EXHIBIT 4.1
CHOICE ONE COMMUNICATIONS INC.
1999 DIRECTOR STOCK INCENTIVE PLAN
Choice One Communications Inc., a Delaware corporation, hereby
establishes the Choice One Communications Inc. 1999 Director Stock Incentive
Plan (the "Plan") as follows:
1. PURPOSE
The purpose of the Plan is to enable Choice One Communications
Inc. (the "Company") to attract and retain outside directors and provide them
with an incentive to maintain and enhance the Company's long-term performance
record. It is intended that this purpose will best be achieved by granting
eligible directors non-qualified stock options ("options") under this Plan
pursuant to the rules set forth in Section 83 of the Internal Revenue Code, as
amended from time to time.
2. ADMINISTRATION
The Plan shall be administered by the Company's Board of
Directors (the "Board"). Subject to the provisions of the Plan, the Board shall
possess the authority, in its discretion, (a) to prescribe the form of the stock
option agreements, including any appropriate terms and conditions applicable to
the options, and to make any amendments to such agreements or options; (b) to
interpret the Plan; (c) to make and amend rules and regulations relating to the
Plan; and (d) to make all other determinations necessary or advisable for the
administration of the Plan. The Board's determinations shall be conclusive and
binding. No member of the Board shall be liable for any action taken or decision
made in good faith relating to the Plan or any option granted hereunder.
3. ELIGIBLE DIRECTORS
Either (i) Members of the Board of Directors of the Company
who are not also employees of the Company or (ii) the limited partnerships who
appointed the Member listed in (i) to the Board of Directors, are eligible to
participate in this Plan.
4. SHARES AVAILABLE
An aggregate of 1500 shares of the Common Stock (par value
$0.01 per share) of the Company (subject to substitution or adjustment as
provided in Section 8 hereof) shall be available for the grant of options under
the Plan. Such shares may be authorized and unissued shares. If an option
expires, terminates or is cancelled without being exercised, new options may
thereafter be granted covering such shares. No options may be granted more than
ten years after the effective date of the Plan.
5. TERMS AND CONDITIONS OF OPTIONS
Each option granted under the Plan shall be evidenced by an
option agreement in such form as the Board shall approve from time to time,
which agreement shall conform with this Plan and contain the following terms and
conditions:
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(a) Number of Shares. As soon as administratively practicable
on or following the shareholder approval of this Plan, and
following the date of each annual meeting of shareholders
thereafter, each newly-elected or continuing eligible director
of the Company shall receive an option to purchase 100 shares
of the Company's Common Stock. An eligible director of the
Company who begins Board service on a date other than the date
of an annual meeting of shareholders shall receive a pro rata
grant to cover the partial year remaining to the date of the
next annual meeting of shareholders. The number of shares
subject to such option shall be multiplied by a fraction (not
to exceed 1.0), the numerator of which is the number of full
or partial months in the period commencing on the first day of
the month following the new Board member's appointment and
ending on the next annual meeting of shareholders and the
denominator of which is twelve. Any fractional share shall be
rounded up to the next highest whole number of shares.
(b) Exercise Price. The exercise price of each option shall
equal the fair market value of the Common Stock at the time
such option is granted.
(c) Duration of Option. Each option by its terms shall not be
exercisable after the expiration of ten years from the date
such option is granted.
(d) Options Nontransferable. Each option by its terms shall
not be transferable by the participant otherwise than by will
or the laws of descent and distribution, and shall be
exercisable, during the participant's lifetime, only by the
participant, the participant's guardian or the participant's
legal representative.
(e) Exercise Terms. Each option granted under the Plan shall
become exercisable pursuant to a vesting schedule set forth in
the option agreement. Options may be partially exercised from
time to time during the period extending from the time they
first become exercisable until the tenth anniversary of the
date of grant.
(f) Payment of Exercise Price. An option shall be exercised
upon written notice to the Company accompanied by payment in
full for the shares being acquired. The payment shall be made
in cash, by check or, if the option agreement so permits, by
delivery of shares of Common Stock of the Company registered
in the name of the participant, duly assigned to the Company
with the assignment guaranteed by a bank, trust company or
member firm of the New York Stock Exchange, or by a
combination of the foregoing. Any such shares so delivered
shall be deemed to have a value per share equal to the fair
market value of the shares on such date. For this purpose,
fair market value shall equal the closing price of the
Company's Common Stock on the listing exchange on the date the
option is exercised, or, if there was no trading in such stock
on the date of such exercise, the closing price on the last
preceding day on which there was such trading.
6. GENERAL RESTRICTION ON ISSUANCE OF STOCK CERTIFICATES
The Company shall not be required to deliver any certificate
upon the grant of any option, the exercise of an option or the satisfaction of
any condition with respect to any option until it has been furnished with such
opinion, representation or other document as it may reasonably deem necessary to
insure compliance with any law or regulation of the Securities and Exchange
Commission or any other governmental authority having jurisdiction under this
Plan. Certificates delivered upon such grant, exercise or satisfaction of any
condition may bear a legend restricting transfer absent such compliance. Each
option shall be subject to the requirement that, if at any time the Board shall
determine, in its discretion, that the listing,
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registration or qualification of the shares subject to such option upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of such option or the issue or
purchase of shares thereunder, such option may not be granted or exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors in the exercise of its reasonable judgment.
7. TERMINATION OF EMPLOYMENT
If a director dies, either before or after termination as a
director, resigns from the Board as a result of a conflict of interest or is
removed from the Board for cause, any option may be exercised by the director or
by the director's personal representative, as the case may be, at any time prior
to the earlier of the expiration date of the option or the first anniversary of
the director's date of death, resignation or removal but only if, and to the
extent that, the director was entitled to exercise the option at the date of
death, resignation or removal. If a director's employment as a director
terminates for any reason other than death, resignation due to a conflict or
removal for cause, option rights shall continue to vest in accordance with the
terms of the option agreement without regard to the termination of employment
and may be exercised by the director pursuant to the terms of that agreement.
8. ADJUSTMENT OF SHARES
In the event of any change in the Common Stock of the Company
by reason of any stock dividend, stock split, recapitalization, reorganization,
merger, consolidation, split-up, combination, or exchange of shares, or rights
offering to purchase Common Stock at a price substantially below fair market
value, or of any similar change affecting the Common Stock, the number and kind
of shares authorized under Section 4, the number and kind of shares which
thereafter are subject to an option under the Plan and the number and kind of
shares set forth in options under outstanding agreements and the price per share
shall be adjusted automatically consistent with such change to prevent
substantial dilution or enlargement of the rights granted to, or available for,
participants in the Plan.
9. NO EMPLOYMENT RIGHTS
The Plan and any options granted under the Plan shall not
confer upon any director any right with respect to continuance as a director of
the Company, nor shall they interfere in any way with any right the Company may
have to terminate the director's position as a director at any time.
10. RIGHTS AS A SHAREOWNER
The recipient of any option under the Plan shall have no
rights as a shareowner with respect thereto unless and until certificates for
shares of Common Stock are issued to the recipient.
11. AMENDMENT AND DISCONTINUANCE
This Plan may be amended, modified or terminated by the
shareholders of the Company or by the Company's Board of Directors, provided
that Plan provisions relating to the amount, price and timing of options may not
be amended more than once every six months other than to comport with changes in
the Internal Revenue Code or the regulations thereunder and provided further
that the Board may not, without approval of the shareowners, materially increase
the benefits accruing to participants under the Plan, increase the maximum
number of shares as to which options may be granted under the Plan, change the
minimum exercise price, change the class of eligible persons, extend the period
for which options may be granted or
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exercised, or withdraw the authority to administer the Plan from the Board or a
Committee of the Board. Notwithstanding the foregoing, to the extent permitted
by law, the Board may amend the Plan without the approval of shareowners, to the
extent it deems necessary to cause the Plan to comply with Securities and
Exchange Commission Rule 16b-3 or any successor rule, as it may be amended from
time to time. Except as required by law, no amendment, modification, or
termination of the Plan may, without the written consent of a director to whom
any option shall theretofore have been granted, adversely affect the rights of
such director under such option.
12. CHANGE IN CONTROL
(a) Notwithstanding other provisions of the Plan, in the event
of a change in control of the Company (as defined in subsection (c) below), all
of a participant's options shall become immediately vested and exercisable
unless directed otherwise by a resolution of the Board adopted prior to and
specifically relating to the occurrence of such change in control.
(b) In the event of a change in control each participant
holding an exercisable option (i) shall have the right at any time thereafter
during the term of such option to exercise the option in full notwithstanding
any limitation or restriction in any option agreement or in the Plan, and (ii)
may, subject to Board approval and after written notice to the Company within 60
days after the change in control, or during the period beginning on the third
business day and ending the twelfth business day following the first release for
publication by the Company after such change of control of a quarterly or annual
summary statement of earnings, which release occurs at least six months
following grant of the option, whichever period is longer, receive, in exchange
for the surrender of the option or any portion thereof to the extent the option
is then exercisable in accordance with clause (i), an amount of cash equal to
the difference between the fair market value (as determined by the Board) on the
date of surrender of the Common Stock covered by the option or portion thereof
which is so surrendered and the option price of such Common Stock under the
option.
(c) For purposes of this section "change in control" means:
1) there shall be consummated
i. any consolidation or merger of the Company in which
the Company is not the continuing or surviving
corporation or pursuant to which any shares of the
Company's common stock are to be converted into cash,
securities or other property, provided that the
consolidation or merger is not with a corporation
which was a wholly-owned subsidiary of the Company
immediately before the consolidation or 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 the
Company; or
2) the shareholders of the Company approve any plan or
proposal for the liquidation or dissolution of the Company; or
3) any person (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act), directly or indirectly, of 30% or more
of the Company's then outstanding common stock, provided that such
person shall not be a wholly-owned subsidiary of the Company
immediately before it becomes such 30% beneficial owner; or
4) individuals who constitute the Board on the date hereof
(the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any
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person becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company's shareowners, was
approved by a vote of at least three quarters of the directors
comprising the Incumbent Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is
named as a nominee for director, without objection to such nomination)
shall be, for purposes of this clause (d), considered as though such
person were a member of the Incumbent Board.
13. EFFECTIVE DATE
The effective date of the Plan shall be the date this Plan is
approved by the affirmative vote of the owners of a majority of the Company's
outstanding shares of Common Stock.
14. DEFINITIONS
Any terms or provisions used herein which are defined in
Section 83 of the Internal Revenue Code as amended, or the regulations
thereunder or corresponding provisions of subsequent laws and regulations in
effect at the time options are made hereunder, shall have the meanings as
therein defined.
15. GOVERNING LAW
To the extent not inconsistent with the provisions of the
Internal Revenue Code that relate to non-qualified stock options, this Plan and
any agreement adopted pursuant to it shall be construed under the laws of the
State of New York.
Dated: December 16, 1999 CHOICE ONE COMMUNICATIONS INC.
By: /s/ Steve M. Dubnik
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Title: Chairman and Chief Executive Officer
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Date of Shareholder Approval: December 16, 1999
