may be reallocated to other Options,
SARs, and Restricted Stock awards to be granted under this Plan. If an SAR is
terminated, in whole or in part, for any reason other than its exercise or the
exercise of a related Option, the number of shares of Common Stock allocated to
the SAR or portion thereof may be reallocated to other Options, SARs, and
Restricted Stock awards to be granted under this Plan.
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ARTICLE VI.
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an
Option shall be determined by the Administrator on the date of grant; provided,
however, that the price per share for Common Stock purchased on the exercise of
any Option that is an incentive stock option shall not be less than the Fair
Market Value on the date the Option is granted and provided further that the
price per share shall not be less than 110% of such Fair Market Value in the
case of an incentive stock option granted to a Participant who is a Ten Percent
Shareholder on the date such incentive stock option is granted.
ARTICLE VII.
EXERCISE OF OPTIONS AND SARS
7.01. Maximum Option or SAR Period. The maximum period in which an
option or SAR may be exercised shall be determined by the Administrator on the
date of grant, except that no Option that is an incentive stock option or its
Corresponding SAR shall be exercisable after the expiration of ten years from
the date such Option or Corresponding SAR was granted. In the case of an
incentive stock option or its Corresponding SAR that is granted to a Participant
who is a Ten Percent Shareholder, such Option and Corresponding SAR shall not be
exercisable after the expiration of five years from the date of grant. The terms
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of any Option that is an incentive stock option or Corresponding SAR may provide
that it is exercisable for a period less than such maximum period.
7.02. Nontransferability. Any Option or SAR granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any such transfer, the Option and any
Corresponding SAR must be transferred to the same person or persons. During the
lifetime of the Participant to whom the Option or SAR is granted, the Option or
SAR may be exercised only by the Participant. No right or interest of a
Participant in any Option or SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
7.03. Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the event
that the terms of any Option or SAR provide that it may be exercised only during
employment or continued service or within a specified period of time after
termination of employment or service, the Administrator may decide to what
extent leaves of absence for governmental or military service, illness,
temporary disability, or other reasons shall not be deemed interruptions of
continuous employment or service.
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ARTICLE VIII.
METHOD OF EXERCISE
8.01. Exercise. Subject to the provisions of Articles VII and XI, an
Option or SAR may be exercised in whole at any time or in part from time to time
at such times and in compliance with such requirements as the Administrator
shall determine; provided, however, that a Corresponding SAR that is related to
an incentive stock option may be exercised only to the extent that the related
Option is exercisable and when the Fair Market Value exceeds the option price of
the related Option. An Option or SAR granted under this Plan may be exercised
with respect to any number of whole shares less than the full number for which
the Option or SAR could be exercised. A partial exercise of an Option or SAR
shall not affect the right to exercise the Option or SAR from time to time in
accordance with this Plan and the applicable Agreement with respect to the
remaining shares subject to the Option or related to the SAR. The exercise of
either an Option or Corresponding SAR shall result in the termination of the
other to the extent of the number of shares with respect to which the Option or
Corresponding SAR is exercised.
8.02. Payment. Unless otherwise provided by the Agreement, payment of
the Option price shall be made in cash or a cash equivalent acceptable to the
Administrator. If the Agreement provides, payment of all or part of the Option
price may be made by surrendering shares of Common Stock to the Company. If
Common Stock is used to pay all or part of the Option price, the cash, cash
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equivalent and any shares surrendered must have a Fair Market Value (determined
as of the day preceding the date of exercise) that is not less than the Option
price for the number of shares the Option is being exercised.
8.03. Installment Payment. If the Agreement provides, and if the
Participant is employed by the Company on the date the Option is exercised,
payment of all or part of the Option price may be made in installments. In that
event the Company shall lend the Participant an amount equal to not more than
ninety percent (90%) of the Option price of the shares acquired by the exercise
of the Option. This amount shall be evidenced by the Participant's promissory
note and shall be payable in not more than five equal annual installments,
unless the amount of the loan exceeds the maximum loan value for the shares
purchased, which value shall be established from time to time by regulations of
the Board of Governors of the Federal Reserve System. In that event, the note
shall be payable in equal quarterly installments over a period of time not to
exceed five years. The Administrator, however, may vary such terms and make such
other provisions concerning the unpaid balance of such purchase price in the
case of hardship, subsequent termination of employment, absence on military or
government service, or subsequent death of the Participant as in its discretion
are necessary or advisable in order to protect the Company, promote the purposes
of the Plan and comply with regulations of the Board of Governors of the Federal
Reserve System relating to securities credit transactions.
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The Participant shall pay interest on the unpaid balance at the minimum
rate necessary to avoid imputed interest or original issue discount under the
Code. All shares acquired with cash borrowed from the Company shall be pledged
to the Company as security for the repayment thereof. In the discretion of the
Administrator, shares of stock may be released from such pledge proportionately
as payments on the note (together with interest) are made, provided the release
of such shares complies with the regulations of the Federal Reserve System
relating to securities credit transactions then applicable. While shares are so
pledged, and so long as there has been no default in the installment payments,
such shares shall remain registered in the name of the Participant, and he shall
have the right to vote such shares and to receive all dividends thereon.
8.04. Determination of Payment of Cash and/or Common Stock Upon
Exercise of SAR. At the Administrator's discretion, the amount payable as a
result of the exercise of an SAR may be settled in cash, Common Stock, or a
combination of cash and Common Stock. No fractional share shall be deliverable
upon the exercise of an SAR but a cash payment will be made in lieu thereof.
8.05. Shareholder Rights. No Participant shall have any rights as a
stockholder with respect to shares subject to his Option or SAR until the date
of exercise of such Option or SAR.
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ARTICLE IX.
RESTRICTED STOCK
9.01. Award. In accordance with the provisions of Article IV, the
Administrator will designate each individual to whom an award of Restricted
Stock is to be made and will specify the number of shares of Common Stock
covered by the award.
9.02. Vesting. The Administrator, on the date of the award, may, but
shall not be required to, prescribe that a Participant's rights in the
Restricted Stock shall be forfeitable or otherwise restricted for a period of
time set forth in the Agreement. By way of example and not of limitation, the
restrictions may postpone transferability of the shares or may provide that the
shares will be forfeited if the Participant separates from the service of the
Company and its Affiliates before the expiration of a stated term or if the
Company, the Company and its Affiliates or the Participant fails to achieve
stated objectives.
9.03. Shareholder Rights. Prior to their forfeiture (in accordance with
the terms of the Agreement and while the shares are Restricted Stock), a
Participant will have all rights of a shareholder with respect to Restricted
Stock, including the right to receive dividends and vote the shares; provided,
however, that (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of Restricted Stock, (ii) the Company shall
retain custody of the certificates evidencing shares of Restricted Stock, and
(iii) the Participant will deliver to the Company a stock power, endorsed in
blank, with respect to each
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award of Restricted Stock. The limitations set forth in the preceding sentence
shall not apply after the shares cease to be Restricted Stock.
ARTICLE X.
ADJUSTMENT UPON CHANGE IN COMMON STOCK
The maximum number of shares as to which Restricted Stock may be
awarded and as to which Options and SARs may be granted under this Plan shall be
proportionately adjusted, and the terms of outstanding Restricted Stock awards,
Options, and SARs shall be adjusted, as the Committee shall determine to be
equitably required in the event that (a) the Company (i) effects one or more
stock dividends, stock split-ups, subdivisions or consolidations of shares or
(ii) engages in a transaction to which Section 424 of the Code applies or (b)
there occurs any other event that, in the judgment of the Committee,
necessitates such action. Any determination made under this Article X by the
Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
outstanding awards of Restricted Stock, Options or SARs.
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The Committee may award shares of Restricted Stock, may grant Options,
and may grant SARs in substitution for stock awards, stock options, stock
appreciation rights, or similar awards held by an individual who is or becomes
an employee of the Company or an Affiliate in connection with a transaction
described in the first paragraph of this Article X. Notwithstanding any
provision of the Plan (other than the limitation of Article V), the terms of
such substituted Restricted Stock awards and Option or SAR grants shall be as
the Committee, in its discretion, determines is appropriate.
ARTICLE XI.
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued,
no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Company's shares may be
listed. The Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any share certificate issued to evidence Common Stock for
which shares of Restricted Stock are awarded or for which an Option or SAR is
exercised may bear such legends and statements as the Administrator may deem
advisable to assure compliance with federal and state laws and regulations. No
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Option or SAR shall be exercisable, no Restricted Stock shall be awarded, no
Common Stock shall be issued, no certificates for shares shall be delivered, and
no payment shall be made under this Plan until the Company has obtained such
consent or approval as the Administrator may deem advisable from regulatory
bodies having jurisdiction over such matters.
ARTICLE XII.
GENERAL PROVISIONS
12.01. Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any individual any right to continue in the employ of
the Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment of any individual at any
time with or without assigning a reason therefor.
12.02. Unfunded Plan. The Plan, insofar as it provides for grants, shall
be unfunded, and the Company shall not be required to segregate any assets that
may at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.
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12.03. Disposition of Stock. A Participant shall notify the
Administrator of any sale or other disposition of Common Stock acquired pursuant
to an Option that was an incentive stock option if such sale or disposition
occurs (i) within two years of the grant of an Option or (ii) within one year of
the issuance of the Common Stock to the Participant. Such notice shall be in
writing and directed to the Secretary of the Company.
12.04. Rules of Construction. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
ARTICLE XIII.
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan, (ii) the amendment changes the class of
individuals eligible to become Participants, or (iii) the amendment materially
increases the benefits that may be provided under the Plan. No amendment shall,
without a Participant's consent, adversely affect any rights of such Participant
under any outstanding Restricted Stock award, Option or SAR outstanding at the
time such amendment is made.
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ARTICLE XIV.
DURATION OF PLAN
No shares of Restricted Stock may be awarded and no Option or SAR may
be granted under this Plan more than ten years after the earlier of the date
that the Plan is adopted by the Board or the date that the Plan is approved by
shareholders as provided in Article XV. Restricted Stock awards, Options and
SARs granted before that date shall remain valid in accordance with their terms.
ARTICLE XV.
EFFECTIVE DATE OF PLAN
Shares of Restricted Stock may be awarded and Options and SARs may be
granted under this Plan upon its adoption by the Board, provided that no
Restricted Stock award, Option, or SAR will be effective unless this Plan is
approved by a majority of the votes entitled to be cast by the Company's
shareholders, voting either in person or by proxy, at a duly held shareholders'
meeting or by the unanimous consent of shareholders within twelve months of such
adoption.
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