<PAGE> 1
As filed with the Securities and Exchange Commission on June 12, 1998
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------
TELEGROUP, INC.
(Exact name of Registrant as specified in its charter)
Iowa 42-1344121
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2098 Nutmeg Avenue
Fairfield, Iowa 52556
(Address of Registrant's principal executive offices)
--------------------------
TELEGROUP, INC.
THIRD AMENDED AND RESTATED
1996 STOCK OPTION PLAN
(Full Title of the Plan)
--------------------------
Clifford Rees
Chief Executive Officer
Telegroup, Inc.
2098 Nutmeg Avenue
Fairfield, Iowa 52556
(515) 472-5000
(Name, address and telephone number of agent for service)
--------------------------
Copies of Correspondence to:
Robert J. Tannous, Esq.
Porter, Wright, Morris & Arthur
41 South High Street
Columbus, Ohio 43215
--------------------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum Amount of
Title of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered Per Share* Price* Fee*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
no par value................. 750,000 $11.00 $8,250,000 $2,433.75
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
*Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(h), based upon the average of the high and low prices of Telegroup
Common Stock as reported on the Nasdaq National Market System on June 10, 1998.
This Registration Statement shall be deemed to cover an indeterminate number of
additional shares of Telegroup, Inc. Common Stock, no par value, as may be
issuable pursuant to future stock dividends, stock splits or similar
transactions.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The document(s) containing the information concerning the Telegroup,
Inc. Third Amended and Restated 1996 Stock Option Plan, specified in Part I will
be sent or given to employees as specified by Rule 428(b)(1). Such documents are
not filed as part of this Registration Statement in accordance with the Note to
Part I of the Form S-8 Registration Statement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
INCORPORATION OF DOCUMENTS BY REFERENCE.
The contents of the Post-Effective Amendment No. 1 to the Form S-8
Registration Statement previously filed with the Securities and Exchange
Commission by the Registrant on May 5, 1998, Registration No. 333-34547, are
hereby incorporated by reference herein.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fairfield, State of Iowa, on June 11, 1998.
TELEGROUP, INC.
By: /s/ DOUGLAS A. NEISH
-----------------------------------
Douglas A. Neish, Vice President -
Finance and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Fred Gratzon Chairman of the Board ) June 11, 1998
- --------------------------------------- )
Fred Gratzon )
)
)
* Clifford Rees Chief Executive Officer and ) June 11, 1998
- --------------------------------------- Director )
Clifford Rees (Principal Executive Officer) )
)
)
* Steven J. Baumgartner President, Chief Operating ) June 11, 1998
- --------------------------------------- Officer, and Director )
Steven J. Baumgartner )
)
)
/s/ Douglas A. Neish Vice President - Finance, Chief ) June 11, 1998
- --------------------------------------- Financial Officer, and Director )
Douglas A. Neish (Principal Financial Officer) )
)
)
* Gary Korf Director of Finance and ) June 11, 1998
- --------------------------------------- Controller (Principal Accounting )
Gary Korf Officer) )
)
)
* Rashi Glazer Director ) June 11, 1998
- --------------------------------------- )
Rashi Glazer )
)
)
* J. Sherman Henderson II Director ) June 11, 1998
- --------------------------------------- )
J. Sherman Henderson II )
)
)
* Eric E. Stakland Senior Vice President - ) June 11, 1998
- --------------------------------------- International Marketing and )
Eric E. Stakland Director )
)
*By: /s/ Douglas A. Neish )
---------------------------------- )
Douglas A. Neish, Attorney-in-fact )
</TABLE>
<PAGE> 4
Registration No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TELEGROUP, INC.
--------------------------
EXHIBITS
--------------------------
<PAGE> 5
EXHIBIT INDEX
Exhibit Exhibit
Number Description
- ------ -----------
4.1 Telegroup, Inc. Amended and Restated 1996 Stock Option Plan
(Exhibit 4.1 to Form S-8 Registration Statement (Reg. No.
333-34547), and incorporated herein by reference).
4.2 Telegroup, Inc. Second Amended and Restated 1996 Stock
Option Plan (Exhibit 99 to the Registrant's Proxy Statement
for the 1998 Annual Meeting of Stockholders, dated as of
April 17, 1998, and incorporated herein by reference).
4.3 * Telegroup, Inc. Third Amended and Restated 1996 Stock Option
Plan.
4.4 Restated Articles of Incorporation of Telegroup, Inc.
(Exhibit 3.1 to Form S-1 Registration Statement, as amended
(Reg. No. 333-25065), and incorporated herein by reference).
4.5 Form of Second Restated Articles of Incorporation of
Telegroup, Inc. (Exhibit 3.2 to Form S-1 Registration
Statement, as amended (Reg. No. 333-25065), and incorporated
herein by reference).
4.6 By-Laws of Telegroup, Inc. (Exhibit 3.3 to Form S-1
Registration Statement, as amended (Reg. No. 333-25065), and
incorporated herein by reference).
4.7 Form of Amended and Restated By-Laws of Telegroup, Inc.
(Exhibit 3.4 to Form S-1 Registration Statement, as amended
(Reg. No. 333-25065), and incorporated herein by reference).
5.1 * Opinion of Porter, Wright, Morris & Arthur regarding
legality.
23.1 * Consent of KPMG Peat Marwick LLP.
23.2 Consent of Porter, Wright, Morris & Arthur (included in
Exhibit 5.1).
24.1 * Powers of Attorney.
- ----------
*Filed with this Registration Statement.
<PAGE> 1
Exhibit 4.3
TELEGROUP, INC.
THIRD AMENDED AND RESTATED
1996 STOCK OPTION PLAN
1. PURPOSE
-------
This Third 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. DEFINITION
----------
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) "DISABILITY" shall mean any injury of the body or any
disorder of the body or mind which renders the Optionee unable to
perform the material and substantial duties of his regular employment
by the Company at the time of the Optionee's termination of employment
by the Company. The Company's determination that a termination of
employment was not a Disability Related Termination may be disputed by
the Optionee for purposes of any Option held by the Optionee under this
Plan upon written notice to the Company's Chief Financial Officer
within 30 days after termination of employment. If so disputed, the
Company will promptly select a physician, the Optionee will promptly
select a physician, and the physicians so selected will select a third
physician ("INDEPENDENT PHYSICIAN") who will make a binding
determination of Disability for purposes of this Plan. The Optionee
will make himself available for and submit to examinations by such
physicians as may be directed by the Company. Failure of the Optionee
to submit to any examination or failure of the Independent Physician to
make his determination within 90 days after the date of the notice that
the Optionee disputed the Company's determination shall constitute
acceptance of the Company's determination as to Disability. If the
decision of the Independent Physician upholds the Company's
determination, any outstanding Option held by the Optionee shall be
exercisable for 30 days from the date of such decision (but not later
than the expiration of the date of the Option Agreement) to the extent
that the Option was exercisable on the date of the Optionee's
termination of employment and thereafter the Option shall terminate.
(f) "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.
(g) "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
<PAGE> 2
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
day 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.
(h) "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.
(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 Third 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)(I)(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) "RETIREMENT" shall mean the termination of employment by
an Optionee who usually (but not necessarily) has attained the age of
at least 59 1/2, who has been continuously employed by the Company for
at least five years, and who has entered into a written confidentiality
and non-competition agreement with the Company ("RETIREMENT AGREEMENT")
in a form acceptable to the Board at the time of such termination of
employment. For purposes of the Plan, the Board has discretion to deem
any employee of the Company who has not attained the age of at least 59
1/2 to have retired.
(p) "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.
<PAGE> 3
(q) "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.
(r) "TERMINATION OF EMPLOYMENT FOR CAUSE" shall mean
termination of employment for (i) the commission of an act of
dishonesty, including but not limited to misappropriation of funds or
property of the Company; (ii) the engagement in activities or conduct
injurious to the reputation of the Company; (iii) the conviction or
entry of a guilty or no contest plea to a misdemeanor involving an act
of moral turpitude or a felony; (iv) the violation of any of the terms
and conditions of any written agreement the Optionee may have from time
to time with the Company (following 30 days' written notice from the
Company specifying the violation and the employee's failure to cure
such violation within such 30-day period); or (v) any refusal to comply
with the written directives, policies or regulations established from
time to time by the Board.
3. GENERAL ADMINISTRATION
----------------------
(a) The Plan shall be administered by the Compensation
Committee (the "Committee"), consisting of not less than two members of
the Board. 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
-------------------------------------------
Directors serving on the Committee are eligible to receive Options
pursuant to the Plan and pursuant to the approval of the full Board.
<PAGE> 4
5. GRANTING OF OPTIONS
-------------------
Options may be granted under this Plan at any time prior to April 1,
2007.
6. ELIGIBILITY
-----------
(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
-----
(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, seven hundred fifty
thousand (4,750,000) shares, subject to adjustment as provided in
Section 8(i) 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,
subject to adjustment as provided in Section 8(i) 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
-------------------------------
Each Option granted pursuant to this Plan shall be evidenced by one or
more Option Agreements in such form 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 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(i) 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.
<PAGE> 5
(b) NON-INCENTIVE STOCK OPTION PRICE. Each Option that is not
an 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(i) 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
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 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 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.
(1) INCENTIVE STOCK OPTIONS. Incentive Stock Options
shall 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 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 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.
(h) TERMINATION OF EMPLOYMENT. Upon termination of an
Optionee's employment with the Company, other than by reason of death
or Retirement or termination by the Company by reason of Disability or
For Cause, the Optionee shall have 90 days after the date of
termination of employment (but not later than the expiration date of
the Stock Option Agreement) to exercise all Options held by him to the
extent the same were exercisable on the date of termination. Optionee
who may trade shares only during trading windows, i.e., Access
Employee, shall have the later of 180 days after the date of
termination of employment or the completion of a trading window that is
of at least ten days duration
<PAGE> 6
to exercise all Options held by him to the extent the same were
exercisable on the date of termination. The Board may cancel an Option
during the 90-day period after termination of employment referred to in
this paragraph if the Optionee engages in employment or activities
contrary, in the sole opinion of the Board, to the best interests of
the Company.
(1) Upon termination of an Optionee's employment by
death or by the Company by reason of Disability ("DISABILITY
RELATED TERMINATION"), the Optionee or the Optionee's personal
representative, or the person or persons to whom his rights
under the Options pass by will or the laws of descent or
distribution, shall have one year after the date of death or
the date of the Disability Related Termination (but not later
than the expiration date of the Stock Option Agreement) to
exercise all Options held by the Optionee to the extent the
same were exercisable on the date of the Optionee's
termination of employment, except that the time elapsed from
the date of death or a Disability Related Termination to the
date of exercise of such Option shall accrue toward any
vesting requirements in the Stock Option Agreement evidencing
such Option as if the Optionee had remained employed by the
Company.
(2) Upon termination of an Optionee's employment For
Cause, all Options held by such Optionee shall terminate
effective on the date of termination of employment.
(3) With respect only to options granted after April
21, 1998, upon termination of an Optionee's employment by
reason of Retirement, the Optionee shall have three years
after the date of Retirement (but not later than the
expiration of the Stock Option Agreement) to exercise any
Option held by Optionee at the time of Retirement to the
extent the same was exercisable on the date of the Optionee's
exercise of the Option, except that the time elapsed from the
date of Retirement to the date of exercise of such Option
shall accrue toward any vesting requirements in the Stock
Option Agreement evidencing such Option as if the Optionee had
remained employed by the Company; provided, however,
notwithstanding the foregoing, in the event of the Optionee's
death after Retirement, the Optionee or the Optionee's
personal representative, or the person or persons to whom his
rights under the Options pass by will or the laws of descent
or distribution, shall have one year after the date of death
(but not later than the expiration date of the Stock Option
Agreement) to exercise all Options held by the Optionee to the
extent the same were exercisable on the date of the Optionee's
death and the elapsed time from the date of death to the
exercise of the Option shall not accrue toward any vesting
requirements in the Stock Option Agreement evidencing such
Option; provided further, at the time of the exercise of an
Option by an Optionee following termination of employment by
reason of Retirement, the Optionee shall represent and warrant
to the Company that he has been in material compliance with
all terms and conditions of the Retirement Agreement with the
Company; and provided further, that in the event that the
Optionee violates the Retirement Agreement, all of the
Optionee's unexercised Options shall immediately terminate and
the Optionee shall return to the Company the economic value of
any Option which was realized or obtained (measured at the
date of exercise) by the Optionee after the violation of the
Retirement Agreement.
(i) EFFECT OF CERTAIN CHANGES.
(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.
<PAGE> 7
(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(i), 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.
(j) RIGHTS AS A SHAREHOLDER. An Optionee or a transferee of an
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(i) hereof.
(k) OTHER PROVISIONS. The Option Agreements authorized under
this 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.
<PAGE> 8
9. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES
-------------------------------------------------
(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
------------
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
--------------
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
-------------------------------------
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 9(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 21, 1998.
Attest:
/s/ Robert E. Steinberg
-----------------------
Secretary
<PAGE> 1
Exhibit 5.1
PORTER, WRIGHT, MORRIS & ARTHUR 41
South High Street Columbus, Ohio 43215
Telephone: (614)227-2000
Fax: (614)227-2100
June 11, 1998
Telegroup, Inc.
2098 Nutmeg Avenue
Fairfield, Iowa 52556
Re: Registration Statement on Form S-8
Telegroup, Inc. Third Amended and Restated 1996 Stock Option Plan
(the "Plan")
Ladies and Gentlemen:
We have acted as counsel for Telegroup, Inc., an Iowa corporation
("Telegroup"), in connection with the Registration Statement on Form S-8 (the
"Registration Statement"), filed by Telegroup with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
registration of an additional 750,000 shares of Telegroup Common Stock, no par
value (the "Shares"), to be issued under the Plan.
In connection with this opinion, we have examined such corporate
records, documents and other instruments of the registrant as we have deemed
necessary.
Based on the foregoing, we are of the opinion that the Shares will,
when issued and paid for in accordance with the provisions of the Plan, be
legally issued, fully paid and nonassessable, and entitled to the benefits of
the Plan.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ PORTER, WRIGHT, MORRIS & ARTHUR
PORTER, WRIGHT, MORRIS & ARTHUR
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Telegroup, Inc.:
We consent to incorporation by reference in the Registration Statement on Form
S-8 of Telegroup, Inc. of our report dated March 6, 1998, relating to the
consolidated balance sheets of Telegroup, Inc. and subsidiaries as of December
31, 1996 and 1997, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1997, and the related financial statement schedule,
which reports appear in the December 31, 1997, annual report on Form 10-K of
Telegroup, Inc.
/s/ KPMG PEAT MARWICK LLP
Lincoln, Nebraska
June 12, 1998
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
-----------------
Each of the undersigned officers and directors of TELEGROUP, INC., an
Iowa corporation (the "Company"), hereby appoints Clifford Rees and Douglas A.
Neish as his true and lawful attorneys-in-fact, or either of them, with power to
act without the other, as his true and lawful attorney-in-fact, in his name and
on his behalf, and in any and all capacities stated below, to sign and to cause
to be filed with the Securities and Exchange Commission the Company's
Registration Statement on Form S-8 to register under the Securities Act of 1933,
as amended, an additional 750,000 shares of Common Stock, no par value, to be
sold and distributed by the Company pursuant to the Company's Third Amended and
Restated 1996 Stock Option Plan, as amended (the "Plan") and such other number
of shares as may be issued under the anti-dilution provisions of the Plan, and
any and all amendments thereto, hereby granting unto said attorneys, and to each
of them, full power and authority to do and perform in the name and on behalf of
the undersigned, in any and all such capacities, every act and thing whatsoever
necessary to be done in and about the premises as fully as each of the
undersigned could or might do in person, hereby granting to each such attorney
full power of substitution and revocation, and hereby ratifying all that any
such attorney or his substitute may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney in counterparts if necessary, effective as of May 9, 1998.
<TABLE>
<CAPTION>
<S> <C>
/s/ Clifford Rees /s/ Gary Korf
- --------------------------------------- ---------------------------------------
Clifford Rees, Chief Executive Officer Gary Korf, Director of Finance and Controller
and Director (Principal Executive (Principal Accounting Officer)
Officer)
/s/ Douglas A. Neish /s/ Rashi Glazer
- --------------------------------------- ---------------------------------------
Douglas A. Neish, Vice President - Rashi Glazer, Director
Finance, Chief Financial Officer, and
Director (Principal Financial Officer)
/s/ Fred Gratzon /s/ J. Sherman Henderson
- --------------------------------------- ---------------------------------------
Fred Gratzon, Chairman of the Board J. Sherman Henderson, Director
/s/ Steven J. Baumgartner /s/ Eric E. Stakland
- --------------------------------------- ---------------------------------------
Steven J. Baumgartner, President, Eric E. Stakland, Senior Vice President -
Chief Operating Officer and Director International Marketing and Director
</TABLE>
